Sunday, January 17, 2021

December's consumer & producer prices, retail sales, & industrial production; November's business inventories & JOLTS

Major reports that were released this past week included the December Consumer Price Index, the December Producer Price Index, the December Import-Export Price Index, and the Job Openings and Labor Turnover Survey (JOLTS) for November, all from the Bureau of Labor Statistics; the Advance Retail Sales Report for December and the Full Report on Manufacturers' Shipments, Inventories and Orders for November, both from the Census Bureau, and the December report on Industrial Production and Capacity Utilization from the Fed....the week also saw the release of the first regional Fed manufacturing survey for January: the Empire State Manufacturing Survey from the New York Fed, which covers all of New York state, one county in Connecticut, Puerto Rico and northern New Jersey, reported their headline general business conditions index fell from +6.3 in November and from +4.7 in December to +3.5 in January, suggesting somewhat sluggish growth of First District manufacturing....

CPI Rose 0.4% in December on Higher Prices for Fuel, Food, Clothing, and Car Insurance

The consumer price index rose 0.4% in December, as higher prices for fuel, food, clothing, and vehicle insurance were only slightly offset by lower prices for airline fares, major appliances and used vehicles...the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that seasonally adjusted prices averaged 0.4% higher in December, after rising 0.2% in November, being unchanged in October, rising by by 0.2% in September, 0.4% in August, by 0.6% in July and by 0.6% in June, after falling by 0.1% in May, falling by 0.8% in April and by 0.4% in March, but after rising by 0.1% in February, by 0.1% in January, and rising by 0.2% last December....the unadjusted CPI-U index, which was set with prices of the 1982 to 1984 period equal to 100, rose from 260.229 in November to 260.474 in December, which left it statistically 1.3620% higher than the 256.974 reading of October of last year, which is reported as a 1.4% year over year increase, up from the 1.2% year over year increase reported a month ago....with higher prices for gasoline a major factor in the overall index increase, seasonally adjusted core prices, which exclude food and energy, were just 0.1% higher for the month, as the unadjusted core price index actually fell from 269.473 to 269.226, which left the core index 1.6196% ahead of its year ago reading of 264.935, which is reported as a 1.6% year over year increase, the same as the year over year core price increase that was reported for November...

The volatile seasonally adjusted energy price index rose 4.0% in December, after rising 0.4% in November, 0.1% in October, 0.8% in September, 0.9% in August, 2.5% in July, 5.1% in June, but after falling by 1.8% in May, by 10.1% in April, 5.8% in March, 2.0% in February and by 0.7% in January, but after rising 1.6% in December, 0.8% in November and by 1.7% last October, but is still 9.4% lower than in November a year ago...the price index for energy commodities was 8.2% higher in December, while the index for energy services was 0.1% higher, after rising 1.1% in November....the energy commodity index was up 8.2% on a 8.3% increase in the price of gasoline and a 10.0% increase in the index for fuel oil, while prices for other energy commodities, including propane, kerosene, and firewood, were on average 1.2% higher...within energy services, the price index for utility gas service fell 0.8% after rising 3.1% in November and is now 4.1% higher than it was a year ago, while the electricity price index rose 0.4% after rising 0.5% in November....energy commodities are still averaging 15.2% lower than their year ago levels, with gasoline prices also averaging 15.2% lower than they were a year ago, while the energy services price index is now up 2.6% from last December, as electricity prices are now 2.2% higher than a year ago…

The seasonally adjusted food price index rose 0.4% in December, after falling 0.1% in November, rising 0.2% in October, being unchanged in September, rising 0.1% in August, falling 0.4% in July, rising 0.6% in June, 0.7% in May, 1.5% in April, 0.3% in March, 0.4% February, 0.2% January, 0.2% December, 0.1% in November, 0.2% October, 0.2% September, but after being unchanged last June, July & August, as the price index for food purchased for use at home was 0.4% higher in December, after falling 0.3% in November, while the index for food bought to eat away from home was also 0.4% higher, as average prices at fast food outlets rose 0.5% and prices at full service restaurants rose 0.3%, while food prices at employee sites and schools averaged 0.1% higher...

In the food at home categories, the price index for cereals and bakery products was 0.4% higher as average bread prices rose 0.2%, the price index for breakfast cereal rose 1.0%, and the price index for cakes, cupcakes, and cookies rose 1.2%....on the other hand, the price index for the meats, poultry, fish, and eggs food group was 0.2% lower as the price index for beef and veal fell 0.3%, the price index for poultry fell 0.9%, and egg prices fell 3.5%...at the same time, the seasonally adjusted index for dairy products was 0.8% higher, as whole milk prices rose 3.4% and the index for cheese and related products was 0.4% higher....meanwhile, the fruits and vegetables index was 0.4% lower as the price index for canned fruit fell 1.5% and the price index for canned vegetables fell 2.1%, while the price index for fresh vegetables fell 0.5% on a 2.6% decrease in tomato prices...on the other hand, the beverages price index was 1.1% higher as the price index for carbonated drinks rose 1.8% and the price index for coffee also rose 1.8%....lastly, the price index for the ‘other foods at home’ category was 0.7% higher, as the price index for butter and margarine rose 2.1%, peanut butter prices rose 3.2%, and the price index for soups rose 1.7%...the itemized list for price changes of over 100 separate food items is included at the beginning of Table 2 for this release, which also gives us a line item breakdown for prices of more than 200 CPI items overall...since last November, just peanut butter prices, which have risen 11.2%, is the only food line item showing a change greater than 10% over the past year...

Among the seasonally adjusted core components of the CPI, which was 0.1% higher in December after being 0.2% higher in November, being unchanged in October, after rising by 0.2% in September, 0.4% in August, by 0.6% in July and by 0.2% in June, after falling by 0.1% in May, by 0.4% in April and by 0.1% in March, but after rising by 0.2% in February, 0.2% in January, 0.1% December, and by 0.2% last November, the composite price index of all goods less food and energy goods was 0.2% higher in December, while the more heavily weighted composite for all services less energy services was 0.1% higher....

Among the goods components, which will be used by the Bureau of Economic Analysis to adjust November's retail sales for inflation in national accounts data, the price index for household furnishings and supplies was 0.1% lower, as the price index for major appliances fell 3.0% and the price index for window and floor coverings fell 2.3%....at the same time, the apparel price index was 1.4% higher on a 4.6% increase in the price index for men's suits, sport coats, and outerwear, a 4.8% increase in the price index for men's shirts and sweaters, a 3.2% increase in the price index for women's dresses, a 3.0% increase in the index for women's outerwear, a 2.3% increase in the price index for girls' apparel, and a 2.3% increase in the price index for boys' apparel....on the other hand, the price index for transportation commodities other than fuel was 0.2% lower even as prices for new cars rose 0.3%, as prices for used cars and trucks fell 1.2% and the price index for vehicle parts and equipment other than tires fell 0.1%....meanwhile, the price index for medical care commodities 0.4% lower, as both prescription and nonprescription drug prices fell 0.4% and the price index for medical equipment and supplies fell 0.2%...however, the recreational commodities index was 0.2% higher on a 0.7% increase in TV prices, a 2.5% increase in the price index for other video equipment, a 0.5% increase in the price index for pets, pet supplies, & accessories, a 2.4% increase in the price index for photographic equipment, and a 3.6% increase in the price index for sports equipment...at the same time, the education and communication commodities index was 0.8% higher on a 1.8% increase in the price index for computers, peripherals, and smart home assistants and a 1.7% increase in the price index for computer software and accessories….lastly, a separate price index for alcoholic beverages was 0.2% lower, while the price index for ‘other goods’ was up 0.3% on a 3.2% increase in the price index for infants equipment and a 1.1% increase in cigarette prices...

Within core services, the price index for shelter was 0.1% higher as rents and homeowner's equivalent rent were both 0.1% higher, while prices for lodging away from home at hotels and motels unchanged, while at the same time the shelter sub-index for water, sewers and trash collection rose 0.4% and other household operation costs were on average 2.0% higher on a 3.2% increase in domestic services....meanwhile, the price index for medical care services was 0.1% lower, as the price index for eyeglasses and eye care fell 0.1% and the average price of health insurance fell 1.1%... the transportation services price index was also 0.1% lower even though vehicle insurance costs rose 1.4% as airline fares fell 2.3%, car and truck rentals fell 5.6%, and the price index for automobile service clubs fell 1.1%...at the same time, the recreation services price index fell 0.5% as the index for photo processing fell 5.6% and the index for admissions to movies, concerts and sporting events fell 3.5%....meanwhile, the index for education and communication services was 0.1% higher as the price index delivery services rose 1.5% and the price index for day care and preschool rose 0.3%...lastly, the index for other personal services was up 0.9% as the price index for checking accounts and other bank services rose 8.5% and the price index for laundry and dry cleaning services was 0.4% higher...

Among core line items, the price index for telephone hardware, calculators, and other consumer information items, which is down by 16.3% since last December, the price index for men's suits, sport coats, and outerwear, which is still down 13.4% from a year ago, the price index for women's dresses, which has fallen by 11.2% in the past year, the price index for medical equipment and supplies which is down by 10.0% from a year ago, the price index for lodging away from home including hotels and motels, which has fallen by 11.2% in the past year, and airline fares, which are now down by 18.4% since last December, have all seen prices drop by more than 10% over the past year, while the cost of intercity bus fare, which is up by 12.8% over the past year, the price index for used cars and trucks, which has risen 10.0% from a year ago, the price index for infant's equipment, which is up by 22.3% year over year, and the price index for major appliances, which is up 16.6% from last December, are the only line items to have increased by a double digit magnitude over that span.... 

