Sunday, May 20, 2018

April retail sales, industrial production and new housing starts; March business inventories

regular monthly reports that were released this week included the Retail Sales report for April, the Wholesale Trade, Sales and Inventories report for March, both from the Census Bureau, the April report on Industrial Production and Capacity Utilization from the Fed, the April report on New Residential Construction from the Census Bureau, and the Regional and State Employment and Unemployment Summary for April from the Bureau of Labor Statistics...the week also saw the release of the first two regional Fed manufacturing surveys for May: 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 rose to +20.1, up from +15.8 in April, indicating an accelerating pace of growth for First District manufacturing... meanwhile, the Philadelphia Fed Manufacturing Survey, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest diffusion index of manufacturing conditions rose to +34.4 in May from +23.2 in April, indicating a significant plurality of the region's manufacturing firms reported increases in their activity this month...

April Retail Sales Up 0.3% after February and March Sales Revised Higher

seasonally adjusted retail sales increased by 0.3% in April after retail sales for February and March were both revised higher...the Advance Retail Sales Report for April (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $497.6 billion for the month, which was a increase of 0.3 percent (±0.4%)* from revised March sales of $496.1 billion and 4.7 percent (±0.5 percent) above the adjusted sales of April of last year...March sales were originally reported at $494.6 billion, up 0.6% from February; they are now indicated to have risen 0.8% to $496.1 billion ...February adjusted sales were concurrently revised from $491.8 billion to $492,379 million....estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated unadjusted sales fell 5.2%, from $511,939 in March to $485,432 in April, while they were up 3.8% from the $461,954 million of sales in April a year ago....

we are again including below the table of monthly and yearly percentage changes in sales by business type taken from the Census marts pdf....the first double column below gives us the seasonally adjusted percentage change in sales for each type of retail business type from March to April in the first column, and then the year over year percentage change for those businesses since last April in the 2nd column; the second pair of columns gives us the revision of last month’s March advance monthly estimates (now called "preliminary") as revised in this report, likewise for each business type, with the February to March change under "Feb 2018 revised" and the revised March 2017 to March 2018 percentage change in the last column shown...for your reference, our copy of the table of last month’s advance March estimates, before the benchmark revision, is here....

April 2018 retail sales table

as you know, to judge the economic impact of these sales, they first have to be adjusted for inflation...recall that last week's release of the April Consumer Price Index showed that gasoline prices were up 3.0% in April, while prices for food at home rose 0.3% and prices for food away from home were 0.2% higher...that suggests that real gasoline sales actually fell in April, rather than rising 0.8%, and that restaurant sales were down on the order of 0.5%, while grocery store sales only rose 0.2%...on the other hand, prices for transportation commodities other than fuel were 0.9% lower, as prices for new cars fell 0.5%, prices for used cars were down 1.6%, and tire prices fell 0.7%; those lower prices would suggest that real sales at auto and parts dealers were up a full one percent, rather than the tenth of a percent indicated...overall, the composite price index for all goods less food and energy goods was 0.1% lower, which would mean that real sales other than food or energy were 0.1% higher in April than what the nominal dollar increase indicates; however, that boost from lower prices appears to be more than offset by higher food and energy prices, suggesting overall real sales for the month were weaker than what this report shows...

Industrial Production Up 0.7% in April after Prior Months Revised Lower

industrial production increased in April, but only after production for the four prior months was revised lower...the Fed's G17 release on Industrial production and Capacity Utilization for April reported that industrial production rose 0.7% in April after rising by a revised 0.7% in March, which left total output 3.5% higher than a year ago...the industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, was at 107.3 in April, after the March index value was revised from the 107.2 reported last month down to 106.5, the February index was revised from 106.6 to 105.7, the January index was revised up from 105.6 to 105.3, and the December index was revised from 105.8 to 105.7...

the manufacturing index, which accounts for more than 77% of the total IP index, rose 0.5% to 104.1 in April, after the March index was revised from 104.2 to 103.6, the February index was revised from 104.1 to 103.6, the January index was revised up from 102.6 to 102.1, and the December index was revised from 103.0 to 102.8...as a result, the manufacturing index now stands 1.8% above its year ago level....meanwhile, the mining index, which includes oil and gas well drilling, rose 1.2%, from 118.0 in March to 119.3 in April, after the March index was revised down from from the originally reported 118.2, which left the mining index 10.6% higher than it was a year earlier...finally, the utility index, which typically fluctuates due to deviations from normal temperatures, rose by 1.9% in our cooler than normal April, from 104.4 to 106.4, after the March utility index was revised from 104.4 to 106.6, now up 6.1% from February, because the February index was revised from 102.8 to 98.4, now down 9.6% from January....

this report also includes capacity utilization data, which is expressed as a percentage of our plant and equipment that was in use during the month…seasonally adjusted capacity utilization for total industry rose to 78.0% in April from 77.6% in March, after capacity utilization for March was revised from 78.0%, and  capacity utilization for both January and February was also revised lower...capacity utilization of NAICS durable goods production facilities rose from a revised 75.3% in March to 75.5% in April, while capacity utilization for non-durables producers rose from a revised 76.9% to 77.7%...capacity utilization for the mining sector rose to 90.6% in April from 90.0% in March, which was previously reported as 90.1%, while utilities were operating at 79.2% of capacity during April, up from their 77.9% of capacity during March, which was previously reported at 79.0%...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..   

April Housing Starts and Building Permits Reported Lower

the April report on New Residential Construction (pdf) from the Census Bureau estimated that new housing units were being started at a seasonally adjusted annual rate of 1,278,000 in April, which was 3.7 percent (±11.4 percent)* below the revised March estimated rate of 1,336,000 annually, but was still 10.5 percent (±9.7 percent) above last April's rate of 1,165,000 housing starts a year...the asterisk indicates that the Census does not have sufficient data to determine whether housing starts actually rose or fell during April, with the figures in parenthesis the most likely range of the change indicated; in other words, April housing starts could have been up by 7.7% or down by as much as 15.1% from those of March, with revisions of a greater magnitude in either direction possible...with this report, the annual rate for March housing starts was revised from the 1,319,000 reported last month to 1,336,000, while February starts, which were first reported at a 1,236,000 annual rate, were revised from last month's initial revised figure of 1,295,000 annually back to a 1,290,000 annual rate with this report....these annual rates of housing starts reported here were extrapolated from a survey of a small percentage of US building permit offices visited by canvassing Census field agents, which estimated that 117,600 housing units were started in April, up from the 107,500 housing units that were started in March and the 87,900 housing units that were started in February..

the monthly data on new building permits, with a smaller margin of error, are probably a better monthly indicator of new housing construction trends than the volatile and often revised housing starts data...in April, Census estimated new building permits for housing units were being issued at a seasonally adjusted annual rate of 1,352,000, which was 1.8 percent (±1.3 percent) below the revised March rate of 1,377,000 permits, but was still 7.7 percent (±0.9 percent) above the rate of building permit issuance in April a year earlier...the annual rate for housing permits issued in March was revised from 1,354,000 to 1,377,000....again, these annual estimates for new permits reported here were extrapolated from the unadjusted estimates collected monthly by canvassing census agents, which showed permits for roughly 118,600 housing units were issued in April, actually up from the revised estimate of 117,600 new permits issued in March.... for graphs and commentary on this report, see the following two posts by Bill McBride at Calculated Risk: Housing Starts decreased to 1.287 Million Annual Rate in April and Comments on April Housing Starts...  

March Business Sales Rose 0.5%, Business Inventories Were Unchanged

after the release of the April retail sales report, the Census Bureau also released the composite Manufacturing and Trade, Inventories and Sales report for March  (pdf), which incorporates the revised March retail data from that April report and the earlier published March 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 $1,438.3 billion in March, up 0.5 percent (±0.2 percent) from February's revised sales, and up 6.4 percent (±0.3 percent) from March sales of a year earlier...note that total February sales were concurrently revised up from the originally reported $1,430.4 billion to $1,431.4 billion, now a 0.5% increase from January....manufacturer's sales rose 0.4% to $502,794 million in March; retail trade sales, which exclude restaurant & bar sales from the revised March retail sales reported earlier, rose 0.7% to $437,564 million, while wholesale sales rose 0.3% to $497,935 million...

meanwhile, total manufacturer's and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $1,929.6 billion at the end of March, essentially unchanged (±0.1%) from the end of February, but 3.8 percent (±0.3 percent) higher than in March a year earlier...the value of end of February inventories was revised but remained statistically unchanged from the $1,928.8 billion reported last month, 0.6% higher than January's inventory valuation....seasonally adjusted inventories of manufacturers were estimated to be valued at $677,285 million, up 0.3% from February, while inventories of retailers were valued at $624,902 million, 0.5% less than in February, and while inventories of wholesalers were estimated to be valued at $627,396 million at the end of March, 0.3% higher than in February...  

