Photo: Daniel Goodman / Business Insider
Earlier we mentioned how retail sales growth of 0.5% was well ahead of expectations of 0.3%.Excluding autos the gap was even better: 0.6% vs. 0.2%.
What drove the strong performance?
Retail sales increased by 0.5% (month-over-month), more than expected. Sales ex-autos increased by 0.6%, and “core” sales (ex-autos, gasoline and building materials) also gained 0.6%. The better than expected results suggest upside risk to our 2.0% Q4 GDP forecast. Large gains in sales for electronics and “non-store” retailers (online shopping) suggest that the introduction of Apple’s latest iPhone likely accounted for much of the upside surprise to core retail sales.
As for the rest of the data:
The October Producer Price Index (PPI) declined by 0.3% (month-over-month), a larger drop than the consensus had expected. The core PPI was unchanged, in contrast to consensus expectations for a 0.1% increase. The core PPI was affected by volatility in vehicle prices, which often occurs in the month of October due to the roll-out of new auto-year vehicles. Excluding passenger cars and light trucks, the core PPI likely increased by about 0.1%.
The Empire index rises 9 points (from -8.48 to 0.61) in November, beating expectations which looked for a 6.5 point increase. The composition of the report, however, remains weak: new orders decline by around 2 points to -2.07 and the employment index weakens by almost 7 points to -3.66. Shipments increase by around 4 points to 9.43 and inventories decline 3 points to -12.20.
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