Sunday, December 20, 2015

November's consumer prices, industrial production, new housing starts, state jobs, et al

  major releases of this past week were the November Consumer Price Index from the Bureau of Labor Statistics, the November report on Industrial Production and Capacity Utilization from the Fed, and the November report on New Residential Construction from the Census Bureau...other reports released this week included the Regional and State Employment and Unemployment Summary for November, and, with the release of the Consumer Price Index, the November report on Real Average Hourly Earnings, which indicated that inflation adjusted and seasonally adjusted hourly earnings for all employees increased by 0.1% from October to November, which resulted from a less than 0.2% increase in average hourly earnings offset by a small increase in the CPI…meanwhile, real average weekly earnings decreased by 0.2%, with the 0.1% increase in real average hourly earnings offset by a 0.3% decrease in the average workweek...

in addition, this week also saw the release of the first three regional Fed manufacturing indexes for December: the Empire State Manufacturing Survey from the New York Fed, which covers New York and northern New Jersey, saw their headline general business conditions index rise from -10.7 to -4.6, still the fifth negative monthly index reading in a row, indicating an ongoing recession in First District manufacturing, the Philadelphia Fed Manufacturing Survey, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest diffusion index of manufacturing conditions fell from +1.9 in November to -5.9, it's third negative reading in 4 months; and the Kansas City Fed manufacturing survey for November, which covers western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico, and which reported its broadest composite index fell to –9 in December from +1 in November, its eighth negative reading out of the last nine months, indicating that their regional contraction, mostly in the energy industry, continues... 

CPI Unchanged in November; Real Retail Sales up 0.5%, Will Boost 4th Quarter GDP

the consumer price index was unchanged in November as lower prices for food, energy and core goods offset higher prices for services...the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that seasonally adjusted prices were flat in November after rising 0.2% in October and falling 0.2% in September...the unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, actually fell in November to 237.336, from 237.838 in October, which left it statistically 0.5% higher than the 236.151 reading of November of last year...regionally, prices for urban consumers have risen 1.5% in the West,  0.3% in the South, and 0.3% in the Northeast while they have fallen 0.2% in the Midwest over the past year, with greater price increases within regions in cities of more than 1,500,000 people...since both food and energy prices fell in November, core prices, which exclude food and energy, rose by 0.2% for the month, as the unadjusted core index rose from 243.985 to 244.075, a level 2.02% ahead of its year ago reading of 239.248...

the seasonally adjusted energy price index fell by 1.3% in November after rising 0.3% in October and falling by 4.7% in September, as the energy index remains 14.7% lower than it was in November a year ago...prices for energy commodities were 2.4% lower in November while the index for energy services saw a 0.1% decrease, after increasing 0.2% in October....the decrease in the energy commodity index was largely due to a 2.4% drop in the price of gasoline, the largest component, while fuel oil prices fell 1.3% 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 by 1.9%, leaving utility gas priced 11.7% lower than a year ago, while the electricity price index rose by 0.3%, after it rose by 0.4% in October...energy commodities are still priced 24.2% below their year ago levels, with gasoline 24.1% lower priced than it was a year ago, while the energy services price index is 2.4% lower than last November, as even electricity prices have fallen 0.2% over that period...

