5 Economic Reports to Know Now

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Almost every day a major government agency or private organization releases new information covering the status of some pocket of the economy.

Weeklys Can Offer a Better Way to Play the NewsI’m here to help you sift through the barrage of economic data out there and determine what this will mean for your stocks.

Let’s take a look at the five most recent reports:

Retail Sales

What It Measures: Through this report, the Commerce Department announces total receipts of retail stores for the past month. Retail sales do not include spending on services, which makes up over half of total consumption. The report also covers retail sales ex-autos, removing the most volatile consumer purchases. The changes in retail sales are followed closely and are a good indicator of broad consumer spending patterns.

The Breakdown: For the month of April, retail sales did not budge. This underperformed economists’ expectations for a 0.2% rise. Meanwhile, March retail sales were revised up from the previously stated 0.9% gain to a 1.1% revised increase.

The Bottom Line: Economists were expecting Americans to resume shopping once the weather warmed up, especially because lower prices at the pump have put extra cash in consumers’ wallets. But it seems that consumers remain hesitant to spend in April. The good news is that March’s revised increase slightly offsets April’s disappointing sales.

Business Inventories

What It Measures: The Commerce Department’s business inventories report includes sales and inventory statistics from all three stages of the manufacturing process (manufacturing, wholesale and retail). The retail inventory number is an important part of this report as it can move the market. The report also can affect the Gross Domestic Product outlook.

The Breakdown: U.S. business inventories inched up 0.1% in March, just shy of economists’ projections for a 0.2% gain. Retail inventories were flat, and the retail inventory-to-sales ratio dropped to 1.36 in March, down from 1.37 in February. In March, business sales increased 0.4% (the biggest increase since July 2014), after dropping 0.2% in February.

The Bottom Line: The good news is that with cold winter weather fading into the background, businesses should continue to restock their shelves.

Initial Claims for Unemployment

What It Measures: It is an indicator of the direction of the job market. Increases in jobless claims show slowing job growth; decreases in claims signal accelerating job growth. On a week-to-week basis, jobless claims are volatile, so one of the best ways to track this measure is to look at the four-week moving average. It usually takes a jump or decline of at least 30K claims to signal a meaningful change in job growth.

The Breakdown: The Labor Department revealed Thursday that initial claims for unemployment fell to their lowest level in 15 years, dropping to 264,000. Economists expected that jobless claims would rise to 275,000. Meanwhile, the four-week moving average dipped to 279,500, the lowest level since May 2000.

The Bottom Line: This was a welcome sign that the labor market is indeed improving, with claims continuing to fall below the 300,000 mark.

Producer Price Index (PPI)

What It Measures: This is the price of goods at the wholesale level for the past month, and a first sign of inflation.

The Breakdown: On Thursday, the U.S. Labor Department reported that April’s headline Producer Price Index (PPI) reading sank 0.4%. Meanwhile, the core PPI, which excludes food and energy prices, fell 0.2%. Economists expected both the headline index and the core index to rise 0.2%, so this decline was unexpected.

The Bottom Line: Wholesale prices have fallen 1.3% over the past year, mostly due to plummeting oil prices. A stronger dollar and weaker global economy has also put pressure on import prices. It is clear that we’re in a deflationary environment; Wednesday’s PPI reading marks the seventh decline over the past nine months.

Industrial Production

What It Measures: The index of industrial production measures the amount of output from the manufacturing, mining, electric and gas industries–several huge industries that literally power our economy. Manufacturing production, the largest component of the total, is derived from using the manufacturing hours worked from the employment report.

The Breakdown: In April, U.S. industrial output stumbled 0.3%, falling for the fifth straight month. This came as somewhat of a surprise to economists, who estimated production to increase by 0.1%. Manufacturing output, which accounts for nearly 75% of industrial production, was unchanged in April. Meanwhile, mining output dipped 0.8%, reflecting sharp decline in oil and gas drilling. Utility output also fell by 1.3% in April, after plunging 5.4% in March; this sharp decline can be attributed to the harsh winter. Industrial capacity utilization dropped to 78.2%, down from the revised 78.6% reading in March and below expectations for a 0.1% decline.

The Bottom Line: While this report was a little disappointing, industrial production is up 1.9% from last year and March’s industrial production was revised up to a 0.3% decline (from the previously stated 0.6% drop).

Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip GrowthEmerging GrowthUltimate GrowthFamily Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.

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