Import Prices Decelerate, Retail Sales Healthy, Job Market Strong

- The Import Price Index for August rose .8% versus estimates of a .3% gain and a 1.0% rise in July.
- Advance Retail Sales for August rose .2% versus estimates of a .2% decline and a 1.4% gain in July.
- Retail Sales Less Autos for August rose .2% versus estimates of a .3% increase and a .6% increase in June.
- Initial Jobless Claims for last week fell to 308K versus estimates of 315K and 313K prior.
- Continuing Claims were 2499K versus estimates of 2495K and 2481K prior.

BOTTOM LINE: Prices of goods imported into the US rose more than forecast in August, led by increases in oil, natural gas and metals. Over the last 12 months, import prices have risen 6.6%. However, excluding petroleum, prices have risen only 2.7%. Oil has declined 18.7% since peaking on July 14. Substantial declines in most commodity prices should dramatically cut import price increases going forward.

Retail sales in the US unexpectedly rose in August, a sign the economy is withstanding a slowing housing market, Bloomberg reported. Rising incomes and falling energy prices should give consumers added spending power. The unemployment rate is near a five-year low, while employee compensation rose at a 6.6% annual rate in the second quarter. Moreover, filling station sales decreased 1% in August, the largest drop since February. The average price of regular-grade gasoline at the pump dropped to $2.58 a gallon on Sept. 13, down 15% from highs of $3.04 on Aug. 9. I expect retail sales to continue to exceed estimates over the intermediate-term as energy prices continue to fall, stocks rise, housing stabilizes, inflation decelerates, interest rates remain low, the job market remains healthy and irrational pessimism lifts.


The number of US workers filing first-time applications for state jobless benefits unexpectedly dropped last week, evidence demand remains strong enough to encourage companies to retail workers. The four-week moving-average of jobless claims fell to 314,250. The unemployment rate among those eligible for benefits, which tracks the US unemployment rate remained steady at 1.9%. I continue to believe the job market will remain healthy over the intermediate-term without generating substantial unit labor cost increases.