February 17, 2017
It's Friday and that means 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 every Friday. Let's take a look at this week's big headlines:
On Tuesday, the Labor Department reported that U.S. producer prices increased 0.6% in January, which was the biggest jump since September 2012. Economists were looking for a 0.3% rise. Interestingly, the strong U.S. dollar continues to keep inflation in check, as the PPI only increased 1.6% in the past 12 months.
Then on Wednesday, the Labor Department announced that the Consumer Price Index (CPI) also increased 0.6% in January. That marked the index's largest jump in about four years. In the past 12 months, CPI has climbed 2.5%, suggesting that inflation is rising due to higher energy and commodity prices. Core CPI, which excludes energy and food, rose 0.3% in January.
Retail sales jumped 0.4% in January, topping economists' estimates for a 0.2% increase. Excluding autos and gasoline, retails sales soared 0.7% last month. December retail sales were revised higher to show a 1% gain, up from the previously reported 0.6% rise. With department store and restaurant sales both up last month, it appears that the U.S. consumer is growing more confident.
The Federal Reserve reported on Wednesday that industrial production dipped 0.3% in January, due mainly to unseasonably warm weather across much of the U.S. The 5.7% drop in utilities output last month offset the 0.2% gain in manufacturing and the 2.8% jump in mining output.
On Wednesday, the Commerce Department announced that business inventories climbed 0.4% in December, while November's business inventories were revised higher to show a 0.8% increase. Retail inventories, which exclude autos, rose 0.1% in December and jumped 0.9% in November. At the December sales pace, it would take 1.35 months to empty shelves.
The Commerce Department reported yesterday that housing starts dropped 2.6% in January to an annual rate of 1.25 million units. That beat economists' estimates for housing starts to fall to a 1.22-million-unit rate. December's housing starts were revised slight higher to a 1.28-million-unit pace, up from the previously reported 1.23 million rate. Building permits jumped 4.6% last month to a rate of 1.29 million units, which marks the highest level since November 2015.
The Conference Board's Index of Leading Economic Indicators climbed 0.6% in January. Economists were expecting a 0.4% rise. The better-than-expected increase was due to broad-based gains across the leading indicators. If the index continues to move higher, it would point to a further improving U.S. economy.