Retail Sales Fell 0.7% in December after Prior Months Were Revised Lower

Seasonally adjusted retail sales decreased in December after retail sales for October and November were revised lower...the Advance Retail Sales Report for December (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $540.9 billion during the month, which was 0.7 percent (±0.5%) lower than November's revised sales of $544.6 billion, but was 2.9 percent (±0.7 percent) above the adjusted sales in December of last year...November's seasonally adjusted sales were revised almost 0.4% lower, from $546.5 billion to $544.6 billion, while October's sales were revised less than 0.1% lower, from $552.5 billion to $552.2 billion; as a result, the October to November change was revised up from a decrease of 1.1 percent (±0.5%) to a decrease of 1.4 percent (±0.2%), and the quarter over quarter increase for the 4th quarter was reduced to 0.3%....estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated actual sales rose 13.5%, from $546,082 million in November to $620,036 million in December, while they were up 4.8% from the $591,380 million of sales in December a year ago, so we can see how the large December seasonal adjustment knocked the big holiday sales increase we’d normally expect down to a negative print...

Since it's the end of the quarter and the end of the year for retail sales, we'll include the entire table from this report showing retail sales by business type, including the quarter over quarter data...again, to explain what this table shows, the first double column below shows us the seasonally adjusted percentage change in sales for each kind of business from the November revised figure to this month's December "advance" figure in the first sub-column, and then the year over year percentage sales change since last December in the 2nd column; the second double column pair below gives us the revision of the November advance estimates (now called "preliminary") as of this report, with the new October to November percentage change under "Oct 2020 r" (revised) and the November 2019 to November 2020 percentage change as revised in the 2nd column of that pair (for your reference, the table from the advance estimate of November sales, before this month's revisions, is here).... then, the third pair of columns shows the percentage change of the most recent 3 months of this year's sales (October, November and December) from the preceding three months of the 3rd quarter (July, August and September) and then from the same three months (October, November and December) of a year earlier....that first column of the last pair thus gives us a snapshot comparison of 3rd quarter sales to fourth quarter sales, which is useful in estimating the impact of retail sales on 4th quarter GDP, after those sales are adjusted for price changes….

December 2020 retail sales table

To compute December's real personal consumption of goods data for national accounts from this December retail sales report, the BEA will use the corresponding price changes from the December consumer price index, which we reviewed above...to estimate what they will find, we'll first separate out the volatile sales of gasoline from the other totals...from the third line on the above table, we can see that December retail sales excluding the 6.6% price-related increase in sales at gas stations were down by 1.2%....then, subtracting the figures representing the 1.4% decrease in grocery & beverage sales and the 4.5% decrease in food services sales from that total, we find that core retail sales were down by almost 0.7% for the month...since the CPI report showed that the composite price index for all goods less food and energy goods was 0.1% higher in December, we can thus approximate that real retail sales excluding food and energy will show an decrease of roughly 0.8%... however, the actual adjustment for each of the types of sales shown above will vary by the change in the related price index…for instance, while nominal sales at clothing stores were 2.4% higher in December, the apparel price index was 1.4% higher, which would mean that real sales of clothing only rose by around 1.0%.…similarly, while nominal sales at sporting goods, hobby, music and book stores fell 0.8%, the price index for recreational commodities rose 0.2%, so we can figure real sales of recreational goods were down roughly 1.0%...on the other hand, while nominal sales at motor vehicles and parts dealers were down 1.9%, the price index for transportation commodities other than fuel decreased by 0.2%, which would suggest that real sales at motor vehicles and parts dealers were down around 1.7%…

In addition to figuring those core retail sales, to make a complete estimate of real December PCE, we'll need to adjust food and energy retail sales for their price changes separately, just as the BEA will do.…the CPI report showed that the food price index was 0.4% higher in December, with both the index for food purchased for use at home and the index for food bought to eat away from home 0.4% higher... hence, with nominal sales at food and beverage stores 1.4% lower, real sales of food and beverages would be down around 1.8% in light of the 0.4% higher prices…likewise, the 4.5% decrease in nominal sales at bars and restaurants, once adjusted for 0.4% higher prices, suggests that real sales at bars and restaurants fell about 4.9%...meanwhile, while sales at gas stations were up 6.6%, there was an 8.3% increase in the retail price of gasoline, which would suggest real sales of gasoline were down around 1.7%, with the caveat that gasoline stations do sell more than gasoline, and we haven’t accounted for those other sales.....by averaging those estimated real sales figures with a sales appropriate weighting, and excluding food services, we can estimate that the income and outlays report for December will show that real personal consumption of goods fell by more than 0.9% for the month, after falling by a revised 1.4% in November, but after being close to unchanged in October...at the same time, the 4.9% decrease in real sales at bars and restaurants will have a significant negative impact on December’s real personal consumption of services...

Industrial Production Rose 1.6% in December, With a Big Boost from Cold Temperatures

The Fed's G17 release on Industrial production and Capacity Utilization indicated that industrial production jumped by a seasonally adjusted 1.6% in December after rising by a revised 0.5% in November and 1.0% in October, which together meant that industrial production rose at a 8.4% annual rate in the 4th quarter, after rising by a revised 42.5% rate in the 3rd quarter, even as industrial production is still down 3.6% year over year, albeit an improvement from the 5.5% year over year decrease reported a month ago.....the industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, rose to 105.7 in December from 104.1  in November, which was revised from the 104.0 reported last month, while at the same time the index for October was revised but remained at 103.6 but is now a 1.0% increase from September, rather than the 0.9% increase previously reported, while the IP index for September remained at 102.6...

The manufacturing index, which accounts for more than 75% of the total IP index, rose 0.9% to 102.2 in December, after the November index was revised from 101.1 to 101.3 and the October idex was revised from 100.3 to 100.5, while the manufacturing index is still 2.8% lower than it was a year ago....meanwhile, the mining index, which includes oil and gas well drilling, rose from 115.5 in November to 117.4 in December, after the November mining index was revised down from 116.0, still leaving the mining index at a level 12.3% lower than it was a year earlier...finally, the seasonally adjusted utility index, which often fluctuates due to above or below normal temperatures, rose by 6.2% in our cold December, from 100.0 to 106.3, after the November utility index was revised up from 99.9, now 4.5% lower than October...since December 2019 was a warmer than normal month, the utility index is now 2.7% higher than it was a year ago...

This report also includes capacity utilization data, which is expressed as the percentage of our plant and equipment that was in use during the month, and which indicated that seasonally adjusted capacity utilization for total industry rose to 74.5% in December from 73.4% in November, which was revised from the 73.3% reported last month...capacity utilization of NAICS durable goods production facilities rose from a upwardly revised 72.3% in November to 73.0% in December, while capacity utilization for non-durables producers rose from a upwardly revised 74.3% to 75.0%...capacity utilization for the mining sector rose to 80.5% in December from 79.0% in November, which was originally reported as 79.4%, while utilities were operating at 74.5% of capacity during December, up from 70.3% of capacity during November, which was previously reported at 70.2%...for more details on capacity utilization by type of manufacturer, see Table 7: Capacity Utilization: Manufacturing, Mining, and Utilities, which shows the historical capacity utilization figures for a dozen types of durable goods manufacturers, 8 classifications of non-durable manufacturers, mining, utilities, and capacity utilization for a handful of other special categories....

Producer Prices rose 0.3% in December on Higher Wholesale Fuel Prices

The seasonally adjusted Producer Price Index (PPI) for final demand rose 0.3% in December, as prices for finished wholesale goods averaged 1.1% higher while margins of final service providers were on average 0.1% lower....that followed a November report that the PPI rose 0.1%, as prices for finished wholesale goods averaged 0.4% higher while margins of final service providers were unchanged, an October report wherein the PPI rose 0.3%, as prices for finished wholesale goods averaged 0.5% higher while margins of final service providers averaged 0.2% higher, a newly revised September report that showed the PPI had risen 0.4%, as prices for finished wholesale goods rose 0.4% and margins of final service providers averaged 0.5% higher, and a re-revised August report that indicates the PPI was 0.2% higher, as prices for finished wholesale goods averaged 0.3% higher while margins of final service providers averaged 0.1% higher....on an unadjusted basis, producer prices are 0.8% higher than a year ago, same as year over year increase indicated by last month's report, while the core producer price index, which excludes food, energy and trade services, rose by 0.4% for the month, and is now 1.1% higher than in December a year ago, up from the 0.9% year over year increase shown in November...

As noted, the price index for final demand for goods, aka 'finished goods', was 1.1% higher in December, after being 0.4% higher in November, 0.5% higher in October, 0.4% higher in September, 0.3% higher in August, 0.7% higher in July, 0.4% higher in June, 1.5% higher in May, 3.0% lower in April, 1.0% lower in March, 0.9% lower in February, 0.3% higher in January, and 0.2% higher in December of last year....the finished goods price index rose 1.1% in December because the price index for wholesale energy goods was 5.5% higher, after it had risen by 1.2% in November, by 0.8% in October, fallen by a revised 0.4% in September, and risen by a revised 0.8% in August, by 4.6% in July, and by 9.6% in June, while the price index for wholesale foods fell 0.1%, after rising by 0.5% in November, 2.4% in October, and by a revised 1.4% in September, after falling 0.3% in August, while the index for final demand for core wholesale goods (excluding food and energy) was 0.5% higher, after rising 0.2% in November, being unchanged in October, 0.4% higher in September and 0.3% higher in July and August....wholesale energy prices averaged 5.5% higher due to a 16.1% increase in wholesale prices for gasoline, a 12.6% increase in wholesale prices for No.2 diesel fuel, and a 47.6% increase in wholesale prices for home heating oil, while the wholesale price for residential natural gas fell 1.5%...meanwhile, the wholesale food price index fell 0.1% on a 3.6% decrease in the wholesale price index for dairy products, an 5.0% decrease in the wholesale price index for fresh and dry vegetables, and a 24.9% decrease in wholesale price of eggs for fresh use....among core wholesale goods, the wholesale price index for industrial chemicals rose 3.4%, the wholesale price index for travel trailers and campers rose 0.8%, and the wholesale price index for iron and steel scrap rose 25.8% while the wholesale price index for computers and computer equipment fell 1.6% ..

