Sunday, October 26, 2014

September’s consumer prices, new and existing home sales, states’ jobs report, et al

the key release of the past week was that of the consumer price index from the BLS, which in addition to giving us itemized price changes for roughly 200 categories of consumer expenditures for the recent three months and for the year, is also used in the case of this September report to set the annual change to the cost of living adjustments (COLA) for Social Security and several other programs; based on the change in the CPI from the third quarter of 2013 to the third quarter of 2014, the annual  increase to Social Security stipends from the COLA will be 1.7%....other reports we saw this week included the Census report on new home sales and the National Association of Realtor's report on sales of existing homes, both for September...this week also saw the release of the October Kansas City Fed manufacturing survey (pdf), covering an region that includes western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico, and reporting that their broadest composite index fell from 6 in September to 4 in October, indicating continuing manufacturing growth at a slow pace...in addition, this week also saw the release of the Chicago Fed National Activity Index for September (pdf), a weighted composite index of 85 different economic metrics grouped into four broad categories of data, which rose to +0.47 in September from –0.25 in August, with the positive number indicating growth above the historical trend....58 of the 85 individual indicators made positive contributions to the index in September, as production related indicators added 0.30 to the index, employment-related indicators added 0.22, sales, orders, and inventories added 0.08, while the the consumption and housing category subtracted 0.13 from the overall reading for September...the index’s three-month moving average increased to +0.25 in September from +0.16 in August as the August monthly index was revised to –0.25 from an initial estimate of –0.21, and the July monthly index was revised to +0.52 from last month’s estimate of +0.26...

September CPI Up 0.1% on Higher Rent and Food Prices

consumer prices inched up in September after falling in August as increased costs for food and shelter offset lower prices for energy and commodities other than drugs....the Consumer Price Index for All Urban Consumers (CPI-U) for September from the Bureau of Labor Statistics showed that seasonally adjusted prices rose by 0.1% after falling 0.2% in August and increasing 0.1% in July, meaning that overall prices were virtually unchanged in the 3rd quarter...the unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, rose to 238.031 in September from 237.852 in August, and still remained 1.7% higher than the 234.149 reading from September of last year...as food price increases were almost enough to offset a drop in energy prices, core prices, which exclude those volatile components, also rose by 0.1%, as the unadjusted core index rose from 238.296 in August to 238.841 in September, while that index was also 1.7% ahead of its year ago level of 234.782...

the seasonally adjusted energy price index fell by 0.7% in September as prices for energy commodities were 1.1% lower while the index for energy services fell 0.2%...energy commodity prices decreased on a 1.0% drop in the price of gasoline, the largest component, and a 2.1% drop in fuel oil prices, while prices for other fuels, including propane, kerosene and firewood, averaged a 0.5% decrease…within energy services, the index for utility gas service rose by 1.6%, the first increase in four months, as it had fallen 3.5% over the summer months, while the electricity price index fell 0.7% after rising 0.1% in August...energy commodities are now priced 3.3% below their year ago levels, while the energy services price index is 3.5% lower...

the seasonally adjusted food index rose by 0.3% in September, after rising 0.2% in August, and it is now 3.0% higher than September a year ago....prices for food away from home rose by 0.3% as prices for meals at full service restaurants rose by 0.2% and prices at fast food restaurants were 0.4% higher, while prices for food at schools rose by 0.5%, and prices for other food away from home rose by 0.2%....in addition, the price index for food at home also rose 0.3% as higher prices for meats and dairy products were partially offset by lower prices for cereal and bakery products....the latter food group averaged 0.4% lower than in August as every item in the group was priced lower except for frozen pastries; flour fell by 1.2%, as did breakfast cereals, while rice, pasta and cornmeal were down 0.9% and bread prices fell by 0.3%....however, prices in the meats, poultry, fish, and eggs group rose by another 0.7% and are now 9.4% higher than last year as beef and veal prices were 2.0% higher and ham prices rose 1.4%, while egg prices fell 2.8% and poultry prices were unchanged...for the year ending with this report, beef prices have risen 17.8%, with a 16.8% increase in steak prices the smallest line item increase in the group, while pork prices have risen 11.4%, led by a 20.0% increase in prices for picnics and roasts.....in addition, dairy products prices were 0.5% higher in September than in August as milk prices increased by 0.7% and ice cream was priced 1.8% higher, while cheese prices fell by 0.7%....meanwhile, the fruit and vegetable price index was just 0.1% higher as fresh fruit prices rose 1.3% despite a 3.2% drop in apple prices, fresh vegetables fell 1.1% and canned fruits and vegetables fell 1.8% while prices for dried beans, peas, and lentils rose 1.0%...in addition, prices for the beverage group rose by 0.2% as prices for roast coffee and frozen noncarbonated juices and drinks were both up by 0.5%, and lastly prices for other foods at home rose by 0.5% as prices for olives, pickles, and relishes rose 5.4%, butter prices rose 2.3%, candy and gum prices rose 2.1% and prepared salads rose 1.4% while soup prices fell 1.4%...for the year, butter prices have now risen 23.7%, which was the largest line item annual increase in the index...

