It’s Friday and that means it’s time to review the latest economic data and identify which pockets of the economy are heating up and which are slowing down. Don’t worry about catching every headline and every report throughout the week—I recap all of the most important news impacting your wealth right here every Friday. Let’s take a look at this week’s big headlines:
In July, retail sales were relatively unchanged from June’s $439 billion. Retail sales only rose 0.1%, when you exclude motor vehicles and parts. Car sales fell 0.2% in July. Economist were looking for 0.3% growth overall and 0.4% growth when excluding automobiles. This report broke a five-month streak of increases, which is disappointing but not the end of the world. Consumer spending is likely to pick up in the coming months as the job market improves, which will boost retail sales and GDP growth.
The Commerce Department revealed that inventories increased 0.4% in June, right in line with economists’ projections. Sales rose 0.3% during the month, and at the current sales pace, it would take 1.29 months for businesses to empty shelves. Overall, smaller inventory piles bode well for economic growth. Businesses will work to boost their inventory levels, which will help U.S. GDP growth improve.
Initial Claims for Unemployment
For the week ending August 9, unemployment claims increased to 311,000, which was more than economist forecast for 295,000. Claims for the previous week were revised slightly higher to 290,000. The four-week moving average is now 295,750. The big take-away from this report is that despite the weekly increase, unemployment claims are sitting near eight-year lows.
Producer Price Index
The Producer Price Index rose to a seasonally adjusted 0.1% in July. Excluding food and energy, producer prices increased 0.2%, which was in-line with economists’ expectations. Inflation remains modest, but it is getting closer to the Fed’s 2% target. Still, the Fed expects inflation to remain under 2% this year and has no plans of lifting interest rates any time soon.
Industrial production increased 0.4% in July, which beat economists’ expectations for a 0.3% rise. The bump higher last month was thanks to a 10.1% increase in auto production. Capacity utilization was 79.2%, up from 79.1% in June. This marks the six month of gains this year, and shows that the U.S. economy is continuing to improve.
Have a nice weekend,