At the same time, the index for final demand for services was 0.1% lower in December, after being unchanged in November, rising 0.2% in October, a revised 0.5% in September, a revised 0.1% in August, and 0.5% in July, as the index for final demand for trade services fell 0.8% and the index for final demand for transportation and warehousing services fell 0.1%, while the core index for final demand for services less trade, transportation, and warehousing services was 0.2% higher....among trade services, seasonally adjusted margins for hardware, building materials, and supplies retailers fell 8.2%, margins for RVs, trailers, and campers retailers fell 10.0%, and margins for fuels and lubricants retailers fell 6.6%... among transportation and warehousing services, average margins for airline passenger services fell 3.4% while average margins for air transportation of freight fell 1.4%...among the components of the core final demand for services index, the index for arrangement of cruises and tours rose 11.1%, the index for membership dues and admissions and recreation facility use fees rose 2.4%, margins for consumer loans rose 3.5%, while margins for deposit services (partial) fell 3.7%…

This report also showed the price index for intermediate processed goods rose 1.5% in December, after rising 1.4% in November, 0.3% in October, a revised 0.7% in September, a revised 0.9% in August, 1.4% in July, and 1.3% in June, but after being unchanged in May and falling the prior 5 months....the price index for intermediate energy goods rose 3.3%, as refinery prices for gasoline rose 16.1%, refinery prices for jet fuel rose 27.4%, and producer prices for lubricating oil base stocks rose 13.7%, while producer prices for natural gas to electric utilities fell 17.6%... meanwhile, the price index for intermediate processed foods and feeds rose 0.4%, as the producer price index for processed poultry rose 1.4%, the producer price index for meats rose 3.7% and the producer price index for prepared animal feeds rose 1.9%...at the same time, the core price index for intermediate processed goods less food and energy rose 1.2% as the producer price index for primary nonferrous metals rose 8.1%, the producer price index for copper and brass mill shapes rose 6.8%, and the producer price index for softwood lumber rose 12.5%, while the producer price index for plywood fell 3.5%...prices for intermediate processed goods are now 1.3% higher than in December a year ago, the first increase after 19 consecutive year over year decreases, which followed 29 months of year over year increases, which had been preceded by 16 months of negative year over year comparisons, as prices for intermediate goods fell every month from July 2015 through March 2016....

Meanwhile, the price index for intermediate unprocessed goods rose 2.2% in December, after rising 7.3% in November, 2.6% in October, a revised 4.0% in September, a revised 3.9% in August and .0% in July, and rising 5.1% in June and 8.6% in May, but after falling 12.6% in April and 8.5% in March....that was as the December price index for crude energy goods rose 2.5% as crude oil prices rose 17.5% while unprocessed natural gas prices fell 9.4%, and as the price index for unprocessed foodstuffs and feedstuffs rose 0.2% on an 11.6% jump in the price of raw milk, a 2.2% increase in the price of raw sugar cane, and a 0.8% increase in the price of unprocessed wheat...at the same time, the index for core raw materials other than food and energy materials rose 4.5%, as producer prices for recyclable paper rose 14.6%, the price index for iron and steel scrap rose 25.8%, the price for copper base scrap rose 10.0%, and raw cotton prices rose 8.6%... this raw materials index is now 1.5% higher than a year ago, the second annual increase in 2 years, as the year over year change on this index had been negative from the beginning of 2019 through October...

Lastly, the price index for services for intermediate demand rose 0.4% in December, after falling 0.1% in November, rising 0.8% in October, rising a revised 0.8% in September, a revised 0.9% in August, 0.4% in July, and 0.3% in June….the price index for intermediate trade services was 0.7% higher, as margins for metals, minerals, and ores wholesalers rose 7.0% and margins for intermediate building materials, paint, and hardware wholesalers rose 4.7%...meanwhile, the index for transportation and warehousing services for intermediate demand was 0.1% lower, as the intermediate price index for arrangement of freight and cargo fell 4.8% and the intermediate price index for transportation of passengers (partial) fell 3.3%...at the same time, the core price index for intermediate services less trade, transportation, and warehousing rose 0.4%, as the intermediate price index for business loans rose 6.2%, the intermediate price index for permanent job placement services rose 1.8% and the intermediate price index for portfolio management rose 1.7%...over the 12 months ended in December, the year over year price index for services for intermediate demand is 1.6% higher than it was a year ago, the fourth consecutive positive annual change since it turned negative year over year in April for the first time in the history of this index...

November Business Sales Down 0.1%: Business Inventories Up 0.5%

After the release of the December retail sales report, the Census Bureau released the composite Manufacturing and Trade, Inventories and Sales report for November (pdf), which incorporates the revised November retail data from that December report and the earlier published November wholesale and factory data to give us a complete picture of the business contribution to the economy for that month....according to the Census Bureau, total manufacturer's and trade sales were estimated to be valued at a seasonally adjusted $1,480.8 billion in November, down 0.1 percent (±0.2%)* from October's revised sales, but up 1.5 percent (±0.4%) from November sales of a year earlier...note that total October sales were concurrently revised from the previously reported $1,482.3 billion  to $1,482.1 billion, still up 0.9% from September....manufacturer's sales rose 0.7% to $492,931 million in November; retail trade sales, which exclude restaurant & bar sales from the revised November retail sales reported earlier, fell 1.1% to $491,081 million, and wholesale sales rose 0.2% to $496,738 million..

Meanwhile, total manufacturer's and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $1,959.9 billion at the end of November, up 0.5 percent (±0.1 percent) from October, but 3.2 percent (±0.5 percent) lower than in November a year earlier...at the same time, the value of end of October inventories was revised from the $1,948.7 billion reported a month ago to $1,950.354 billion, now an 0.8% increase from September.... seasonally adjusted inventories of manufacturers were estimated to be valued at $692,933 million, up 0.7% from October, and inventories of retailers were valued at $617,142 million, also 0.7% higher than in October, while inventories of wholesalers were estimated to be valued at $649,823 million at the end of November, statistically unchanged from October...

For GDP purposes, all inventories, including retail, will be adjusted for inflation with appropriate component price indices of the producer price index for November, which was up 0.4% for finished goods, including an increase of 0.2% ex food & energy...last week, we looked at real factory inventories with price adjustments for goods at various stages of production, and judged the negative change in those inventories would have a modest negative impact on 4th quarter GDP growth…also last week, we found that real wholesale inventories were at least 0.4% lower for the month, following a 0.5% real increase in October, and that they add to the growth of 4th quarter GDP largely because of the sharp drop in the 3rd quarter they were poised to reverse….since nominal retail inventories for November have now been shown to 0.7% higher, real retail inventories for the month, considering a 0.4% finished goods price adjustment, would have thus increased by 0.3% from October, after a real 0.4% increase in that month...since the third quarter saw a small real decrease in real retail inventories, these real inventory increases we now have indicated for the 4th quarter would necessarily add back that decrease, plus the amount of the real 4th quarter increase, to the growth of 4th quarter GDP...

Job Openings Lower in November; Hiring & Layoffs Rose, Quitting was Little Changed

The Job Openings and Labor Turnover Survey (JOLTS) report for November from the Bureau of Labor Statistics estimated that seasonally adjusted job openings decreased by 105,000, from 6,632,000 in October to 6,527,000 in November, after October’s job openings were revised 20,000 lower, from 6,652,000 to 6,632,000...November's jobs openings were also 3.9% lower than the 6,793,000 job openings reported in November a year ago, as the job openings ratio expressed as a percentage of the employed fell to 4.4% in November from 4.5% October, while it was up from 4.3% in November a year ago....the largest percentage decrease in November openings appears to be a 45,000 job opening decrease to 77,000 openings in the information sector, while the professional and business services sector saw job openings increase by 54,000 to 1,274,000 (see table 1 for more job openings details)...like most BLS releases, the press release for this report is easy to understand and also refers us to the associated table for the data cited, which are linked at the end of the release...

The JOLTS release also reports on labor turnover, which consists of hires and job separations, which in turn is further divided into layoffs and discharges, those who quit, and 'other separations', which includes retirements and deaths....in November, seasonally adjusted new hires totaled 5,979,000, up by 67,000 from the revised 5,912,000 who were hired or rehired in October, as the hiring rate as a percentage of all employed remained at 4.2% in November, while it was still up from 3.9% in November a year ago (details on hiring by region and by sector since July are in table 2)....meanwhile, total separations rose by 271,000, from 5,142,000 in October to 5,413,000 in November, as the separations rate as a percentage of the employed rose from 3.6% to 3.8%, and it was also up from 3.7% in November a year ago (see table 3)...subtracting the 5,413,000 total separations from the total hires of 5,979,000 would imply an increase of 566,000 jobs in November, somewhat more than the revised payroll job increase of 336,000 for November reported in the December establishment survey last week, with at least some of that difference likely due to the difference in the date of the surveys, which is at month end for this report but is during the week of the 12th for the employment situation...

