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, starting with the market moving Unemployment Rate report:
The Truth Behind September Retail Sales
In September, U.S. retail sales slipped 0.3%. This followed a 0.6% increase in August, which was the largest in four months. Economists were looking for retail sales to decline 0.1% in September. Car and clothing sales dipped 0.8% and 1.2%, respectively, while electronics and appliance sales increased 3.4%. While it’s disappointing that retail sales posted a worse-than-expected decline, it is not unusual to see retail sales pullback in September. Historically, car sales are up in August and clothing sales increase in the back-to-school shopping season. The holiday shopping season is nearly upon us, so we should see retail sales pick up in the coming months.
Wholesale Inflation Remains Tame
U.S. producer prices dropped 0.1% in September, which was below economists projections for a 0.1% increase. Excluding food and energy, producer prices were unchanged. The decline in September was the first dip in producer prices in over a year, and shows that inflation remains under control. With inflation still below the Fed’s 2% target, the Fed is under no pressure to increase interest rates any time soon.
Layoff Activity Hits 14-Year Low
For the week ending October 11, jobless claims slipped by 23,000 to a 264,000 annual rate. Economists were expecting jobless claims to increase to 290,000. The claims of the prior week remained the same at 287,000. Jobless claims are now at their lowest level since 2000, which continues to show that the labor market is gaining steam.
American Industry Bounces Back
Industrial production bounced back in September, increasing 1%. Capacity utilization rose to 79.3%. Economists were looking for a 0.4% rise in industrial production and a utilization rate of 79%. August’s industrial production was revised lower to a decline of 0.2%, down from the previously reported drop of 0.1%. September marked the largest monthly increase since May 2010, and industrial production last month vastly exceeded expectations. Industrial production is now up 4.3% from a year earlier, and increased at a 3.2% annual rate in the third quarter.
U.S. Housing Market Improves in Fits and Starts
In September, housing starts increased 6.3% to a 1.02 million annual rate, in line with economists’ expectations. Construction on apartments soared 18.5% while single-family home construction improved 1.1%. Housing construction picked up across the country, with the West reporting a 13.2% jump in activity and the Midwest seeing a 3.5% gain. Meanwhile building permits rose 1.5% to a 1.02 million annual rate. In the past year, housing starts have risen 17.8% while building permits have climbed 2.5%. These are solid results, but economists would like to see more construction on single family homes, which generates more jobs.
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,