for the seasonally adjusted core components of the CPI, which rose by 0.1% in September, we find that the composite of all commodities less food and energy commodities was statistically unchanged, while the composite for services less energy services rose by 0.2%....the index for shelter, which is almost 32% of the CPI, rose by 0.3%, with rent of shelter rising 0.3% and homeowner's equivalent rent rising 0.2%, while prices for lodging away from home rose by 0.5%, water & sewer bills rose 0.4%, and the cost of household operations fell 0.1%....meanwhile, prices for household furnishings and supplies, the commodity component of housing, fell by 0.1%, with a 0.7% drop in prices for living room, kitchen and dining room furniture and 0.5% lower prices for decor items offsetting a 2.0% price increase in laundry appliances....the price index for apparel was unchanged in September after falling 0.2% in August as a 3.2% increase in prices for men's suits, coats, and outerwear and a 1.6% increase in prices for girl's apparel was offset by a 4.2% drop in prices for women's outerwear ..the aggregate index for medical care, meanwhile, rose 0.2% in September as the medical care commodity index rose 0.5% after falling 0.1% in August on a 1.5% increase in non-prescription drug prices, while the medical care services index rose 0.1% on 0.4% increases in both outpatient hospital services and nursing homes and adult day services, while prices for health insurance fell another 0.1% and were down 2.0% for the year....then, while the transportation composite index showed a 0.3% decrease, that index includes gasoline, which you'll recall fell in price by 1.0%; prices for transportation commodities less fuel prices, however, were unchanged, as prices for new cars and trucks were unchanged, prices for used cars & trucks fell 0.1%, the price of tires fell 0.4% while the price of parts and accessories rose 0.2%...meanwhile, the transportation services index rose 0.1% as 0.8% higher priced car repairs, 0.6% higher intracity transit fees, and 0.4% higher vehicle insurance were partially offset by 3.2% lower car and truck rentals and 1.6% lower state motor vehicle registration and license fees....at the same time, the recreation price index was unchanged as recreation commodities rose 0.2% on a 1.2% increase in prices for pets and pet products and a 0.7% increase in photography equipment, which was only partially offset by an 0.8% drop in prices for televisions, while prices for recreation services were unchanged as 0.6% higher film processing and 0.3% higher costs for cable and satellite television service were offset by 0.6% lower rentals of video and audio discs and other media and 0.6% lower admissions to movies, theaters, and concerts.....lastly, the aggregate education and communication price index was also unchanged as education and communication commodities fell 0.7% as a 1.0% decline in prices for personal computers and peripheral equipment, a 1.2% decrease in prices for software, and a 2.2% drop in prices for telephones and other consumer information hardware offset a 1.0% increase in prices for college textbooks, while education and communication services were unchanged as a 0.4% increase in elementary and high school tuition and fees was offset by a 0.1% decrease in college tuitions and fees and a 0.1% downtick in charges for wireless phone services....other than the aforementioned increases in meat and butter prices, the only other line item among CPI components that showed an annual price increase greater than 10% was women's outerwear, which was 11.3% higher priced than in September 2013, while video discs and similar media have fallen in price by 10.8%, and televisions are now 13.8% 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 the indexes reset to 100 as of that month for an apples to apples comparison of the price changes in each since...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… 

September 2014 CPI components

Existing-Home Sales increased 2.4% in September

according to the National Association of Realtors (NAR), seasonally adjusted existing home sales rose by 2.4% in September to an annual rate of 5.17 million completed transactions, from an annual rate of 5.05 million home sales in August, while home sales still remained 1.7% below the annual sales rate of 5.26 million units that the NAR reported in September of last year....before the seasonal adjustment and conversion to an annualized figure, an estimated 435,000 homes sold in September, down 9.2% from the 479,000 homes that sold in August, and down 1.9% from the estimated 427,000 homes that sold in September a year ago...while seasonally adjusted data (pdf) indicates that homes sales were up in every region of the country except the Midwest, where they were down 5.6%, the unadjusted data shows that sales fell in every region, with sales in the Northeast off 14.7% and sales in the Midwest down 13.8%....