Breaking down the seasonally adjusted job separations, the BLS finds that 3,156,000 of us voluntarily quit our jobs in November, up by 6,000 from the revised 3,150,000 who quit their jobs in October, while the quits rate, widely watched as an indicator of worker confidence, remained unchanged at 2.2% of total employment, while it was down from 2.3% a year earlier (see job quitting details in table 4)....in addition to those who quit, another 1,971,000 were either laid off, fired or otherwise discharged in November, up by 295,000 from the revised 1,676,000 who were discharged in October, as the discharges rate rose from 1.2% to 1.4% of total employment, which was also up from the discharges rate of 1.2% in November a year ago....meanwhile, other separations, which includes retirements and deaths, were at 287,000 in November, down from 317,000 in October, for an 'other separations rate’ of 0.2%, which was the same rate as in October and as in November of last year....both seasonally adjusted and unadjusted details by industry and by region on hires and job separations, and on job quits and discharges can be accessed easily using the links to tables at the bottom of the press release...

 

(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most of which are picked from the aforementioned GGO posts, contact me…)  

Sunday, January 10, 2021

December’s jobs report; November’s trade deficit, construction spending, factory inventories, and wholesale trade..

The major economic reports released the past week were the Employment Situation Summary for December from the Bureau of Labor Statistics, the November report on our International Trade from agencies within the Commerce Dept, and the November report on Construction Spending (pdf), the Full Report on Manufacturers' Shipments, Inventories and Orders for November and the November report on Wholesale Trade, Sales and Inventories (pdf), all from the Census Bureau....in addition, this week the Fed released the Consumer Credit Report for November, which showed that overall consumer credit, a measure of non-real estate debt, expanded by a seasonally adjusted $15.3 billion, or at a 4.4% annual rate, as non-revolving credit expanded at a 6.1% rate to $3,198.0 billion in November, while revolving credit outstanding shrank at a 1.0% rate to $978.8 billion...

Privately issued reports released this week included the ADP Employment Report for December, the light vehicle sales report for December from Wards Automotive, which estimated that vehicles sold at a 16.27 million annual rate in December, up from the 15.55 million annual pace of vehicle sales reported for November, but down from the 16.70 million vehicle sales rate reported for December of 2019,  and both of the widely followed purchasing manager's surveys from the Institute for Supply Management (ISM): the December Manufacturing Report On Business® indicated that the manufacturing PMI (Purchasing Managers Index) rose to 60.7% in December, up from 57.5% in November, indicating a more robust growth rate of US manufacturing during the month, and the December Services Report On Business, which saw the Services index rise to 57.2% in December, up from 55.9% in November, meaning a modestly larger plurality of service industry purchasing managers reported expansion in various facets of their business in December than in November...both of those ISM reports are easy to read and include anecdotal comments from purchasing managers from the 34 business types who participate in those surveys nationally...

Employers Cut 140,000 Jobs in December, Unemployment Rate Steady

The Employment Situation Summary for December indicated that employers reduced payrolls for the first time since April, but that the unemployment rate remained at 6.7% and the U-6 unemployment rate fell by 0.3% to 11.7%…estimates extrapolated from the seasonally adjusted establishment survey data projected that employers cut 140,000 jobs in December, after the previously estimated payroll job increase for November was revised up by 91,000, from 245,000 to 336,000, and the payroll jobs increase for October was revised up by 44,000, from 610,000 to 654,000…while that means that this report represents a net of just 5,000 fewer seasonally adjusted payroll jobs than were reported last month, it still leaves December's non-farm payrolls down by 9,812,000 jobs from the 152,436,000 seasonally adjusted jobs that were reported in February...the unadjusted data, meanwhile, shows that there were actually 328,000 fewer payroll jobs extent in December than in November, as the usual seasonal layoffs in areas such as construction and other outdoor services were normalized by the seasonal adjustments to show the job increases indicated..

December's seasonally adjusted job losses were concentrated in just a few sectors; the largest job decrease was in the leisure and hospitality sector, which lost 498,000 jobs, with the loss of 372,900 jobs in bars and restaurants, 91,900 more in amusements, gambling, and recreation and 23,600 fewer jobs in accommodation...in addition, private educational services cut 62,500 employees, while the government sector shed 45,000 jobs, with 31,500 of those from local governments excluding education and 19,900 jobs cut from state government education...meanwhile, seasonally adjusted job increases included 161,000 more jobs in the professional and business services sector, where 67,600 jobs were added by temporary employment services and 20,300 were added by computer systems design and related services...after a holiday related downward seasonal adjustment, retail sales still added 120,500 more workers, led by a 56,700 increase in those working in general merchandise stores, a 14,300 increase in jobs with non-store retailers, and a 13,400 job increase in those working for automobile dealers...after a upward seasonal adjustment of 154,000 jobs, the construction sector showed a 51,000 job increase, with 18,300 of those employed by nonresidential specialty trade contractors and another 15,000 added in heavy and civil engineering construction...the transportation and warehousing sector added 46,600 employees in December, of which 37,400 were 'couriers and messengers' (ie, package delivery), while employment in health care increased by 38,800 jobs during the month, as 31,500 more employees were added by hospitals...meanwhile, manufacturing employment increased by 38,000, as manufacturers of plastics and rubber products added 6,900 jobs, motor vehicles and parts factories added 6,700, and nonmetallic mineral products manufacturers added 6,100, while the wholesale trade sector saw the addition of 25,100 employees, with 11,400 of those in durable goods sales and 10,800 in sales of non-durable goods...at the same time, employment in the other major sectors, including utilities, financial activities, information, and resouce extraction, was little changed over the month..

With the aforementioned employment decreases of mostly lower paying jobs, the establishment survey thus showed that average hourly pay for all employees rose by 23 cents an hour to $29.81 an hour in December, after it had increased by a 9 cents an hour in November; at the same time, the average hourly earnings of production and nonsupervisory employees increased by 20 cents to $25.09 an hour......employers also reported that the average workweek for all private payroll employees was down by a tenth of an hour to 34.7 hours in December, while hours for production and non-supervisory personnel was unchanged at 34.2  hours...at the same time, the manufacturing workweek held steady at 40.2 hours, while average factory overtime rose 0.1 hour to 3.3 hours...

Meanwhile, the December household survey indicated that the seasonally adjusted extrapolation of those who reported being employed rose by an estimated 21,000 to 149,830,000, while the estimated number of those unemployed rose by 8,000 to 10,736,000; which together meant there was a rounded 30,000 increase in the total labor force....since the working age population had grown by 145,000 over the same period, that meant the number of employment aged individuals who were not in the labor force rose by 115,000 to 100,663,000...with the increase of those in the labor force just a bit below the increase in the civilian noninstitutional population, the labor force participation rate remained unchanged at 61.5% in December....meanwhile, the increase in number employed as a percentage of the increase in the population was not significant enough to change the employment to population ratio, which we could think of as an employment rate, as it was also unchanged at 57.4%...at the same time, the relatively small increase in the number considered unemployed was not enough to change the unemployment rate, which remained at 6.7% in December.. however, the number of those who reported they were forced to accept just part time work fell by 471,000, from 6,641,000 in November to 6,170,000 in December, which was enough to lower the alternative measure of unemployment, U-6, which includes those "employed part time for economic reasons", by 0.3% to 11.7% of the labor force in December, the lowest since March...

Like most reports from the Bureau of Labor Statistics, the employment situation press release itself is easy to read and understand, so you can get more details on these two reports from there...note that almost every paragraph in that release points to one or more of the tables that are linked to on the bottom of the release, and those tables are also on a separate html page here that you can open it along side the press release to avoid the need to scroll up and down the page..

Trade Deficit Rose 8.0% in November on Higher Imports of Consumer Goods, Industrial Supplies and Capital Goods

Our trade deficit rose 8.0% in November as the value of our exports increased but the value of our imports increased by quite a bit more....the Commerce Dept report on our international trade in goods and services for November indicated that our seasonally adjusted goods and services trade deficit rose by a rounded $5.0 billion to $68.1 billion in November, from an October deficit of $63.1 billion, which was revised but remained statistically unchanged from the deficit reported for October a month ago....the value of our November exports rose by $2.2 billion to $184.2 billion on a $1.3 billion increase to $127.7 billion in our exports of goods and a $0.9 billion increase to $56.4 billion in our exports of services, while the value of our imports rose by $7.2 billion to $252.3 billion on a $6.3 billion increase to $214.1 billion in our imports of goods and an increase of $0.9 billion to $38.2 billion in our imports of services...export prices were on average 0.6% higher in November, which means the relative real increase in exports for the month was smaller than the nominal increase by that percentage, while import prices were 0.1% higher, meaning the increase in real imports was smaller than the nominal dollar increase reported here by that percentage...

The $1.3 billion increase in the value of our November exports of goods largely resulted from greater exports of industrial supplies and materials and of foods, feeds, and beverages...referencing the Full Release and Tables for November (pdf), in Exhibit 7, we find that the value of our exports of industrial supplies and materials rose by $830 million to $41,798 million on a $473 million increase in our exports of natural gas, and that our exports of foods, feeds and beverages rose by $538 million to $12,904 million on increased exports of soybeans, wheat, barley, sorghum, oats, meats and poultry...in addition, our exports of exports of consumer goods rose by $176 million to $16,375 million, and our exports of other goods not categorized by end use rose by $136 million to $5,007 million...partially offsetting the increases in those export categories, our exports of capital goods fell by $241 million to $38,904 million on a $291 million decrease in our exports of civilian aircraft engines, and our exports of automotive vehicles, parts, and engines fell by $125 million to $12,550 million on a $133 million decrease in our exports of trucks, buses, and special purpose vehicles...

Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our imports of goods, and shows that higher imports of consumer goods, industrial supplies and materials, and capital goods accounted for November's $6.3 billion increase in our imports...our imports of consumer goods rose by $4,003 million to $61,183 million on a $2,752 million increase in our imports of cellphones, a $300 million increase in our imports of household appliances and a $296 million increase in our imports of artwork, antiques and other collectibles, and our imports of industrial supplies and materials rose by $1511 million to $39,727 million, led by a $353 million increase in our imports of precious metals other than gold and a $222 million increase in our imports of crude oil, and our imports of capital goods rose by $1,203 million to $58,092 million on a $414 million increase in our imports of civilian aircraft, a $320 million increase in our imports of semiconductors, and a $264 million increase in our imports of photo servicing industry machinery...in addition, our imports of foods, feeds, and beverages rose by $53 million to $13,403 million, and our imports of other goods not categorized by end use rose by $706 million to $9,452 million....partly offsetting the increases in those import categories, our imports of automotive vehicles, parts and engines fell by $1,035 million to $31,168 million on a $1,054 million decrease in our imports of new and used passenger cars....

The Full Release and Tables pdf for this month's report also summarizes Exhibit 19,  which gives us surplus and deficit details on our goods trade with selected  countries:

The November figures show surpluses, in billions of dollars, with South and Central America ($3.0), Hong Kong ($1.8), OPEC ($1.2), Brazil ($1.2), United Kingdom ($1.1), Saudi Arabia ($0.2), and Singapore ($0.2). Deficits were recorded, in billions of dollars, with China ($30.0), European Union ($16.7), Mexico ($11.3), Japan ($6.6), Germany ($4.9), Italy ($3.5), Taiwan ($3.0), South Korea ($2.9), India ($2.4), Canada ($1.7), and France ($1.7).

  • The deficit with China increased $3.5 billion to $30.0 billion in November. Exports decreased $0.5 billion to $12.6 billion and imports increased $3.0 billion to $42.6 billion.
  • The deficit with the European Union increased $1.0 billion to $16.7 billion in November. Exports increased $0.9 billion to $20.4 billion and imports increased $2.0 billion to $37.1 billion.
  • The surplus with South and Central America increased $0.8 billion to $3.0 billion in November. Exports increased $0.2 billion to $11.0 billion and imports decreased $0.6 billion to $8.0 billion.

To estimate the impact of October's and November's trade in goods on the eventual 4th quarter GDP growth figures, we use exhibit 10 in the pdf for this report, which gives us monthly goods trade figures by end use category and in total, already adjusted in chained 2012 dollars, the same inflation adjustment used by the BEA to compute trade figures for GDP, with the exception that they are not annualized here....from that table, we can figure that we can figure that 3rd quarter real exports of goods averaged 136,611 million monthly in 2012 dollars, while similarly inflation adjusted October and November exports were at 143,883 million and 144,581 million respectively in that same 2012 dollar quantity index representation...annualizing the change between the average monthly real exports of the two quarters, we find that the 4th quarter's real exports of goods are running at a 24.25% annual rate above those of the 3rd quarter, or at a pace that would add about 1.32 percentage points to 4th quarter GDP if it were to continue at the same pace through December....in a similar manner, we find that the 3rd quarter's real imports of goods averaged 227,055.3 million monthly in chained 2012 dollars, while inflation adjusted October and November imports were at 233,736 million and 241,121 million in 2012 dollars respectively...those chained dollar representations of real goods imports would indicate that so far in the 4th quarter, real imports have been growing at annual rate of 19.565% from those of the 3rd quarter...since imports are subtracted from GDP because they represent the portion of the consumption and investment components of GDP that occurred during the quarter that was not produced domestically, their increase at a 19.656% rate would subtract about 1.36 percentage points from 4th quarter GDP....hence, if our October and November trade deficit in goods is maintained at these levels throughout December, our deteriorating balance of trade in goods would subtract a negligible 0.04 percentage points from the growth of 4th quarter GDP....(note, however, that we have not computed the impact on GDP of the usually less volatile change in services here, mostly because the BEA does not provide inflation adjusted data on those, but that the increases in November's imports and exports of services were statically similar, also suggesting a negligible impact on GDP)...

Construction Spending Rose 0.9% in November After Prior Months Were Revised Higher

The Census Bureau's report on construction spending for November (pdf) estimated that the month's seasonally adjusted construction spending would work out to $1,459.4 billion annually if extrapolated over an entire year, which was 0.9 percent (±0.8%) above the revised October annualized estimate of $1,446.9 billion and also 3.8 percent (±1.3 percent) above the estimated annualized level of construction spending in November of last year...at the same time, the annualized October construction spending estimate was revised nearly 0.6% higher, from $1,438.5 billion to $1,446.9 billion, while the annual rate of construction spending for September was revised almost 0.3% higher, from $1,420.4 billion to $1,423.963 billion...the $3.6 billion upward revision to September construction spending would imply that the 3rd estimate of 3rd quarter GDP growth was understated by roughly 0.03 percentage points, a change which will not be applied to published GDP figures until the annual revision is released in the middle of next summer...

A further breakdown of the different subsets of construction spending is provided in a Census summary, which precedes the detailed spreadsheets:

  • Private Construction: Spending on private construction was at a seasonally adjusted annual rate of $1,111.8 billion, 1.2 percent (±0.5 percent) above the revised October estimate of $1,098.6 billion. Residential construction was at a seasonally adjusted annual rate of $658.1 billion in November, 2.7 percent (±1.3 percent) above the revised October estimate of $641.0 billion. Nonresidential construction was at a seasonally adjusted annual rate of $453.8 billion in November, 0.8 percent (±0.5 percent) below the revised October estimate of $457.6 billion.
  • Public Construction: In November, the estimated seasonally adjusted annual rate of public construction spending was $347.6 billion, 0.2 percent (±1.3 percent)* below the revised October estimate of $348.3 billion. Educational construction was at a seasonally adjusted annual rate of $86.7 billion, 0.3 percent (±1.2 percent)* above the revised October estimate of $86.5 billion. Highway construction was at a seasonally adjusted annual rate of $97.5 billion, 1.8 percent (±3.5 percent)* above the revised October estimate of $95.8 billion.

As you can infer from that summary, construction spending would be included in 3 subcomponents of GDP; investment in private non-residential structures, investment in residential structures, and in government investment outlays, for both state and local and Federal governments...however, getting an accurate read on the impact of November spending reported in this release on 4th quarter GDP is difficult because all figures given here are in nominal dollars and as you know, data used to compute the change in GDP must be adjusted for changes in price...that’s problematic because there are multiple prices indexes for different types of construction listed in the National Income and Product Accounts Handbook, Chapter 6 (pdf), so in lieu of trying to adjust for the prices changes of all of those types of construction separately, we've opted to use the producer price index for final demand construction as an inexact shortcut to make an approximate price adjustment and thereby get a rough estimate of the real change in construction...

That price index showed that aggregate construction costs were up 0.1% in November after being unchanged in October, down 0.2% in September and down 0.3% in August...on that basis, we can estimate that construction costs for November were up 0.1% from September, down 0.1% from August, and down 0.4% from July, while they were obviously up 0.1% from October...we then use those percentage changes to adjust the spending figures for each of those 3rd quarter months against November, which is arithmetically the same as adjusting lower priced October and November construction spending upward, for purposes of comparison...annualized construction spending in millions of dollars for the third quarter months is given as $1,423,963 for September, $1,426,884 for August, and $1,398,952 for July, while it was at annual rates of $1,446,877 in October and $1,459,440 in November....thus to compare the difference between the inflation adjusted construction spending of the two recent 4th quarter months and those of the third quarter, our calculation would be ((1,459,440 + 1,446,877 * 1.001)/2) / ((1,423,963 *1.001 + 1,426,884 * .999 + 1,398,952 * .996) / 3) = 1.027672, meaning average real construction over the months of October and November was up 2.7672% vis a vis the 3rd quarter...in GDP terms, that means real construction for the 4th quarter has increased at an annual rate of 11.537% from that of the 3rd quarter so far, or at a pace that would add about 1.30 percentage points to 4th quarter GDP, should real December construction continue at the same pace as that of October and November…

Factory Shipments Up 0.7% in November, Factory Inventories Up 0.7%, Both on Higher Prices

The Full Report on Manufacturers' Shipments, Inventories, & Orders (pdf) for November from the Census Bureau reported that the seasonally adjusted value of new orders for manufactured goods rose by $5.0 billion or 1.0 percent to $487.2 billion in November, following an increase of 1.3% to $482.2 billion in October, which was revised from the 1.0% increase to $480.8 billion that was reported for October a month ago....however, since the Census Bureau does not even collect data on new orders for non durable goods for this widely watched "factory orders report", both the "new orders" and "unfilled orders" sections of this report are really only accurate as revised updates to the October advance report on durable goods we reported on two weeks ago...on those durable goods revisions, the Census Bureau's own summary, which precedes their detailed spreadsheet of the metrics included in this report, is quite clear and complete, so we'll just quote directly from that summary here:

