Major reports released this week included the the November Producer Price Index, the November Consumer Price Index, and the November Import-Export Price Index from the Bureau of Labor Statistics, Retail Sales for November and Business Sales and Inventories for October from the Census Bureau, and the November report on Industrial Production and Capacity Utilization from the Fed...in addition, the BLS also released the the Job Openings and Labor Turnover Survey (JOLTS) for October, while Black Knight Financial Services released the Mortgage Monitor for October, which indicated that 3.64% of all mortgages were delinquent in October, down from 3.97% in September and down from 4.44% in October of 2017, and that 0.52% of all mortgages were in the foreclosure process, the same percentage as were in foreclosure in September but down from the 0.68% in foreclosure year ago...
November CPI Unchanged as Higher Rents Are Offset by Lower Gasoline Prices
The consumer price index was unchanged in November, as higher rents, food and used car prices were offset by lower priced clothing and gasoline....the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that the seasonally adjusted price index was statistically unchanged in November, after it had risen 0.3% in October, 0.1% in September, 0.2% in August, 0.2% in July, 0.1% in June, 0.2% in May, 0.2% in April but after falling 0.1% in March after it had risen by 0.2% in February, 0.5% in January, 0.1% in December, by 0.4% last November...the unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, actually fell from 252.885 in October to 252.038 in November, which still left it statistically 2.177% higher than the 246.669 index reading in November of last year, which is reported as a 2.2% increase....with lower gasoline prices the main reason for that small drop in the unadjusted index, seasonally adjusted core prices, which exclude food and energy, rose by 0.2% for the month, with the unadjusted core price index rising from 259.063 to 259.105, which left the core index 2.214% ahead of its year ago reading of 253.492, which is reported as a 2.2% year over year increase, same as the annual increase reported a month ago..
The volatile seasonally adjusted energy price index fell by 2.2% in November, after rising by 2.4% in October, falling by 0.5% in September, rising by 1.9% in August, falling by 0.3% in July and by 0.3% in June, rising by 0.9% in May and by 1.4% in April, falling by 2.8% in March, rising by 0.1% in February and by 3.0% in January, and thus is still 3.1% higher than in November a year ago...the price index for energy commodities was 4.1% lower in November, while the index for energy services rose by 0.3%, after rising by 1.7% in October...the energy commodity index was down 4.1% due to a 4.2% decrease in price of gasoline, the largest component, and a 2.9% decrease in the index for fuel oils, while prices for other energy commodities, such as propane, kerosene, and firewood, averaged 1.3% lower...within energy services, the index for utility gas service rose 0.7% after falling by 0.6% in October and is still 2.1% lower than it was a year ago, while the electricity price index was 0.3% higher, after it rose 2.3% in October....energy commodities are still 5.4% higher than their year ago levels, with gasoline prices averaging 5.0% higher than they were a year ago, while the energy services price index is now unchanged from last November, as electricity prices have increased by 0.6% over that period…
The seasonally adjusted food price index was 0.2% higher in November, after falling 0.1% in October, being unchanged in September, rising 0.1% in August, 0.1% in July, 0.2% in June, being unchanged in May, rising 0.3% in April, 0.1% in March, being unchanged in February, rising 0.2% in January, 0.2% in December 2017, and being unchanged in October and November of last year, as the price index for food purchased for use at home rose 0.2% in November, while the index for food bought to eat away from home was 0.3% higher, as prices at fast food outlets rose 0.3%, prices at full service restaurants rose 0.2%, while food prices at employee sites and schools were 0.2% lower...
