Landaas & Company newsletter November edition now available.
No major releases
No major releases
The broadest measure of inflation, the Consumer Price Index, rose 0.3% in October, led by a 3% jump in gasoline prices. Higher costs for shelter costs and used vehicles also contributed to the increase. Excluding the volatile categories of food and energy, the CPI rose 0.2%, the Bureau of Labor Statistics reported. The general index grew 2.5% since October 2017, which was up from 2.3% in September. Core prices rose 2.1% in the last 12 months – the lowest level since February, and another sign that inflation is not an imminent threat.
A key measure of consumer spending – retail sales – grew more than analysts expected in October, possibly boosted by post-hurricane-related sales of vehicles and building supplies. Price increases at gasoline stations led 13 retail categories, according to the Commerce Department. Only furniture stores and restaurants had lower sales than in September. Year-to-year, retail sales rose 4.6%, which is above the 21-year average of 4.3%. Consumer spending accounts for more than two-thirds of U.S. economic activity.
The four-week moving average for initial unemployment claims rose for the seventh time in eight weeks, a week following its lowest level since December 1969. The Labor Department indicator is 39% below the 51-year average, suggesting that employers continue to be reluctant to let workers go. The extraordinarily tight labor market should be boosting confidence, if not wages, which should fuel more consumer spending.
Business inventories rose 0.3% in September, lagging a 0.4% increase in sales, according to another Commerce Department report. Year-to-year, inventories rose 4.4% while sales rose 6.6%, suggesting businesses need to keep building supply to keep up with demand. Inventory buildup is a key contributor to U.S. economic growth.
The Federal Reserve reported that industrial production edged up in October. Manufacturing output offset production declines in the mining and utilities sectors. The Fed said factories were slightly more productive than initially estimated in September and August. Meantime, capacity utilization grew to 78.4%, remaining below the long-term average of 79.8%. Economists begin to worry about inflation pressure when the rate gets above the long-term average, which reached since April 2008.