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 Prices Creep Up
The Labor Department reported this week that its Producer Price Index increased 0.1% in January, which was better than economists’ expectations for a 0.2% decline. Core PPI prices, which excludes food and energy, climbed 0.2% in January. While there was a slight rise in the cost of services in January, weak energy prices and the strong U.S. dollar continue to keep inflation in check.
Homebuilding Activity Slows Down
On Wednesday, the Commerce Department announced that housing starts slipped 3.8% in January to a 1.099 million-unit annual pace. December’s housing starts were revised lower to a 1.143 million-unit pace, down from the previously reported 1.15 million-unit pace. Building permits also dipped in January, falling 0.2% to an annual rate of 1.202 million units. Much of the decline in housing starts and building permits last month has been attributed to winter weather, particularly in the Northeast. However, this is the weakest housing start data in three months, and it could weigh on GDP growth in the first quarter.
Industrial Output Rebounds
Industrial production posted its biggest gain in 14 months, rising 0.9% in January. This topped economists’ forecasts for a 0.4% gain. The increase was supported by a 0.5% rise in manufacturing output and a 5.4% jump in utilities production. Industrial production in December was revised lower to show a 0.7% decline, down from the previously reported 0.4% drop. The strong U.S. dollar will likely continue to weigh on factory production, but last month’s gain is a positive sign that there may finally be some stabilization in industrial production.
Layoff Activity’s 50 Week Winning Streak
For the week ending February 13, initial claims for unemployment declined by 7,000 to a 262,000, which topped economists’ estimates for claims to increase to 275,000. The previous week’s jobless claims remained unchanged. The four-week moving average also dropped, falling by 8,000 to 273,250. The jobless claims data from the most-recent week is the lowest reading since November. Jobless claims have now remained below the 300,000 threshold for 50 straight weeks.
Leading Indicators Slip
The Conference Board reported on Thursday that its index of leading economic indicators slipped 0.2% to 123.2 in January. This was the second-straight month that the index fell, and last month’s drop was attributed to volatile stock prices and slightly higher jobless claims. While it’s a little concerning that the index has declined for two-straight months, the six-month growth rate remains steady. So there is little risk of a recession at this time.
Consumer Prices Remain Unchanged
This morning, the Labor Department reported that its Consumer Price Index was flat in January. Core CPI, which doesn’t include food and energy costs, increased 0.3% in January, which was above economists’ estimates for a 0.2% rise and marked the largest gain since August 2011. In the past 12 months, CPI has risen 1.4% and core CPI has jumped 2.2%. While the latest data shows that inflation is firming up a little, it is still well below the Fed’s 2% target—and has remained below this level for about four years. So weak inflation will likely continue to weigh on the Fed’s decision to raise rate at its March meeting.
Have a great weekend,
P.S. If you live around Woodland Hills or Sacramento, California, please join me for a free seminar next week. I’ll be speaking at the Warner Center Marriott on February 23, and I’ll be at the Sacramento Marriott Rancho Cordova on February 24. 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. To reserve your spot, please call 800-454-1395 or email [email protected]. For more information, please visit my events calendar here. I hope to see you there!