Flurry of tepid data could de­lay rate hike

Daily Local News (West Chester, PA) - - BUSINESS - By Paul Wise­man AP Eco­nomics Writer

WASH­ING­TON » U.S. fac­tory out­put fell, con­sumers cut back at re­tail­ers and whole­sale prices went nowhere in Au­gust, the lat­est ev­i­dence of a less-than-ro­bust econ­omy. The weak num­bers could give the Fed­eral Re­serve fur­ther rea­son to hold off on rais­ing in­ter­est rates when it meets next week.

“All the data seem to say the same thing: Not much is hap­pen­ing in the econ­omy,” said Joel Naroff of Naroff Eco­nomic Ad­vi­sors. “We have no in­fla­tion, not a lot of con­sumer spend­ing, not much pro­duc­tion ... The data don’t de­mand that the Fed do any­thing right now.”

The Fed re­ported Thurs­day that fac­tory pro­duc­tion fell 0.4 per­cent last month. Over­all in­dus­trial pro­duc­tion — which com­bines man­u­fac­tur­ing, mines and util­i­ties — dropped by an iden­ti­cal amount.

A sec­ond re­port Thurs­day sug­gested that the fac­tory weak­ness may be ex­tend­ing into Septem­ber. The Fed­eral Re­serve Bank of New York said that man­u­fac­tur­ing in New York shrank in Septem­ber for a sec­ond straight month. New or­ders and ship­ments fell sharply.

Ear­lier this month, a sur­vey by the In­sti­tute for Sup­ply Man­age­ment showed that U.S. man­u­fac­tur­ing con­tracted in Au­gust for the first time since Fe­bru­ary. Still, the Philadel­phia Fed re­ported Thurs­day that its man­u­fac­tur-

ing gauge climbed in Septem­ber for a sec­ond straight month, sug­gest­ing greater fac­tory out­put in the mid-At­lantic re­gion.

In re­port­ing its closely watched mea­sure of re­tail

spend­ing, the Com­merce De­part­ment said that re­tail sales fell in Au­gust for the first time in five months. Con­sumers spent less on build­ing ma­te­ri­als, fur­ni­ture

and cars. Amer­i­cans did spend more at cloth­ing re­tail­ers, restau­rants and bars.

“They were buy­ing Tshirts and eat­ing out — and that was about it,” Naroff said.

Not­ing the slide in re­tail sales, Bar­clays Re­search down­graded its fore­cast for U.S. eco­nomic growth from July through Septem­ber to an an­nual rate of 2.6 per­cent from 2.8 per­cent ear­lier.

“The re­port was soft across the board,” Bar­clays econ­o­mists said in a re­search re­port.

The Fed will meet Tues­day and Wed­nes­day, after which it will an­nounce whether it will re­sume rais­ing in­ter­est rates. In De­cem­ber, it raised its bench­mark short-term rate from a record low, where it had been since the depths of the 2008 fi­nan­cial cri­sis, but hasn’t in­creased it since then.

In re­cent days, some Fed pol­i­cy­mak­ers have said a rate hike should be con­sid­ered next week. But given re­cent lack­lus­ter eco­nomic re­ports, in­vestors peg the chances of a Septem­ber rate hike at just 12 per­cent, ac­cord­ing to fig­ures from the CME Group.

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