Sunday, December 21, 2014

November’s consumer prices, industrial production, new housing starts, and states jobs report, et al

the key reports released this week were the Consumer Price Index for November from the Bureau of Labor Statistics and the November G17 release on Industrial Production and Capacity Utilization from the Fed...we also saw the release of the November report on new home construction (pdf) by the Census Bureau, and the Regional and State Employment Report for November from the BLS...and this week also saw the first three regional manufacturing surveys for December from Fed district banks: the New York Fed reported that its December Empire State Manufacturing Survey, covering a district that includes New York and northern New Jersey, revealed that its composite general business conditions fell nearly fourteen points to -3.6, its first negative reading in nearly two years, in a diffusion index where values below  zero indicate contraction....then the Philadelphia Fed's December Manufacturing Business Outlook Survey covering Pennsylvania, southern New Jersey, and Delaware, reported that its broadest measure of manufacturing conditions, the diffusion index of current activity, fell more than 16 points, from a record reading of 40.8 in November to 24.5 in December, still a solidly positive number which indicates ongoing growth for a large plurality of the District's manufacturers...lastly, the December Kansas City Fed manufacturing survey (pdf), covering a region that includes western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico, reported that their broadest composite index rose from 7 in November to 8 in December, indicating ongoing manufacturing growth at a slightly faster pace...

Consumer Prices Fall In November on Cheaper Energy

November consumer prices saw their largest drop in one month since 2008 as considerably lower prices for fuel offset modest price increases in food, shelter and a number of other services....the Consumer Price Index for All Urban Consumers (CPI-U) for November from the Bureau of Labor Statistics indicated that seasonally adjusted prices fell 0.3% after being unchanged in October and rising 0.1% in September, and are now just 1.3% higher than a year ago ...the unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, fell to 236.151 in November from 237.433 in October, a reading 1.32% higher than the 233.069 reading from November of last year...since the drop in energy prices was the major drag on the index in November, core prices, which exclude food and energy, rose by 0.1%, as the unadjusted core index actually fell from 239.413 in October to 239.248 in November, while that index still remained 1.70% ahead of its year ago level of 235.243... 

the seasonally adjusted energy price index fell by 3.8% in November after falling a total of 5.2% over the prior three months and hence energy prices are 4.8% lower than they were in November a year ago...prices for energy commodities were 6.4% lower while the index for energy services fell 0.3%...energy commodity prices decreased on a 6.6% drop in the price of gasoline, the largest component, and a 3.5% drop in fuel oil prices, while prices for other fuels, including propane, kerosene and firewood, averaged a 1.8% decrease…within energy services, the index for utility gas service fell by 1.7%, the fifth decrease in six months, while the electricity price index rose 0.1% after falling 0.2% over October and September...energy commodities are now priced 10.2% below their year ago levels, with gasoline down 10.5%, while the energy services price index is still 2.9% higher than last November...  

