Looking Ahead: Week of October 13 to October 17

Wednesday
Retail sales rose 0.6 percent in August, the fourth straight monthly gain. Excluding the volatile auto component, retail sales increased 0.7 percent for the month, also the fourth monthly rise. In August, sales rose in all categories except for a slight dip in building materials stores (-0.2 percent) and a moderate drop in clothing & accessory stores (-1.4 percent). Due to a drop in motor vehicle sales from a torrid August pace, economists are looking for a modest drop in total retail sales for September. However, the majority expects the nonauto component to continue its string of increases.

Retail sales Consensus Forecast for Sept 03: -0.1 percent
Range: -0.5 to +0.9 percent

Retail sales ex autos Consensus Forecast for Sept 03: 0.5 percent
Range: 0.2 to +1.0 percent

The Empire State Manufacturing Survey posted gains in the past couple of months and stood at a level of 18.4 in September. Any level above zero points to an expanding manufacturing sector in the New York Fed district. Market players like to look at this indicator as a barometer of the ISM manufacturing survey.

Empire State Manufacturing Survey Consensus Forecast for Oct 03: 15
Range: 11 to 19

The Fed's Beige Book will be released on Wednesday afternoon in anticipation of the FOMC meeting on October 28. The last Beige Book released in September showed a slightly improved economic picture relative to the previous releases earlier in the year. Market players will be looking at labor market conditions as well as evidence of improvement in manufacturing activity.

Thursday
New jobless claims fell back to 382,000 in the week ended October 4 to their lowest level since February. This encouraged equity investors, although one week does not a trend make. A continuation of the downward trend or at least maintaining the current level for several weeks would suggest some improvement in the labor market.

Jobless Claims Consensus Forecast for 10/11/03: 385,000 (3,000)
Range: 376,000 to 390,000

The consumer price index rose 0.3 percent in August after gaining 0.2 percent in each of the two previous months. This was primarily due to large energy price hikes over the period. Excluding food & energy, the CPI inched up 0.1 percent in August. Aside from an acceleration in transportation and education costs, price increases were modest across the board.

CPI Consensus Forecast for Sept 03: 0.3 percent
Range: 0.1 to 0.5 percent

CPI ex food & energy Consensus Forecast for Sept 03: 0.1 percent
Range: 0.1 to 0.2 percent

Business inventories were unchanged in June and July after declining 0.3 percent in May. Declining manufacturers' inventories held down inventory levels. In August, manufacturers and wholesale trade inventories both decreased 0.2 percent for the month. Retail trade inventories are the only missing component.

Business inventories Consensus Forecast for Aug 03: -0.1 percent
Range: -0.2 to 0.1 percent

The index of industrial production edged down 0.1 percent in August after posting a stronger 0.7 percent gain in July. In August, production of consumer goods edged down, but business equipment, defense & space equipment and construction supplies all posted healthy gains for the month.

Industrial production Consensus Forecast for Sept 03: 0.5 percent
Range: 0.2 to 1.0 percent

Capacity utilization rate Consensus Forecast for Sept 03: 74.9 percent
Range: 74.7 to 75.5 percent

The Philadelphia Fed's business outlook survey scaled back to 14.6 in September from a high level of 22.1 in August. The index has remained above the zero line for four straight months. Market players like to look at this indicator as a barometer of the ISM manufacturing survey. It is also a good leading indicator of industrial production.

Philadelphia Fed Survey Consensus Forecast for Oct 03: 16
Range: 10 to 20.7

Friday
Housing starts decreased 3.8 percent in August to a 1.82 million-unit rate. Despite the modest drop in August, houses were started at faster than a 1.8 million-unit rate for three months in a row! That's what low interest rates will accomplish!

Housing starts Consensus Forecast for Sept 03: 1.85 million-unit rate
Range: 1.775 to 1.90 million-unit rate

The University of Michigan's consumer sentiment index edged down for a second straight month to 87.7 in September. The index reached a high of 92.1 in May, fell back in June, picked up a bit in July and then declined over the summer. This consumer sentiment index is less tied to labor market conditions than the Conference Board's version, but personal finances are definitely affected by an individual's job situation.

Consumer sentiment Consensus forecast for mid-Oct 03: 88
Range: 86.5 to 90