In the food at home categories, the price index for cereals and bakery products was 0.6 higher as both bread and cereal prices rose 0.6%, rice prices rose 2.7%, prices for biscuits, rolls and muffins rose 2.1%, and cake and cupcake prices rose 1.8%....at the same time, the price index for the meats, poultry, fish, and eggs group was 0.3% higher, as pork prices rose 1.8% and turkey prices were 4.6% higher....on the other hand, the index for dairy products was 0.2% lower, as fresh whole milk prices fell 1.0%...meanwhile, the fruits and vegetables index was unchanged as a 0.8% decrease in the price index for fresh fruits was offset by a 1.0% increase in the price index for fresh vegetables, which rose due to a 7.5% jump in prices for tomatoes....at the same time, the beverages index was 0.4% lower, as noncarbonated juices and drink prices were priced 0.5% lower and instant coffee prices fell 3.0%...lastly, the index for the ‘other foods at home’ category was 0.3% higher, as the index for spices, seasonings, condiments, sauces rose 0.7% while prices for baby foods rose 2.8%....the itemized list for price changes in over 100 separate food items is included at the beginning of Table 2 for this release, which gives us a line item breakdown for prices of more than 200 CPI items overall...since last November, none of the ‘food at home’ line items have seen prices change by more than 10% over the past year...
Among the seasonally adjusted core components of the CPI, which rose by 0.2% in November after rising by 0.2% in October, 0.1% in September, by 0.1% in August, 0.2% in July, 0.2% in June, 0.2% in May, 0.1% in April, 0.1% in March, 0.2% in February, 0.3% in January, 0.3% in December, and by 0.1% last November, the composite price index of all goods less food and energy goods was 0.2% higher, and the composite for all services less energy services was also 0.2% higher....among the goods components, which will be used by the Bureau of Economic Analysis to adjust November retail sales for inflation in national accounts data, the index for household furnishings and supplies increased by 0.1%, as the price index for major appliances rose 0.9% while the price index for window and floor coverings was 2.2% lower...at the same time, the apparel price index was 0.9% lower, as the index for men's shirts and sweaters fell 4.1% and prices for women's dresses fell 2.7%...on the other hand, the price index for transportation commodities other than fuel was 0.9% higher, as prices for used cars and trucks rose 2.4% while new vehicle prices were unchanged...meanwhile, prices for medical care commodities were 0.4% higher as prescription drugs prices rose 0.5%, while the recreational commodities index was unchanged as 1.5% lower prices for televisions were offset by a 0.7% increase in the index for sporting goods...however, the education and communication commodities index was 1.3% lower after falling 1.5% in October on a 1.8% decrease in the index for personal computers and peripheral equipment and a 1.3% drop in the index for telephone hardware, calculators, and other consumer information items...lastly, a separate price index for alcoholic beverages was 0.3% higher, while the price index for ‘other goods’ rose 0.2% on a 0.9% increase in the price index for miscellaneous personal goods...
Within core services, the price index for shelter rose 0.3% on a 0.4% increase in rents and a 0.3% increase in homeowner's equivalent rent, while prices for lodging away from home at hotels and motels rose 0.1%, and the sub-index for water, sewers and trash collection rose 1.2%, and other household operation costs were on average 0.3% higher....the price index for medical care services was up by 0.4%, as hospital outpatient services rose 1.0% and health insurance rose 1.4%...on the other hand, the transportation services index was down by 0.3% as car and truck insurance fell 0.5% while airline fares fell 2.4%...at the same time, the recreation services price index was 0.5% higher as club memberships rose 1.5% and photo processing rose 2.8%....meanwhile, the index for education and communication services was 0.4% lower as prices for wireless telephone services fell 2.2%...lastly, the index for other personal services was up 0.3% as legal services rose 1.3% and the index for tax return preparation and other accounting fees rose 0.5%...among core line items, prices for televisions, which are now 18.1% cheaper than a year ago, and the price index for toys, which is down by 10.4% since last November, have seen prices drop by more than 10% over the past year, while the price index for laundry equipment, which has now increased 15.5% year over year, and the price index for boy's apparel, which is up 11.9% since last November, have both seen prices rise by a double digit magnitude over that span...
