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:
Consumer Price Index (CPI) Matches October Reports
On Tuesday, the Labor Department reported that its Consumer Price Index was unchanged in November. Core CPI, which doesn’t include food and energy costs, rose 0.2% for the third-straight month. Airfare, rent, new vehicles and medical care accounted for the increase in core CPI last month. In the past 12 months, CPI has increased 0.5%. While CPI has risen at its strongest annual pace since December 2014, the Personal Consumption Expenditure (PCE) index (the Fed’s favorite inflation indicator) has only risen 0.2% in the past 12 months. So, inflation has yet to significantly materialize.
Housing Starts & Building Permits Surge
In November, housing starts surged 10.5% to a seasonally adjusted rate of 1.173 million units, beating economists’ estimates for 1.14 million. New construction of apartments and single-family homes drove last month’s gain. Building permits increased 11% in November to an annual pace of 1.289 million. The strongest region for housing starts was the South, while the Northeast was the weakest region. Despite the Northeast’s weakness recently, the housing starts report was very strong and a sign that builders are trying to boost their inventories to meet demand.
Industrial Production Drops
In November, industrial production dropped 0.6% month-over-month, missing economists’ forecasts for a 0.1% slide. October’s figure was revised down to a 0.4% drop. Capacity utilization slipped to 77%, down from 77.5% in October. This marks the steepest decline in industrial output since March 2012, and is largely due to the sharp decline in the utilities index, as much of the country has experienced unseasonably warm weather so far this winter.
Initial Claims for Unemployment Fall
For the week ending December 12, initial claims for unemployment fell to a seasonally adjusted 271,000. The previous week’s claims remained unchanged. The four-week moving average dropped slightly to 270,500. We have now experienced the longest stretch of claims remaining below the 300,000 threshold since the early 1970s. Claims have remained below this level for 41-straight weeks.
Index of Leading Economic Indicators Rises
The Conference Board reported yesterday that its index of leading economic indicators rose 0.4% in November, which beat economists’ forecast for a 0.1% gain. The increase was supported by higher stock prices and a jump in home construction permits. With half of the 10 indicators advancing last month, including consumer goods orders, the outlook for fourth-quarter GDP growth remains positive.
Have a great weekend,