Tag: Leading Indicators

Retail sales expanded while growth in manufacturing slowed. Here are the five things we learned from U.S. economic data released during the week ending August 17.

Retail sales heated up in July. The Census Bureau estimates retail and food services sales rose 0.5 percent to a seasonally adjusted $507.5 billion. This was an improvement from the downwardly revised 0.2 percent sales gain in June. Sales grew 0.2 percent at auto dealers/parts stores and 0.8 percent at gas stations (think higher gas prices). Net of auto dealers and gas stations, core retail sales jumped 0.6 percent in July following a 0.2 percent bump in June. Sales improved during the month at apparel retailers (+1.3 percent), restaurants/bars (+1.3 percent), department stores (+1.2 percent), grocery stores (+0.8 percent), and electronics/appliance retailers (+0.1 percent). Sales lost traction at retailers focused on sporting goods/hobbies (-1.7 percent), furniture (-0.5 percent), and health/personal care (-0.4 percent). Retail sales have risen 6.4 percent over the past year while the core retail sales measure has a 12-month comparable of +5.6 percent.

Industrial production slowed in July. The Federal Reserve reports industrial production crept up a modest 0.1 percent on a seasonally adjusted basis during the month following a 1.0 percent jump in June. Growth in manufacturing slowed to a 0.3 percent increase in July after having surged 0.8 percent during the previous month. Production of durable goods gained 0.4 percent (including increases of around 1.0 percent for motor vehicles and computers/electronics) while the output of nondurables inched up 0.2 percent (with higher output of apparel, petroleum/coal products, chemicals, and plastics/rubber products). Mining output, which has surged 12.9 percent over the past year, slipped 0.3 percent during July (even as oil and gas extraction continued to rise). Utility output slowed for the third straight month with a 0.5 percent decline.

Forward-looking economic indicators further strengthened in July. The Conference Board’s Leading Economic Indicators (LEI) jumped by 7/10^ths of a point to 110.7 (2016=100). This was an improvement from the 6/10^ths of a point gain in June and leaves the LEI 5.1 percent ahead of its year-ago reading. July’s increase was broad-based as nine of the LEI’s ten components made positive contributions, led by the count of jobless claims staying near multi-decade lows. The coincident index grew by 2/10^ths of a point to 104.2, a 2.4 percent increase from a year earlier as all four components made positive contributions. The lagging index slipped by 2/10^ths of a point to 105.2 with only two of seven components growing during the month. The backward-looking measure was still 2.3 percent above its July 2017 mark. The press release noted that the LEI’s reading indicates economic growth will be “at a solid pace for the remainder of this year.”

Housing starts sputtered during July. Housing starts edged up 0.9 percent to a seasonally adjusted annualized rate of 1.168 million units, per the Census Bureau. This was a weak rebound to June’s 12.9 percent drop and left housing starts 1.4 percent below the July 2017 pace. Starts of single-family home gained 1.9 percent while those of construction with more five or more units increased 3.1 percent. Starts weakened in the West (-19.6 percent) and Northeast (-4.0 percent) but improved in both the Midwest (+11.6 percent) and South (+10.4 percent). Looking towards the future, the annualized rate of issued building permits grew 1.5 percent during the month to 1.311 million permits (+4.2 percent versus July 2017). Issued permits increased for both single-family (+1.9 percent) and multi-family (+1.7 percent). Fewer homes were completed during the month—the annualized count of homes completed slumped 1.7 percent to 1.188 million units (-0.8 percent versus July 2017). Single-family home completions plummeted 5.2 percent during the month while multi-family completions gained 8.2 percent.

Small business owner optimism inches ever so close to a 35-year high. The Small Business Optimism Index added 7/10^ths of a point in July to a seasonally adjusted reading of 107.9 (1986=100). This was not only a 2.7 point gain from a year earlier, it was the measure’s best reading since July 1983 (which itself was the best reading for the National Federation of Independent Business index in its 45-year history). Six of the ten index components improved from their June readings, including three-point gains for indices tracking expected real sales, plans to increase employment, and whether it is a good time to expand. Only two measures—current inventories and plans to increase inventories—declined from their June readings. The press release notes that business owners “anticipate more sales and better business conditions.”

Other U.S. economic data released over the past week:
– Jobless Claims (week ending August 11, 2018, First-Time Claims, seasonally adjusted): 212,000 (-2,000 vs. previous week; -24,000 vs. the same week a year earlier). 4-week moving average: 215,500 (-10.5% vs. the same week a year earlier).
– Import Prices (July 2018, All Imports, not seasonally adjusted): Unchanged vs. June 2018, +4.8% vs. July 2017. Nonfuel imports:  -0.3% vs. June 2018, +1.3% vs. July 2017.
– Export Prices (July 2018, All Exports, not seasonally adjusted): -0.5% vs. June 2018, +4.3% vs. July 2017. Nonagricultural imports: Unchanged vs. June 2018, +5.0% vs. July2017.
– Housing Market Index (August 2018, Index (>50=”Good” housing market, seasonally adjusted): 67 (vs. July 2018: 68, vs. August 2017: 67).
– Productivity (2018 Q2-preliminary, Nonfarm Business Labor Productivity, seasonally adjusted annualized rate): +2.9% vs. 2018Q1 +1.3% vs. 2017Q2.
– State Employment (July 2018, Change in Nonfarm Payrolls, seasonally adjusted): Vs. June 2018: Increased in 6 states, decreased in 1, and essentially unchanged 43 states and the District of Columbia. Vs. July 2017: Increased in 34 states and essentially unchanged in 16 states and the District of Columbia
– University of Michigan Surveys of Consumers (August 2018-preliminary, Index of Consumer Sentiment (1966Q1=100), seasonally adjusted): 95.3 (July 2018: 97.9 August 2017: 96.8).
– Treasury International Capital Flows (June 2018, Net Foreign Purchases of U.S. Securities, not seasonally adjusted): -$45.5 billion (vs. May 2018: +$20.3 billion, vs. June 2017: +$35.5 billion).

