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.
Let’s take a look at this week’s big headlines:
Retail Sales Fall Flat in April
For the month of April, retail sales did not budge. This underperformed economists’ expectations for a 0.2% rise. 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.
Meanwhile, March retail sales were revised up from the previously stated 0.9% gain to a 1.1% revised increase. The good news is that this slightly offsets April’s disappointing sales.
Business Inventories Edge Up
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 good news is that with cold winter weather fading into the background, businesses should continue to restock their shelves.
Producer Prices Decline Another Month
On Thursday, the U.S. Labor Department reported that April’s headline Producer Price Index (PPI) reading sank 0.4%. Meanwhile, 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.
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 Dips
In April, U.S. industrial output stumbled 0.3%, falling for a 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.
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).
Layoff Activity At 15-Year Low
The Labor Department revealed on Thursday that initial claims for unemployment fell to their lowest level in 15 years, dropping to 264,000 last week. 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.
This was a welcome sign that the labor market is indeed improving, with claims continuing to fall below the 300,000 mark.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family 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.