 

(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…)   

Sunday, May 13, 2018

April consumer and producer prices; March job openings, et al

regular monthly reports that were released this week included the the April Consumer Price Index, the April Producer Price Index, and the April Import-Export Price Index from the Bureau of Labor Statistics, and the Job Openings and Labor Turnover Survey (JOLTS) for March, also from the BLS, and the Wholesale Trade, Sales and Inventories report for March from the Census Bureau...that report estimated that the seasonally adjusted value of wholesale sales was at $497.9 billion billion, up 0.3 percent (+/-0.5%)* from February, after February sales were revised from $495.9 billion to $496.2 billion, and that the adjusted value of wholesale inventories at the end of March was at $627.4 billion, also up 0.3% from February, after the value of wholesale inventories at the end of January was revised from $625.6 billion to $625.3 billion...in addition, the Consumer Credit Report for March was released by the Fed this week, and it showed that overall consumer credit, a measure of non-real estate debt, expanded by a seasonally adjusted $11.7 billion, or at a 3.6% annual rate, as non-revolving credit expanded at a 6.0% annual rate to $2,847.9 billion while revolving credit outstanding shrunk at a 3.0% rate to $1,027.0 billion, in the largest decrease in revolving credit since 2012...

the major privately issued report released this week was the Mortgage Monitor for March from Black Knight Financial Services….that report indicated that 3.73% of US home mortgages were delinquent in March, down from 4.30% in February but up from 3.62% in March a year ago, and that 0.63% of all mortgages were in the foreclosure process at the end of the month, down from 0.65% of mortgages in February and down from the 0.88% of mortgages that were in foreclosure in March a year ago..

Consumer Prices Rose 0.2% in April on Higher Food, Shelter and Energy Costs

the consumer prices increased by 0.2% in April, as higher prices for gasoline, food and shelter more than offset lower prices for automobiles, many other goods and some services...the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that the seasonally adjusted price index for urban consumers rose 0.2% in April, after it had fallen by 0.1% in March but after it had risen by 0.2% in February, 0.5% in January, 0.1% in December, 0.4% in November, 0.1% in October, 0.5% in September, 0.4% in August, and 0.1% last July...the unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, rose from 249.554 in March to 250.546 in April, which left it statistically 2.463% higher than the 244.524 index reading of last March, which is reported as a 2.5% year over year increase...with higher priced energy being a major reason for the increase in the overall index, seasonally adjusted core prices, which exclude food and energy, rose by 0.1% for the month, with the unadjusted core index rising from 256.610 257.025, which put it 2.139% ahead of its year ago reading of 251.642, which is reported as a 2.1% increase...

the volatile seasonally adjusted energy price index increased by 1.4% in April, after it had fallen by 2.8% in March, but after it had risen by 0.1% in February, 3.0% in January, fallen by 0.2% in December, risen by 3.2% in November and by 2.0% in October, and thus is now 7.9% higher than in April a year ago...prices for energy commodities were 3.0% higher in April, while the index for energy services fell by 0.5%, after falling 0.2% in March....the increase in the energy commodity index was driven by a 3.0% increase in the retail price of gasoline, the largest component, while the price of fuel oil rose 2.7%, whereas prices for other fuels, including propane, kerosene and firewood, fell by an average of 0.3%…as a result, the energy commodities index is now 13.7% above its year ago levels, with gasoline prices averaging 13.4% higher than they were a year ago…within energy services, the index for utility (piped) gas service fell 0.4% after falling by 1.2% in March, which left utility gas priced just 1.0% higher than it was a year ago, while the electricity price index was 0.6% lower, after being unchanged in March...the energy services price index is now only 1.2% higher than last April, as electricity prices have also increased by 1.2% over that period...

the seasonally adjusted food price index rose 0.3% in April, after rising 0.1% in March, being unchanged in February, rising 0.2% in January, 0.2% in December, being unchanged in October and November, rising 0.1% in September, 0.1% in August, 0.2% in July, being unchanged in June, rising 0.2% in May, and 0.2% last April, as the index for food purchased for use at home was 0.3% higher in April, the largest increase since March 2017, while prices for food bought to eat away from home were 0.2% higher, as prices at fast food outlets rose 0.1% and prices at full service restaurants rose 0.3%, while food prices at elementary and secondary schools were unchanged...

in the food at home categories, the price index for cereals and bakery products decreased by 0.2%, as prices for bread fell 1.3% and prices for cookies fell 2.4%...the price index for the meats, poultry, fish, and eggs group was up 0.7% after rising 0.8% in March as egg prices rose 7.1% and the beef and veal index was 1.3% higher, while at the same time the index for dairy products was 0.4% higher on a 0.4% increase in the price index for milk...in addition, the fruits and vegetables index was 1.0% higher on a 1.1% increase in the price index for fresh fruits, a 0.6% increase in the index for fresh vegetables and 4.5% jump in canned fruit prices....on the other hand, the beverages index was 0.6% lower, as coffee prices fell 1.3% and noncarbonated juices and drink prices were priced 0.5% lower...lastly, the index for the ‘other foods at home’ category was unchanged, as prices for butter and margarine rose 2.0% and while prices for salt and other seasonings and spices fell 2.3%....

among food at home line items, only prices for eggs, which have risen 23.3% since last April, have seen price increase greater than 10% over the past year, while lettuce prices, down 14.0% over the past year, are the only food item that has fallen in price by more than 10%...the itemized list for price changes in over 100 separate food items is included at the beginning of Table 2, which gives us a line item breakdown for prices of more than 200 CPI items overall...

among the seasonally adjusted core components of the CPI, which rose by 0.1% in April after rising by 0.2% in March, 0.2% in February, 0.3% in January, 0.3% in December, 0.1% in November, 0.2% in October, 0.1% in September, 0.2% in August and by 0.1% in each of the prior 4 months, the composite of all goods less food and energy goods fell by 0.1%, while the more heavily weighted composite for all services less energy services was 0.2% higher....among the goods components, which will be used by the Bureau of Economic Analysis to adjust April retail sales for inflation in national accounts data, the index for household furnishings and supplies rose 0.6% on a 1.1% increase in the index for living room, kitchen, and dining room furniture and a 9.6% increase in prices for laundry equipment...the apparel price index was 0.3% higher on a 4.5% increase in prices for women's outerwear and a 3.0% increase in the index for girls' apparel....on the other hand, prices for transportation commodities other than fuel were 0.9% lower, as prices for new cars fell 0.5%, prices for used cars were down 1.6%, and tire prices fell 0.7%...at the same time, prices for medical care commodities were 0.2% lower on a 0.4% decrease in non-prescription drug prices, while the recreational commodities index was 0.3% lower on a 2.0% drop the prices for televisions....in addition, the education and communication commodities index was 0.2% lower, on 0.8% decreases in the indexes for college textbooks and for telephone hardware, calculators, and other consumer information items...lastly, a separate price index for alcoholic beverages was up 0.3%, while the price index for ‘other goods’ was up 0.6% on a 1.4% increase in cigarette prices and a 0.9% increase in the index for miscellaneous personal goods..

within core services, which rose by 0.2%, 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 costs for lodging away from home at hotels and motels rose 0.8%, the sub-index for water, sewers and trash collection rose 0.4%, and other household operation costs were on average 0.1% higher....at the same time, the index for medical care services was up 0.2%, as professional services rose 0.2% and hospital services were also priced 0.2% higher...on the other hand, the transportation services index was 0.4% lower on a 2.7% decrease in airline fares, while the recreation services index also fell 0.4% as cable and satellite television service fell 0.5%, as did club memberships for shopping clubs, fraternal, and other organizations, and participant sports...meanwhile, the index for education and communication services was unchanged, as postage was up 0.5% while internet and electronic information services fell 0.7%...lastly, the index for other personal services was up 1.0% as the index for tax return preparation and other accounting fees rose 7.9%...among core line items, prices for televisions, which are now 15.6% cheaper than a year ago, and the index for audio equipment, which is now 18.4% lower than last April, have seen prices drop by more than 10% over the past year, while nothing has seen prices rise by a double digit magnitude over that span...

