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Weekly Economic Review (August 12 - 16, 2013)

By: Market IQ
Posted: 8/16/2013 5:05:00 PM
Referenced Stocks: CSCO;GLD;JCP;M;WMT

US stocks closed sharply lower this week amid weak earnings and concerns that the Federal Reserve could ease off its support for the economy.

Consumer and technology stocks were among the biggest decliners after Wal-Mart(NYSE:WMT) shares fell on a surprise decline in quarterly same-store sales and Cisco Systems (NASDAQ:CSCO) shares dropped after the network equipment maker provided weak guidance and announced it was cutting 4,000 jobs. Retailers such as Nordstrom Inc (NASDAQ:JWN), Macy's Inc.(NYSE:M), and J.C. Penney Co.(NYSE:JCP) were also pummeled this week on worries that US shoppers might be pulling back on spending.

Adding to the sell-off were jobless claims for last week that fell near a six-year low, which could draw the Fed closer towards trimming its $85-billion monthly stimulus program.

Precious metals were also in the news this week — Gold (NYSE:GLD), touched a two-month high as the metal witnessed investor short-covering and safe-haven buying amid the sell-off in US stock market and the escalation of violence in Egypt.

Following is an economic review for the week August 12 - August 16, 2013.

Monday, August 12

Federal Budget Balance:

US Federal government posted a budget deficit of $97.6 billion in July, a rise from $95.3 billion in June, though a rise in tax receipts may make the annual budget gap the smallest in five years.

Tuesday, August 13

Great Britain CPI:

UK inflation fell to 2.8% in July, from 2.9% in June. The largest contributions to the fall in the rate came from air fares, plus price movements in the recreation & culture, and clothing & footwear sectors. A rise in petrol and diesel prices partially offset the fall.

US Retail Sales:

July retail sales increased 0.2% (m/m) while Core Retail sales increased 0.5% (m/m). July's gain was the biggest since December 2012, and suggests the economy could be regaining steam after tax hikes and federal budget cuts dragged on growth in the first half of the year.

Wednesday, August 14

Great Britain Claimant Count Change:

The number of unemployed in UK dropped by 29,200 in July — its steepest fall since mid 2010, from a revised figure of 29,400 drop posted in June. The figure also beat expectations of a drop in unemployment by 15K.

EU Q2 GDP 2013 (preliminary estimate):

GDP rose by 0.3% in the EU during Q2 2013, compared with Q1 2013, beating expectations of an increase by 0.2%.

US Producer Price Index (m/m):

US producer prices were flat in July vs. expectations of a 0.3% increase and pointed to very little inflationary pressure in the economy. Low inflation is worrisome because it can encourage businesses and consumers to put off purchases. This undermines the Fed's efforts to boost consumption by lowering borrowing costs.

Thursday, August 15

Great Britain Retail Sales:

UK July retail sales increased by 3% after sunny weather prompted strong growth in the food sector. In the food sector — which includes supermarkets, specialist food stores and alcoholic drinks vendors, annual sales were up by 2.1% — the highest monthly rise recorded since April 2011.

US Unemployment Claims:

US unemployment benefits dropped by 15K last week to a seasonally adjusted 320K, the lowest total since October 2007.

US Consumer Price Index (m/m):

Consumer price index rose 0.2% in July as the cost of goods and services ranging from tobacco to apparel and food increased. July's increase in consumer inflation was in line with economists' expectations.

Philly Fed Manufacturing Index:

Manufacturing activity in the Philadelphia-region in August expanded at the slowest pace in four months. The index fell 9.3 in August from July's reading of 19.8, underlining concerns over the US economic outlook.

Friday, August 16

Canada Manufacturing Sales:

Manufacturing sales fell 0.5% to $48.2-billion during July, falling short of the consensus estimate of a modest 0.3% gain.

US Housing Starts:

Housing starts increased 5.9% in July to a seasonally adjusted annual rate of 896K units. While that was a recovery from June's decline, it was below economists' forecasts for a 900K rate, suggesting that higher mortgage rates could be slowing the housing market's momentum.

US Building Permits:

Permits rose 2.7% to 943K, boosted by a 13.5% jump in apartment permits. Permits for multi-family homes rose 12.6%, but approvals for single-family homes fell 1.9%.

Preliminary University of Michigan Consumer Sentiment:

University of Michigan's preliminary reading on the overall index on consumer sentiment slipped to 80.0 from July's six-year high of 85.1. August's reading was the lowest in four months.



This commentary is for informational purposes only and does not constitute investment advice. The opinions offered herein are not recommendations to buy, sell or hold securities. Market IQ expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.