Retail Sales Figures Shine in Otherwise Dull Week of Economic News

A larger jump in retail sales proved to be one of very few optimistic highlights in last week’s economic news. The week entailed mostly negative news, as housing starts increased less than expected, the Philly Fed’s Manufacturing Index slipped significantly, and the University of Michigan Consumer Sentiment Index fell unexpectedly. 

• According to a report released last Wednesday by the Commerce Department, retail sales increased 0.5% from June to July and 6.4% from July 2017. Economists polled by Reuters had predicted that retail sales would gain 0.1%.

• Last Wednesday, oil prices fell as US crude inventories surprisingly rose. The Energy Information Administration noted crude storage rose 6.8 million barrels in the week ended August 10th. Analysts surveyed by the Wall Street Journal had forecasted a decline of 2.4 million barrels. The US benchmark West Texas Intermediate crude for September delivery ended the day down 3% to $65.01 per barrel.

• Housing starts rebounded less than expected in July, according to the Commerce Department. Starts rose just 0.9% to a seasonally adjusted annual rate of 1.168 million units in July, while June figures were revised down to 1.158 million units, or the lowest level since September 2017. Reuters had polled economists, who had forecasted starts to rise at a pace of 1.26 million units. Rising interest rates and higher home prices are largely credited with the weak reading.

• The Federal Reserve Bank of Philadelphia released its Business Outlook Survey last Thursday. The report’s Manufacturing Index sank in August to 11.9 from 25.7 in July, marking the lowest reading in 21 months. Economists’ consensus estimate called for a reading of 22.5. While readings above zero indicate improving conditions, August’s reading highlights slipping new orders and shipments. The Institute for Supply Management, which may highlight similar readings, releases its factory survey next week.

• The University of Michigan released its Consumer Sentiment Index last Friday, which fell to its lowest level in 11 months. The Index fell to 95.3 in August, down from 97.9 in July; economists had forecasted a reading of 98.5. According to the University, the decline was focused among households in the bottom third of income distribution, and the concern was rising prices. Purchasing conditions of household durables, which includes cars, furniture, and appliances, fell to its lowest level in nearly four years.