  • Summary: New orders for manufactured goods in November, up seven consecutive months, increased $5.0 billion or 1.0 percent to $487.2 billion, the U.S. Census Bureau reported today. This followed a 1.3 percent October increase. Shipments, also up seven consecutive months, increased $3.4 billion or 0.7 percent to $492.9 billion. This followed a 1.2 percent October increase. Unfilled orders, down eight of the last nine months, decreased $0.6 billion or 0.1 percent to $1,073.2 billion. This followed a 0.2 percent October decrease. The unfilled orders-to-shipments ratio was 6.40, up from 6.38 in October. Inventories, up three of the last four months, increased $5.1 billion or 0.7 percent to $692.9 billion. This followed a 0.3 percent October increase. The inventories-to-shipments ratio was 1.41, unchanged from October.
  • New orders for manufactured durable goods in November, up seven consecutive months, increased $2.3 billion or 1.0 percent to $244.4 billion, up from the previously published 0.9 percent increase. This followed a 1.8 percent October increase. Transportation equipment, up six of the last seven months, led the increase, $1.6 billion or 2.1 percent to $79.0 billion. New orders for manufactured nondurable goods increased $2.7 billion or 1.1 percent to $242.8 billion.
  • Shipments of manufactured durable goods in November, up six of the last seven months, increased $0.8 billion or 0.3 percent to $250.1 billion, unchanged from the previously published increase. This followed a 1.5 percent October increase. Miscellaneous products, up nine of the last ten months, led the increase, $0.4 billion or 2.5 percent to $15.5 billion. Shipments of manufactured nondurable goods, up seven consecutive months, increased $2.7 billion or 1.1 percent to $242.8 billion. This followed a 0.8 percent October increase. Petroleum and coal products, up six of the last seven months, led the increase, $1.8 billion or 4.4 percent to $41.6 billion.
  • Unfilled orders for manufactured durable goods in November, down eight of the last nine months, decreased $0.6 billion or 0.1 percent to $1,073.2 billion, unchanged from the previously published decrease. This followed a 0.2 percent October decrease. Transportation equipment, down nine consecutive months, drove the decrease, $3.4 billion or 0.5 percent to $713.4 billion. \
  • Inventories of manufactured durable goods in November, up three consecutive months, increased $3.8 billion or 0.9 percent to $426.5 billion, unchanged from the previously published increase. This followed a 0.3 percent October increase. Transportation equipment, up twenty-six of the last twenty-seven months, led the increase, $2.5 billion or 1.7 percent to $150.8 billion. Inventories of manufactured nondurable goods, up three of the last four months, increased $1.3 billion or 0.5 percent to $266.5 billion. This followed a 0.2 percent October increase. Petroleum and coal products, up following two consecutive monthly decreases, led the increase, $0.9 billion or 2.9 percent to $31.3 billion.

To gauge the impact of November factory inventories on 4th quarter GDP, they must first be adjusted for changes in price with appropriate components of the producer price index...by stage of fabrication, the value of November's finished goods inventories was 0.8% higher at $247,059 million; the value of work in process inventories was 1.0% higher at $219,930 million, and materials and supplies inventories were valued 0.4% higher at $236,198 million...the producer price index for November indicated that prices for finished goods increased 0.4%, that prices for intermediate processed goods were 1.4% higher, and that prices for unprocessed goods were on average 7.3% higher....assuming similar valuations for like types of inventories, those price changes would suggest that November's real finished goods inventories were up about 0.4%, that real inventories of intermediate processed goods were around 0.4% smaller, and around 6.9% smaller, with a caveat on that last figure because two-thirds of the increase in the index for unprocessed goods was due to a 48.9% jump in prices for unprocessed natural gas; even so, real raw material inventories were down at least 2% without that...those November inventory changes follow an October report that indicated real finished goods inventories were about 0.1% lower, that real inventories of intermediate processed goods were about 2.6% lower, and that real raw material inventory inventories were about 2.3% lower…since real factory inventories in the 3rd quarter were only slightly lower, any larger inventory decreases in the 4th quarter such as we see indicated here will subtract from GDP by the difference bewteen the 3rd quarter and 4th quarter decreases..

November Wholesale Sales Up 0.2%, Wholesale Inventories Unchanged

The November report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at "$496.7 billion, up 0.2 percent (±0.4 percent)* from the revised October level, but were down 0.2 percent (±1.1 percent)* from the revised November 2019 level."...October's sales were revised down to $495,974 million from the $496.6 billion reported last month, and as a result "The September 2020 to October 2020 percent change was revised from the preliminary estimate of up 1.8 percent (±0.4 percent) to up 1.7 percent (±0.4 percent)."  as an intermediate activity, wholesale sales are not included in GDP except insofar as they are a trade service, since the traded goods themselves do not represent an increase in the output of the goods produced or finally sold...

On the other hand, the monthly change in private inventories is a major factor in GDP, as additional goods left in a warehouse represent goods that were produced but not sold, and this November report estimated that wholesale inventories were valued at a seasonally adjusted "$649.8 billion at the end of November, virtually unchanged (±0.2 percent)* from the revised October level. Total inventories were down 2.1 percent (±1.1 percent) from the revised November 2019 level". ..the value of inventories at the end of October was revised to $649.8 billion from the $649.0 billion indicated by last month's report, which is now up 1.3% from September..

To estimate the impact of November wholesale inventories on 4th quarter GDP, we must first adjust them for changes in price with appropriate components of the producer price index...although details are not broken out in this report, we've previously estimated that about 2/3rd of wholesale inventories are finished goods, with notable exceptions such as inventories of crude oil and farm products...as we noted earlier, the producer price index for November indicated that prices for finished goods increased 0.4%, that prices for intermediate processed goods were 1.4% higher, and that prices for unprocessed goods were on average 7.3% higher; thus the lack of change in the nominal value of wholesale inventories was despite rising prices, and hence real wholesale inventories were at least 0.4% lower for the month, and that follows an October when real whole inventories were around 0.5% higher....since real wholesale inventories in the 3rd quarter were down sharply, the change real wholesale inventories in the 4th quarter would thus add to the growth of 4th quarter GDP by first reversing the 3rd quarter decline, and then by incrementing or decrementing that with the magnitude of the 4th quarter change...

 

 

(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most of which are picked from the aforementioned GGO posts, contact me…)  

Sunday, January 3, 2021

October's Case-Shiller HPI; Advance Economic Indicators for November

With the major month end reports already released last week, the only widely watched report released this week was the Case-Shiller Home Price Index for October from S&P Case-Shiller, which doesn’t even include any prices of homes, but just a index generated by averaging relative sales prices of homes that sold during August, September and October against the sales prices of the same homes when they sold during prior 3 month periods going back to January of 2000...comparing sales prices on that basis, the Case-Shiller report indicated that their national home price index for those 3 months averaged 8.4% higher than it did for the same homes that sold during the same 3 month period a year earlier, up from the 7.0% year over year index increase indicated by the September report, which covered sales prices from July, August and September....meanwhile, this week also saw the last of the regional Fed manufacturing surveys for December: the Dallas Fed Texas Manufacturing Outlook Survey reported their general business activity composite index fell to +9.7 from November's +12.0, suggesting that the Texas manufacturing economy is growing slightly slower than a month ago...

In addition, the Census Bureau released three "Advance Economic Indicators" this week, which are sketchy estimates that have typically been released a day before the monthly GDP reports since 2016, & which are intended to give the Bureau of Economic Analysis a basis for their estimates of the related GDP components... the Advance U.S. International Trade in Goods report indicated that our trade deficit in goods increased to $84.8 billion in November from a revised $80.4 billion in October, as November's exports of goods were valued at $127.2 billion, $1.1 billion more than October's exports, while November's imports of goods were valued at $212.0 billion, $5.5 billion more than October’s imports... meanwhile, the Advance Monthly Retail Inventories report indicated that retail inventories were valued at $616.9 billion at the end of November, up 0.7 percent (+/- 0.4%) from October, after October's revised inventories rose 0.9% from September, while the Advance Monthly Wholesale Inventories report indicated end-of-month wholesale inventories were valued at $649.0 billion, down 0.1 percent (+/- 0.2 percent)* from October, after October's revised inventories rose 1.2% from September...the details on and revisions to these advance estimates will be provided when the full reports are released in the coming weeks..

 

(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most of which are picked from the aforementioned GGO posts, contact me…)  

Sunday, December 27, 2020

Q3 GDP revision, November's income & outlays, durable goods, new home sales & existing home sales

As is usual in advance of the holidays, some of the reports that are normally released during the last week of the month were accelerated into this past week...that meant that we had the 3rd estimate of 3rd quarter GDP and the November report on Personal Income and Spending, both from the Bureau of Economic Analysis, in addition to the advance report on durable goods for November and the new residential sales report for November, both from the Census Bureau, and the Existing Home Sales Report for November from the National Association of Realtors (NAR)...

This week also saw the release of the Chicago Fed National Activity Index (CFNAI) for November, a weighted composite index of 85 different economic metrics, which indicated that the CFNAI decreased to +0.27 in November from +1.01 in October, which was revised from the +0.83 index reading indicated for October a month ago....after that revision, the 3 month average of the CFNAI index fell to +0.56 in November from from a revised +0.85 in October, which, since it’s a positive number, still indicates that national economic activity has continued at a pace above the historical trend over those recent months.....in addition, this week also saw the release of the Richmond Fed Survey of Manufacturing Activity, covering an area that includes Virginia, Maryland, the Carolinas, the District of Columbia and West Virginia, which reported its broadest composite index fell to +15 in December from +29 in November, still suggesting a moderate expansion of Fifth District manufacturing, albeit not as robust as a month ago...

3rd Quarter GDP Growth Rate Revised to 33.4% in 3rd Estimate

The Third Estimate of our 3rd Quarter GDP from the Bureau of Economic Analysis indicated that our real output of goods and services grew at a 33.4% rate in the quarter, revised from the 33.1% growth rate reported in the second estimate a month ago, as personal consumption, fixed investment and inventories all grew more than was previously estimated, more than offsetting a downward revision to export growth....in current dollars, our third quarter GDP grew at a 38.35% annual rate, increasing from what would work out to be a $19,520.1 billion a year output rate in the 2nd quarter to a $21,170.3 billion annual rate in the 3rd quarter, with the headline 33.4% annualized rate of increase in real output arrived at after annualized inflation adjustments now averaging 3.5%, aka the GDP deflator, was computed for each of the GDP components and then applied to the current dollar change of each component...