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

Manufacturing activity grew again in March (albeit at a slower pace than in February) while retail sales had its best month since last November. Here are the five things we learned from U.S. economic data released during the week ending April 20.

Manufacturing output grows at a slower pace during March. The Federal Reserve estimates manufacturing production increased 0.1 percent on a seasonally adjusted basis during the month following a 1.5 percent gain in February, leaving the measure up 3.0 percent over the past year. Production of durable goods gained 0.4 percent—which included the impact of a 2.7 percent surge in motor vehicle output—and has increased 3.8 percent over the past year. Production of nondurables slowed 0.3 percent during the month but remained 2.7 percent ahead of its March 2017 mark. Overall industrial production rose 0.5 percent during March and has jumped 4.3 percent over the past 12 months. Mining output increased 1.0 percent (down from its 2.9 percent increase in February) while production at utilities surged 3.0 percent. The latter helped lead a 3/10ths of a percentage point in capacity utilization (factory utilization) to 78.0 percent, its highest point in three years.

Retail sales gained in March. Retail and food services sales increased 0.6 percent during the month to a seasonally adjusted $494.6 billion, per the Census Bureau. This was the largest single-month percentage increase in retail sales since last November and left the measure up 4.5 percent over the past year. Leading the surge in retail sales was the 2.0 percent jump in sales at auto dealers/parts stores. Net of auto dealer/parts stores, retail sales gained a more modest 0.2 percent in March and was 4.5 percent ahead of the year-ago sales pace. Sales grew at retailers focused on health/personal care (+1.4 percent), furniture (+0.7 percent), electronics (+0.5 percent), general merchandisers (+0.3 percent), and groceries (+0.2 percent). Sales also improved at nonstore retailers (+0.8 percent) and restaurants/bars (+0.4 percent). Slipping were sales at sporting goods/hobby stores (-1.8 percent), building materials retailers (-0.6 percent), gas stations (-0.3 percent), and department stores (-0.3 percent).

Forward-looking economic indicators foretell continued economic growth in the coming months. The Conference Board’s Leading Economic Index (LEI) added 3/10^ths of a point during March to 109.0 (2016=100), rising 6.2 percent over the past year. Six of the ten LEI components made positive contributions to the index, led by the interest rate spread, the new orders index from the Institute for Supply Management, and consumer expectations for future business conditions. The coincident index increased by 2/10^ths of a point to 103.4, 2.2 percent ahead of its year-ago reading. All four components of the coincident index made positive contributions, including that for industrial production and personal income net of transfer payments. The lagging index inched up 1/10^th of a point to 104.5 (+2.6 percent versus March 2017), with five of seven components making a positive contribution. The press release noted that leading indicators point “to continued solid growth in the U.S. economy for the rest of the year” but that weakness in labor market indicators “bear watching in the future.”

Housing starts advanced in March, thanks to gains in multifamily units. The Census Bureau estimates housing starts increased 1.9 percent to a seasonally adjusted annualized rate (SAAR) of 1.319 million units. This was 10.9 percent ahead of the year-ago rate of starts. Starts of multifamily units (e.g., condos, apartments) jumped 16.1 percent during the month to an annualized 439,000 units while those of single-family homes dropped 3.7 percent to 867,000 units (SAAR). Looking towards future construction activity, the annualized count of issued building permits increased 2.5 percent during March to 1.354 million permits (+7.5 percent versus March 2017). Again, the 22.9 percent bump in permits for multifamily units outpaced the 5.5 percent decline in issued permits for single-family homes. Completions of homes slowed 5.1 percent during the month to 1.217 million homes (SAAR)—this was 1.9 percent ahead of March 2017’s pace of completions.

Home builders’ confidence held strong in April. The National Association of Home Builders’ Housing Market Index (HMI) lost a point to a seasonally adjusted reading of 69. While this was the HMI’s lowest point since last November, it represented the 46^th consecutive month with a reading above 50, indicating more homebuilders see the housing market as “good” rather as “poor.” The index slipped in the South and West, held steady in the Midwest, and inched up in the Northeast. Also losing grounds were indices measuring current and expected sales, with the former shedding two points to 75 and the latter slipping by a point to 77. The index for traffic of prospective buyers was unchanged at 51. The press release said that the housing market “remains on solid ground” thanks to “strong demand” with the NAHB expecting “the market to continue to make gains at a gradual pace.”

Other U.S. economic data released over the past week:
– Jobless Claims (week ending April 14, 2018, First-Time Claims, seasonally adjusted): 232,000 (-1,000 vs. previous week; -15,000 vs. the same week a year earlier). 4-week moving average: 231,250 (-5.3% vs. the same week a year earlier).
– State Employment (March 2018, Nonfarm Payrolls, seasonally adjusted): Two states had significant increases in payrolls vs. February 2018. 24 states had significant increases in payrolls vs. March 2017.
– Treasury International Capital Flows (February 2018, Net Foreign Purchases of U.S. Securities, not seasonally adjusted): +$57.9 billion (vs. January 2018: +$62.5 billion; vs. February 2017: +$38.3 billion).
– Business Inventories (February 2018, Manufacturers’ and Trade Inventories, seasonally adjusted): $1.929 trillion (+0.6% vs. January 2018, +4.0% vs. February 2017).
– Beige Book 

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