What you need to know about Friday’s U.S. economic data:
MICHIGAN CONSUMER SENTIMENT (APRIL PRELIMINARY)
- Fell to 89.7 (forecast was 92), fourth straight drop and lowest since September, from 91 in March
- Decline paced by weakening outlook for inflation-adjusted wages, concern about impact of election on economic policy
- Almost half (48 percent) of respondents thought real incomes would drop, biggest share since May 2014
- Five- to 10-year inflation expectations fell to 2.5 percent, matching lowest in records to 1979, from 2.7 percent
- Almost 1 in 5 respondents “spontaneously” said election/government policy made them more negative on outlook
The Takeaway: The increasingly vitriolic presidential primaries are beginning to take a toll on consumers’ psyche. The economic outlook index for those who mentioned the negative political environment was 39 points lower than for those who didn’t. While sluggish wage gains also weighed on confidence, the addition of the political wrinkle could cast a pall over household purchases for months to come. Survey director Richard Curtin reduced his forecast for the increase in consumer spending this year to 2.6 percent. That follows a 3.1 percent gain in 2015, which would mark a noticeable step down for the biggest part of the economy.
INDUSTRIAL PRODUCTION (MARCH)
- Output at factories, mines and utilities fell 0.6 percent (forecast was 0.1 percent decline) for a second month
- Manufacturing production dropped 0.3 percent (forecast was 0.1 percent gain) and February was revised to a 0.1 percent decrease (prior was up 0.1 percent)
- Production in most major market groups retreated in March
- Mining decreased 2.9 percent, most since September 2008, utility output fell 1.2 percent
The Takeaway: Heavy industry remains bogged down by soft global demand and the lingering fallout from last year’s surge in the dollar and plunge in commodities prices. The pullback at factories, which make up 75 percent of all industrial production, was widespread -- from consumer goods to business equipment to construction materials. Production of household goods retreated for the sixth month in the last seven, underscoring tepid consumer demand. Against this backdrop, manufacturing capacity utilization fell to 75.1 percent, the weakest since April 2014.
To contact the reporters on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net, Michelle Jamrisko in Washington at mjamrisko@bloomberg.net. To contact the editors responsible for this story: Carlos Torres at ctorres2@bloomberg.net, Vince Golle
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