Economic Update 11/16/15

RETAIL PURCHASES UP JUST 0.1% IN OCTOBER

The tiny increase was actually an improvement, as retail sales were flat in both August and September. Gas station sales tailed off 0.9% in October, car sales 0.5%; offsetting those declines, online retail purchases were up 1.4% last month, spending at restaurants and bars up 0.5%. The Commerce Department’s latest report notwithstanding, the National Retail Federation projects holiday season retail sales to rise 3.7% this year to $630.5 billion.

HOUSEHOLDS THINK POSITIVE

Economists polled by Bloomberg expected the preliminary November University of Michigan consumer sentiment index to rise 2.0 points to 92.0. It surpassed that forecast, reaching 93.1 thanks in large part to consumer expectations of low inflation and larger wage gains in 2016. Twelve months ago, the index was at 88.8.

PRODUCER PRICE INDEX DECREASES AGAIN

The Labor Department’s barometer of wholesale inflation declined 0.4% in October. September saw the index fall 0.5%. Through October, the PPI was down 1.6% year-over-year, even though wholesale gasoline prices rose 3.8% last month. Core producer prices have risen but 0.1% in 12 months.

STOCKS RETREAT ON SOFT DATA, LOW OIL PRICES

Negative wholesale inflation, tepid retail sales and light sweet crude ending the week at $40.74 on the NYMEX, its lowest close since August 26 – that was enough to snap Wall Street’s winning streak. The S&P 500 lost 3.63% on the week to fall to 2,023.04 Friday. The Dow (-3.71%) and Nasdaq (-4.26%) made similar descents, wrapping up the week at respective closes of 17,245.24 and 4,927.88.

THIS WEEK: Monday offers quarterly results from Agilent Technologies and Dillard’s. Tuesday, October’s CPI and a report on October industrial output complement earnings from Dick’s Sporting Goods, Home Depot, Jack-in-the-Box, La-Z-Boy, TJX and Walmart. Minutes from the October Federal Reserve policy meeting appear on Wednesday, along with October’s housing starts report and earnings from Aramark, Keurig Green Mountain, L Brands, Lowe’s, NetApp, Staples, Target, The Children’s Place and Weibo. Thursday brings the Conference Board’s latest leading indicator index, a new initial claims report and earnings from America’s Car-Mart, Best Buy, Fresh Market, Gap, Intuit, J.M. Smucker, Kirkland’s, Ross, Stein Mart and Williams-Sonoma. Abercrombie & Fitch and Foot Locker report Q3 results on Friday.