Producer Prices Up 0.1% in April, as Lower Wholesale Foods partially offset Higher Transportation Services

the seasonally adjusted Producer Price Index (PPI) for final demand rose 0.1% in April, as prices for finished wholesale goods averaged no change, while margins of final services providers increased by 0.1%...that followed a March report that indicated the PPI was 0.3% higher, with prices for both finished goods and final demand for services up 0.3%, and a February report that indicated the PPI was 0.2% higher, with prices for finished wholesale goods down 0.1%, while margins of final services providers increased by 0.3%....on an unadjusted basis, producer prices are now 2.6% higher than a year ago, with the core producer price index, which excludes food, energy and trade services, 2.5% higher for the year, down from the year over year figures of 3.0% for the PPI and 2.8% for core that were indicated in March....

as noted, the price index for final demand for goods, aka 'finished goods', was unchanged in April, after being up 0.3% in March, down 0.1% in February, up 0.4% in January, and rising a revised 0.1% in December, and 0.8% in November...the price index for wholesale energy was up 0.1% in April after falling 2.1% in March, 0.5% in February but rising 3.4% in January, while the price index for wholesale foods fell 1.1%, and the index for final demand for core wholesale goods (ex food and energy) was 0.3% higher...driving the wholesale food price index lower were a 17.8% decrease in prices for fresh and dry vegetables, and a 22.9% decrease in wholesale prices for fresh eggs, partially reversing higher prices for both that we saw last month...the wholesale energy price index, meanwhile, inched up as 4.7% higher wholesale prices for home heating oil and a 4.0% increase in wholesale LP gas prices were partially offset by a 0.5% lower residential natural gas and electricity prices and a 0.4% decrease in the wholesale price of gasoline....among wholesale core goods, prices for cigarettes rose 3.2% while the wholesale price indexes for both commercial and residential furniture rose 0.7%…

at the same time, the index for final demand for services rose 0.1%, after being rising 0.3% in February and March and a revised 0.5% in January, as the April index for final demand for trade services rose 0.2%, the index for final demand for transportation and warehousing services rose 0.6%, while the index for final demand for services less trade, transportation, and warehousing services was 0.1% lower....among trade services, seasonally adjusted margins for automobile and parts retailers rose 1.4% and margins for machinery, equipment, parts, and supplies wholesalers rose 1.6%... among transportation and warehousing services, margins for air transportation of passengers rose 1.3%...in the core final demand for services index, the index for traveler accommodation services fell 3.2% while the index for bundled wired telecommunications access services fell 1.3%..

this report also showed the price index for intermediate processed goods was 0.5% higher in April, after falling 0.3% in March, but rising 0.7% in both January and February, and by a revised 0.3% in December....the price index for intermediate energy goods rose 1.3%, as prices for liquefied petroleum gas rose 4.0% and prices for natural gas sold to electric utilities rose 5.4%, while prices for intermediate processed foods and feeds rose 0.3% as the index for processed fruits and vegetables rose 0.8%...meanwhile, the core price index for processed goods for intermediate demand less food and energy was 0.3% higher on a 3.0% increase in the index for steel mill products and a 3.0% increase in prices for metal containers....prices for intermediate processed goods are now 4.7% higher than in March a year ago, now the 17th 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 rose 0.9% in April, after falling 4.8% in March, rising 2.8% in February, and a revised 1.1% in January and 1.3% in December....that was as the price index for crude energy goods rose 3.8% as crude oil prices rose 7.2%, while at the same time the index for unprocessed foodstuffs and feedstuffs fell 2.1%, as prices for slaughter hogs fell 18.7% and prices for slaughter steers and heifers fell 6.3%...on the other hand,  the index for core raw materials other than food and energy materials rose 0.7%, as prices for iron ore rose 7.6% and prices for iron and steel scrap rose 5.2%...this raw materials index is now up by 3.2% from a year ago, in contrast to the year over year increase of 12.8% that we saw last April...

lastly, the price index for services for intermediate demand rose 0.3% in April, after rising 0.3% in March and 0.5% in February, but after January's increase was revised to unchanged....the index for trade services for intermediate demand was up 0.9%, as margins for metals, minerals, and ores wholesalers rose 10.0% and margins for intermediate food wholesalers rose 1.2%…the index for transportation and warehousing services for intermediate demand rose 0.5%, as the intermediate index for transportation of passengers (partial) rose 1.3%...meanwhile, the core price index for services less trade, transportation, and warehousing for intermediate demand was 0.2% higher, as the index for securities brokerage, dealing, and investment advice services rose 1.2% while the index for television advertising time sales rose 3.8%....over the 12 months ended in April, the year over year price index for services for intermediate demand, which has never turned negative on an annual basis, is now 3.1% higher than it was a year ago... 

Job Openings at a Record High in March; Job Quitting Rises, Hiring and Layoffs Fall

the Job Openings and Labor Turnover Survey (JOLTS) report for March from the Bureau of Labor Statistics estimated that seasonally adjusted job openings increased by 472,000 to a record 6,550,000 in March, after February job openings were revised up 22,000 from the originally reported 6,052,000...March's jobs openings were also up 16.8% from the 5,607,000 job openings reported in March a year ago, as the job opening ratio expressed as a percentage of the employed was rose to 4.2% in March, up from the 3.9% rate in February and the 3.7% rate of March a year ago...(details on job openings by industry and region can be viewed in Table 1)...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 March, seasonally adjusted new hires totaled 5,425,000, down by 86,000 from the revised 5,511,000 who were hired or rehired in February, as the hiring rate as a percentage of all employed remained unchanged at 3.7% in March, which was up from the 3.6% hiring rate in March a year earlier (details of hiring by sector since November are in table 2)....meanwhile, total separations rose by 118,000 to 5,291,000 in March, as the separations rate as a percentage of the employed rose from 3.5% to 3.6%, which was also up from 3.5% a year ago (see table 3)...subtracting the 5,291,000 total separations from the total hires of 5,425,000 would imply an increase of 134,000 jobs in March, very much in line with the revised payroll job increase of 135,000 for March reported in the April establishment survey last week...

breaking down the seasonally adjusted job separations, the BLS found that 3,344,000 of us voluntarily quit our jobs in March, up from the revised 3,208,000 who quit their jobs in February, while the quits rate, widely watched as an indicator of worker confidence, rose 0.1% to 2.3% of total employment, and it was also up from 2.2% a year earlier (see details in table 4)....in addition to those who quit, another 1,564,000 were either laid off, fired or otherwise discharged in March, down by 56,000 from the revised 1,620,000 who were discharged in February, as the discharges rate remained unchanged at 1.1% of all those who were employed during the month, same as a year ago...meanwhile, other separations, which includes retirements and deaths, were at 382,000 in March, up from 346,000 in February, for an 'other separations rate’ of 0.3%, up from 0.2% in February and in March 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 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 from the aforementioned GGO posts, contact me…)   

Sunday, May 6, 2018

April’s jobs report; March incomes and outlays, trade deficit, construction spending, and factory inventories

the major economic releases from the past week that we'll review today include the Employment Situation Summary for April from the Bureau of Labor Statistics, and four March reports that include metrics which were either estimated or included in last week's advance estimate of 1st quarter GDP:  the March report on Personal Income and Spending from the Bureau of Economic Analysis, the Commerce Dept report on our international trade in goods and services for March, and the March report on Construction Spending (pdf), and the Full Report on Manufacturers' Shipments, Inventories and Orders for March, both from the Census Bureau...in addition, this week also saw the release of the last regional Fed manufacturing survey for April: the Dallas Fed Texas Manufacturing Outlook Survey reported their general business activity composite index fell to +21.8 in April, down from a revised +22.8 in March, still suggesting a strong expansion in the energy industry centered Texas economy…

privately issued reports released this week included the ADP Employment Report for April and the light vehicle sales report for April from Wards Automotive, which estimated that vehicles sold at a 17.07 million annual rate in April, down from the 17.40 million annual rate of sales in March, but up from the 16.81 million annual rate in April a year ago...in addition, the week saw both of the widely followed purchasing manager's surveys from the Institute for Supply Management (ISM): the April Manufacturing Report On Business indicated that the manufacturing PMI (Purchasing Managers Index) fell to 57.3% in April, down from 59.3% in March, which suggests a more modest expansion in manufacturing firms nationally, and the April Non-Manufacturing Report On Business; which saw the NMI (non-manufacturing index) fall to 56.8% in April from 58.8% in March, indicating a smaller plurality of service industry purchasing managers reported expansion in various facets of their business in April...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 Add 164,000 Jobs in April, Unemployment Rate Drops to 3.9% On Labor Force Decline