Retail Sales Up 0.2% in November after October Sales are Revised Higher
Seasonally adjusted retail sales increased in November after retail sales for October sales were revised higher...the Advance Retail Sales Report for November (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $513.5 billion during the month, which was 0.2 percent (±0.5%) higher than October's revised sales of $512.4 billion and 4.0 percent (±0.9%) above the adjusted sales in November of last year.…October's seasonally adjusted sales were revised up from $511.5 billion to $512.4 billion, while September's sales were revised lower, from $507.6 billion to $506.75 billion; as a result, the September to October change was revised from up 0.8 percent (±0.5%) to up 1.1 percent (±0.2%), while the change in September's sales was revised from a decrease of 0.1% to a decrease of 0.3%...assuming a similar inflation adjustment, the $0.85 billion downward revision to September sales should reduce previous estimate of the personal consumption expenditures contribution to 3rd quarter GDP by about 0.07 percentage points.....unadjusted sales, extrapolated from surveys of a small sampling of retailers, were estimated to have risen 3.4%, from $506,859 million in October to $524,147 million in November, while they were up 4.9% from the $499,833 million of sales in November a year ago...
Included below is the table of the monthly and yearly percentage changes in retail sales by business type taken from the November Census Marts pdf....the first pair of columns below gives us the seasonally adjusted percentage change in sales for each kind of business from the October revised figure to this month's November "advance" report in the first sub-column, and then the year over year percentage sales change since last November in the 2nd column...the second double column pair below gives us the revision of the October advance estimates (now called "preliminary") as of this report, with the new September to October percentage change under "Sep 2018 r" (revised) and the revised October 2017 to October 2018 percentage change in the last column shown...for your reference, the table of last month’s advance estimate of October sales, before this month's revisions, is here.…
To compute November's real personal consumption of goods data for national accounts from this November retail sales report, the BEA will use the corresponding price changes from the November 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 this table, we can see that November retail sales excluding the 2.3% price-related decrease in sales at gas station were up by 0.5%....then, pulling the 0.4% increase in grocery sales and the 0.5% decrease in food services sales out from that total, we find that core retail sales were up 0.6% for the month...since the CPI report showed that the composite price index for all goods less food and energy goods was up 0.2% in November, we can thus approximate that real retail sales excluding food and energy will on average be 0.2% lower than our nominal core retail sales, or show an increase of roughly 0.4%...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 motor vehicle & parts dealers were up 0.2%, the price index for for transportation commodities other than fuel was up 0.9%, which would mean that real unit sales at auto & parts dealers were probably on the order of 0.7% lower... on the other hand, while sales at clothing stores were 0.2% lower in November, the apparel price index was 0.9% lower, which means that real sales of clothing rose around 0.7%.…
In addition to figuring those core retail sales, we should adjust food and energy retail sales for price changes separately…the CPI report showed that the food price index was 0.2% higher in November, with the index for food purchased for use at home 0.2% higher, while prices for food bought to eat away from home were 0.3% higher... so while nominal sales at food and beverage stores were 0.4% higher, real sales of food and beverages would only be 0.2% higher in light of the 0.2% higher prices…meanwhile, the 0.5% decrease in nominal sales at bars and restaurants, once adjusted for 0.3% higher prices, suggests that real sales at bars and restaurants fell 0.8% during the month...on the other hand, while sales at gas stations were down 2.3%, there was a 4.2% decrease in the retail price of gasoline, which would suggest that real sales of gasoline were up on the order of 1.9%, with a caveat that gasoline stations do sell more than gasoline... averaging real sales computed thusly together, we'd estimate that the income and outlays report for November will show that real personal consumption of goods rose around 0.4% in November, after rising by a revised 0.8% in October...at the same time, the 0.8% drop in real sales at bars and restaurants would reduce November’s real personal consumption of services by about 0.1%...
Industrial Production Up 0.6% in November After October Production Revised Lower
The Fed's G17 release on Industrial production and Capacity Utilization reported that industrial production rose 0.6% in November after falling by a revised 0.2% in October, as increases in the mining index and the utility index more than made up for flat manufacturing....the total industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, rose to 109.4 in November from 108.7 in October, which was revised from the 109.1 index reported last month...at the same time, the September index was revised down from 109.0 to 108.9 and the June index was revised from 107.5 to 107.4....year over year industrial production is now up 3.9%, down from last month's 4.1% year over year decrease....
