Economic Update 08/17/15

SHOPPERS SPEND MORE IN JULY

Retail sales rose 0.6% last month according to Commerce Department data, topping the 0.5% gain projected in a Briefing.com poll of economists. This was great news after the flat June reading (which was initially recorded as an 0.3% decline).

A SLIGHT DIP IN HOUSEHOLD SENTIMENT

Falling 0.2 points to a mark of 92.9, the initial August University of Michigan consumer sentiment index nearly matched the 92.8 reading projected by economists surveyed by MarketWatch. Although this was the index’s second-lowest reading of 2015, it was still 10.4 points above where it was a year earlier.

WHOLESALE INFLATION INCREASED IN JULY

The Labor Department reported a 0.2% gain for the Producer Price Index last month, following the 0.4% advance in June. The core PPI also rose 0.2% in July. Annualized wholesale inflation was still at -0.8% through July thanks to falling energy prices. U.S. automakers boosted production 10.6% in July, leading to the 0.6% rise in overall industrial output reported by the Federal Reserve.

WALL STREET HOLDS UP AFTER YUAN WEAKENS

China devalued its currency for three straight days last week, but U.S. equities withstood that surprise. The S&P 500 advanced 0.68% for the week to 2,091.54, the Nasdaq 0.09% to 5,048.24 and the Dow 0.61% to 17,477.40. The devalued yuan certainly helped gold – the yellow metal had its best week in almost a month, rising 1.7% on the COMEX to a Friday close of $1,112.70. Light sweet crude, on the other hand, declined another 3.1% to a Friday NYMEX settlement of $42.50.

THIS WEEK: Monday, Q2 results arrive from Estee Lauder and Urban Outfitters. Tuesday, July housing starts and building permits reports accompany earnings from Dick’s Sporting Goods, Home Depot, La-Z-Boy, TJX, and Walmart. Minutes from the July FOMC policy meeting appear Wednesday, along with July’s CPI, and earnings from American Eagle Outfitters, Hormel, L Brands, Lowe’s, NetApp, Popeye’s, Staples, and Target. Thursday brings NAR’s report on July existing home sales, new initial jobless claims numbers, the Conference Board’s July LEI, and earnings from America’s Car-Mart, Fresh Market, Gap, Hewlett-Packard, Kirkland’s, Perry Ellis, Regis Corp., Ross Stores, Salesforce, Stein Mart, Stage Stores, Intuit, Sears Holdings, and Toro. Friday offers Q2 results from Deere and Foot Locker.