the seasonally adjusted food index rose by 0.2% in November, after rising 0.1% in October and 0.3% in September, and it is now 3.2% higher than November a year ago....prices for food away from home rose by 0.4%, their largest increase since January 2012, as prices for meals at full service restaurants rose by 0.3% and prices at fast food restaurants were 0.5% higher, while prices for food at workplaces and schools rose by 0.2%, and prices for food from vending machines were up 0.7%....meanwhile, the price index for food at home just rose 0.1% as lower prices for fruits and vegetables and grain and dairy products partially offset higher prices for meat, beverages, and other food at home....the index for cereals and bakery products was 0.2% lower than in October as a 1.7% drop in the price index for rice, pasta and cornmeal and 0.2% lower priced cakes and cupcakes more than offset a 0.7% increase in bread prices...dairy products prices were also 0.2% lower in November as milk prices fell 0.4% while cheese prices rose 0.5%....prices for fruits and vegetables fell 0.7% as prices for prices for citrus fruit fell 2.1%, prices for potatoes fell 1.8%, frozen vegetables also fell 1.8%, and prices for canned fruits and vegetables fell 1.3% while tomato prices rose 10.4% and lettuce prices rose 5.5%....meanwhile, prices for the meats, poultry, fish, and eggs group rose by 0.6% as poultry prices rose 1.7% on 1.8% higher turkey prices and 1.6% higher chicken prices, beef prices rose 0.8% on 1.4% higher ground beef, seafood prices rose 03% on 0.9% higher frozen fish, while pork prices fell 0.3% as 1.1% lower pork chops and 1.6% lower pork roasts more than offset 1.3% higher ham prices...as of November, prices for the various cuts of beef were between 15.3% and 23.2% higher than a year earlier, while ham prices were 13.8% higher, pork roasts were 14.9% higher, pork chops were up 11.8% on the year, and sausage prices were 11.6% more than last November.....prices for nonalcoholic beverages and beverage materials were also 0.5% higher in November than in October as prices for fresh juices and non-carbonated drinks rose 1.3% while coffee prices rose 0.2%...lastly, prices for other foods at home rose by 0.4% as prices for salt and other seasonings rose 2.3%, prices for frozen and freeze dried prepared foods rose 1.2%, prices for soups rose 1.2%, and prices for sugar and artificial sweeteners rose 0.6%, while prices for olives, pickles, and relishes fell 2.2%, salad dressings were 1.8%, and butter prices fell 1.7%; even so, butter prices are still 27.2% higher than a year ago and still represent the largest line item annual increase in the index... 

for the seasonally adjusted core components of the CPI, which rose by 0.1% in November, we find that the composite of all commodities less food and energy commodities fell by 0.4%, while the composite for all services less energy services rose by 0.2%....the index for shelter, which is almost 32% of the CPI, rose by 0.3%, with rents rising 0.2% and homeowner's equivalent rent rising 0.2%, while water & sewer bills rose 0.9%, and the cost of household operations was unchanged....meanwhile, prices for household furnishings and supplies, the commodity component of housing, fell by 0.5%, with a 4.4% drop in prices for laundry appliances, a 1.9% decrease in prices for linens, 1.8% lower prices for decor items and 1.2% lower cookware and tableware more than offsetting a 3.4% increase in the price of window coverings...the price index for apparel fell 1.1% in November as a 3.7% drop in prices for women's outerwear, a 3.4% drop in prices for girls apparel, a 2.4% drop in prices for women's suits, 1.7% lower priced boys' and girls' footwear, and 1.2% lower prices for men's suits, coats, and outerwear, more than offset a 1.7% increase in the prices of men's pants and shorts. ...meanwhile, the aggregate index for medical care rose 0.4% in November as the medical care services index rose 0.4% on a 0.9% increase in services from medical professionals other than doctors and dentists and a 0.5% increase in costs for physicians' services, while the medical care commodity index rose 0.6% on a 0.6% increase in prescription drug prices….then, while the transportation composite index showed a 2.0% decrease, that index includes gasoline, which you'll recall fell in price by 6.6%; prices for transportation commodities less fuel prices, however, still fell 0.4%, as prices for new cars and trucks fell 0.1%, prices for used cars & trucks fell 1.2%, tire prices fell 0.4% and prices for oil & other automotive fluids fell by 0.5%; at the same time, the transportation services index rose 0.3% on 2.8% higher car and truck rentals, a 3.1% increase in intercity train fares, a 2.2% increase in ship fares and a 1.1% increase in airline fares, while motor vehicle repairs fell 0.4%...meanwhile, the recreation price index fell  0.2% as recreation commodities fell 0.6% as television prices fell 3.2%, prices for other video equipment fell 2.7%, prices for audio equipment fell 1.2%, and prices for both toys and photography equipment fell 0.9%, while prices for recreational services were unchanged as 0.4% higher veterinary fees and 0.2% higher pet services were offset by a 1.3% drop in photographer fees and 0.9% lower rental of video discs and other media...lastly, the aggregate education and communication price index fell 0.1% as education and communication commodities fell 0.9% on a 2.9% drop in prices for telephones and other consumer information hardware and 1.5% lower prices for personal computers and similar gear, while the education and communication services index was unchanged, as a 0.6% decrease in charges for wireless phone services was offset by a 0.4% increase in college tuitions and fees and 0.5% higher postage...in November, 3 line items among the CPI core components showed a annual price drops of greater than 10%: televisions, which have fallen in price by 16.2%, telephone hardware, which is now priced 10.6% less, and laundry appliances, which are now 10.2% cheaper than they were a year ago...  

