Last week was light in economic data, but such is not the case this week, with a few early-week reports leading up to a surge on Thursday. This week’s data will cover the whole gamut of the health of the U.S. economy, from housing to manufacturers to jobs and back again. Earnings season is winding down and investors are remaining keen to when the Federal Reserve will begin tapering its massive plan of monthly Treasury and security purchases, so the upcoming reports could prove impactful on market direction.
“Market moving” data will include:
Retail Sales for July – The Commerce Department said that retail sales rose 0.4 percent in June from May (which rose 0.5 percent from April), led by a 1.8-percent jump in auto purchases. So-called “core” retail sales, which eliminate the volatile auto segment, rose only 0.2 percent, their weakest move since January. Both the headline and core gains were short of forecasts. For the recent month, economists are expecting overall retail sales to rise by 0.3 percent and core sales to climb 0.4 percent.
Producer Price Index for July – The Labor Department reported that a 7.2-percent spike in gasoline prices in June drove wholesale prices up 0.8 percent, surpassing expectations of a 0.4 percent increase. Excluding food and energy, “core” PPI rose 0.2 percent, topping forecasts of a 0.1 percent rise as prices for passenger cars rose 0.8 percent. On a year-over-year basis, core PPI was up 1.7 percent. For July, economists are expecting headline PPI to rise 0.3 percent and core PPI to climb 0.2 percent.
Initial Jobless Claims for the Week Ended August 10 – In the week ended August 3, initial jobless claims rose by 5,000 to 333,000 from the prior week’s revised figure of 328,000 (up from an originally estimated 326,000). In the week ended July 27, the number of claims hit the lowest level since January 2008. The four-week moving average, a less volatile barometer of labor trends because it irons out weekly fluctuations, dropped by 6,250 to 335,500, marking the lowest level since November 2007 and signaling that the U.S. labor jobs market continues to improve. For the latest week, economists expect initial claims to hover around 330,000.
Consumer Price Index for July – The Bureau of Labor Statistics announced that headline CPI rose 0.5 percent in June, mostly because of rising gasoline prices. Forecasts were for a 0.4-percent rise. Over the last 12 months, the all-items index increased 1.8 percent before seasonal adjustment. "Core" CPI, which excludes the volatile energy and food segments, matched predictions by rising 0.2 percent, the same amount at May. For July, economists are expecting a 0.2-percent increase in both all-item and core CPI.
Philadelphia Fed Survey for August – In July, the Philly Federal Reserve reported that its general conditions index improved by 7.3 points to 19.8, representing the largest monthly gain in 2-1/2 years. The shipments index rose to 14.3 in July from 4.1 in June. The closely-watched new orders index was an anchor on the overall advance, falling from 16.6 in June to 10.2 in July. Readings above zero indicate expansion in factory activity in the mid-Atlantic region, while negative readings signal contraction. Analysts expect expansion, but at a slower pace in August, calling for a reading of 15.0.
Industrial Production for July – The Federal Reserve reported that industrial production rose 0.3 percent in June, fueled by a 2.2 percent rise in home electronics and 1.4 percent increase in automotive products. June’s advance was a welcome move compared to no gain in May and an April figure that was revised from a negative 0.3-percent to a negative 0.4-percent. Not counting the auto segment, manufacturing advanced 0.2, equaling May’s gain. Capacity utilization for the whole industry increased to 77.8 percent in June from 77.7 percent in May. For July, economists are expecting industrial production to continue to build momentum, increasing another 0.3 percent. Capacity utilization is forecast to advance modestly to 77.9 percent.
Wall Street will also be looking at the Empire State Manufacturing Index on Thursday.
Housing Starts for July – Last month, the Commerce Department said that groundbreaking on new homes fell 9.9 percent in June to a seasonally adjusted annual rate of 836,000, representing the lowest level since August 2012 and baffling economists who thought the annual rate would rise above 950,000. May’s figure was revised from an original estimate of 914,000 to 928,000. June’s decline was mostly because of a slowdown in the volatile multifamily component, which fell 26.2 percent. Permits fell 7.5 percent to a 911,000 annual rate as the brakes were hit on multifamily units for future construction as well. Economists expect a rebound in housing starts for July, predicting the annualized rate to rise back to 903,000 and permits to hit 940,000.
To a lesser extent, the University of Michigan/Reuters Consumer Sentiment Index will also impact the markets on Friday.