Sunday, September 21, 2014

August price indexes, industrial production, housing starts and states jobs report

there were several widely watched reports released this past week; on inflation, we saw both the August consumer price index and the August producer price index reports from the Bureau of Labor Statistics; on housing, the Census released it's estimates on August residential construction, while for manufacturing, we saw the release of the G17 on Industrial Production and Capacity Utilization for August from the Fed...we also saw the first two regional manufacturing surveys for September from Fed district banks: the September Empire State Manufacturing Survey from the New York Fed, surveying New York State and northern New Jersey, saw the composite general business conditions index rise to 27.5, up from 14.7 in August, the highest reading since October of 2009, in a diffusion index where any number above zero suggests expansion, and hence indicating robust growth of manufacturing in the 2nd District...meanwhile, the September Business Outlook Survey from the Philadelphia Fed, covering Pennsylvania and southern New Jersey, saw it's broadest diffusion index for current activity fall to 22.5 from a reading of 28.0 in August, a reading which nonetheless is still indicative of robust expansion...

August CPI Down 0.2% on Cheaper Gasoline

consumer prices fell for the first time in 16 months in August as lower gasoline prices pulled the energy index and overall prices lower; moreover, core prices were flat, the first time since October 2010 that the core price index did not increase...the Consumer Price Index for All Urban Consumers (CPI-U) for August from the Bureau of Labor Statistics showed that seasonally adjusted prices fell by 0.2% after rising only 0.1% in July....the unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, slipped to 237.852 in August from 238.250 in July, while it still remained 1.7% higher than the 233.877 reading from August of last year….with modest food price increases insufficient to offset decreases in energy prices, core prices, which exclude those volatile components, were statistically unchanged, as the unadjusted core index rose from 238.138 in July to 238.296 in August, while that index was also 1.7% ahead of its year ago level of 234.258...

the seasonally adjusted energy price index was 2.6% lower in August as prices for energy commodities fell 3.9% while the index for energy services fell 0.6%...the decrease in energy commodity prices was primarily due to a 4.1% drop in the price of gasoline, the largest component, while fuel oil prices fell 0.6% and prices for other fuels, including propane, kerosene and firewood, averaged a 1.2% decrease….within energy services, the index for utility gas service fell for the 3rd consecutive month, as it was down another 0.4% after falling 2.6% in June and 1.7% in May, while the electricity price index rose 0.1% in August after falling 0.3% in July...

the seasonally adjusted food index rose by 0.2% in August, after rising 0.4% in July, and it is now 2.7% higher than August a year ago....prices for food away from home rose by 0.2% as prices for meals at full service restaurants and at fast food restaurants were both 0.3% higher, while prices for food at schools fell 2.3%, and prices for other food away from home fell 0.2%.... meanwhile, the price index for food at home also rose 0.2% as higher prices for meats and dairy products were partially offset by lower prices for fruits, vegetables and beverages....cereal and bakery products averaged 0.2% higher than in July, as a 0.6% increase in prices flour and prepared mixes, a 1.1% increase in the price of bread, and a 1.8% increase in cookie prices was only partially offset by a 0.7% decrease in prices for breakfast cereals and a 2.3% decrease in the price of rice...prices in the meats, poultry, fish, and eggs group rose 1.5% as beef and veal prices were 4.2% higher, pork prices rose 1.6%, poultry prices increased by 0.4%, fish and other seafood prices averaged 0.5 higher, while egg prices fell 2.0%...over the past year, most of the items in the beef and pork groups have seen price increases greater than 10%, topped by 19% higher prices for beef roasts and 13.7% higher prices for pork chops, while the prices in the entire meats, poultry, fish, and eggs group now average 8.8% higher than a year ago....in addition, dairy products prices were 0.6% higher in August than in July as ice cream was priced 1.8% higher, cheese prices rose 0.8% and milk prices increased by 0.4%....meanwhile, the fruit and vegetable price index was 0.8% lower as fresh produce fell in price: apples were priced 3.5% lower than in July, prices for oranges fell 1.9%. potatoes were 4.0% cheaper, and lettuce and tomato prices both fell 1.7%...prices for the beverage group were lower by 0.2% as a 1.9% increase in the price of roast coffee and 0.2% higher juice prices were more than offset by 1.4% lower prices for instant coffee, 1.2% lower tea prices, and 0.4% lower prices for carbonated drinks...finally, prices for other foods at home also fell 0.2% as increases of 1.8% in the price of butter was offset by 0.6% lower prices for olives, pickles, and relishes, 0.2% lower prices for frozen dinners and 1.0% lower prices for other miscellaneous foods...however, combined with increases of 4.1% in June and 2.8% in July, butter prices are now 18.8% higher than they were last August...

