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 housing starts and building permits report:
Homebuilding Activity Freezes in Bitter Cold
Housing starts slipped 2% in January to a seasonally adjusted annual rate of 1.065 million. Building permits also dipped, falling 0.7% last month. Despite the pullback, housing starts were actually up nearly 19% year-over-year. The dip in housing starts and building permits is likely due to the bitter cold temperatures that have gripped much of the United States so far this year. Once temperatures rise, we’ll likely see the housing market continue to recover.
Plunging Energy Prices Drag Down Wholesale Prices
The Producer Price Index dropped 0.8% in January, due mainly to a 10.3% plunge in energy goods prices and a 24% drop in the gasoline index. Food prices slipped 1.1% last month. And excluding food and energy, prices only slid 0.1% in January. With the January decline, the U.S. Producer Price Index is now flat year-over-year. With low oil prices, inflation remains well in check, though there is now the threat of deflation if prices continue to fall.
Industrial Activity Edges Up in January
Industrial production bumped 0.2% higher in January, while December was revised to a 0.3% decline (down from the previous 0.1% dip). Capacity utilization remained steady at 79.4% last month. Economists were looking for industrial production to expand 0.4% and capacity utilization to come in at a 79.8% rate. This is the latest sign that U.S. industrial production has cooled off in recent months. Still, overall industrial production was up 4.8% year-over-year in January.
Layoff Activity Remains Near Multi-Year Lows
For the week ending February 14, jobless claims fell 21,000 to a 283,000 annual rate. This surpassed economists’ projections for jobless claims to drop to 293,000 last week. The four-week moving average also slipped, falling to 283,250. In the past three months, the U.S. economy has added more than a million jobs—a level we have not seen since 1997. So improvement in the U.S. labor market continues to accelerate.
Economic Indicators Gain For Fifth Straight Month
The Conference Board’s leading economic index rose 0.2% in January, while December’s figure was revised to a 0.4% gain, down from the previous 0.5% increase. Economists were looking for a 0.3% increase last month. The index was weighed down last month by declines in building permits and factory orders. However, this was the fifth-straight gain for the leading economic index, and that still shows the U.S. economy is still in good health.
That’s all I have for you this week. I’ll be in touch with the latest Portfolio Grader changes on Monday.
Have a great weekend,
P.S. I have scheduled a few more seminars over the next several weeks. I will be speaking at the Grand Hyatt Tampa Bay in Tampa, Florida, on Tuesday, February 24. I will then be speaking at the Marina del Rey Marriott in Marina del Rey, California, on Wednesday, March 4. These seminars start at 7 P.M. and you may attend at no cost, but please call 800-454-1395 to register. I will review where investors can achieve the highest yields in both bonds and stocks, as well my current market outlook, favorite stock picks and have an extensive question-and-answer session.