the preliminary median home selling price for all housing types was $209,700 in September, down 4.0% from $218,400 in August, but 4.8% higher than the $209,700 median sales price in September of last year, in home price data that is not seasonally adjusted...the average home sales price was $255,500, down from $263,800 in August, while it was up 3.4% from the $246,300 average sales price in September a year ago, with regional average home prices ranging from a high of $336,500 in the West to the average of $197,300 for homes sold in the Midwest....foreclosed homes, which sold for an average of 14% below the price of similar homes in their market, accounted for 7% of September's sales, while short sales, at 3% of all sales, were also discounted by an average of 14%...the median time on the market for all homes was 56 days in September, up from 53 days in August, and up from a median of 50 days on the market in September a year ago.…those who bought houses with cash accounted for 24% of transactions in September, up from 23% in August but down from 33% of all cash sales a year earlier, while those identified as investors accounted for 14% of all transactions, up from 12% in August but down from the 19% of all home sales to investors in September a year agp....30 year mortgage rates averaged 4.16% in September, up from 4.12% in July, while the share of first time home buyers remained unchanged at 29%, still well below the historical average of 40%....2.30 million existing homes remained available for sale at the end of September, which would be a 5.3 month supply of unsold homes at the September sales pace, down from 5.5 months in August but up 6.0% from the 5.0 month supply of 2.17 million existing homes available for sale a year earlier...

New Home Sales Nearly Unchanged in September and Year to Date

like existing homes sales, sales of new homes also inched up in September, but only by virtue of a 7.5% downward revision of the new homes sales reported in August... the Census bureau report on New Residential Sales for September estimated that new single family homes were sold at a seasonally adjusted annual rate of 467,000 in September, which was 0.2 percent (±15.7%)* above the revised August rate of 466,000 at an annual rate and was 17.0 percent (±20.6%)* above the annualized new homes sales pace in September of last year....the August annualized sales rate was revised down from the 504,000 annually reported a month ago to 466,000, while July's sales rate was revised down from 419,000 annually to 404,000...the asterisks indicate that based on their small sampling, Census could not be certain whether September's new home sales rose or fell from those of August or even from those of a year ago, but there’s a 90% likelihood that September home sales were in a range between 15.5% less than and 15.9% more than those of August, and that new homes sold could have been as many as 37.6% more than last September or as few as 3.6% less than last September, a range of uncertainty to be expected in this report which has the largest margin of error of any census construction series....

the unadjusted data from Census field reps estimated that 39,000 homes sold in September, unchanged from August, which was revised from the original estimate of 41,000 in sales to 38,000 with this report...new home sales for the year through September were 338,000, up 2.4% from 330,000 during the same nine months of 2013...of the 38,000 homes sold in September, 12,000 were completed, 13,000 were under construction, and 12,000 had not yet been started...the median new home sales price was $259,000 in September, down from $286,800 in August, while the average sales price was $313,200, down from August's $349,300 average, as there were 7,000 less homes over $400,000 in the sales mix... the Census estimated that a seasonally adjusted 207,000 new homes remained unsold at the end of September, which was a 5.3 month supply at the September sales pace, unchanged from the 5.3 month supply of unsold new homes in August...

the FRED graph below shows the seasonally adjusted annual rate of new single family home sales from this Census report in thousands since January 2000 in red, and the seasonally adjusted annual rate of existing home sales from the Realtors monthly over the same time period in blue..this graph can also be viewed as an interactive at the FRED site, where the annualized monthly sales extrapolations for both existing and new homes will appear as you scroll across the face of the graph...

September 2014 new and existing home sales

September State and Regional Employment

this week also saw the release of the Regional and State Employment and Unemployment Summary for September, a report which further expands on the national employment situation summary of three weeks ago by breaking down the state and regional details...so while they tell us in opening that 31 states had their unemployment rate decrease in September while 8 states saw a jobless rate increase 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 seven states had statistically significant monthly unemployment rate decreases, led by Colorado, where the jobless rate fell from 5.1% in August to 4.7% in September, and Kentucky, where the unemployment rate dropped to 6.7% from August's 7.1%, and that only Vermont and Massachusetts had statistically significant increases in unemployment....the BLS 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 36,400 jobs in Texas and 19,300 jobs added in Illinois, to the net decreases  of 9,800 jobs in California and 9,600 in Pennsylvania...for a breakdown of payroll employment by job type for each state over the past 3 months, and the change in employment since last September, 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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