The manufacturing index, which accounts for more than 77% of the total IP index, was unchanged at 104.9 in November, but only after the manufacturing index for October was revised from 105.4 to 104.9...in addition, the manufacturing index for September was revised from 105.1 to 105.0, and July's manufacturing index was revised down from 104.4 to 104.3... meanwhile, the mining index, which includes oil and gas well drilling, rose from 126.8 in October to 128.9 in November, after the October index was revised up from 126.3, which meant the mining index is now 13.2% higher than it was a year earlier...finally, the utility index, which often fluctuates due to above or below normal temperatures, rose 3.3% in November, from a downwardly revised 104.4 in October to 107.8 in November, and is now 4.3% higher than it was a year earlier..
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 US industry rose to 78.5% in November from 78.1% in October, which was revised from the 78.4% reported last month ...capacity utilization of NAICS durable goods production facilities rose from 76.3% in October to 76.4% in November, while capacity utilization for non-durables producers fell from 76.8% to 76.6%...at the same time, capacity utilization for the mining sector rose to 94.1% in November from 93.1% in October, which was originally reported at 92.7%, while utilities were operating at 79.4% of capacity during November, up from their 77.0% of capacity during October, which was revised down from the previously reported 77.3%...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 0.1% in November as Higher Margins for Transportation Services more than Offset Lower Fuel Prices
The seasonally adjusted Producer Price Index (PPI) for final demand was 0.1% higher in November, as average prices for finished wholesale goods were 0.4% lower, while margins of final services providers increased by 0.3%...that followed an October report that showed the PPI was 0.6% higher, with prices for finished wholesale goods rising 0.6% and margins of final services providers rising 0.7%, a September report that indicated the PPI was 0.2% higher, with prices for finished wholesale goods 0.1% lower and margins of final services providers 0.3% higher, and a revised August report that showed the producer price index was 0.2% lower, with prices for finished wholesale goods unchanged while margins of final services providers decreased by 0.3%....on an unadjusted basis, producer prices are now 2.5% higher than a year ago, down from the year over year increase of 2.9% that had been indicated by last month's report...at the same time, the core producer price index, which excludes food, energy and trade services, was up by 0.3% for the month, and is now 2.8% higher than in October a year ago...
As noted, the price index for final demand for goods, aka 'finished goods', was 0.4% lower in November, after being 0.6% higher in October, 0.1% lower in September, being unchanged in July and August, but after rising by 0.2% in June and by 0.9% in May...the goods index fell because the price index for wholesale energy was 5.0% lower, after rising 2.7% higher in October falling 0.8% in September, rising 0.4% in August, and falling a revised 0.8% in July and rising a revised 1.5% in June, while the price index for wholesale foods rose 1.3%, and the index for final demand for core wholesale goods (excluding food and energy) was up 0.3%....wholesale energy prices fell largely on a 14.0% decrease in the wholesale price for gasoline and a 27.9% decrease in the wholesale price of liquefied petroleum gas ...the wholesale food price index, meanwhile, included a 12.2% increase in wholesale prices for fresh eggs and an 31.6% increase in wholesale prices for fresh and dry vegetables....among wholesale core goods, wholesale prices for pharmaceutical preparations rose 1.5% and wholesale prices for mining machinery and equipment rose 6.4%, while wholesale prices for industrial chemicals fell 2.8%..
At the same time, the index for final demand for services rose 0.3%, after rising 0.7% in October, 0.3% in September, falling a revised 0.3% in August, rising a revised 0.2% in July, and rising 0.3% in June, 0.3% in May, 0.2% in April and 0.3% in March, as the November index for final demand for trade services rose 0.3%, the index for final demand for transportation and warehousing services rose 1.2%, and the core index for final demand for services less trade, transportation, and warehousing services rose 0.1%....among trade services, seasonally adjusted margins for fuels and lubricants retailers rose 25.9% and margins for health, beauty, and optical goods retailers rose 3.0%, while margins for TV, video, and photographic equipment retailers fell 19.1%... among transportation and warehousing services, margins for airline passenger services rose 2.3% and margins for air transportation of freight rose 1.3%...among the components of the core final demand for services index, the index for guestroom rentals fell 3.5% while margins for cellular phone and other wireless telecommunications services rose 4.7%..
