Retail Sales and Industrial Production

We had some good economic news this morning. The Commerce Department released a good report on retail sales. This is important because consumer spending is a key part of GDP. For November, retail sales excluding automobiles, gasoline, building materials and food services rose 0.9%. Economists were expecting 0.4%. Also, October was revised up to +0.7%.

November’s increase in core retail sales suggested a brisk pace of consumer spending in the fourth quarter. Consumer spending, which accounts for more than two-thirds of the U.S. economy, increased at a 3.6 percent annualized rate in the July-September quarter.

A sharp sell-off on Wall Street and partial inversion of the U.S. Treasury yield curve had stoked fears of a recession. But worries over the economy’s health were eased on Thursday after government data showed the number of Americans seeking unemployment benefits fell back to a near 49-year low last week.

Gross domestic product estimates for the fourth quarter are around a 2.4 percent rate. The economy grew a 3.5 percent pace in the July-September period. Overall retail sales, however, rose 0.2 percent in November as cheaper gasoline undercut sales at service stations. Gasoline prices have dropped about 40 cents per gallon since October, according to the U.S. Energy Information Administration.

Also this morning, the Federal Reserve said that industrial production rose 0.6% last month.

The increase in November output was above Wall Street expectations of a 0.4% increase. Compared with 12 months earlier, production was up 3.9%.

But manufacturing output was weak for the second straight month. During November, manufacturing output was flat and there was a large downward revision in the prior month, to a fall of 0.1% from a gain of 0.3%.

What happened: As expected, the gain in overall production was led by a 3.3% jump in utility output as cold weather swept across the country. In addition, mining output rose 1.7%. This index, which includes oil production, is 13.2% above its level of a year earlier.

Within manufacturing, durable goods output rose 0.2% but this was offset by weakness in nondurables and publishing and logging.

Auto manufacturing rose a slight 0.3% in November after a 3.1% decline in the prior month. Excluding autos, manufacturing was down 0.1%.

Posted by on December 14th, 2018 at 11:51 am


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