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:
The Commerce Department reported this week that retail sales jumped 0.5% in May, which follows a 1.3% gain in April. In the past 12 months, retail sales are up 2.5%. If you exclude gasoline, automobiles, building materials and food services, core retail sales increased 0.4%. U.S. consumers are feeling more confident about the economy, as spending online and at gas stations fueled last month’s increase.
In April, business inventories posted a meager 0.1% gain and March business inventories were revised lower to a 0.3% increase. Economists were expecting a 0.2% rise in April. Inventories of automobiles climbed 0.1%, while retail inventories fell 0.2%. Such a slow pace of inventory growth could weigh on GDP growth in the second quarter.
Producer Price Index (PPI)
For the second-consecutive month, producer prices rose, thanks in part to rising energy costs and services. The Labor Department reported that the producer price index (PPI) jumped 0.4% in May, topping estimates for a 0.3% gain. Energy prices soared 2.8% last month, while prices for services climbed 0.2%. Core PPI, which excludes food, energy and trade, slipped 0.1% in May. In the past 12 months, the PPI has fallen 0.1% and core PPI has risen 0.8%. Overall, inflation continues to remain calm and well below the Fed’s 2% target.
The Federal Reserve announced on Wednesday that industrial production dropped 0.4% in May, missing economists’ estimates for a 0.2% decline. April’s industrial production figure was revised lower to a 0.6% increase. The dip was attributed to a decline in auto manufacturing and utilities output.
Consumer Price Index (CPI)
According to the Labor Department, the Consumer Price Index (CPI) rose 0.2% in May, missing economists’ estimates for a 0.3% increase. In the past 12 months, the CPI has climbed 1% higher. Core CPI, which excludes food and energy costs, also jumped 0.2% in May, and it is up 2.2% in the past 12 months. So there are some signs of inflation brewing, but given the Fed’s decision to stand pat yesterday, the central bank expects inflation to remain below 2% through 2017.
Initial Claims for Unemployment
For the week ending June 11, initial claims for unemployment increased by 13,000 to 277,000, which is the highest level in four weeks. On the other hand, the four-week moving average dipped to 269,250. Jobless claims have now remained below the 300,000 threshold for 67-straight weeks, the longest stretch since 1973.
Housing Starts & Building Permits
Before the opening bell today, the Commerce Department reported that U.S. housing starts slipped 0.3% in May to an annual pace of 1.16 million units. This was better than economists’ estimates for housing starts to fall to a 1.15 million-unit rate. Building permits, on the other hand, increased 0.7% to a 1.14 million-unit pace last month. So despite the decline in housing starts last month, the jump in building permits signals that the U.S. housing market will continue to recover.