for the seasonally adjusted core components of the CPI, which netted out as unchanged, we find that the grouping of all commodities less food and energy commodities fell by 0.1% in August, while overall services less energy services were statistically unchanged....the index for shelter, which is almost 32% of the CPI, rose by 0.2%, with rent of shelter and homeowner's equivalent rent both rising 0.2%, while prices for lodging away from home rose 0.8%, and water & sewer bills and the cost of household operations all rose 0.3%....meanwhile, household furnishings and supplies, the commodity component of housing, fell by 0.1% with prices for window and floor coverings 1.5% lower, living room, kitchen and dining room furniture 1.2% lower, and appliances 0.9% lower...the price index for apparel fell 0.2% in August after 3 monthly increases as a 4.5% decrease in prices for boy's apparel, a 4.0% decrease in prices for men's shirts and sweaters, and a 3.0% decrease in prices for girl's clothing were only partially offset by a 4.6% increase in prices for women's outerwear....the aggregate index for medical care, meanwhile, was unchanged in August as the medical care commodity index fell 0.1% after rising 1.0% over the previous two months, as non-prescription drug prices fell 0.7%, while the medical care service index was unchanged, as 0.3% decreases in both outpatient hospital services and prices for health insurance was offset by a 0.4% increase in prices for physicians' services and 0.6% higher charges for nursing homes and adult day services...then, while the transportation composite index showed a 1.5% decrease, that index includes gasoline, which you'll recall fell in price by 4.1%; prices for transportation commodities less fuel prices, however, were unchanged, as prices for new cars and trucks rose 0.2%, prices for used cars & trucks fell 0.3%, and the price of tires fell 0.2%...however, the transportation services index fell 0.6% on a 4.7% cut in airline fares and a 2.3% drop in prices for car and truck rentals... meanwhile, the recreation price index fell 0.4% as recreation commodities fell 0.3% on 1.0% decrease in prices for audio equipment and 0.9% lower prices for pets and pet products, while recreation services fell 0.5% on a 1.6% decrease in rental of video and audio media and 0.7% declines in sports club dues and admissions to sporting events, which was only partially offset by a 1.1% increase in photographer's fees and 0.5% higher film processing pricing....finally, the aggregate education and communication index was down 0.1% as education and communication commodities fell 0.1% as a 1.3% decline in prices for personal computers and peripheral equipment offset a 2.2% increase in prices for college textbooks, while education and communication services also fell 0.1% on a 0.5% decrease in college tuition and fees that was only partially offset by a 0.4% increase in postage and delivery services....other than the aforementioned increases in meat and butter prices, the only other line items among CPI components that showed annual price changes greater than 10% were women's outerwear, which was 19.0% higher than in August 2013, video discs and similar media, prices for which have fallen 11.4%, and televisions, which are now 14.2% cheaper than they were a year earlier...  

