Cash Registers Rang Even Louder: November 15 – 19

Retail and manufacturing activity both rose in October. Here are the five things we learned from U.S. economic data released during the week ending November 19. 


Sales rose across most retail segments in October. The Census Bureau estimates retail and food services sales surged 1.7 percent during the month to a seasonally adjusted $638.2 billion. Sales were up a massive 16.3 percent from a year earlier, while the sales over the past three months (August through October) were up 15.4 percent their same months a year ago. One caveat with this report is that the Census Bureau does not adjust the figures for price variations, so some of these increases reflect inflation. Sales at auto dealers/parts stores jumped 1.8 percent and those at gas stations rose 3.9 percent. Net of both, core retail sales increased 1.4 percent for the month and were 14.9 percent above year-ago levels. In October, sales grew at retailers focused on electronics/appliances (+3.8 percent), building materials (+2.8 percent), sporting goods/hobbies (+1.5 percent), groceries (+0.9 percent), general merchandise (+0.8 percent), and furniture (+0.4 percent). Sales dropped 0.7 percent at apparel retailers and 0.6 percent at health/personal care stores. While sales at restaurants/bars held steady in October, they were up a whopping 29.3 percent from a year earlier. 

Forward-looking data suggests more growth into 2022. The Conference Board’s Leading Economic Index (LEI) added a whole point to a reading of 118.3 (2016=100). The LEI has risen 4.6 percent over the past six months. Eight of ten LEI components made positive contributions, led by jobless claims, the interest rate spread, and building permits. The coincident index added a half-point to 106.3 (+1.7 percent over the past six months), with all four components making positive contributions. The lagging index grew by 4/10ths of a point to 107.4, with three of seven components making positive contributions. The press release warned that “rising prices and supply chain bottlenecks pose challenges to growth and are not expected to dissipate until well into 2022.”

Industrial production—and that in manufacturing—surged in October. The Federal Reserve estimates manufacturing output rose a seasonally adjusted 1.2 percent during the month, following declines in the two prior months. Manufacturing production was 4.5 percent ahead of its year-ago pace. Output rose 1.3 percent for both durable and nondurable goods in October, including an 11.0 percent jump for motor vehicles. Overall industrial production advanced 1.6 percent (following a 1.3 percent decline during the prior month) and was up 5.1 percent from a year earlier. Mining output surged 4.1 percent (rebounding from Hurricane Ida-caused shutdowns in September), while output at utilities gained 1.2 percent. Manufacturing capacity utilization jumped 9/10ths of a point to 76.7 percent (also a rebound following weather-related shutdowns). Even with the gain, capacity utilization remained below its 1972-2020 average of 78.2 percent.

Housing starts slowed in October. The Census Bureau reports that housing starts declined 0.7 percent during the month to a seasonally adjusted annualized rate (SAAR) of 1.520 million (+0.4 percent versus October 2020). Single-family home starts slumped 3.9 percent, while multi-family unit starts rose 6.8 percent. Looking towards the future, issued building permits grew 4.0 percent in October to an annualized 1.650 million (+3.4 percent), with increases for single-family and multi-family homes of +2.7 percent and 6.5 percent, respectively. Completions held steady during the month at an annualized 1.242 million, which was down 8.4 percent from a year earlier.

Business inventories expanded in September. Manufacturers’ and trade inventories grew 0.7 percent to a seasonally adjusted $2.102 trillion. The Census Bureau has inventories 7.5 percent ahead of their year-ago levels. Inventories grew 1.4 percent among wholesalers and 0.8 percent with manufacturers but narrowed 0.2 percent among retailers. Business sales grew 0.9 percent in September and were 15.5 percent from a year earlier. As a result, the inventory-to-sales (I/S) ratio held steady for the month at 1.26, which was nine basis points under its year-ago reading. The I/S ratio remained at 1.48 among manufacturers (September 2020: 1.53) and at 1.23 with wholesalers (September 2020: 1.33), while the retailer I/S ratio lost a basis point to 1.09 (September 2020: 1.22)

Other U.S. economic data released over the past week:

  • Jobless Claims (Week ending November 13, 2021, First-Time Claims, seasonally adjusted): 268,000, -1,000 vs. the previous week, -464,000 vs. the same week a year earlier). 4-week moving average: 272,750 (-63.5% vs. the same week a year earlier). 
  • Housing Market Index (November 2021, Index (>50=More Homebuilders View Housing Market as “Good” Versus Being “Bad,” seasonally adjusted): 83 (October 2021: 80; November 2020: 90).
  • State Employment (October 2021, Nonfarm Payrolls, seasonally adjusted): Vs. September 2021: Increased in 25 states and the District of Columbia and held steady in 25 states. Vs. October 2020: Increased in 48 states and the District of Columba and held steady in 2 states.
  • Treasury International Capital Flows (September 2021, Net Foreign Purchases of U.S. Securities, not seasonally adjusted): +$14.2 billion (vs. August 2021: +$71.8 billion; September 2020: +$78.2 billion).

The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.

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