the Employment Situation Summary for April indicated weak payroll job growth, while the unemployment rate dropped because the labor participation rate fell…seasonally adjusted estimates extrapolated from the establishment survey data projected that employers added 164,000 jobs in April, after the previously estimated payroll job increase for March was revised up from 103,000 to 135,000, while the payroll jobs increase for February was revised down from 326,000 to 324,000…that means that this report represents a total of 194,000 more seasonally adjusted payroll jobs than were reported last month, about in line with the past year's average of 191,000 jobs per month...the unadjusted data shows that there were actually 998,000 more payroll jobs extant in April than in March, as the usual seasonal job increases in sectors such as construction, services to buildings and dwellings, and leisure and hospitality were normalized by the seasonal adjustments…

seasonally adjusted job increases in April were spread through throughout both the goods producing and the private service sectors, with only the wholesale trade sector showing a 9,800 job loss on a seasonally adjusted basis, while governments shed 4,000 employees with the loss of 7,000 at the state level...the broad professional and business services sector added 54,000 jobs, as 8,600 more than normal for this time of year were added in services to buildings.... employment in health care and social assistance rose by 29,300, with the addition of 8,000 jobs in hospitals, while manufacturers added 24,000 jobs, led by an 8,400 job increase in the production of machinery...the leisure and hospitality sector added 18,000 jobs, with the addition of 14,800 more spots than usual in bars and restaurants, while the construction sector added 17,000 jobs above their seasonal norm, with 7,300 of those added by nonresidential specialty trade contractors....meanwhile, the other major sectors, including financial services, information, mining, retail, transportation and warehousing, utilities, and education all also saw small increases in payroll employment over the month…

the establishment survey also showed that average hourly pay for all employees rose by 4 cents an hour to $26.84 an hour in April, after it had increased by a revised 6 cents an hour in March; at the same time, the average hourly earnings of production and non-supervisory employees increased by 5 cents to $22.51 an hour...employers also reported that the average workweek for all private payroll employees was unchanged at 34.5 hours in April, while hours for production and non-supervisory personnel rose 0.1 hour to 33.8 hours after falling back 0.1 hour in March...in addition, the manufacturing workweek was up 0.2 hours at 41.1 hours, while average factory overtime increased by 0.1 hours to 3.7 hours...

meanwhile, the April household survey indicated that the seasonally adjusted extrapolation of those who reported being employed inched up by an estimated 3,000 to 155,181,000, while the similarly estimated number of those who reported being unemployed fell by 239,000 to 6,346,000; which thus meant a net 236,000 decrease in the total labor force...since the working age population had grown by 175,000 over the same period, that meant the number of employment aged individuals who were not in the labor force rose by 410,000 to a record 95,745,000....with the number of those in the labor force decreasing  while the civilian noninstitutional population was increasing, the labor force participation rate fell 0.1% to 62.8%....at the same time, since the number employed was virtually unchanged, the employment to population ratio, which we could think of as an employment rate, fell 0.1% to 60.3%...in addition, the decrease in the number unemployed was also large enough to lower the unemployment rate from 4.1% to 3.9%, the lowest in 18 years....meanwhile, the number who reported they were involuntarily working part time fell by 34,000 to 4,985,000 in April, which was also enough to lower the alternative measure of unemployment, U-6, which includes those "employed part time for economic reasons", from 8.0% in March to 7.8% in April, the lowest since May 2001....

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.. 

March Personal Income Rose 0.3%, Personal Spending Rose 0.4% , PCE Price Index Little Changed

the release on Monday of this week of the March Income and Outlays report from the Bureau of Economic Analysis was actually concurrent with the release of the advance report on 1st quarter GDP on the prior Friday, and much of the data in this report has already been included in that report...and like that report, all the dollar values reported here are at an annual rate and seasonally adjusted, ie, they tell us what income, spending and saving would be for a year if March's adjusted income and spending were extrapolated over an entire year...however, the percentage changes are computed monthly, from one 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 February to March....thus, when the opening line of the press release for this report tell us "Personal income increased $47.8 billion (0.3 percent) in March...", it means that the annualized figure for all types of personal income in March, $16,888.3 billion, was $47.8 billion, or a bit less than 0.3% greater than the annualized personal income figure for February; the actual increase in personal income in March over February is not given....similarly, disposable personal income, which is income after taxes, also rose by less than 0.3%, from an annual rate of $14,770.1 billion in February to an annual rate of $14,809.9 billion in March...

meanwhile, seasonally adjusted personal consumption expenditures (PCE) for March, which were included in the change in real PCE in 1st quarter GDP that we reviewed last week, rose at a $61.7 billion annual rate to a rate of $13,823.9 billion in consumer spending annually, more than a 0.4% increase from February, which itself was revised down from the originally reported annual rate of $13,777.0 billion to $13,762.2 billion...the current dollar increase in March spending included an annualized $57.1 billion increase in spending for services, but just a $4.6 billion increase in annualized spending for goods...total personal outlays for March, which includes interest payments and personal transfer payments in addition to PCE, rose by an annualized $62.3 billion to $14,349.3 billion, which left personal savings, which is disposable personal income less total outlays, at a $460.6 billion annual rate in March, down from the revised $483.1 billion in annualized personal savings in February...as a result, the personal saving rate, which is personal savings as a percentage of disposable personal income, fell to 3.1%, from 3.3% in February, which itself was originally reported at 3.4%..

while our personal consumption expenditures accounted for 69.4% of our first quarter GDP, before they were included in the measurement of the change in our output they were 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.....that was done with the price index for personal consumption expenditures, which is also included in this report, which is a chained price index based on 2009 prices = 100....from Table 9 in the pdf for this report, we find that that index rose from 114.273 in February to 114.310 in March, giving us a month over month inflation rate of 0.032379%, which the BEA reports as a increase of less than 0.1 percent, or 0.0% in their tables….at the same time, Table 11 gives us a year over year PCE price index increase of 2.0%, and a core price increase, excluding food and energy, of 1.9% for the past year, both close to the Fed's inflation target....applying the March inflation adjustment to the change in March PCE shows that real PCE was up 4.158%, which BEA reports as a 0.4% increase in their press release and in the tables...note that when those PCE price indexes are applied to a given month's annualized current dollar PCE, it yields that month's annualized real PCE in chained 2009 dollars, which aren't really dollar amounts at all, but merely the means that the BEA uses to compare one month's or one quarter's real goods and services produced to another....those results are shown in tables 7 and 8 of the PDF, where the quarterly figures given are identical to those shown in table 3 in the GDP report, and which were used to compute the contribution of real personal consumption of goods and services to GDP...

March Trade Deficit Drops 15.2% as Imports Fall and Exports Rise

our trade deficit was significantly lower in March, after our February deficit was revised a bit higher....the Commerce Department report on our international trade in goods and services for March indicated that our seasonally adjusted goods and services trade deficit fell by $8.787 billion to $48.956 billion in March, from a February deficit that was revised from the originally reported $57.59 billion to $57.743 billion...in rounded numbers, the value of our March exports rose by $4.2 billion to $208.5 billion on a $3.7 billion increase to $140.9 billion in our exports of goods and an increase of $0.4 billion to $67.6 billion in our exports of services, while our imports fell $4.6 billion to $257.5 billion on a $3.7 billion decrease to $210.4 billion in our imports of goods and a $0.9 billion decrease to $47.1 billion in our imports of services.....the latter reflected the absence of the one-time $1.0 billion increase in charges for the use of intellectual property for the rights to broadcast the 2018 Winter Olympic Games in February...export prices averaged 0.3% higher in March, so the real growth in exports was less than the nominal dollar value by that percentage, while import prices were unchanged, so hence the change in real imports will be roughly equal to the nominal dollar values reported here..

the increase in our March exports of goods came about as a result greater exports of capital goods, foods and feeds, and industrial supplies and materials...referencing the Full Release and Tables for March (pdf), in Exhibit 7 we find that our exports of capital goods rose by $1,900 million to $47,440 million on a $1,938 million increase in our exports civilian aircraft and a $387 million increase in our exports of engines for civilian aircraft, that our exports of foods, feeds and beverages rose by $1,049 million to $11,825 million on a $517 million increase in our exports of soybeans and a $308 million increase in our exports of corn, and that our exports of industrial supplies and materials rose by $947 million to $44,377 million on a $443 million increase in our exports of crude oil, a $331 million increase in our exports of fuel oil, and a $218 million increase in our exports of other petroleum products...in addition, our exports of consumer goods rose by $146 million to $17,217 million on a $379 million increase in our exports of pharmaceuticals, and our exports of other goods not categorized by end use rose by $531 million to $5,521 million...partially offsetting those increases, our exports of automotive vehicles, parts, and engines fell by $646 million to $14,180 million on $687 million lower exports of passenger cars..

Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our goods imports and shows that lower imports of all categories of goods other than passenger cars were responsible for the decrease in March imports...our imports of capital goods fell by $1513 million to $56,215 million on a $543 million decrease in our imports of computer accessories, a $548 million decrease in our imports of telecommunications equipment, and a $531 million decrease in our imports of semiconductors...in addition, our imports of consumer goods fell by $928 million to $54,216 million on a $710 million decrease in our imports of toys, games and sporting goods, and a $696 million decrease in our imports of TVs, and our imports of industrial supplies and materials fell by $704 million to $47,330 million, as our imports of crude oil fell by $509 million...meanwhile, our imports of foods, feeds, and beverages fell by $411 million to $12,227 million, and our imports of other goods not categorized by end use fell by $248 million to $7,566 million....partially offsetting those decreases, our imports of automotive vehicles, parts and engines rose by $214 million to $31,301 million on a $531 million increase in our imports of new and used passenger cars...

in the advance report on 1st quarter GDP last week, our March trade deficit was estimated based on the sketchy Advance Report on our International Trade in Goods which was released just before the GDP release...that report estimated that our March goods trade deficit was at $68.037 billion on a Census adjusted basis, on goods exports of $125.5 billion and goods imports of $190.3 billion....at the same time, the February goods trade deficit had remained unrevised from advance figure of $75,875 million…Table 5 from the March trade report revises those figures and indicates that our March goods deficit actually came in at $68,294 million on a Census basis, while the February goods deficit was revised to $75,811 million...those revisions from the previously published data mean that the 1st quarter trade deficit in goods was $0.193 billion more than was included in last week's GDP report, or roughly $0.8 billion more on an annualized basis, which would subtract about 0.02 percentage points from 1st quarter GDP when the 2nd estimate is published at the end of May....

Construction Spending Fell 1.7% in March after Prior Months Were Revised Much Higher

the Census Bureau's report on construction spending for March (pdf) estimated that the month's seasonally adjusted construction spending would work out to $1,284.7 billion annually if extrapolated over an entire year, which was 1.7 percent (±0.8%) below the revised annualized February estimate of $1,306.4 billion, but 3.6 percent (±1.3 percent) above the estimated annualized level of construction spending in March of last year...however, the annualized February construction spending estimate was revised 2.6% higher, from $1,273.1 billion to $1,306.4 billion, while the annual rate of construction spending for January was revised 1.7% higher, from $1,272.2 billion to $1,294.0 billion...

details on different subsets of construction spending are provided by the Census release summary:  Spending on private construction was at a seasonally adjusted annual rate of $987.5 billion, 2.1 percent (±0.8 percent) below the revised February estimate of $1,009.1 billion. Residential construction was at a seasonally adjusted annual rate of $536.8 billion in March, 3.5 percent (±1.3 percent) below the revised February estimate of $556.5 billion. Nonresidential construction was at a seasonally adjusted annual rate of $450.7 billion in March, 0.4 percent (±0.8 percent)* below the revised February estimate of $452.5 billion.  In March, the estimated seasonally adjusted annual rate of public construction spending was $297.2 billion, nearly the same as (±1.6 percent)* the revised February estimate of $297.3 billion. Educational construction was at a seasonally adjusted annual rate of $73.1 billion, 0.1 percent (±2.5 percent)* below the revised February estimate of $73.2 billion. Highway construction was at a seasonally adjusted annual rate of $91.0 billion, 1.2 percent (±5.4 percent)* above the revised February estimate of $89.9 billion.

with the upward revisions to the prior months, it turns out that construction spending for all three months of the 1st quarter was higher than was reported by the BEA in their advance estimate of GDP last week....as we saw above, annualized construction spending for January was revised $21.8 billion higher, and annualized construction spending for February was revised $33.3 billion higher...in reporting 1st quarter GDP, the BEA's key source data and assumptions (xls) indicated that they had estimated March residential construction (at an annual rate) would be $4.6 billion more than that of the previously reported February figure, that March nonresidential construction would be valued at $456.6 billion, $2.4 billion more than that of the reported February figure, and that March public construction would increase by $1.4 billion from previously reported February levels...totaling those changes, the 1st quarter GDP report showed March construction spending at an annual rate $8.4 billion higher than previously reported February levels...with this report showing March construction spending was down at an $21.7 billion annual rate from February figures that were revised $33.3 billion higher, that means the total annualized construction figure used for March in the GDP report was $3.2 billion too low...averaging the understatements in the annual rates of construction spending for the three months of the 1st quarter, that would mean that this report suggests that construction spending was underestimated by $19.43 billion (at an annual rate) in the 1st quarter GDP report, implying a upward revision to the related GDP components at a rate that would result in an addition of about 0.47 percentage points to first quarter GDP when the 2nd estimate is released at the end of May...

March Factory Shipments Up 0.4%, Inventories up 0.1%

the Census Bureau's summary of the Full Report on Manufacturers' Shipments, Inventories, & Orders (pdf) for March, which precedes the detailed spreadsheet of those metrics and which includes revisions to the March advance durable goods report which we reviewed last week, is quite complete, so we'll just quote directly from that here:

  • New orders for manufactured goods in March, up seven of the last eight months, increased $7.8 billion or 1.6 percent to $507.7 billion, the U.S. Census Bureau reported today. This followed a 1.6 percent February increase. Shipments, up fifteen of the last sixteen months, increased $2.1 billion or 0.4 percent to $502.8 billion. This followed a 0.2 percent February increase. Unfilled orders, up six of the last seven months, increased $9.2 billion or 0.8 percent to $1,153.8 billion. This followed a 0.3 percent February increase. The unfilled orders-to-shipments ratio was 6.52, up from 6.51 in February. Inventories, up sixteen of the last seventeen months, increased $1.7 billion or 0.3 percent to $677.3 billion. This followed a 0.4 percent February increase. The inventories-to-shipments ratio was 1.35, unchanged from February.
  • New orders for manufactured durable goods in March, up four of the last five months, increased $6.5 billion or 2.6 percent to $255.2 billion, unchanged from the previously published increase. This followed a 3.6 percent February increase. Transportation equipment, also up four of the last five months, led the increase, $6.4 billion or 7.6 percent to $91.4 billion. New orders for manufactured nondurable goods increased $1.2 billion or 0.5 percent to $252.4 billion. 
  • Shipments of manufactured durable goods in March, up ten of the last eleven months, increased $0.9 billion or 0.4 percent to $250.4 billion, up from the previously published 0.3 percent increase. This followed a 0.8 percent February increase. Transportation equipment, up four of the last five months, drove the increase, $1.5 billion or 1.8 percent to $83.5 billion. Shipments of manufactured nondurable goods, up nine of the last ten months, increased $1.2 billion or 0.5 percent to $252.4 billion. This followed a 0.3 percent February decrease. Petroleum and coal products, up eight of the last nine months, led the increase, $0.8 billion or 1.5 percent to $51.7 billion.
  • Unfilled orders for manufactured durable goods in March, up six of the last seven months, increased $9.2 billion or 0.8 percent to $1,153.8 billion, unchanged from the previously published increase. This followed a 0.3 percent February increase. Transportation equipment, up three of the last four months, led the increase, $7.9 billion or 1.0 percent to $782.8 billion.
  • Inventories of manufactured durable goods in March, up twenty of the last twenty-one months, increased $0.5 billion or 0.1 percent to $411.5 billion, unchanged from the previously published increase. This followed a 0.5 percent February increase. Machinery, up four of the last five months, led the increase, $0.4 billion or 0.5 percent to $71.0 billion. Inventories of manufactured nondurable goods, up ten consecutive months, increased $1.2 billion or 0.5 percent to $265.8 billion. This followed a 0.2 percent February increase. Petroleum and coal products, up nine consecutive months, led the increase, $0.8 billion or 1.9 percent to $43.7 billion. By stage of fabrication, March materials and supplies increased 0.5 percent in durable goods and increased 0.2 percent nondurable goods. Work in process decreased 0.4 percent in durable goods and increased 2.0 percent in nondurable goods. Finished goods increased 0.4 percent in durable goods and were virtually unchanged in nondurable goods.

the BEA's key source data and assumptions (xls) for the advance estimate of first quarter GDP indicates that they had estimated that the value of non-durable goods inventories would increase by $0.6 billion in March, while this report indicates total non-durable goods inventories increased by $1.2 billion, so that would indicate that they underestimated the 1st quarter GDP inventory component by about $2.4 billion on an annualized basis, which would seem to imply that 1st quarter GDP would have to be revised upwards by 0.06 percentage points to account for what this report shows..