our FRED graph below shows the overall change in each of the major component indexes of the CPI since January 2000, with all indexes reset to 100 as of that month for an apples to apples comparison of the price changes in each...in blue, we show  the relative track of the price index for food and beverages; in bright green, we show the reset price index for all housing components, which includes rent, homeowners equivalent rent, utilities, insurance & household maintenance; in red, we have the price changes for apparel, the only index to show a net price decline over the previous decade; while the relative change in the price index for medical care shown in violet has obviously seen the greatest price increase over the period…next, the transportation price index is in orange, and shows the impact of volatile fuel prices on the cost of transportation, while the price change for education and communication over the period is tracked in brown, and in dark green is the relative strength of the index for recreation prices...finally, we’ve added the track of the overall CPI-U in black, which tends to track close to the large housing component, which makes up 41.5% of the total index…this graph can also be viewed as an interactive, wherein you can track the monthly changes in all of these relative price indexes by dragging your cursor across the graph… 

August 2014 CPI components

August Producer Prices Flat on Lower Energy Prices

the Producer Price Index for August from the BLS, meanwhile, indicated that the seasonally adjusted producer price index for final demand was unchanged for the month, after rising 0.1% in July and 0.4% in June, and now shows August wholesale prices 1.8% above their level of a year earlier...the index for final demand for services rose by 0.3% largely on the strength of a 0.3% rise in prices for final demand services less trade, transportation, and warehousing as margins for consumer loans, deposit services, and credit intermediation all rose by more than 1.0%, and also a 0.3% increase in the index for final demand for transportation and warehousing services, a measure of the change in the margins received by such services, while the margins for final demand for trade services were unchanged...meanwhile, the price index for final demand for goods, aka 'finished goods', fell 0.3% after being unchanged in July as the price index for final demand energy fell 1.5% on a 4.5% decline in producer prices for natural gas and a 1.4% decrease in wholesale gasoline prices...the price index for final demand for food also fell 0.5% as wholesale fresh egg prices fell 21.5% and wholesale seafood prices were off 5.7%...meanwhile, core final demand for goods, or producer prices for finished goods not including food and energy, were unchanged in August as a 1.4% increase in wholesale prices for pet foods was the only monthly change greater than 1.0%...

this report also showed the price index for processed goods for intermediate demand also fell 0.3%, as prices for intermediate processed foods and feeds fell 0.8% and prices for intermediate processed energy goods fell 1.7%, while intermediate core producer prices were 0.2% higher....meanwhile, the price index for intermediate unprocessed goods fell 3.3% after falling 2.7% in July on a 3.4% drop in producer prices for for unprocessed foods and feeds and a 4.9% decline in the index for raw energy materials, while prices for unprocessed nonfood materials less energy fell 0.7%......finally, the price index for services for intermediate demand rose 0.2% in August, mostly on a 0.3% increase in the index for prices for services less trade, transportation, and warehousing for intermediate demand and a 0.2% increase in prices for transportation and warehousing services for intermediate demand, while prices for indeterminate trade services fell 0.2%...over the 12 months ended in July, the index for services for intermediate demand rose 1.6%...

August Industrial Production Falls 0.1% on Automotive Sector Pullback

the August release on Industrial production and Capacity Utilization from the Fed indicated that industrial production fell 0.1% from a July reading which was revised from an increase of 0.4% to an increase of 0.2% after the June to July increase was revised from a 0.4% increase to a 0.3% increase...the industrial production index itself, which is benchmarked to 2007 production equal to 100.0, fell to 101.1 from the previously issued reading of 104.4 for July, which was revised to 104.2, while June's industrial production index was revised from 103.9 to 104.0, as May's industrial production was revised 0.2% higher...the manufacturing index, which accounts for roughly 70% of the industrial composite, fell 0.4% in August to 100.2, after the manufacturing index for July was revised up from 100.7 to 100.6, while the August level is now 3.6% higher than the level of August 2013..... meanwhile the seasonally adjusted utility index, rebounding from 2.7% decline due to a milder than normal July, rose 1.0% to an August reading of  97.6, the same reading as last August, as temperatures and A/C use were closer to normal...and for the last of our industry groups, the mining index, which includes oil & gas production, increased by 0.5% to 131.2 in August, after decreasing by 0.3% for the first time this year to in July, and is still now 8.7% higher than a year ago...

