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 were bolstered by strong motor vehicle sales during July. The Commerce Department reported that retail sales rose 0.6% last month, which was the biggest gain in seven months. Economists were expecting just a 0.4% increase in July. Motor vehicle sales soared 1.2% in July, also marking its biggest increase since December. Retail sales for June were revised to 0.3%, up from the previously reported 0.2% decline. Excluding auto, gasoline, food and building materials, retail sales still climbed 0.6% last month. Thanks to the June revision, economists will likely revised their second-quarter GDP estimates higher.
Housing Starts & Building Permits
During July, the U.S. housing market tapped on the brakes. Housing starts slipped 4.8% last month to an annual rate of 1.16 million units. Economists were looking for a rate of 1.22 million units. Housing starts for June were also revised lower to 1.21 million units, down from the 1.22 million units previously reported. A lack of skilled workers and rising materials costs have been named as the main reason for a decline in groundbreaking recently.
Building permits also declined in July, falling 4.1% to a rate of 1.22 million units. Building permits for single-family homes remained unchanged last month, and multi-family home permits dropped 11.2%.
On Thursday, the Federal Reserve reported that industrial production climbed 0.2% in July, missing economists’ estimates for a 0.3% increase. The miss comes on the heels of a 3.6% drop in automobile production during July. Mining output jumped 0.5%, while utility production surged 1.6%. Industrial production has risen 2.2% in the past year, and it is expected to continue to steadily rise.
Index of Leading Economic Indicators
The Conference Board announced on Thursday that the Leading Economic Indicator index (LEI) jumped 0.3% in July, after rising 0.6% in June and 0.3% in May. The continuing improvement in the LEI implies that U.S. economy is on a firm footing and could signal even more GDP growth in the second half of the year.
According to the Commerce Department, U.S. business inventories increased 0.5% in June, up from a 0.3% rise in May. That marks the largest jump in business inventories in seven months. Breaking it down further, motor vehicle inventories climbed 0.7% in June and retail inventories, which exclude motor vehicles, increased 0.5%. And at the current June sales pace of 0.3%, it would take 1.38 months to empty the shelves.
The consumer sentiment index climbed to 97.6 in August, topping economists’ estimates for the index to increase to 94. That’s also up from a 93.1 reading back in July. About 50% of the consumers responding to the past three surveys showed an improvement in finances, which is the best reading in 17 years. This bodes well for consumer spending and overall GDP growth.
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,