Economic Data Recap: Retail Sales, PPI Signal Slow Growth

September 13, 2013 05:50 AM

via a special arrangement with Informa Economics, Inc.

Energy prices key in inflation reading while auto sales drove consumer purchases

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.

U.S. consumers were reluctant to make a lot of purchases in August with the exception of automobiles while inflation remained tame and minus food and energy was non-existent in August, according to the Retail Sales and Producer Price Index (PPI) data released this morning.

Retail sales reflect auto purchases. US Retail Sales came in at $426.6 billion, up 0.2 percent from July and were 4.7 percent above Aug. 12. Sales for June-August were up 5.4 percent from year-ago. The July Retail Sales were revised upward to 0.4 percent from the initial 0.2 percent. Providing most of the push higher were automobile and motor vehicle sales which rose 12.3 percent from August 2012. Minus the auto component, however, sales only were up 0.1 percent.

PPI data signals tame inflation lingers. The overall Producer Price Index (PPI) rose 0.3 percent in August, after prices for finished goods were unchanged in July and up 0.8 in June. On an unadjusted basis, prices for finished goods moved up 1.4 percent for the 12 months ended in August, the smallest advance since a 0.5-percent rise in April 2013.

Foods rose 0.6 percent in August while energy was up 0.8 percent. When those two volatile components are taken out, the core PPI was unchanged, breaking a string of nine consecutive months of increases.

Crude energy: Prices for crude energy materials fell 2.7 percent in August but rose 1.5 percent for the June-August period. Natural gas accounted for nearly three-quarters of the monthly decline as ti fell 8.2 percent while crude petroleum was down 1.2 percent.

Crude foods: The 4.2 percent decrease contributed to a 5.5 percent decline from May to August. By contrast, those rose 1.3 percent in the Feb.-May period. In August, a major factor in the monthly decline was the index for soybeans, which dropped 17.8 percent. Lower prices for corn and slaughter chickens also contributed to the decrease in the crude foods index.

Comments: Consumers still appear to be reluctant to open their wallets in a major way and the auto sales rise is likely reflective of purchases that had been delayed previously. Sales rose at the slowest pace since April. And that reluctance on the part of consumers to spend is an ongoing concern point as consumers account for two-thirds of U.S. economic activity. As for inflation, it still is tame and will not be a worry point for the Fed if they opt to maintain their current asset purchase efforts when they meet next week.



NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.






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