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 Continue Gaining Growth
The Commerce Department announced that retail sales rose 0.5% in July. This was slightly better than economists’ consensus estimate of a 0.4% increase. June’s retail sales were revised down to a 0.2% increase, down from the previously reported 0.5% increase.
Excluding vehicle sales and gas station sales, retail sales in July still rose at a very healthy 0.6% pace. In fact, July’s retail sales were very healthy for all but a few categories. Over the past 12 months, retail sales have risen at a healthy 6.4% annual pace.
Industrial Production Fails to Heat Up
The Fed reported that industrial production rose only 0.1% in July. This was due to a 0.5% decline in utility output. Since it was unseasonably hot for much of the U.S. in July, I must tell you that I am truly confused why utility output declined. The Fed said that manufacturing output rose 0.3% in July, while mining declined by 0.3%, which represented the first drop in six months.
In the past 12 months, mining activity has risen nearly 13% due largely to the fracking boom in West Texas. Overall, I expect industrial production to pick up in the upcoming months as long as the fracking boom continues.
Q2 Productivity Rises to Three-Year High
The Labor Department announced that productivity rose to a robust 2.9% annual rate in the second quarter. This was the strongest annual pace in more than three years. Interestingly, in the past 12 months, productivity only grew at a 1.3% annual pace, so the second-quarter surge in productivity bodes well for possible upward GDP revisions.
Most of the productivity gains are attributable to the service sector and recent business investment to boost productivity due to a tight labor market. Overall, the surge in second-quarter productivity is very bullish for continued strong GDP growth.
That’s all I have for you this week. I’ll be in touch again next week with the latest ratings out of Portfolio Grader.
Until next week,