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…   

November 2014 CPI components

November Industrial Production Up 1.3% to a Record High

the Fed's G17 release on Industrial production and Capacity Utilization for November indicated that industrial production rose 1.3% from a October reading which itself was revised from a decrease of 0.1% to a increase of 0.1% ...the industrial production index, which is benchmarked to 2007 production being equal to 100.0, rose to a record 106.7 from the previously issued reading of 104.9 in October, which has been revised to 105.3 with this report, while the industrial production index for September was revised from 105.0 to 105.5 and the August index was revised from 104.1 to 104.3...the manufacturing index, which accounts for roughly 70% of the industrial composite, rose 1.1% in November to 102.2, while the manufacturing index for October was revised up from 100.6 to 101.1, after the September manufacturing index was revised up from 100.4 to 100.7 and the August index was revised up from 100.2 to 100.3...after these revisions and this month's gain, the November manufacturing index is now 4.8% higher than the level of November 2013....in addition, the seasonally adjusted utility index rose 5.1% to 105.6 as electricity production rose 4.8% and natural gas output increased by 6.9% due to the abnormally cold November; even so, the utility index is still only 1.8% above last November's reading...meanwhile, the mining index, which includes oil & gas production, fell 0.1% to 132.6 in November, after falling by 1.0% in October, as lower oil prices are slowing the higher cost extraction processes, even as the index remains 9.3% 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...the seasonally adjusted production of final products and nonindustrial supplies, which accounts for 52.7% of total production, rose by 1.7% in November as production of consumer goods rose 2.5% after slipping 0.1% in October....production of durable goods rose by 3.0% as the heavily weighted automotive products sector rose 5.0% and production of consumer electronics rose 2.6%... in addition, production of non-durable goods rose by 2.3% as output of consumer energy products rose 5.7% while output of non-energy non-durables rose 1.2%, as clothing production rose by 2.5%, the output of food and tobacco rose 1.5%, chemical products production rose 0.8%, and paper products production rose 0.3%....over the preceding year, production of durable goods increased by 5.4%, led by 7.8% growth in output of appliances, furniture, and carpeting, and a 7.4% increase in production of automotive products, while annual production of non-durable goods grew by 3.6% as a 1.6% decrease in output of paper products partially offset 5.7% growth of chemical products output and over 3% increases in output of energy and other non-durables..

seasonally adjusted production of business equipment rose 1,2% in November after rising by an upwardly revised 1.0% in October as production of production of transit equipment rose 1.7% and production of industrial equipment rose 1.4% while production of information processing equipment slipped 0.1%...over the past year, output of business equipment rose by 5.8%, as production of industrial equipment rose by 8.3%, production of transit equipment rose by 5,8%, and output of information processing equipment rose by 2.5% ....meanwhile, production of defense and space equipment rose by 0.3% in November and grew by 2.1% over the year ending November ...in addition, production of supplies for use in construction increased by 0.5% for the month and by 4.7% for the year, while production of business supplies rose 1.2% in November and grew 3.7% for the year...meanwhile, production of raw and intermediate materials that would input into other production processes increased by 0.8% in November while growing 6.0% over the year, with the output of energy materials and the output of consumer parts both up 7.4%, while raw and intermediate paper production fell 0.8% over the year ending November....

