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:
Industrial production slipped 0.1% in August, which was below economists’ forecast for a 0.3% gain. Industrial production for July was revised lower to 0.2%, down from 0.4%. And capacity utilization dropped to a 78.8% rate, down from 79.2% in July. This is the first time that industrial production has fallen since January, mainly due to a 0.4% decrease in manufacturing production in August. While it’s disappointing for industrial production to slip after seven months of gains, the reality is that industrial output in August was up 4.1% year-over-year—so industrial production is still showing signs of strength.
Producer Price Index
The Producer Price Index remained flat in August, which was below economists’ predictions for a 0.1% gain. Excluding food and energy, producer prices increased 0.1% in August, down from July’s 0.2% gain. In the past year, producer prices have increased 1.8%, which is still below the Fed’s 2% target. So inflation remains muted at this point.
Consumer Price Index
The Labor Department reported that the Consumer Price Index slipped 0.2% in August, due to the slide in energy prices. This comes on the heels of July’s 0.1% gain, and below economists’ forecast for consumer prices to be flat in August. In the past 12 months, the CPI and core CPI (excludes food and energy) have both gained 1.7%. The drop in consumer prices marks the first slide in almost one and half years. This coupled with the flat PPI reading shows that inflation remains under control and the Fed will continue to keep interest rates low.
Initial Claims for Unemployment
For the week ending September 13, unemployment claims fell by 36,000 to 280,000. Economists were expecting claims to fall to 305,000 last week, so this was a big surprise. The four-week average is now 299,500. With unemployment levels back below 300,000, the job market is continuing to show more signs of strength.
Housing Starts & Building Permits
The Commerce Department announced that housing starts slipped 14.4% to a 956,000-unit pace in August. July’s housing starts were revised to a 1.12 million pace, up from the previously reported 1.09 million rate. Last month, housing permits slipped 5.6% to a 998,000-unit pace. Housing continues to be an area of the U.S. economy that is improving slowly and at an uneven pace. However, with the labor market firming up, we’ll likely see the housing market bounce back in the months ahead.
Index of Leading Economic Indicators
The Conference Board announced this morning that its Leading Economic Index increased 0.2% in August. This was below economists’ forecast for a 0.4% rise. The Leading Economic Index for July was revised higher to 1.1%, up from 0.9%. While the Index didn’t increase as much as economists’ had hoped, the report indicates that the U.S. economy is continuing to improve.
That’s all I have for you this week. I’ll be in touch with the latest Portfolio Grader changes and Stock of the Day on Monday.
Have a great weekend,