This report also showed the price index for intermediate processed goods fell 0.7% in November, after rising 0.8% in October, being unchanged in September, but after rising a revised 0.1% in August....the price index for intermediate energy goods fell 2.5%, as refinery prices for gasoline fell 14.0% while producer prices for natural gas to electric utilities rose 7.4%...prices for intermediate processed foods and feeds rose 0.4%, as the intermediate price index for meat rose 1.3% and prepared animal feeds prices rose 1.7%...meanwhile, the core price index for processed goods for intermediate demand less food and energy was 0.2% lower on a 3.1% decrease in the index for basic organic chemicals and a 3.0% decrease in the price index for softwood lumber....prices for intermediate processed goods are still 4.3% higher than in November a year ago, now the 24th consecutive year over year increase, after 16 months of negative year over year comparisons, as intermediate goods prices fell every month from July 2015 through March 2016....
Meanwhile, the price index for intermediate unprocessed goods fell 5.3% in November, after rising 3.6% in October and 1.7% in September, falling a revised 4.4% in August, and rising a revised 0.6% in July....that was as the November price index for crude energy goods fell 11.5% as crude oil prices fell 29.5%, and as the price index for unprocessed foodstuffs and feedstuffs fell 0.1%, as producer prices for slaughter hogs fell 7.2% and producer prices for alfalfa hay fell 8.7%...on the other hand, the index for core raw materials other than food and energy materials rose 2.4%, as prices for carbon steel scrap rose 9.5% and prices for aluminum base scrap rose 1.9%...this raw materials index is now 0.7% lower than a year ago, down from the 7.8% year over year increase that we saw in October and the first negative year over year reading since October 2016...
Lastly, the price index for services for intermediate demand rose 0.2% in November, after rising 0.4% in October, 0.5% in September, falling a revised 0.2% in August, and rising a revised 0.4% in July...the price index for intermediate trade services was 0.2% lower, as margins for intermediate metals, minerals, and ores wholesalers fell 7.4% and margins for margins for chemicals and allied products wholesalers fell 2.2%…the index for transportation and warehousing services for intermediate demand rose 0.5%, as the intermediate index for air transportation of passengers rose 2.3% and the index for air transportation of freight rose 1.3%...meanwhile, the core price index for intermediate services less trade, transportation, and warehousing was 0.3% higher, as the index for prices for business loans (partial) rose 4.5% and television advertising time sales rose 1.9%....over the 12 months ended in November, the year over year price index for services for intermediate demand, which has never turned negative on an annual basis, is still 3.1% higher than it was a year ago...
October Business Sales Up 0.3% Business Inventories Up 0.6%
After the release of the November retail sales report, the Census Bureau released the composite Manufacturing and Trade, Inventories and Sales report for October (pdf), which incorporates the revised October retail data from that November report and the earlier published October wholesale and factory data to give us a complete picture of the business contribution to the economy for the month....according to the Census Bureau, total manufacturer's and trade sales were estimated to be valued at a seasonally adjusted $1,469.9 billion in October, up 0.3 percent (±0.2%) from September's revised sales, and up 6.1 percent (±0.3 percent) from October sales of a year earlier...note that total September sales were concurrently revised down from the originally reported $1,468.0 billion to $1,466.2 billion....manufacturer's sales were down 0.1% to $508,363 million in October; retail trade sales, which exclude restaurant & bar sales from the revised October retail sales reported earlier, rose 1.2% to $451,496 million, while wholesale sales fell 0.2% to $510,056 million...
