Wages Jump. Now, talking about wage increases to anyone spinning their wheels at work always opens you up to a little backlash. What we’re all really talking about are broad trends. And, in fact, we’re talking about one of the key barometers of inflation risks—wages. This morning’s consumer price report had a little bit for all inflation watchers. Consumer prices fell again in January and inflation turned negative compared to 12 months ago because of falling energy prices. Excluding food and energy, so-called core consumer prices rose 0.2% in January. Core prices are also up 1.6% in the past year, mainly reflecting rising prices for housing, the single biggest expense for consumers. Real (meaning inflation adjusted) hourly wages, meanwhile, roared back 1.2% in January, the result of higher pay and lower inflation. Real hourly wages have climbed 2.4% in the past 12 months.
Factories Humming Again? Orders for durable U.S. goods rose 2.8% in January, smashing the cautious 0.5% gain that Wall Street expected after a few sloppy months. Orders for core capital goods— a proxy for business investment— surged 9.5%. Shipments of core capital goods, a category used to help determine quarterly economic growth, rose 1% in January. Orders fell 3.7% in December, newly revised data show. January’s reading making a little sense given rising employment gains.
Kohl’s is Also on Target? A couple of key retail names have largely delivered upbeat results this week. Middle-market department store Kohl's (KSS) said results in its holiday quarter topped Street expectations and its outlook for the current fiscal year is about in line with industry analyst expectations. Results may indicate some success from its spring cleaning last year. In May, Kohl's outlined a multi-year plan that included stocking better products, new savings promotions, gearing offerings to local tastes, and attracting top talent. For its 2015 fiscal year, Kohl's expects sales to grow 1.8% to 2.8%, while analysts had called for 2% growth. EPS are pegged at $4.40 to $4.60, also largely aligning with a consensus analyst call for $4.54. The company boosted its quarterly dividend by 15%. Kohl’s news follows largely positive headlines out of Target (TGT) a day earlier. The discount retailer and investors are putting new CEO Brian Cornell to the test and he’s starting to deliver with initiatives like free shipping and a stronger focus on clothing and home goods. Target said same-store sales rose 3.8% in Q4, ahead of a company projection for 3% growth.