for capacity utilization, which is the percentage of our plant and equipment that was in use during the month, the Fed found that the utilization rate for total industry rose from a revised 79.3% in October to 80.1% in November, which was also up from a utilization rate of 78.5% in November last year....78.4% of our total manufacturing capacity was in use during November, up  from a revised 77.6% in October and up 0.9% from the factory operating rate of 77.5% in November of last year...the operating rate for NAICS classified durable goods manufacturers was at 78.4%, up from 77.8% in October, with capacity utilization ranging from 84.4% for manufacturers of electrical equipment, appliances, and components to a low of 64.8% for manufacturers of non-metallic mineral products, while the November operating rate for NAICS classified manufacturers of non-durables was at 80.0%, up from 79.1% in October, with the oil and coal products industry now operating at 86.3% of capacity while the printing industry was operating at just 73.1% of capacity... meanwhile, capacity utilization by the 'mining' industry fell 1.5% from 88.7% to 87.9%, reflecting a pullback in drilling by the oil and gas industry due to lower oil prices, while the operating rate for utilities rose from 78.5% to 82.4%, reflecting above normal consumption due to below normal temperatures.... 

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…the recent downturn mining and upturn in utility production are both fairly evident:

November 2014 industrial production

New Housing Construction Continues at a Million Units a Year Pace in November

according to the Census report on New Residential Construction for November (pdf) starts on new housing units were estimated to be at a seasonally adjusted annual rate of 1,028,000 in November, which was 1.6 percent (±8.1%)*  below the revised estimated pace of 1,045,000 homes hypothetically being started annually in October, and 7.0 percent (±10.2%)* below the annual rate of 1,105,000 housing starts estimated for November a year ago...the asterisks indicate that the Census, based on their survey of a small percentage of permit offices visited by Census field agents, does not have sufficient data to determine whether housing starts rose or fell for the month or even for the year, while the numbers in parenthesis indicates their 90% confidence range – ie, housing units started in November were likely at a seasonally adjusted annual rate ranging between 9.7% less and 6.5% greater than those in October.....the unadjusted estimates from which those annual rates were extrapolated indicated an estimated 77,500 housing units were started in November, down from 87,600 in October, which was revised up from 84,000, with 47,700 of those November starts being single family dwellings, while construction was started on 28,800 apartment units in buildings with 5 or more units...

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 dramatically revised starts data... in November, Census estimated new permits were issued at a seasonally adjusted annual rate of 1,035,000, which was 5.2 percent (±1.4%) below the revised October annual rate of 1,092,000 and 0.2 percent (±1.8%)* below the 1,037,000.annual rate estimated for new permit issuance in November of last year...those estimates were extrapolated from the unadjusted estimate of 69,800 new permits issued in November, which was down from the estimated 96,400 new permits issued in October...of those units permitted in November, 59,600 (±1.1%) were for single family homes, and 36,500 (±1.0%) 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 represents an extrapolated estimate of how many units would be permitted or started over an entire year if that month’s pace were continued over 12 months; actual starts and permits each month are closer to the unadjusted data we cited…   

November 2014 new home construction

State and Regional Employment for November

this week also saw the release of the Regional and State Employment and Unemployment Summary for November, a report which further expands on the national employment situation summary we covered two weeks ago by breaking down the state and regional details...although we're told in opening that 41 states and the District of Columbia saw their unemployment rate decrease in November while 3 states saw a jobless rate increase and 6 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 only 22 of those states had statistically significant monthly unemployment rate decreases, led by North Carolina, where the unemployment rate fell from 6.3% to 5.8%, followed by four states that saw employment rates by drop by 0.4%: Delaware, where the jobless rate fell from 6.4% to 6.0%; Georgia, where it fell from 7.6% to 7.2%; Maryland, where it fell from 6.0% to 5.6%; and Michigan, where the unemployment rate fell from 7.1% to 6.7%..…meanwhile, there were no states that saw a statistically significant increase 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 90,100 jobs in California, 41,900 jobs in Florida, and 34,600 jobs added in Texas to the net decreases of 5,200 jobs in West Virginia and 4,500 jobs in Mississippi...for a breakdown of payroll employment by job type for each state over the past 3 months, and the change in employment since last November, 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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