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 that retail sales fell 0.3% last month. Not only did this miss the consensus estimate of a 0.1% decrease, this also marked the first decline since March. Breaking it down, eight of the 12 retail categories experienced declining sales. What really surprised economists is that, even excluding auto sales, retail sales still dipped 0.1%. Economists had expected this measure to rise 0.3%. By all accounts, consumers should be spending more. With gasoline costs as low as they are, Americans have more disposable income to put towards other purchases. Inflation has been nonexistent, and the latest reports suggest that consumer confidence is on the rise.
Inflation Watch: Wholesale and Consumer Prices
On Thursday, the U.S. Labor Department reported that its Producer Price Index (PPI) reading was flat for the month of August. So, wholesale prices were largely unchanged. The core PPI, which excludes food and energy prices, rose 0.1%. This was in line with expectations.
Then on Friday, the Labor Department announced that its Consumer Price Index (CPI) climbed 0.2% in August. This was slightly higher than economists’ expectations of a 0.1% increase. Over the past 12 months, consumer prices have risen 1.1%. Meanwhile, the core CPI increased 0.3%.
These reports suggest that inflation is nonexistent at the wholesale level, but that it’s starting to brew at the consumer level. Even so, it’s too soon to tell whether this is a blip on the radar or the start of a prolonged trend.
In August, U.S. industrial output declined 0.4% on less manufacturing activity. This was a steeper than expected drop; the consensus estimate called for a 0.3% drop. Meanwhile, July industrial production was revised lower to reflect a 0.6% gain, down from the previously stated 0.7% increase. Industrial capacity also sagged, falling 0.4% to 75.5% in August.
These mixed results line up with the findings of the recent ISM manufacturing survey. In it, the manufacturing index fell to 49.4 in August, down from 52.6 in July. Economists were estimating that the ISM manufacturing index would be 52 in August. Of the 18 industries surveyed, 11 reported less activity. As a reminder, any reading below 50 signals a contraction in manufacturing.
That’s all I have for you this week; I’ll be back online on Monday morning with your weekly ratings changes.
Have a great weekend,