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 Falls Short of Estimates
In May, U.S. industrial production slipped 0.2%, which missed economists’ estimates for a slight 0.2% increase. Mining output declined 0.3%, while manufacturing fell 0.2%. Capacity utilization was 78.1%, which is down from 78.3% in April and below expectations for 78.3%. Industrial production has been impacted by struggling manufacturing, as the strong U.S. dollar and low oil prices continue to weigh on manufacturers and crude oil producers. And the decline in industrial production also suggests the U.S. economy hasn’t bounced back from the disappointing first quarter just yet.
While Building Permits Reach New High, Housing Starts Pull Back
According to the Commerce Department, U.S. housing starts declined 11.1% in May to a seasonally adjusted annual 1.04 million unit pace.That’s down significantly from April’s revised pace of 1.17 million units, and missed economists’ estimates for a 1.10 million unit pace. Building permits increased last month, rising 11.8% to a pace of 1.28 million units. That’s the highest level since August 2007. While housing starts declined last month, groundbreakings still remain stable and the increase in building permits suggest that there’s growing demand for housing in the U.S.
Jobless Claims Fall More Than Expected
For the week ending June 13, initial claims for unemployment fell 12,000 to a seasonally adjusted 267,000. This beat economists’ expectation for claims to slip to 275,000 and marks the 15th straight week that claims have been below 300,000. The four-week moving average dipped to 276,750 last week. Jobless claims are now back to levels seen just two months ago and are nearing 15-year lows. Overall, employers have cut back on layoffs and there is more job security in the U.S. again, which is very encouraging news for the labor market.
Consumer Prices Up in May, But Miss Estimates
The Labor Department reported yesterday that its Consumer Price Index (CPI) increased 0.4% in May, up from a 0.1% gain in April. This was slightly below economists’ forecast for a 0.5% rise. Core CPI, which excludes food and energy, rose 0.1% last month after a 0.3% increase in April. This was the largest increase in consumer prices in more than two year, thanks in part to a 10.4% increase in gasoline prices in May. However, the strong U.S. dollar continues to keep inflation in check.
Index of Leading Economic Indicators Rises in May
On Thursday, the Conference Board announced that its Leading Economic Index increased 0.7% in May, which matched the increase in April. This was nearly double economists’ expectations for a 0.4% gain. The increase in the Leading Economic Index in April and May marks the strongest rise since mid-2014. So it looks like economic growth is set to continue improving in the second half of the year.
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,