Remember that the GDP release reports all quarter over quarter percentage changes at an annual rate, which means that they're expressed as a change typically a bit over 4 times of that what actually occurred over the 3 month period, and that the prefix "real" is used to indicate that each change has been adjusted for inflation using price changes chained from 2012, and then that all percentage changes in this report are calculated from those 2012 dollar figures, which would be better thought of as a quantity indexes than as any reality based dollar amounts....for our purposes, all the data that we'll use in reporting the changes here comes directly from the pdf for the 2nd estimate of 3rd quarter GDP, which we find on the BEA GDP landing page, where we can also find the GDP tables on Excel and other technical notes relating to this report...specifically, we reference table 1, which shows the real percentage change in each of the GDP components annually and quarterly since the 4th quarter of 2016; table 2, which shows the contribution of each of the components to the GDP figures for those quarters and years; table 3, which shows both the current dollar value and inflation adjusted value of each of the GDP components; and table 4, which shows the change in the price indexes for each of the components....the pdf for the 3rd quarter second estimate, which this estimate revises, is here...

Growth of real personal consumption expenditures (PCE), the largest component of GDP, was revised from the 40.6% growth rate reported last month to a 41.0% rate in this 3rd estimate…that growth rate figure was arrived at by deflating the 46.2% growth rate in the dollar amount of consumer spending with the PCE price index, which indicated consumer inflation increased at a 3.7% annual rate in the 3rd quarter, which was unrevised from the PCE inflation rate reported a month ago......real personal consumption of durable goods grew at a 82.7% annual rate, revised from the 82.9% growth rate shown in the 2nd estimate, and added 5.20 percentage points to GDP, as real consumption of durable goods other than autos, furniture and recreational goods and vehicles grew at a 265% annual rate and accounted for nearly 30% of the durable goods increase....real consumption of nondurable goods by individuals grew at a 31.1% annual rate, revised from the 30.6% growth rate reported in the 2nd estimate, and added 4.35 percentage points to the 3rd quarter’s economic growth rate, as real growth in consumption of clothing and footwear at a 182.8% rate accounted for nearly 45% of the growth in non-durables....at the same time, consumption of services rose at a 38.0% annual rate, revised from the 37.6% growth rate reported last month, and added 15.89 percentage points to the final GDP tally, as real health care services grew at a 90.9% rate and accounted for more than half of the quarter’s growth in services...

Meanwhile, seasonally adjusted real gross private domestic investment grew at a 86.3% annual rate in the 3rd quarter, revised from the 84.9% growth estimate reported last month, as real private fixed investment grew at a 31.3% rate, revised from the 30.4% growth rate reported in the second estimate, while the change in inventory growth was a bit greater than previously estimated...however, investment in non-residential structures was revised to show contraction at a 17.4% rate, worse than the 15.8% contraction rate previously reported, while real investment in equipment grew at a 68.2% rate, revised up from the 66.6% rate reported last month, and the quarter's investment in intellectual property products was revised from growth at a 6.0% rate to growth at a 8.4% rate…at the same time, real residential investment was shown to be growing at a 63.0% annual rate, revised from the 62.3% rate shown in the previous report…after those revisions, the decrease in investment in non-residential structures subtracted 0.53 percentage points from the 3rd quarter's growth rate, while the increase in investment in equipment added 3.26 percentage points to the quarter's growth rate, growth in investment in intellectual property added 0.46 percentage points to the growth rate of 3rd quarter GDP and growth in residential investment added 2.19 percentage points to the growth of GDP...

In addition, investment in real private inventories shrunk by an inflation adjusted $3.7 billion in the 3rd quarter, revised from the previously reported $4.3 billion of real inventory shrinkage...that came after inventories had shrunk at an inflation adjusted $287.0 billion rate in the 2nd quarter, and hence the $283.3 billion quarter over quarter improvement in real inventory growth added 6.57 percentage points to GDP, revised from the 6.55 percentage point addition to GDP due to lower inventory growth that was indicated in the second estimate....however, since growth in inventories indicates that more of the goods produced during the quarter were left in warehouses or "sitting on the shelf”, their quarter over quarter increase at a $283.3 billion rate meant that growth of real final sales of GDP was relatively smaller by that much, and hence real final sales of GDP rose at a 25.9% rate in the 3rd quarter, a reversal of the real final sales shrinkage rate of 28.1% in the 2nd quarter, when the quarter's decrease in inventory growth meant that the drop in real final sales was that much less than the real decrease in GDP...

The previously reported increase in real exports was revised a lower with this estimate, but the previously reported larger increase in real imports was unchanged, and as a result the change in our net trade was a greater subtraction from GDP than was previously reported...our real exports grew at a 59.6% rate rather than the 60.5% rate reported in the second estimate, and since exports are added to GDP because they are part of our production that was not consumed or added to investment in our country, that growth added 4.89 percentage points to the 3rd quarter's growth rate, revised from the 4.95 percentage point addition shown in the previous report....meanwhile, the previously reported 93.1% increase in our real imports was revised but remained at 93.1%, and since imports are subtracted from GDP because they represent either consumption or investment that was added to an other GDP component that was not produced domestically, their increase subtracted 8.10 percentage points from 3rd quarter GDP, revised from the 8.12 percentage point subtraction shown in the second estimate....thus, our deteriorating trade balance subtracted a rounded total of 3.21 percentage points from 3rd quarter GDP, rather than the 3.18 percentage point subtraction that had been indicated by the second estimate…

Finally, the entire government sector shrank at a 4.8% rate, revised from the 4.9% shrinkage rate previously reported, as overall federal government consumption and investment was little changed from the second estimate, while real state & local government consumption and investment shrank by less than had been previously indicated....real federal government consumption and investment was seen to have shrunk at a 6.2% rate from the 2nd quarter in this estimate, statistically unchanged from the shrinkage rate shown in the advance estimate, as real federal outlays for defense grew at a 3.2% rate, revised from the 3.1% growth reported last month, and added 0.17 percentage points to 3rd quarter GDP, while all other federal consumption and investment shrank at an 18.3% rate, revised from the 18.1% shrinkage rate indicated by the second estimate, and subtracted 0.55 percentage points from 3rd quarter GDP....meanwhile, real state and local consumption and investment shrank at a 3.9% rate in the quarter, which was revised from the 4.0% shrinkage rate reported in the 1st estimate, and subtracted 0.37 more percentage points from 3rd quarter GDP, as a decrease in real state and local investment contributed 0.09 percentage points to that subtraction...but note that government outlays for social insurance are not included in this GDP component; rather, they are included within personal consumption expenditures only when such funds are spent on goods or services, indicating an increase in the output of those goods or services...

November Personal Income Down 1.1%; Personal Spending Down 0.4%; PCE Price Index Unchanged

Following the release of the 3rd estimate of 3rd quarter GDP, the Bureau of Economic Analysis released the November report on Personal Income and Outlays, which gives us nearly half the data that will go into 4th quarter GDP, since it gives us 2 months of data on our personal consumption expenditures (PCE), which accounts for nearly 70% of GDP, and the PCE price index, the inflation gauge the Fed targets, and which is used to adjust that personal spending data for inflation to give us the relative change in the output of goods and services that our spending indicated....this report also provides us with the nation's November personal income data, disposable personal income, which is income after taxes, and our monthly savings rate...however, because this report feeds in to GDP and other national accounts data, the change reported for each of those metrics are not the current monthly change; rather, they're seasonally adjusted amounts at an annual rate, ie, they tell us how much income and spending would increase in a year if November’s adjusted income and spending were extrapolated over an entire year...however, the percentage changes are computed monthly, from one month's annualized figure to the next, and in this case of this month's report they give us the percentage change in each annualized metric from October to November....

Hence, when the opening line of the press release for this report tells us "Personal income decreased $221.8 billion (1.1 percent) in November", they mean that the annualized figure for seasonally adjusted personal income in November, $19,493.3 billion, was $221.8 billion lower, or more than 1.1% less than the annualized personal income figure of $19,715.1 billion extrapolated for October; the actual, unadjusted change in national personal income from October to November is not given...at the same time, annualized disposable personal income, which is income after taxes, fell by more than 1.2%, from an annual rate of $17,495.6 billion in October to an annual rate of $17,277.6 billion in November...those decreases were arrived at after personal income for October was revised down from $19,725.9 billion annually and October's disposable personal income was revised down from $17,515.2 billion annually....the monthly contributors to the change in personal income, which can be seen in the Full Release & Tables (PDF) for this release, are also annualized...in November, the reason for the $221.8 billion annual rate of decrease in personal income were a $163.3 billion annual rate of decrease in proprietors' income, and a $126.7 billion annual rate of decrease in personal current transfer receipts from government programs; wages and salaries, on the other hand, saw an increase at a $39.1 billion annual rate..

For the personal consumption expenditures (PCE) that we're interested in, BEA reports that they decreased at a $63.3 billion rate, or at more than a 0.4% rate, as the annual rate of PCE fell from $14,630.1 billion in October to $14,566.8 billion in November....at the same time, October PCE was revised less than 0.1% lower, from $14,640.5 billion annually to $14,630.1 billion....total personal outlays, which includes interest payments and personal transfer payments in addition to PCE, fell by an annualized $66.8 billion to $15,057.2 billion annually in November, which thus left total personal savings, which is disposable personal income less total outlays, at a $2,220.4 billion annual rate in November, down from the revised $2,371.6 billion in annualized personal savings in October... as a result, the national personal saving rate, which is personal savings as a percentage of disposable personal income, fell to 12.9% in November, from the October savings rate of 13.6%...