in addition to the breakdown of industrial production into the three major industry groups, this release also reports indexes for industrial production by market group...among final products and nonindustrial supplies, which fell by 0.3% in August, seasonally adjusted production of consumer goods fell by 0.8% after rising a revised 0.7% in July...production of consumer durables fell 4.4% in August, reversing July's 4.4% increase, as production of automotive products fell 7.0% after increasing 7.6% in July, production of appliances, furniture and carpeting fell 2.5% after increasing 3.4% in July, while output of home electronics rose 2.4% after falling 2.3% in July....meanwhile, production of non-durable goods rose by 0.3% for the month on 0.5% increase in production of non-energy non-durables, while consumer energy production fell 0.2%...of the non-energy non-durables, production of food was 0.5% higher, and output of chemical products rose by 0.6%, while clothing production fell 2.2% and output of paper products fell 0.2%...since last August, production of durable goods has increased by 5.3%, led by a 7.4% increase in automotive production, and production of non-durable goods has risen 2.1% on a 4.1% increase in output of chemical products, while output of consumer energy products has increased 2.3%.. 

meanwhile, seasonally adjusted production of business equipment was unchanged in August after rising by a revised 1.2% in July as production of transit equipment fell 2.3% while production of information processing equipment rose 1.0% and production of industrial equipment rose 0.6%....for the year ending August, output of business equipment rose by 5.7% as production of transit equipment rose 7.1%, the output of industrial equipment rose 6.7% and production of information processing equipment rose 1.6%....in addition, production of defense and space equipment fell by 0.7% in August, although it grew by just 0.8% over the year...in addition, production of supplies for use in construction rose 0.1% for the month and was 5.4% ahead of year ago output, while production of business supplies rose by 0.6% in August and by 2.2% for the year...meanwhile, production of raw and intermediate materials that would input into other production processes rose by 0.1% in August, with output of inputs into durable goods manufacturing falling 0.5% as consumer parts for durable goods fell 3.5%, while output of non-durable intermediates rose 0.2% and outputs of energy materials fell by 0.6%...for the year, production of intermediate materials was up 4.9%, as production of inputs into durable goods rose 6.3%, production of energy intermediates rose 6.7%, while output of non-durable intermediates fell 0.2%...

with industrial production down by 0.1% in August, capacity utilization, which is the percentage of our plant and equipment that was in use during the month, likewise fell, by 0.3%, from 79.1% in July to 78.8% in August, as new capacity was also added during the month...77.2% of our total manufacturing capacity was in use during August, down from 77.6% in July, but up from the 76.1 capacity utilization rate of August a year earlier...the operating rate for NAICS classified durable goods manufacturers was at 78.0% in August, down from 78.5% in July, as the operating rate for manufacturers of motor vehicles and parts fell from 88.2% to 81.4% and the operating rate for manufacturers of fabricated metal products fell from 81.6% to 80.3%, while the August operating rate for NAICS classified manufacturers of non-durables was at 78.5%, up from 78.4% in July, with the oil and coal products industry continuing to operate at 84.2% of capacity while textile and textile product mills were only operating at a 71.7% rate.... meanwhile, capacity utilization by the 'mining' industry fell from 89.4% to 89.1%, reflecting the increase in oil and gas rig counts during the month; while the operating rate for utilities rose with the higher production, from 75.6% to 76.4%....our FRED graph for this report below shows the percentage of capacity in use for all industries monthly since 2007 in pink, while it shows the the seasonally adjusted industrial production index values for all industry in black, the manufacturing production index in blue, the utility production index in green, and the mining production index in red from the beginning of the index year of 2007, at which time they were all benchmarked to equal 100.0…  

