U.S. retail sales unexpectedly declined in January and December receipts were revised lower, indicating consumer demand in the first quarter may cool, according to Commerce Department figures released Wednesday. Overall sales fell 0.3% (est. 0.2% gain), the most since February 2017, after little change in prior month (prev. 0.4% increase). Purchases at automobile dealers dropped 1.3%, the most since August. So-called retail-control group sales, which are used to calculate GDP and exclude food services, auto dealers, building materials stores and gasoline stations, unchanged following a revised 0.2% decrease in December (prev. 0.3% gain). 7 of 13 major retail categories showed declines in receipts.
On Thursday PPI, Unemployment Claims, Industrial Production, Empire State Manufacturing Index and Philly Fed Manufacturing Index figures were released. The Producer Price Index for final demand increased 0.4 percent in January, seasonally adjusted. Final demand prices were unchanged in December and moved up 0.4 percent in November. On an unadjusted basis, the final demand index rose 2.7 percent for the 12 months ended in January. In January, the rise in the index for final demand is attributable to a 0.3-percent increase in prices for final demand services and a 0.7-percent advance in the index for final demand goods. The index for final demand less foods, energy, and trade services rose 0.4 percent in January, the largest advance since increasing 0.5 percent in April 2017.
Separate report on Unemployment Claims showed that in the week ending February 10, the advance figure for seasonally adjusted initial claims was 230,000, an increase of 7,000 from the previous week's revised level. The previous week's level was revised up by 2,000 from 221,000 to 223,000. The 4-week moving average was 228,500, an increase of 3,500 from the previous week's revised average. The advance seasonally adjusted insured unemployment rate was 1.4 percent for the week ending February 3, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending February 3 was 1,942,000, an increase of 15,000 from the previous week's revised level.
The index for current manufacturing activity increased 4 points in February to a reading of 25.8. The index has stayed within a relatively narrow range over the past nine months. Nearly 41 percent of the firms indicated increases in activity this month, while 15 percent reported decreases. The demand for manufactured goods, as measured by the survey’s current new orders index, showed notable improvement: The diffusion index increased 14 points, with 41 percent of the firms reporting an increase in new orders this month. The current shipments index remained positive but fell 15 points to 15.5. Both the unfilled orders and delivery times indexes were positive, suggesting an increase in unfilled orders and slower deliveries.
Business activity continued to expand in New York State, according to firms responding to the February 2018 Empire State Manufacturing Survey. The headline general business conditions index fell five points to 13.1, suggesting a somewhat slower pace of growth than in January. The new orders index and the shipments index were little changed, and indicated ongoing growth in orders and shipments. Unfilled orders increased slightly, and delivery times lengthened. Labor market conditions pointed to a modest increase in employment and hours worked. Input price increases picked up noticeably, with the prices paid index reaching its highest level in several years. Firms remained very optimistic about future business conditions, and capital spending plans continued to be robust.
The lack of growth in U.S. manufacturing, reported on Thursday by the Federal Reserve, confounded analyst expectations for a 0.3 percent monthly gain. The Fed had previously estimated a small increase in output for December but revised the data to show no gain in that month. Overall industrial production fell 0.1 percent in January, dragged down by a 1.0 percent decline in mining output. Utilities output rose 0.6 percent last month. The industrial sector has received support over the last year from a strengthening global economy.
Friday brought Building Permits, Housing Starts and Consumer Sentiment figures were published. Privately-owned housing units authorized by building permits in January were at a seasonally adjusted annual rate of 1,396,000. This is 7.4 percent above the revised December rate of 1,300,000 and is 7.4 percent above the January 2017 rate of 1,300,000. Single-family authorizations in January were at a rate of 866,000; this is 1.7 percent below the revised December figure of 881,000. Authorizations of units in buildings with five units or more were at a rate of 479,000 in January. Privately-owned housing starts in January were at a seasonally adjusted annual rate of 1,326,000.
U.S. consumer sentiment unexpectedly rose in February to the second-highest level since 2004 as tax cuts and a strong job market helped Americans shrug off stock-market volatility, a University of Michigan survey showed Friday. Sentiment index rose to 99.9 (est. 95.5), highest since October’s 13-year high, from 95.7 in January. Current conditions gauge, which measures Americans’ perceptions of their finances, climbed to 115.1 from 110.5. Expectations measure advanced to 90.2 from 86.3. Year-ahead inflation expectations unchanged at 2.7%.
This week markets will be looking at:
Existing Home Sales (Wednesday 16:00)
FOMC Meeting Minutes (Wednesday 20:00)
Unemployment Claims (Thursday 14:30)
