MARKET UPDATE: US PRODUCER PRICE INDEX, US CONSUMER PRICE INDEX, RETAIL SALES, HOUSING STARTS AND BUILDING PERMITS

What We Are Watching This Week 

  • US Leading Indicators 
  • Existing Home Sales 
  • S&P Flash US Services and Manufacturing 

Highlights From Last Week 

  • US Producer Price Index 
  • US Consumer Price Index 
  • Retail Sales 
  • Housing Starts and Building Permits 

Major U.S. stock indexes closed the week positively, recovering from a steep sell-off the previous week. Value stocks, as tracked by the Russell 1000 indexes, outperformed growth stocks by the widest margin since September. This performance was partly fueled by strength in the energy sector, driven by rising oil prices, and profit-taking in large-cap technology stocks. The financials sector also delivered solid gains, bolstered by strong earnings reports. Shares of major banks—including JPMorgan Chase, Goldman Sachs, Citigroup, and Wells Fargo—climbed after the companies reported significant profit growth for the fourth quarter. 

Canada’s main stock index climbed on Friday as global government bond yields eased. Attention will likely shift to policy changes under U.S. President-elect Donald Trump as he prepares to take office next week. The TSX rose 212.2 points to close at 25,058.40, marking a weekly gain of 290.67 points, or 1.17%. The Canadian dollar slipped by 0.35 cents to 69.12 cents U.S. On the economic front, Statistics Canada reported that Canadian investors increased their holdings of foreign securities by $17.8 billion in November, the largest investment since March 2024. Meanwhile, foreign investors acquired $16.4 billion worth of Canadian securities, driven by record investment in money market instruments. 

The pan-European STOXX Europe 600 Index rose 2.37%, driven by slower-than-expected inflation in Europe and the U.S., which bolstered hopes for further interest rate cuts. Major stock indexes also posted significant gains, with France’s CAC 40 up 3.75%, Germany’s DAX rising 3.41%, Italy’s FTSE MIB increasing 3.36%, and the UK’s FTSE 100 climbing 3.11%. 

The U.S. Bureau of Labor Statistics reported on Tuesday that the Producer Price Index (PPI) for final demand increased by 0.2 percent on a seasonally adjusted basis in December. This follows a 0.4 percent rise in November and a 0.2 percent increase in October. On an unadjusted basis, the index for final demand rose 3.3 percent in 2024, compared to a 1.1 percent increase in 2023. The December increase in final demand prices was primarily driven by a 0.6 percent rise in the index for final demand goods, while prices for final demand services remained unchanged. Excluding food, energy, and trade services, the final demand index increased by 0.1 percent in December, matching the increase in November. For 2024, prices in this category rose 3.3 percent, up from a 2.7 percent increase in 2023. The Producer Price Index (PPI) measures price changes for goods and services at the producer level, serving as a key inflation indicator. It guides monetary policy, business pricing decisions, contract adjustments, and economic forecasting. PPI trends provide insights into industry-specific cost pressures and broader economic conditions, influencing markets and policymakers.1 

The December increase in consumer prices was driven by a 0.4% rise, largely fueled by household staples like food and gas. Food prices rose 0.3%, with notable increases in flour, pork, and eggs, while energy costs jumped 2.6% due to higher oil prices. However, food and energy prices tend to fluctuate, distorting the overall inflation figure. Energy prices, for instance, are expected to stabilize in January. For this reason, Wall Street and the Federal Reserve focus on the “core” inflation rate, which excludes food and energy for a clearer view of long-term trends. In December, the core inflation rate rose a modest 0.2%. This was due to moderating shelter costs—such as rent, housing, and hotels—which have been the largest contributors to inflation. Medical costs, another potential driver, remained subdued with just a 0.1% increase.2 

Business activity in New York State declined in January, as indicated by the Empire State Manufacturing Survey. The general business conditions index dropped 15 points to -12.6, reflecting declines in new orders (-8.6) and shipments (-1.7), with unfilled orders continuing to fall. Inventories grew slightly, while delivery times lengthened marginally. Employment levels were steady, but hours worked decreased significantly. Price pressures increased modestly, with the prices paid index rising to 29.1 and prices received at 9.3, though both remained subdued. Looking ahead, optimism improved, with the future business activity index climbing to 36.7, and firms expecting growth in employment and stable supply availability over the next six months. Capital spending plans remained modest. The Empire State Manufacturing Survey provides key insights into New York’s manufacturing health, signaling regional economic trends, labor conditions, inflation pressures, and future business expectations.3 