Meanwhile, total manufacturer's and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $1,982.2 billion at the end of October, up 0.6 percent (±0.1%)* from September, and 5.2 percent (±1.4 percent) higher than in October a year earlier...at the same time, the value of end of September inventories was revised from the $1,967.5 billion reported last month to $1,970.6 billion, now up 0.5% from August...that $3.1 billion upward revision to September inventories should boost the previous estimate of the inventory component to 3rd quarter GDP by more than $12.4 billion annually, which would add around 0.29 percentage points to 3rd quarter GDP...seasonally adjusted inventories of manufacturers were estimated to be valued at $681,689 million at the end of October, an increase of 0.1% from September, and inventories of retailers were valued at $648,324 million, 0.8% greater than September, and inventories of wholesalers were estimated to be valued at $652,148 million at the end of October, also 0.8% greater than in September...
For GDP purposes, all inventories, including retail, are adjusted for inflation with appropriate component price indices of the producer price index for October, which was up 0.6% for finished goods...last week, we looked at real factory inventories with price adjustments for goods at various stages of production, and judged those inventories would have a large negative impact on 4th quarter GDP…also last week, we found that real wholesale inventories were close to unchanged and hence would also subtract from 4th quarter GDP growth….since nominal retail inventories for October have now been shown to 0.8% higher, real retail inventories for the month, after the 0.6% finished goods price adjustment, thus would have thus increased by just 0.2% from September, after a third quarter that saw total inventories increase at a 29.6% annual rate and add 2.27 percentage points to GDP, before the pending revision we noted above...therefore, any inventory increase smaller than that in the 4th quarter would necessarily subtract from the growth of 4th quarter GDP...
Job Openings and Hiring Increase in October, Job Quitting Decreases
The Job Openings and Labor Turnover Survey (JOLTS) report for October from the Bureau of Labor Statistics estimated that seasonally adjusted job openings increased by 119,000, from 6,960,000 openings in September to 7,079,000 in October, after September job openings were revised 49,000 lower, from 7,009,000 to 6,960,000...October's jobs openings were also 16.8% higher than the 6,059,000 job openings reported in October a year ago, as the job opening ratio expressed as a percentage of the employed rose to 4.5% in October from 4.4% September and from 4.0% in October a year ago...among the largest gains, job openings in information services increased from 104,000 to 149,000, and job openings in manufacturing increased from 485,000 to 522,000 (see table 1 for more details)...like most BLS releases, the press release for this report is easy to understand and also refers us to the associated tables for the data cited, which are linked to 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 October, seasonally adjusted new hires totaled 5,892,000, up by 196,000 from the revised 5,696,000 who were hired or rehired in September, as the hiring rate as a percentage of all employed rose to 3.9% from 3.8% in September, and was also up from from 3.8% in October a year earlier (details of hiring by sector since March are in table 2)....meanwhile, total separations fell by 85,000, from 5,278,000 in September to 5,556,000 in October, while the separations rate as a percentage of the employed fell to 3.7%, down from 3.8% in September but up from 3.6% in October a year ago (see table 3)...subtracting the 5,556,000 total separations from the total hires of 5,892,000 would imply an increase of 336,000 jobs in October, quite a bit more than the revised payroll job increase of 237,000 for October reported in the November establishment survey last week, but still within the expected +/-115,000 margin of error for these reports...
Breaking down the seasonally adjusted job separations, the BLS finds that 3,514,000 of us voluntarily quit our jobs in October, down by 50,000 from the 3,564,000 who quit their jobs in September, as the quits rate, widely watched as an indicator of worker confidence, fell from 2.4% to 2.3% of total employment, while it was still up from 2.2% a year earlier (see details in table 4)....in addition to those who quit, another 1,691,000 were either laid off, fired or otherwise discharged in October, down by 16,000 from the revised 1,707,000 who were discharged in September, as the discharges rate was unchanged at 1.1% of all those who were employed during the month, while it was down from the discharges rate of 1.2% a year earlier....meanwhile, other separations, which includes retirements and deaths, were at 351,000 in October, down from 369,000 in September, for an 'other separations rate’ of 0.2%, which was unchanged from September and from October 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 by 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 picked from the aforementioned GGO posts, contact me…)
