Retail Sales
Total retail sales rose for the seventh straight month, increasing 0.3% in January following a 0.5% increase in December. Consumer spending has picked up, although January’s growth was a bit slower than anticipated as a result of the winter weather. The largest declines came from building materials (-2.9%), sporting goods & hobbies (-1.3%), and food service places (-0.7%). Sales are 7.8% above their year-ago level. Retail sales should continue to expand over the year as consumers’ confidence slowly rebounds.

Housing Starts
New residential construction rose 14.6% in January to an annualized rate of 596,000 units. Leading the increase was a surge in multifamily homes, which increased by 78.0% to 183,000 units. Single family starts were down 1.0% in January, after declining 8.4% in December. Over the year, total starts are down 2.6%. Building permits for new homes decreased 10.4% to 562,000 in January after increasing 15.3% in December. Over the year permits are down 10.7%. Housing completions in January declined 9.5% to an annual rate of 512,000. This report reinforces our outlook for continued weakness in the housing market through this year.

Industrial Production
Industrial production declined a modest 0.1% in January after rising by an upwardly revised 1.2% in December. Production in the mining decreased -0.7%, which drove the decline. Manufacturing production increased 0.3% in January and December’s estimate was revised up as well. Motor vehicle sales, a component of manufacturing, were up 3.2% after a modest increase of 0.2% in December. Capacity utilization, which has gradually improved over the past year, declined slightly to 76.1% from 76.2% in December. The weakness in the industrial production report was mostly attributable to the unseasonably harsh winter conditions in much of the country. We expect more sustained growth in the months ahead.

Consumer Price Index
The consumer price index rose 0.4% in January after rising at the same pace in the previous month. January’s increase in headline inflation was driven by food and energy prices, as they have been in previous months. Energy prices rose 2.1% in January and food prices were up 0.5%. Over the year the CPI is up 1.7%. Food prices rose 1.8% over the past year while energy prices were up 7.5%. Core prices, excluding food and energy costs, rose 0.2% in January. Over the year the core CPI is up 1.0%. While we are seeing more price pressures in food and energy costs, headline levels of inflation remain mild.