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:
Retail Sales Rise Six-Months Straight
The Commerce Department reported on Tuesday that retail sales posted a gain for the sixth month in a row, rising 0.2% in August and increasing 2.2% annually. This just missed economists’ expectations for a 0.3% rise. July retail sales were revised to 0.7%, up from the previously reported 0.6% gain. Core retail sales, which exclude autos, gasoline, building materials and food services, increased 0.4% last month. Retail sales have slowing increased over the past six months, which is a positive sign that U.S. consumer spending is growing at a healthy pace—and that bodes well for the overall U.S. economy.
Industrial Production Falls In August
In August, industrial production slipped 0.4%, while capacity utilization fell to 77.6% after rising to 78% in July. The decline was greater than economists’ expectations for a 0.2% drop in industrial production and capacity utilization of 77.8%. July’s industrial production estimate was revised to a 0.9% increase, up from the initial 0.6%. A sharp decline of 6.4% in auto and auto parts production drove overall manufacturing output down by 0.5%. Since manufacturing output accounts for about three-quarters of total industrial production, this is the main reason for last month’s decline.
Business Inventories Slightly Higher in July
The Commerce Department reported that business inventories only increased 0.1% in July, which was in line with economists’ expectations. June inventories were revised lower to 0.7%, down from the previously reported 0.8% gain. Business sales also increased 0.1% in July, and it would take about 1.36 months to empty shelves. Given the slight gain in July, it appears that businesses cut back on boosting their inventories, which could add further pressure to the manufacturing sector.
Consumer Price Index Moves Lower in August
According to the Labor Department, the Consumer Price Index slipped 0.1% in August after gaining 0.1% in July. This was below economists’ expectations for an unchanged reading last month. Core CPI, which excludes energy and food costs, gained 0.1% in August. In the past 12 months, CPI has risen 0.2%, while core CPI has increased 1.8%. Gasoline prices posted their largest drop since January in August, falling 4.1%, which weighed on consumer prices overall. There were gains in food, tobacco and apparel prices, but overall, there are still no real signs of inflation yet.
Jobless Claims Falls More Than Expected
For the week ending, September 12, initial claims for unemployment decreased by 11,000 to a seasonally adjusted 264,000.This was below economists’ expectations for jobless claims to stay at 275,000. The four-week moving average slipped to 272,500. Initial claims for unemployment are now at their lowest level in about eight weeks, and jobless claims have stayed below the 300,000 threshold for 28-straigh weeks. This is a positive sign that the labor market continues to slowly improve.
Housing Starts Annual Pace Slows in August
The Commerce Department reported yesterday that U.S. housing starts fell 3% to an annual pace of 1.13 million units in August. Housing starts for July were revised lower to a 1.16 million unit pace, down from the previously reported 1.21 million unit pace. Building permits rose 3.5% last month to a 1.17 million unit pace. While it’s disappointing that new home construction fell in August, the rebound in building permits (up from a 15.5% decline in July) is a positive sign for continuing improvement in the housing market.
Index of Leading Economic Indicators Edges Higher
The Conference Board announced this morning that its index of leading economic indicators increased by 0.1% in August, which was below economists’ forecast for a 0.2% rise. July’s reading was revised to no change, up from the previously reported 0.2% decline. Last month’s economic indicators were supported by an increase in building permits and low interest rates. And with the Fed voting to keep interest rates near zero, we may continue to see slow, steady growth this 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,