Data to point to fourth-quarter acceleration
Inflation to remain moderate
WASHINGTON (MarketWatch) — Data to be released this coming week should add to evidence that the economy is getting somewhat stronger in the fourth quarter, although the growth rate remains far below a typical recovery.
Economists have been encouraged by a stronger-than-expected jobs report for October and a strong Institute for Supply Management factory report.
MarketWatch consensus
datereportConsensuspreviousNov. 15Retail sales0.7%0.6%Nov. 15Retail sales ex-autos0.4%0.4%Nov. 15Empire state index15.015.7Nov. 15Inventories0.9%0.6%Nov. 16Producer price index0.8%0.4%Nov. 16Core PPI0.1%0.1%Nov. 16Industrial production0.2%-0.2%Nov. 16Home builders' index1616Nov. 17Consumer price index0.3%0.1%Nov. 17Core CPI0.1%0.0%Nov. 17Housing starts600,000610,000Nov. 18Jobless claims445,000435,000Nov. 18Leading indicators0.6%0.3%Nov. 18Philly Fed5.01.0
“We think the economy is gaining momentum in the fourth quarter and we look for growth of around 3%,” said the economic team at RDQ Economics.
Already, recent reports hint that growth in the July-September quarter is likely to be revised higher to a 2.3% annual rate from the initial estimate of a 2% rate.
The most important report on growth will come on Monday morning when the government releases retail sales data for October at 8:30 a.m. Eastern.
Economists are forecasting a 0.6% gain for retail sales, matching the gain in September.
Excluding strong auto sales, retail sales are expected to rise 0.4%.
Economists said these headlines are a bit misleading as a good deal of the increase will come from higher gasoline prices, which rose a seasonally adjusted 5% in October from the prior month.
Sales excluding gasoline, food and autos will be the figure watched closely.
Jim O’Sullivan, chief economist at MF Global, expects a 0.2% gain in these “core” retail sales in October, which he said was consistent with consumer spending holding steady near the 2.6% rate recorded in the third quarter.
Jobless claims data will also receive close scrutiny. Economists expect claims to move higher to about 445,000 after a surprising 24,000 decline to 435,000 in the past week. Even if claims move higher, the data in recent weeks has shown a healing labor market, analysts said.
The four-week moving average of claims has fallen to 446,000 from the average of 465,000 for the first eight months of the year.
Outside of the outlook for growth, economists will be watching the latest reports on inflation.
The Federal Reserve said in its latest policy statement that inflation is below the level that is consistent with price stability.
Economists said the data should show continued moderate prices at the core level, which excludes soaring food and energy costs.
Economists are forecasting a 0.3% gain in headline consumer prices, up from a 0.1% gain in September.
Excluding food and energy costs, the core CPI should rise 0.1% in October after remaining flat in the prior month. This will translate into a 0.7% gain in core CPI on a year-on-year basis, the lowest level since the 1960s, economists said.
The Labor Department will release the consumer price data at 8:30 a.m. on Wednesday.
Even though commodity food prices are rising sharply, it will not have much direct impact on overall inflation, said Richard Berner, chief U.S. economist at Morgan Stanley, in a recent report.
Food remains a small share of consumer budgets, Berner said.