 

(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 from the aforementioned GGO posts, contact me…)   

Sunday, April 29, 2018

1st Quarter GDP, March durable goods, new and existing home sales

the key economic report of the past week was the advance estimate of 1st quarter GDP from the Bureau of Economic Analysis, which was released on Friday; other widely watched releases included the March advance report on durable goods and the March report on new home sales, both from the Census bureau, the Existing Home Sales Report for March from the National Association of Realtors (NAR), and the February Case-Shiller Home Price Index from S&P Case-shiller, which actually is a relative average of December, January and February home prices...Case Shiller’s report indicated that home prices nationally for those 3 months averaged 6.3% higher than prices for the same homes that sold during the same 3 month period a year earlier….also released this week was the Chicago Fed National Activity Index (CFNAI) for March, a weighted composite index of 85 different economic metrics, which fell to +0.10 in March from +0.98 in February, after February's index was revised from the +0.88 reported last month...as a result, the 3 month average of that index fell to +0.27 in February, down from a revised +0.31 in February, still  a positive number which thus indicates that national economic activity has remained above the historical trend over recent months...

the week also saw the release of two more regional Fed manufacturing surveys for April:  the Richmond Fed Survey of Manufacturing Activity, covering an area that includes Virginia, Maryland, the Carolinas, the District of Columbia and West Virginia, reported its broadest composite index fell to -3, following last month's reading of +15, indicating the first slight slowing of that region's manufacturing since September 2016, while the Kansas City Fed manufacturing survey for April, covering western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico, reported its broadest composite index rose to +26 in April, up from readings of +17 in both March and in February, indicating a somewhat faster pace of growth in that region's manufacturing....

1st Quarter Growth Slows to a 2.3% Rate Despite Weakest Goods Consumption Since Q2 2009

our economy grew at a 2.3% rate in the 1st quarter, somewhat slower than the growth rate of the fourth quarter, as slower growth in personal consumption, fixed investment, and state and local government spending was only partially offset by greater growth of inventories...the Advance Estimate of 1st Quarter GDP from the Bureau of Economic Analysis estimated that the real output of goods and services produced in the US grew at a 2.3% annual rate from the output of the 4th quarter of 2016, when our real output grew at a 2.9% real rate...in current dollars, our first quarter GDP grew at a 4.3% annual rate, increasing from what would work out to be a $19,754.1 billion a year output rate in the 4th quarter of last year to a $19,965.3 billion annual rate in the 1st quarter of this year, with the headline 2.3% annualized rate of increase in real output arrived at after an annualized inflation adjustment averaging 2.0%, aka the GDP deflator, was computed and applied to the current dollar change...

as is usual with an advance estimate, the BEA cautions that the source data is incomplete and also subject to revisions, which have averaged +/-0.6% in either direction before the third estimate for the quarter is released, which will be two months from now....also note that March construction and non-durables inventory data have yet to be reported, and that the BEA assumed a small increase in nonresidential construction, an increase in residential construction, and a small decrease in nondurable manufacturing inventories for March before they estimated 1st quarter output (see their Key source data and assumptions Excel file for more details)..

remember that this release reports all quarter over quarter percentage changes at an annual rate, which means that they're expressed as a change a bit over 4 times the change that 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 2009, and then that all percentage changes in this report are calculated from those 2009 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 advance estimate of 1st quarter GDP, which we find linked to on the sidebar of the BEA press release, along with other references ...specifically, we refer to table 1, which shows the real percentage change in each of the GDP components annually and quarterly since the 2nd quarter of 2014, table 2, which shows the contribution of each of the components to the GDP figures for those months and years, table 3, which shows both the current dollar value and inflation adjusted value of each of the GDP components, table 4, which shows the change in the price indexes for each of the components, and table 5, which shows the quantity indexes for each of the components, which are used to convert current dollar figures into units of output represented by chained dollar amounts...

personal consumption expenditures (PCE), which accounts for nearly 69% of GDP, grew at a 3.8% rate in current dollars in the 1st quarter, which worked out to a 1.1% real growth rate of consumed goods and services after an annualized 2.7% PCE price index increase was used to adjust that personal spending for inflation....however, consumer outlays for durable goods actually fell at a 4.9% rate in current dollars while prices of those durable goods were on average 1.6% lower, and thus the BEA found real growth in output of consumer durables fell at a 3.3% rate, as a drop in real consumption of automobiles at a 16.1% rate more than offset increases in real consumption of recreational goods and vehicles and other durable goods....the BEA also found that real output of consumer non-durable goods grew at a 0.1% rate after increased consumer spending for non-durable goods at a 4.0% rate was adjusted for higher non-durable prices at a 3.9% rate, with decreased consumption of clothing and energy goods barely offset by greater growth of real consumption of other nondurables... meanwhile, the 5.2% nominal growth in consumer outlays for services was deflated by a 3.1% increase in prices for services to show real output of consumer services grew at a 2.1% annual rate, led by real growth of financial services and health care....as a result of these changes in growth from the 4th to the 1st quarter, the decrease in outlays for durable goods subtracted 0.24 percentage points from GDP, largely on a 0.42 percentage point hit from automotives, while the incremental increased consumption of non-durable goods added just 0.01 percentage points to the growth of GDP, and while increased consumption of services added 0.97 percentage points to the growth rate of the 1st quarter economy..

the real change in other components of the change in GDP are computed by the BEA in the same manner as PCE; ie, the actual annualized increase in current dollar spending for the quarter is adjusted with an inflation factor for that component, yielding the change in real units of goods or services produced in the quarter at an annual rate...thus, after that inflation adjustment, real gross private domestic investment, which had grown at a 4.7% annual rate in the 4th quarter of 2017, grew at a 7.3% annual rate from there in the 1st quarter...however, real growth in fixed investment grew at a 4.6% annual rate in the 1st quarter, after growing at a 8.2% rate in the 4th quarter, as real non-residential fixed investment grew at a 6.2% rate while real residential investment was statistically unchanged...real investment in non-residential structures grew at a 12.3% rate and added 0.34 percentage points to 1st quarter GDP, real investment in equipment grew at a 4.7% rate and added 0.27 percentage points to GDP, and real investment in intellectual property grew at 3.6% rate and added 0.14 percentage points to GDP, while real residential investment had no impact....for an easy to read table as to what's included in each of those GDP investment categories, see the NIPA Handbook, Chapter 6, page 3...

however, greater growth in inventories boosted gross investment and hence GDP, as real private inventories grew by an inflation adjusted $33.1 billion in the quarter, up from the $15.6 billion of inflation adjusted inventory growth that we saw in the 4th quarter, and as a result the $17.5 billion greater real inventory growth added 0.43 percentage points to the 1st quarter's growth rate, after $22.9 billion slower real inventory growth in the 4th quarter had subtracted 0.53 percentage points from that quarter's GDP....however, since greater growth in inventories indicates that more of the goods produced during the quarter were left in storage or "sitting on the shelf”, the $17.5 billion increase in their growth in turn meant that real final sales of GDP were actually smaller by that much, and hence real final sales of GDP rose at a 1.9% rate in the 1st quarter, after real final sales had increased at a 3.4% rate in the 4th quarter, when the change in inventories was negative, hence meaning real final sales of GDP was greater…

meanwhile, our real exports of goods and services grew at a 4.8% rate in the 1st quarter, after growing at a 7.0% rate in the 4th quarter of 2017, while our real imports grew at a 2.6% rate in the 1st quarter, after rising at a 14.1% rate in the 4th quarter...as you'll recall, real increases in exports are added to GDP because they are part of our production that was not consumed or added to investment in our country (& hence not counted in GDP elsewhere), so the increase in 1st quarter exports added .59 percentage points to 1st quarter GDP....on the other hand, real increases in imports subtract from GDP because they represent either consumption or investment that was added to another GDP component that shouldn't have been, because it was not produced in our country and hence is not part of our national product….hence the 2.6% increase in real imports in the 1st quarter subtracted 0.39 percentage points from GDP...as a result, our improving trade balance added a net 0.20% percentage points to 1st quarter GDP, after a big increase in our trade deficit had subtracted 1.16% percentage points from GDP in the fourth quarter of last year...

finally, real consumption and investment by all branches of government grew at a 1.2% annual rate in the 1st quarter, after increasing at a 3.0% rate in the 4th quarter, as federal government consumption and investment grew at a 1.7% rate, while state and local consumption and investment grew at a 0.8% rate.....inflation adjusted federal spending for defense grew at a 1.8% rate and added 0.07 percentage points to 1st quarter GDP growth, while real non-defense federal consumption and investment rose at a 1.6% rate and added 0.04 percentage points to GDP...note that federal 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 goods or services....meanwhile, state and local government investment and consumption expenditures grew at an 0.8% annual rate and added 0.09 percentage points to the quarter's growth rate, as shrinkage in real state and local investment at an 0.4% rate subtracted 0.01 percentage points from the quarter's growth...