As you know, before personal consumption expenditures are used in the computation of GDP, they are first adjusted for inflation to give us the real change in consumption, and hence the real change in goods and services that were produced for that consumption....the BEA does that by computing, mostly from CPI source data, a price index for personal consumption expenditures, which is a chained price index based on 2012 prices = 100, and which is included in Table 9 in the pdf for this report...that index rose from 111.688 in October to 111.704 in November, a month over month inflation rate that's statistically +0.014326%, which BEA reports as unchanged, following the unchanged PCE price index they reported for October...applying the actual November inflation adjustment to the nominal change in spending left real PCE down by a rounded 0.4% in November, after October's rounded real PCE growth of 0.3%...notice that when those price indexes are applied to a given month's annualized PCE in current dollars, it yields that month's annualized real PCE in chained 2012 dollars, which are the means that the BEA uses to compare one month's or one quarter's real goods and services produced to another....that result is shown in table 7 of the PDF, where we see that November's chained dollar consumption total works out to 13,040.7 billion annually in 2012 dollars, 0.4466% less than October's 13,099.2 billion, a growth rate that the BEA rounds up and reports as -0.4%...

However, to estimate the impact of the change in PCE on the change in GDP, month over month changes expressed like that don't help us much, since GDP is reported quarterly...thus we have to compare October's and November's real PCE to the the real PCE of the 3 months of the third quarter....while this report shows PCE for all those amounts monthly, the BEA also provides the annualized chained dollar PCE for those three months in table 8 in the pdf for this report, where we find that the annualized real PCE for the 3rd quarter was represented by 12,924.7 billion in chained 2012  dollars...(note that's the same as what's shown in table 3 of the pdf for the revised 3rd quarter GDP report)....then, by averaging the annualized chained 2012 dollar figures for October and November, 13,099.2 billion and 13,040.7 billion respectively, we get an equivalent annualized PCE for the two months of the 4th quarter data that we have so far....when we compare that average of 13,069.95 to the 3rd quarter real PCE representation of 12,924.7, we find that 4th quarter real PCE has grown at a 4.57% annual rate for the two months of the 4th quarter that are included in this report...(notice the math we used to get that annual growth rate: [ (((13,040.7 + 13,099.2) / 2) / 12,924.7) ^ 4 = 1.045716 ] ...that's a growth rate that would add 3.17 percentage points to the GDP growth rate of the 4th quarter, in the unlikely event that December PCE doesn’t vary from the October – November average...  

November Durable Goods: New Orders up 0.9%, Shipments Up 0.3%, Inventories Up 0.9%

The Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders for November (pdf) from the Census Bureau reported that the value of the widely watched new orders for manufactured durable goods increased by $2.2 billion or 0.9 percent to $244.2 billion in November, after October's new orders were revised from the 1.3% increase to $240.8 billion reported last month to a 1.8% increase to $242.0 billion...however, year to date new orders are still 8.0% below those of 2019, a modest increase from the -9.1% year over year change we saw in this report last month....

An increase in the volatile monthly new orders for transportation equipment led this month's increase, as new transportation equipment orders rose $1.5 billion or 1.9 percent to $78.8  billion, on a 15.7% increase to $3,266 million in new orders for defense aircraft and a 2.4% increase to $62,051 million in new orders for motor vehicles and parts... excluding orders for transportation equipment, other new orders were up 0.4%, while excluding just new orders for defense equipment, new orders rose 0.7%....at the same time, new orders for nondefense capital goods less aircraft, a proxy for equipment investment, rose by $271 million or by 0.4% to $70,901 million..

Meanwhile, the seasonally adjusted value of November shipments of durable goods, which will ultimately be included as inputs into various components of 4th quarter GDP after adjusting for changes in prices, increased for the sixth time in 7 months, rising by $0.7 billion or 0.3 percent to $250.1 billion, after the value of October shipments was revised from from $248.7 billion to $249.4 billion, now up 1.5% from September, revised from the 1.3% increase reported last month...the value of shipments of primary metals saw the largest November increase, rising $0.3 billion or 1.8 percent to $19.2 billion, while the value of shipments of transportation equipment rose 0.3% to $82.3 billion...the value of shipments of nondefense capital goods less aircraft rose 0.4% to $69,888 million, after September’s capital goods shipments were revised from $69,380 million to $69,577 million, now a 2.6% increase from August....

At the same time, the value of seasonally adjusted inventories of durable goods, also a major GDP contributor, rose for a third consecutive month, increasing by $3.9 billion or 0.9 percent to $426.6 billion, after October inventories were revised from $422.8 billion to $422.7 billion, still up 0.3% from September... increased inventories of transportation equipment led the November increase, rising $2.4 billion or 1.6 percent to $150.7 billion, on a 2.8% increase in inventories of motor vehicles and parts and a 1.9% increase in inventories of commercial aircraft…but even without the increased inventories of transportation equipment, the value of all other durable goods inventories still rose 0.5%…

Finally, unfilled orders for manufactured durable goods, which are probably a better measure of industry conditions than the widely watched but volatile new orders, decreased for the eighth time in nine months, falling by $0.8 billion or 0.1 percent to $1,072.9 billion, after unfilled orders for October were revised from $1,073.2 billion to $1,073.7 billion, now a 0.2% decrease from September...a $3.5 billion or 0.5 percent decrease to $713.3 billion in unfilled orders for transportation equipment was responsible for the November decrease, as unfilled transportation equipment orders other than transportation equipment rose 0.7% to $359,560 million...compared to a year earlier, the unfilled order book for durable goods is 6.3% below its level of last November, with unfilled orders for transportation equipment 10.2% below their year ago level, largely on a 16.1% decrease in the backlog of orders for commercial aircraft...  

November New Home Sales Reported Lower After Sales for Three Prior Months were Revised Lower

The Census report on New Residential Sales for November (pdf) estimated that new single family homes were selling at a seasonally adjusted annual pace of 841,000 homes during the month, which was 11.0 percent (±9.5 percent) below the revised October rate at 945,000 new single family home sales annually, but was 20.8 percent (±19.5 percent) above the estimated annual rate that new homes were selling at in November of last year...the figures in parenthesis represent the 90% confidence range for reported data in this report, which has the largest margin of error and is subject to the largest revisions of any census construction series....with this report, sales new single family homes in October were revised down from the annual rate of 999,000 reported a month ago to 945,000, while home sales in September, initially reported at an annual rate of 595,000 and revised to a post recession high 1,002,000 annual rate with the last report, were also revised lower, to a 965,000 a year rate with this report, and while August's annualized home sale rate, initially reported at an annual rate of 1,011,000 and revised from the initially revised from a 994,000 a year rate to a 1,001,000 a year rate with the last report, were revised down to a 977,000 rate with this release...those revisions mean the unrevised 979,000 annual rate of new home sales in July now reverts to the post recession high...

The annual rates of sales reported here are seasonally adjusted after extrapolation from the estimates of canvassing Census field reps, which suggested that approximately 59,000 new single family homes sold in November, down from the estimated 76,000 new homes that sold in October and the 77,000 that sold in September.....the raw numbers from Census field agents further estimated that the median sales price of new houses sold in November was $335,300, down from the median sale price of $337,500 in October but up from the median sales price of $328,900 in November a year ago, while the average November new home sales price was $390,100, up from the $383,300 average sales price in October, and up from the average sales price of $384,000 in November a year ago....a seasonally adjusted estimate of 268,000 new single family houses remained for sale at the end of November, which represented a 4.1 month supply at the November sales rate, up from the revised 3.6 months of new home supply in October...for graphs and additional commentary on this report, see the following  two posts by Bill McBride at Calculated Risk: New Home Sales decrease to 841,000 Annual Rate in November and A few Comments on November New Home Sales...

November Existing Home Sales Down 2.5% in November, Still Up 25.8% from a Year Ago

The National Association of Realtors (NAR) reported that their seasonally adjusted extrapolation of existing home sales fell by 2.5% from October to November, projecting that 6.69 million existing homes would sell over an entire year if the November home sales pace were extrapolated over that year, a pace that was still 25.8% above the annual sales rate they projected for November of a year ago...October home sales were at a 6.86 million annual rate, a 14 year high, revised from the 6.85 million annual rate indicated in last month's report...the NAR also reported that the median sales price for all existing-home types was $310,800 in November, up 14.6% from from the $271,300 median sales price reported for November of last year, which they report "marks 105 straight months of year-over-year gains".....the NAR press release, which is titled "Existing-Home Sales Decrease 2.5% in November", is in easy to read plain English, so if you're interested in the details on housing inventories, cash sales, distressed sales, first time home buyers, etc., you can easily find that all info in that press release...as sales of existing properties do not add to our national output, neither these home sales nor the prices for which these homes sell are included in GDP, except insofar as real estate, local government and banking services are rendered during the selling process…

Since this report is entirely seasonally adjusted and at a not very informative annual rate, we like to check the raw data overview (pdf), which gives us a close approximation of the actual number of homes that sold each month...this unadjusted data indicates that roughly 492,000 homes sold in November, down by 14.1% from the 573,000 homes that sold in October, but up by 21.8% from the 404,000 homes that sold in November of last year, so we can see how the seasonal adjustment reduced the magnitude of the month over month decrease in the annualized published figures....that same pdf indicates that the median home selling price for all housing types fell by 0.7%, from a revised $313,100 in October to $310,100 in November, while the average home sales price was $343,000, down 0.5% from the $344,700 average sales price in October, but up 11.3% from the $308,200 average home sales price of November a year ago...for both seasonally adjusted and unadjusted graphs and additional commentary on this report, see the following two posts from Bill McBride at Calculated Risk: NAR: Existing-Home Sales Decreased to 6.69 million in November and Comments on November Existing Home Sales...

 

(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most of which are picked from the aforementioned GGO posts, contact me…)