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05/23/2018
Market Update

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Retail sales rose by 0.3% in April as consumer spending weakened after an already-soft start to the year. Robust gains in furniture, clothing and non-store retailers were mitigated by a fallback in restaurants and sporting-goods sales. Analysts said that higher gasoline prices limited the benefit of recent tax reform that increased take-home pay for consumers.
This Week

  • Retail sales rose by 0.3% in April as consumer spending weakened after an already-soft start to the year. Robust gains in furniture, clothing and non-store retailers were mitigated by a fallback in restaurants and sporting-goods sales. Analysts said that higher gasoline prices limited the benefit of recent tax reform that increased take-home pay for consumers.
  • Oil prices jumped above $80 a barrel to their highest level in more than three years after the U.S. imposed new sanctions on Iran’s energy industry. Members of the Organization of Petroleum Exporting Countries also remained fearful of geopolitical tensions in critical oil-producing countries.
  • Industrial production climbed by 0.7% in April. Utility production grew by 1.9%, driven by weather-related demand for heating; while mining production gained 1.1%, supported by an increase in oil and natural-gas extraction. Capacity utilization, a ratio of realized-to-potential economic output, remained at a three-year high.
  • The Philadelphia Fed Survey showed that regional manufacturing growth accelerated during May; workforce readings remained solidly above neutral, and new-order measurements hit a 45-year high, indicating optimism about future manufacturing activity.
  • The Conference Board’s index of leading economic indicators expanded by 0.4% in April, its sixth straight monthly increase, driven by widespread component strength. The reading, used by economists to gauge the health of the U.S. economy, pointed to ongoing vitality.
  • Housing starts fell by 3.7% in April, due to a cooldown in multi-family home construction. Economists indicated that higher costs in the wake of recently-imposed lumber tariffs remained a concern for builders.
  • Initial jobless claims edged 11,000 higher to 222,000 in the week ending May 12. The more-stable four-week moving average slipped by 2,750 to 213,250, a 49-year low. Continuing claims fell by 87,000 to 1.71 million, a 45-year low, in the week ending May 5. Market commentators remained confident that the job market remained close to, or at, full employment.
  • Mortgage-purchase applications fell by 2% in the week ending May 11 as mortgage rates slightly declined, but remained near their highest level in more than four years. Refinancing activity (which can be sensitive to even small rate changes) retreated by 4%.
  • The eurozone’s economy gained 0.4% in the first quarter, according to the preliminary reading, pointing to a slowdown in economic growth in the region.
  • China’s industrial production grew by 0.6% in April and by 7.0%year over year. Utilities output saw accelerated expansion, while manufacturing benefited from solid output growth.
  • Japan’s first-quarter gross domestic product shrank by 0.2%, according to the preliminary reading—the first decline in over two years. Business investment and consumer spending detracted, although analysts suggested the contraction could be temporary.


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