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By Jason Stipp and Robert Johnson, CFA | 10-29-2013 12:00 PM

Economic Data Show a Softer Side

Recent slow manufacturing and retail data is no reason to panic just yet, but one housing report is a bigger concern, says Morningstar's Bob Johnson.

Jason Stipp: I'm Jason Stipp for Morningstar.

There's been a decided soft tone to a lot of the economic data we've seen recently. But as is usually the case, there's more to the story. Here to give his take on the data is Morningstar's Bob Johnson, our director of economic analysis.

Thanks for joining me, Bob.

Bob Johnson: Great to be here today.

Stipp: We have seen some near-term data that does look a little soft, but you have more than one way of looking at that data. I want to take it datapoint by datapoint, and get your take on recent data and also your longer-term perspective.

One report that we got this week was retail sales and auto sales, and it looked soft in this last month.

Johnson: Yes, absolutely. The retail sales number overall, and this is the official government report, is a little dated. This is September data, and it's about two weeks delayed from when we'd usually see it [because of the government shutdown]. Just a little bit of a caveat there. It was before the furlough, so this shouldn't have been impacted by people not having their government checks. Nevertheless, we were done 0.1% month-to-month, that is comparing September to August.

The year-over-year data that I like to look at, averaged over three months and excluding the volatile gasoline sector as well as the autos, was right in the range where it has been for some time--about 4% [growth]. In fact, maybe just a shade under: Maybe the average is 4.2% on the year-over-year basis, and we're at about 4% right now. So really no reason to panic yet, but again, the trends are a little bit soft there, and we've been warning about that for some time.

The retail sales report was also interesting, in that it explains some of the shopping center data that had been so weak and continues to be weak. In that [report,] the non-store retailers are among the best performers, and those aren't counted in the shopping center data, which is a little bit of the reason why that data has been soft.

Stipp: When it came to autos, there is a near-term issue with how Labor Day got counted.

Johnson: The actual Labor Day, even though it was Sept. 1, got counted in the August data by industry agreement. So that made [August] look unusually strong, 16 million autos sold, and then things kind of fell off a cliff down to 15.3 million in September. Now if you average those two together, you're much closer to the right number, which is probably about 15.7 million. I'll be very much looking forward to the auto data on Friday to see on which side of that 15.7 million we land for October.

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