August 2014 industrial production

Housing Starts and New Permits Fall in August

the Census report on New Residential Construction for August (pdf) gives us broad estimates of new housing permits, new housing starts, and housing completions based on a survey of a small percentage of permit offices visited by Census field agents, and is widely watched and reported on for new housing starts....in August, starts on new housing units were estimated to be at a seasonally adjusted annual rate of 956,000, which was 14.4 percent (±7.9%) below the revised July estimated pace of 1,117,000 homes hypothetically started annually, but 8.0 percent (±11.2%)* above the annual rate of 885,000 housing starts estimated in August a year ago...the numbers in parenthesis means that Census is 90% confident that housing units started in August were at a seasonally adjusted rate between 6.5% and 22.3% lower than the pace in July, and between 3.2% lower and 19.2% greater than the pace of a year ago, and the asterisk indicates they dont have sufficient data to determine whether housing stars rose or fell from a year ago...the unadjusted estimates from which those annual rates were extrapolated indicated an estimated 86,000 total units were started in July, up from 102,800 in July, with just 58,800 of those single family dwellings...meanwhile, construction was started on 26,400 apartment units in buildings with 5 or more units, with year to date apartment starts at a 25 year high, with the caveat that the margin of error on that apartment data is ±15.1%...

the monthly data on new building permits have a much narrower margin of error than new housing starts and hence are probably a better monthly indicator of new construction trends than the volatile and often revised starts data... in August, Census estimated new permits were issued at a seasonally adjusted annual rate of 998,000, which was 5.6 percent (±1.4%) below the revised July annual rate of 1,057,000 but is 5.3 percent (±1.7%) above the 948,000 annual rate estimated for new permits in August of last year...those estimates were extrapolated from the unadjusted estimate of 86,800 new permits issued in August, which was up from the estimated 997,600 new permits issued in July...of those units permitted in August, 55,000 (±1.6%) were for single family homes, and 29,200 (±3.4%) represented permits for housing units in building with 5 or more units...our FRED graph on this report below, which can also be viewed as an interactive at the FRED site, shows the seasonally adjusted annual rate of housing units started in thousands monthly in blue, and the annual rate of housing units authorized by building permits monthly in red since 2000…note that the number in thousands shown monthly for both metrics is an estimate of how many units would be permitted or started over an entire year if that month’s pace were continued over 12 months…  

Augst 2014 new housing

August State and Regional Employment

this week also saw the release of the Regional and State Employment and Unemployment Summary for August, a report which further expands on the national employment situation summary of two weeks ago by breaking down the state and regional details...so while they tell us in opening that 24 states had unemployment rate increases, 15 states saw decreases, and 11 states had no change, we know that the unemployment rate data comes from the household survey with its large margin of error, and they make that point later in the report when they tell us just nine states and the District of Columbia had statistically significant monthly unemployment rate increases, led by South Carolina, whose unemployment rate rose from 5.8% to 6.4%, and that just four states has statistically significant unemployment rate decreases, and that the remaining 37 states had jobless rates that were not measurably different from those of a month earlier...the table with the seasonally adjusted count of the unemployed and the unemployment rate for each state is here...

as with the national report, the sections of this report that correspond to the establishment survey are more informative, in that they show the number & types of jobs added or lost in each state, ranging from the increase of 44.200 jobs in California and 27,700 jobs added in Florida, to the net decrease of 4,800 jobs in New Hampshire...for a breakdown of payroll employment by job type for each state over the past 3 months, and the change in employment since last July, see the following two BLS tables accompanying this release: Table 5. Employees on nonfarm payrolls by state and selected industry sector, seasonally adjusted and Table 6. Employees on nonfarm payrolls by state and selected industry sector, not seasonally adjusted ...

(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 that accompanies these commentaries, most from the aforementioned GGO posts, contact me…)

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