There were two important reports on the U.S. economy released this morning. First, total industrial production in America rose in November by 0.6 percent, according to new data from the Federal Reserve Board of Governors. That was twice the gain expected but helped largely by a 3.3 percent spike in utilities related to unseasonably cold weather (electric and gas heating). Further, factory output (manufacturing) came in well below forecasts in November, and spending on business equipment and construction supplies also weakened. This slowdown is not too surprising as the boost from last year’s tax cuts starts to fade, and continued trade war uncertainty will only provide another headwind. On the bright side, capacity utilization, a leading indicator of potential output, remains near the best level of the past few years.
Elsewhere, advance estimates of retail and food services sales in November totaled $513.5 billion, according to a new report from the U.S. Census Bureau. That was a 0.2 percent increase from October’s upward-revised print and better than the 0.1 percent gain economists anticipated. Core retail sales, which exclude the volatile automobiles and gasoline components, also rose in November (0.5 percent), as did the retail control group (0.9 percent) that tracks underlying consumer demand. Both of those figures were better than expected and included solid sales gains at furniture and home furnishings stores, electronics and appliance vendors, and health and personal care outlets. Moreover, nonstore sales (Amazon) jumped by 2.3 percent in November, the largest gain in a year and an encouraging sign that the 2018 holiday shopping season is off to a healthy start. The annual rate of growth, though, actually cooled last month, which along with the recent decline in personal saving and uptick in credit card utilization will add to the doubts about the sustainability of consumer spending.
Sources: Econoday, FRBG, U.S. Census, Bloomberg, ZH, FRBSL
Post author: Charles Couch