March Durable Goods: New Orders Up 0.7%, Shipments Up 0.2%, Inventories Up 0.1%

the Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders for March (pdf) from the Census Bureau reported that the value of the widely watched new orders for manufactured durable goods increased by $6.4 billion or 2.6 percent to $254.9 billion in March, after February's new orders were revised from the $247.7 billion reported last month to $248.6 billion, now 3.5% more than January's new orders…as a result, year to date new orders are now up by 8.7% from those of 2017...the volatile monthly new orders for transportation equipment were responsible for the month’s increase, as new transportation equipment orders rose $6.4 billion or 7.6 percent to $91.4 billion, on a 44.5% increase in new orders for commercial aircraft....excluding orders for transportation equipment, other new orders were statistically unchanged, while excluding just new orders for defense equipment, new orders rose 2.8%....at the same time, new orders for nondefense capital goods less aircraft, a proxy for equipment investment, fell 0.1% to $67,238 million...

meanwhile, the seasonally adjusted value of March shipments of durable goods, which were ultimately included as inputs into various components of 1st quarter GDP after adjusting for changes in prices, increased by $0.7 billion or 0.3 percent to $250.0 billion, after the value of February shipments increased 0.7% from January...higher shipments of transportation equipment were responsible for the March increase, as those shipments increased by $1.5 billion or 1.8 percent to $83.4 billion...at the same time, the value of seasonally adjusted inventories of durable goods, also a major GDP contributor, rose by $0.3 billion or 0.1 percent to $411.0 billion, after the value of end of February inventories was revised from $410.6 billion to $410.7 billion, still up 0.4% from January....

finally, unfilled orders for manufactured durable goods, which are probably a better measure of industry conditions than the widely watched but somewhat volatile new orders, rose for the 6th time in the past 7 months, increasing by $9.3 billion or 0.8 percent to $1,154.0 billion, after the February increase was revised from $2.3 billion to $3.7 billion, now a 0.3% increase...a $8.0 billion or 1.0 percent increase to $782.8 billion in unfilled orders for transportation equipment led the overall increase, while unfilled orders excluding transportation equipment orders were up 0.2% to $371,153 million...the unfilled order book for durable goods is now 3.0% above the level of last March, with unfilled orders for transportation equipment now 2.3% above their year ago level, mostly on a 8.9% increase in the backlog of orders for motor vehicles...

New Home Sales Reported Higher in March

the Census report on New Residential Sales for March (pdf) estimated that new single family homes were selling at a seasonally adjusted pace of 694,000 homes annually during the month, which was 4.0 percent (±18.6 percent)* above the revised February annual sales rate of 667,000 new home sales and 8.8 percent (±17.0 percent) above the estimated annual rate that new homes were selling at in March of last year....the asterisk indicates that based on their small sampling, Census could not be certain whether March new home sales rose or fell from those of February, with the figures in parenthesis representing 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 of new single family homes in February were revised up from the annual rate of 618,000 reported last month to an annual rate of 667,000, and new home sales in January, initially reported at an annual rate of 593,000 and revised to a 622,000 rate last month, were further revised up to a 644,000 a year rate with this report, while December's annualized new home sales rate, initially reported at an annual rate of 625,000 and revised from the initial revision of 643,000 to a 653,000 a year rate last month, were revised back down to a 644,000 rate with this release...

the annual rates of sales reported here are seasonally adjusted after extrapolation from the estimates of canvassing Census field reps, which indicated that approximately 58,000 new single family homes sold in March, up from the estimated 56,000 new homes that sold in February and up from the 48,000 that sold in January .....the raw numbers from Census field agents were further used to estimate that the median sales price of new houses sold in March was $337,200, up from the median sale price of $325,800 in February and up from the median sales price of $321,600 in March a year ago, while the average new home sales price was $369,900, down from the $370,800 average sales price in February, and down from the average sales price of $384,400 in March a year ago....a seasonally adjusted estimate of 301,000 new single family houses remained for sale at the end of March, which represents a 5.2 month supply at the March sales rate, down from the 5.8 months of new home supply reported in February...for graphs and additional commentary on this report, see the following two posts by Bill McBride at Calculated Risk: New Home Sales increase to 694,000 Annual Rate in March and A few Comments on March New Home Sales..

Existing Home Sales Increase 1.1% in March

the National Association of Realtors (NAR) reported that existing home sales rose at a 1.1% rate from February to March on a seasonally adjusted basis, projecting that 5.60 million existing homes would sell over an entire year if the March home sales pace were extrapolated over that year, a pace that was still 1.2% below the annual sales rate projected in March of a year ago....the NAR also reported that the median sales price for all existing-home types was $250,400 in March, up from the revised $240,900 in February, and 5.7% higher than in March a year earlier, which they report as "the 73rd straight month of year-over-year gains".....the NAR press release, which is titled "Existing-Home Sales Climb 1.1 Percent in March", 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 them 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 usually look at the raw data overview (pdf) to see what actually happened during the month...this unadjusted data indicates that roughly 434,000 homes sold in March, up 36.1% from the 319,000 homes that sold in February, but down by 4.3% from the 455,000 homes that sold in March of last year, so we can see the effect of a large month to month seasonal adjustment....that same pdf indicates that the median home selling price for all housing types rose by 3.9%, from a revised $240,900 in February to $250,400 in March, while the average home sales price rose 3.4% to $290,100 from the $280,600 average sales price in February, while it was up 4.1% from the $278,700 average home sales price of March a year ago...for both seasonally adjusted and unadjusted graphs and additional commentary on this report, again see the following two posts from Bill McBride at Calculated Risk: NAR: "Existing-Home Sales Climb 1.1 Percent in March" and A Few Comments on March 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 from the aforementioned GGO posts, contact me…)   

Sunday, April 22, 2018

March retail sales, industrial production, & new home construction; February's business inventories

major monthly reports released this week included the Retail Sales report for March and the Business Sales and Inventories report for February from the Census Bureau, the March report on Industrial Production and Capacity Utilization from the Fed, and the March report on New Residential Construction from the Census Bureau…the week also saw the release of the Regional and State Employment and Unemployment Summary for March from the BLS and the first two regional Fed manufacturing surveys for April: the Empire State Manufacturing Survey from the New York Fed, which covers all of New York state, an NYC suburban county in Connecticut, Puerto Rico and northern New Jersey, reported their headline general business conditions index fell to +15.8, down from +22.5 in March, suggesting a slower growth rate for First District manufacturing... meanwhile, the Philadelphia Fed Manufacturing Survey, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest diffusion index of manufacturing conditions rose to +23.2 in April from +22.3 in March, indicating a significant plurality of the region's manufacturing firms reported increases in their activity again this month...

Retail Sales Rose 0.6% in March after February and January Sales Revised Lower

seasonally adjusted retail sales increased by 0.6% in March after retail sales for January and February were both revised a bit lower...the Advance Retail Sales Report for March (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $494.6 billion during the month, which was up by 0.6 percent (±0.5%) from February's revised sales of $491.8 billion and 4.5 percent (±0.5%) above the adjusted sales in March of last year...February's seasonally adjusted sales were revised from $492.0 billion down to $491.8 billion, while January's sales were revised down from $492.3 billion to $492,169 million; as a result, the change from January to February remained at -0.1 percent (±0.2%)*.....estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated sales were up 16.5%, from $437,340 million in February to $509,362 million in March, while they were up 5.1% from the $484,550 million of sales in March of a year ago...

below we include the table of the monthly and yearly percentage changes in retail sales by business type taken from the March Census Marts pdf...to once again explain what this table shows, the first double column shows us the seasonally adjusted percentage change in sales for each kind of business from the February revised figure to this month's March "advance" report in the first sub-column, and then the year over year percentage sales change since last March in the 2nd column; the second double column pair below gives us the revision of the February advance estimates (now called "preliminary") as of this report, with the new January to February percentage change under "Jan 2018 r" (revised) and the February 2017 to February 2018 percentage change as revised in the 2nd column of that pair...(for your reference, our copy of this same table from last month’s advance February estimates, before this month's revisions, is here).... lastly, the third pair of columns shows the percentage change of the first 3 months of this year's sales (January, February and March) from the preceding three months of the 4th quarter (October thru December) and from the same three months of the 1st quarter a year ago....

