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:
Wholesale Inventories Beats Estimates
Wholesale inventories increased 0.4% in April, above economists’ expectations of a 0.2% gain. Meanwhile, March inventories were revised from the previously reported 0.1% increase to 0.2%. In April, sales at the wholesale level surged 1.6%, the biggest increase since March of last year. This, combined with the business inventories report, is expected to be a net positive for GDP growth in the second quarter.
Retail Sales Soar in May
The Commerce Department reported that retail sales rose 1.2% in May, surpassing economists’ estimates of a 1.1% increase. Auto sales rose at a very healthy 2% annual pace and gas station sales rose 3.7%, so excluding autos and gas stations, retail sales still rose at an encouraging 0.7%. Sales at home improvement stores rose 2.1% in May, which is a good sign that consumers were fixing up their homes in the spring. Further, the previous two months’ retail sales data were revised higher. April sales revised from 0.0% to a 0.2% gain; March sales growth was revised from 1.1% to 1.5%. It looks like things are finally warming up for retailers as consumers are spending their cash. This should help boost overall GDP growth in the second quarter.
Jobless Claims Slightly Rise
On Thursday the Labor Department revealed that initial claims for unemployment rose from 277,000 to 279,000 last week. Economists expected that jobless claims would dip to 275,000. Meanwhile, the four-week moving average rose 4,000 to 278,750. As far as jobless claims are concerned, this was a minor fluctuation. The fact that claims have held below 300,000 for 14 weeks in a row is a positive sign.
Business Inventories Surge to One-Year High
Commerce Department reported that business inventories rose 0.4% in April,the biggest increase since May 2014. This beat economist’s estimates of a 0.2% increase. Meanwhile, retail inventories remained surged 0.8% in April and the retail inventory-to-sales ratio was unchanged at 1.36. Business sales, excluding autos increased 0.6%. All in all, this was a strong report. Since inventories were severely depleted in the first quarter, inventory rebuilding is also expected to help boost second-quarter GDP growth.
Producer Price Index Reading Spikes in May
On Friday, the U.S. Labor Department reported that Producer Price Index (PPI) reading surged 0.5% for month of May. Meanwhile, the core PPI, which excludes food and energy prices, slightly rose 0.1%. Economists expected both the headline index and the core index to rise 0.4% and 0.1% respectively, so headline wholesale prices rose faster than expected. Despite this recent increase, overall producer prices are still down 1.1% from last year. It’s too soon to tell whether this is the start of a trend or a blip on the radar.
That’s all I have for you this week; I’ll be in touch again next week with the latest ratings updates out of Portfolio Grader.
Have a great weekend,