For the week ending January 11, the US Labor Department reported that seasonally adjusted initial jobless claims rose by 14,000 to 217,000, following a revised prior-week figure of 203,000 (up from 201,000). The four-week moving average decreased by 750 to 212,750, with the previous average revised up to 213,500. Continuing claims across all programs totaled 2,213,431 for the week ending December 28, marking an increase of 327,136 from the previous week. This compares to 2,130,781 claims during the same period in 2023.4 

The US Census Bureau reported December U.S. retail and food services sales reached $729.2 billion, up 0.4% from November and 3.9% from December 2023. Total 2024 sales increased 3.0% compared to 2023, with October-December sales up 3.7% year-over-year. Retail trade sales rose 0.6% monthly and 4.2% annually, with motor vehicle and parts dealers up 8.4% and nonstories retailers up 6.0% from December 2023. Analysts use retail sales data to understand consumer behavior, guide economic policy, inform business strategies, and assess overall economic trends. Rising sales may signal economic expansion while declining sales could hint at a slowdown.5 

In December 2024, U.S. building permits for privately owned housing units were at an annual rate of 1,483,000, down 0.7% from November and 3.1% from December 2023. Single-family permits rose 1.6% month-over-month to 992,000. For 2024, 1,471,200 units were authorized, a 2.6% decrease from 2023. Housing starts in December reached an annual rate of 1,499,000, up 15.8% from November but down 4.4% from December 2023. Single-family starts rose 3.3% to 1,050,000. For 2024, housing starts totaled 1,364,100, a 3.9% decline from 2023.6 

U.S. Industrial Production (IP) rose 0.9% in December, driven by gains in manufacturing (0.6%), mining (1.8%), and utilities (2.1%). Boosted by a resolved work stoppage, aircraft production contributed 0.2 percentage points to the growth. Total IP stood 0.5% above its year-earlier level, with capacity utilization increasing to 77.6%, below the long-term average. Market Groups: Consumer goods output increased by 0.5%, with a 0.7% rise in nondurables, offsetting declines in durables. Business equipment rose 1.4%, led by strong civilian aircraft production. Construction and business supplies both grew by 0.9%, and materials output rose 1.2%. Industry Groups: Durable manufacturing rose 0.4%, driven by aerospace (6.3%) and primary metals (1.7%). Nondurable manufacturing climbed 0.7%, with gains across all subcategories. Mining output increased 1.8%, and utilities grew 2.1%, supported by a 6.2% rise in natural gas output. Capacity utilization improved for all sectors, with mining reaching 90.8%, well above its long-term average.7 

WKYear To Date
Dow3.69%2.22%
S&P5002.91%1.96%
Nasdaq2.45%1.65%
S&P400 Mid-cap4.53%381.00%
Russell3.96%2.05%
TSX1.17%1.37%
Oil1.10%8.00%

  1. https://www.bls.gov/news.release/pdf/ppi.pdf 
  2. https://www.bls.gov/news.release/cpi.nr0.htm 
  3. https://www.newyorkfed.org/medialibrary/media/Survey/Empire/empire2025/ESMS_2025_01.pdf?sc_lang=en&hash=8C7470C43CBE0C43D96204A8774380ED 
  4. https://www.dol.gov/ui/data.pdf 
  5. https://www.census.gov/retail/sales.html 
  6. https://www.census.gov/construction/nrc/pdf/newresconst.pdf 
  7. https://www.federalreserve.gov/releases/g17/current/g17.pdf

Important Information:

Warren Gerow is an independent investment wealth consultant to Sightline Wealth Management.

Sightline Wealth Management LP (“Sightline”) is an investment dealer and is a member of the Canadian Industry Regulation Organization (CIRO) and the Canadian Investor Protection Fund (CIPF).

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