March 2018 retail sales table

as we can see from this table, the increase in seasonally adjusted March sales was underpinned by a 2.0% increase to $101,295 million in sales at motor vehicle and parts dealers, without which nominal sales would have only increased by 0.2%...but remember, to determine real sales, all these nominal amounts and percentage changes must be adjusted for change in price....as we saw in last week's release of the March consumer price index, the composite price index for all goods less food and energy goods fell by 0.1%, and gasoline prices fell 4.9%, while both restaurant and grocery prices rose 0.1%...that means we'll see higher real sales than the nominal sales change for most retail categorizes except for food, and much higher real sales of gasoline...to make a more precise estimate we would have to take each type of retail sales and adjust it with the appropriate change in price to determine real sales...that would mean, for instance, that March's clothing store sales, which fell by 0.8% in dollars, should be adjusted with the price index for apparel, which indicated clothing prices were down by 0.6%, to show us that real retail sales of clothing were only down 0.2% in March...then, to get a GDP relevant quarterly change, we'd have to compare such adjusted real clothing sales for the 3 months of the first quarter, January, February and March, with real clothing consumption for the months of October, November and December, and then repeat that process for each other type of retailer...

however, we can more easily get an idea of what GDP quarterly change would show by checking the 5th column of the table above, which shows the percentage change of January thru March sales vis a vis those of October thru December...as you can see, 1st quarter retail sales were up by just 0.2% from those of the 4th quarter, largely due to a 1.6% drop in sales at motor vehicle and parts dealers...over the same period, the composite price index for all goods less food and energy goods rose by 0.4% in January and by 0.1% in February before falling 0.1% in March....hence, the inflation adjustment for the majority of first quarter sales strongly suggests that real retail sales were actually lower in the first quarter than in the last quarter of last year...so despite the apparent jump in March sales, it appears that real retail sales will be a small drag on first quarter GDP…

February Business Sales Up 0.4%, Business Inventories Up 0.6%

after the release of the March retail sales report, the Census Bureau also released the composite Manufacturing and Trade, Inventories and Sales report for February (pdf), which incorporates the revised February retail data from that March retail report and the earlier published February 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 $1,430.4 billion in February, up 0.4 percent (±0.2 percent)* from January's revised sales, and up 5.8 percent (±0.3 percent) from February sales of a year earlier...note that total January sales were concurrently revised down from the originally reported $1,426.0 billion to $1,424,953 million, now a 0.3% decrease from December....manufacturer's sales rose 0.2% to $500,514 million in February; retail trade sales, which exclude restaurant & bar sales from the revised February retail sales reported earlier, fell 0.1% to $434,004 million, while wholesale sales rose 1.0% to $495,873 million...

meanwhile, total manufacturer's and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $1,928.8 billion at the end of February, up 0.6 percent (±0.1%) from the end of January, and 4.0 percent (±0.3%) higher than in February a year earlier...at the same time, the value of end of January inventories was revised up from the $1,917.0 billion reported last month to $1,918.0 billion, still 0.6% higher than January....seasonally adjusted inventories of manufacturers were estimated to be valued at $675,200 million, up 0.3% from January, and inventories of retailers were valued at $628,049 million, 0.4% more than in January, while inventories of wholesalers were estimated to be valued at $625,577 million at the end of February, 1.0% higher than in January... 

Industrial Production Up 0.5% in March on Return to More Normal Temperatures

industrial production increased in March on a jump in the seasonally adjusted output of utilities, which saw greater than normal demand on cooler weather in March, after warmer than normal temperatures had reduced demand across much of the US in February...the Fed's G17 release on Industrial production and Capacity Utilization for March reported that industrial production rose 0.5% in March after rising by a revised 1.0% in February, which left production 4.5% higher than a year ago...however, this month’s data now reflects the results of an annual revision on March 23rd which left the IP indexes for most months around 1.6% lower than the previously published numbers....hence, the industrial production index, with the benchmark set for average 2012 production to equal to 100.0, was at 107.2 in March, after the February index, which had been published at 108.2 a month ago, was revised up from 106.5 to 106.6, the revised January index was revised up from 105.5 to 105.6, and the revised December index was revised from 105.7 to 105.8...

the manufacturing index, which accounts for more than 77% of the total IP index, rose to 104.2 in March, after the February index was revised from 105.9 to 104.1 in the annual revision and then unrevised in this report....on the other hand, the January manufacturing index was revised from the revised 102.7 to 102.6, and the revised December index was revised from 102.9 to 103.0...taking into account all revisions, the manufacturing index now stands 3.0% above its year ago level, while first quarter manufacturing has grown at a 3.1% annual rate over that of the 4th quarter of 2016....meanwhile, the mining index, which includes oil and gas well drilling, rose 1.0%, from 117.0 in February to 118.2 in March, after the February index was revised down from last month's reported 117.4, which left the mining index 10.8% higher than it was a year earlier...finally, the utility index, which typically fluctuates due to deviations from normal temperatures, rose by 3.0% in March, from 102.8 to 106.6, after the February utility index was revised from 103.7 to 102.8, down 5.0% from January...

this report also includes capacity utilization data, which is expressed as a percentage of our plant and equipment that was in use during the month…seasonally adjusted capacity utilization for total industry rose to 78.0% in March from 77.7% in February, which was revised from the 78.1% reported in the annual revision ...capacity utilization of NAICS durable goods production facilities rose from a revised 75.7% in February to 75.9% in March, while capacity utilization for non-durables producers fell from a revised 77.3% to 77.0%...capacity utilization for the mining sector rose to 90.1% in March from 89.6% in February, which had been reported as 87.6% last month, while utilities were operating at 79.0% of capacity during March, up from their 76.8% of capacity during February, which was previously reported at 76.9%...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..

March Housing Starts and Building Permits Reported Higher

the March report on New Residential Construction (pdf) from the Census Bureau estimated that new housing units were started at a seasonally adjusted annual rate of 1,319,000 in March, which was 1.9 percent (±12.4 percent)* above the revised estimated annual rate of 1,295,000 in February, and 10.9 percent (±10.0 percent) above last March's rate of 1,189,000 housing starts a year....the asterisk indicates that the Census does not have sufficient data to determine whether housing starts actually rose or fell during March, with the figures in parenthesis the most likely range of the change indicated; in other words, March housing starts could have been down by 10.5% or up by as much as 14.3% from those of February, with revisions of a greater magnitude in either direction still possible...in this report, the annual rate for February housing starts was revised from the 1,236,000 reported last month to 1,295,000, while January starts, which were first reported at a 1,326,000 annual rate, were revised from last month's initial revised figure of 1,329,000 annually to a 1,339,000 annual rate with this report....these annual rates of housing starts reported here were extrapolated from a survey of a small percentage of US building permit offices visited by canvassing Census field agents, which estimated that 106,900 housing units were started in March, up from the 90,200 units that were started in February and the 91,300 units that were started in January...

the monthly data on new building permits, with a smaller margin of error, are probably a better monthly indicator of new housing construction trends than the volatile and often revised housing starts data...in March, Census estimated new building permits for housing units were being issued at a seasonally adjusted annual rate of 1,354,000, which was 2.5 percent (±1.4 percent) above the revised February rate of 1,321,000 permits, and was 7.5 percent (±1.4 percent) above the rate of building permit issuance in March a year earlier...the annual rate for housing permits issued in February was revised up from the originally reported 1,298,000....again, these annual estimates for new permits reported here were extrapolated from the unadjusted estimates collected monthly by canvassing census agents, which showed permits for roughly 115,300 housing units were issued in March, up from the revised estimate of 92,100 new permits issued in February.... for graphs and commentary on this report, see the following two posts by Bill McBride at Calculated Risk: Housing Starts increased to 1.319 Million Annual Rate in March and Comments on March Housing Starts... 

 

(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 from the aforementioned GGO posts, contact me…)