Comerica Economic Weekly, November 18, 2022

Bill Adams


Waran Bhahirethan

Retail Sales

The next edition of the Comerica Economic Weekly will be published December 2. Wishing you and yours a safe and happy Thanksgiving holiday!

The Week in Review

Retail sales rose by 1.3% in October, well above market consensus for a 0.9% increase. Core (control) retail sales, which excludes volatile retail sub-sectors such as sales at gasoline stations and food service establishments, rose by a strong 0.7%, more than double market expectations. Retail sales rose broadly with 9 of the 13 retail sales components increasing last month.

The Producer Price Index (PPI) for final demand rose 0.2% in October and 8.0% in year-ago terms. Both were notably below market expectations for 0.5% monthly and 8.4% yearly increases. Underlying details of the PPI report were encouraging, too. Final demand goods prices rose 0.6% primarily due to higher energy prices. The less volatile sub-index for core PPI final demand goods excluding energy and food declined by 0.1%. Final demand for services also declined in October by 0.1%.

Import prices declined by 0.2% in October. Both fuel and non-fuel import prices continue to ease, with the strong dollar helping keep import inflation down. Export prices were down 0.3% from the previous month. Both import and export prices have declined for four consecutive months.

Consumers' expectations for inflation in the year-ahead rose by 0.5% to 5.9% in the New York Fed's monthly survey. Consumers' short-term inflation expectations are heavily influenced by gasoline prices, so the increase isn't a surprise. Three-year-ahead and five-year-ahead inflation expectations rose as well, each by 0.2% to 3.1% and 2.4%, respectively.

Industrial production declined 0.1% in October, below markets' expectation for a flat reading. Mining fell 0.4% and utilities output fell 1.5%. Utilities output has been very weak in the past three months due to mild weather. Manufacturing rose 0.1% but was revised down in the previous two months. After revisions, capacity utilization eased to 79.9%, but was still above its long-term average of 79.6%.

Housing data continue to weaken. Starts sank by 4.2% in October to an annualized rate of 1.425 million. Starts in October were 14.4% below January's rate of 1.666 million. Building permits also fell notably, dropping 2.4% to an annual rate of 1.526 million. Permits in October were down 17.1% compared to January's rate of 1.841 million.

Preview of the Week Ahead


The holiday-shortened week ahead will be light on economic data, with the flash estimates of the S&P Purchasing Managers Indexes on Wednesday the highlight; they are expected to weaken. The November jobs report, to be published December 2, will likely show another step down in payroll job growth and a further modest increase in the unemployment rate.

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November 18, 2022
Bil Adams, Senior Vice President and Chief Economist at Comerica Bank

Bill Adams

Senior Vice President and Chief Economist
Waran Bhahirethan, Vice President and Senior Economist at Comerica Bank

Waran Bhahirethan

Vice President and Senior Economist

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