There were a few important reports on the U.S. economy released this morning. First, total industrial production in America rose in August by 0.4 percent, according to new data from the Federal Reserve Board of Governors. That was in line with estimates and the prior month’s increase was revised much higher. Manufacturing activity was a bit softer than expected but otherwise the strength was fairly broad in August, with notable gains seen in business equipment spending, utilities, and mining. On a year-over-year basis, total industrial production rose last month by 4.9 percent, the fastest pace of annual growth since 2010. As for capacity utilization, this leading indicator of inflation and potential output lifted in August (from a downward-revised July print) to 78.1 percent, the best reading since April.
Next, a report from the U.S. Census Bureau showed that advance estimates of retail and food services sales in August totaled $509.0 billion. That was a 0.1 percent increase from July’s upward-revised print and the seventh monthly gain in a row, albeit well below the 0.4 percent rise economists had anticipated. “Core” retail sales, which exclude the volatile automobile and gasoline components, rose by 0.2 percent in August, again missing forecasts due to some weakness at department stores and sporting goods outlets. Although far from a horrible report, today’s disappointing retail sales data will only add to economists’ concerns about the sustainability of consumer spending, the largest component of U.S. gross domestic product (GDP). Such worries have been exacerbated by the recent slowdown in personal saving and revolving credit (credit card) use, but faster wage growth has the potential to offset these headwinds.
Elsewhere, consumer confidence rebounded this month, according to new data from the University of Michigan. Specifically, the headline sentiment gauge jumped from 96.2 to 100.8 in the first half of September. That was the largest monthly gain in almost a year, the highest headline reading since March, and significantly better than expected. Surveyed Americans’ views of both current and future economic conditions improved considerably this month, with the latter climbing to the best level in nearly a decade and a half. The gains in confidence were seen across all major socioeconomic subgroups, and Surveys of Consumers chief economist Richard Curtin added that “consumers anticipated continued growth in the economy that would produce more jobs and an even lower unemployment rate during the year ahead.”
Sources: Econoday, FRBG, U.S. Census Bureau, UoM, FRBSL
Post author: Charles Couch