the seasonally adjusted food index fell by 0.1% in November, after rising 0.1% in October, 0.4% in September and 0.2% in both July and in August, as prices for food at home fell 0.3% while prices for food away from home rose 0.2%, as average prices at both fast food outlets and at full service restaurants rose 0.2%...meanwhile, prices for all categorizes of food at home except for fruits and vegetables fell in November, with fruits and vegetables seeing a 0.6% increase on a 1.3% price increase for canned fruits and vegetables, while a 0.1% decrease in fresh fruit prices partially offset a 0.9% increase in fresh vegetable prices, led by a 4.7% increase in prices for tomatoes....in the other food at home categories, the index for cereals and bakery products fell 0.5% on 1.0% lower priced breakfast cereals, 0.9% lower flour and mixes, and 2.2% lower cookies, while bread rose 0.4%...prices for the meats, poultry, fish, and eggs group fell 0.6% on a 1.4% drop in beef and veal prices and a 3.8% drop in egg prices while poultry prices rose 0.5% and fish & seafood prices averaged 0.2% higher... the index for dairy products also fell 0.6% on 1.0% lower milk prices, while prices for cheese and related products were unchanged... the index for beverages and beverage materials was 0.5% lower on a 1.2% drop in coffee prices and 0.8% lower priced noncarbonated juices and drinks, both frozen and unfrozen...and lastly, prices in the other foods at home category averaged 0.3% lower...just  two food line items have seen price changes greater than 10% over the past year; egg prices remain 23.7% higher than a year ago, despite dropping 4 months in a row, while ham prices, which were down 1.8% in November, are now 13.1% lower than they were in November a year ago...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 0.2% in October, the composite of all commodities less food and energy commodities fell by 0.2%, while the composite for all services less energy services rose by 0.3%....among the commodity components, which will be used by the BEA to adjust October retail sales for inflation in national accounts data, the index for household furnishings and supplies fell 0.3% on a 1.7% cut in prices for major appliances, a 3.2% drop in prices for clocks, lamps, and decorator items, and a 2.7% decrease in prices for dishes and flatware; apparel prices were also down 0.3% on a 5.0% reduction in prices for women's outerwear and 4.7% lower prices for men's suits, sport coats, and outerwear, partially offset by 2.3% higher prices for men's furnishings and a 1.8% in prices for boy's clothing... prices for transportation commodities less fuel were unchanged as 0.2% lower new car prices offset 0.2% higher new truck prices and a 0.7% drop in prices for car parts other than tires....medical care commodities, on the other hand, rose 0.3% on 0.4% higher prices for prescription drugs, while recreational commodities were 0.6% lower on a 1.7% decrease in prices for pets and pet supplies, a 1.6% decrease in prices for audio discs, tapes and other media and 1.5% lower priced TVs...in addition, education and communication commodities fell 0.4% on a 1.9% decrease in prices for telephone hardware, calculators, and other consumer information items and a 1.2% decrease in prices for software, offset by a 0.6% increase in prices for educational books and supplies, while the index for alcoholic beverages fell 0.1%, and the index for other goods was unchanged...

within services, the price index for shelter rose 0.2% on a 0.2% increase in rent, a 0.2% increase in owner's equivalent rent and a 1.0% increase in costs for lodging away from home, while costs for household services like water, sewer and trash collection services rose 0.4%....medical care services rose 0.4% on a 1.1% increase in physician's services and a 0.7% in health insurance, and transportation services rose 0.6% on a 1.4% increase in car and truck leasing and a 1.1% increase in costs for vehicle insurance while ground intercity transportation such as bus fares fell 1.6%...meanwhile, the recreation services index was unchanged as a 1.7% drop in film processing and a 1.5% decrease in video rentals were offset by 0.4% higher cable and satellite television service and 0.6% higher admissions to movies, theaters, and concerts...education and communication services were 0.3% higher on a 1.4% increase in delivery services and 0.7% higher wireless telephone services, and other personal services rose 0.2% on a 0.4% increase in haircuts and similar personal care services...other than the aforementioned ham and eggs and energy prices, only telephones, which were priced 13.4% lower, and televisions, which are 12.0% cheaper, saw their prices change by more than 10% over the past year...

with this release, we are now able to estimate the economic impact of last week's November retail sales report...for the most accurate estimate, and the way the BEA figures GDP, we should take each type of retail sales and adjust it with the appropriate change in price to determine real sales; ie, for November's clothing sales, which increased by 0.8%, should be adjusted with the price index for apparel, which was down by 0.3%, to show us that real retail sales of clothing were actually up 1.1% in November...then, to get GDP relevant changes, we'd have to compare those real clothing sales in November to real sales in the 3rd quarter months of July, August and September, and then repeat that for each other type of retailer, obviously quite tedious...the short cut we usually use for a ballpark estimate is to apply the composite price index of all commodities less food and energy commodities, which was down 0.2%, to retail sales less grocery, gas station, and restaurant sales, which account for nearly 70% of the aggregate sales....those sales were up 0.2% in November, and since their price index was down 0.2%, real retail sales ex food and energy was up 0.4%...in the food and energy components, grocery stores sales were up 0.8% while prices for food at home were down 0.3%, meaning real food sales rose by 1.1% in November; sales at bars and restaurants were up 0.7% in dollars, but those dollars bought 0.2% less, so real sales of food away from home was up 0.5%...and while gas station sales were down 0.8%, gasoline prices were down 2.4%, suggesting a solid real increase in gasoline sold as well...weighing the food and energy components at one third of total retail sales suggests that real retail sales were up on the order of 0.5% in November, following an October when a 0.1% increase in retail sales was boosted to real sales of 0.2% by the inflation adjustment...together, these suggest a strong contribution from personal consumption of goods in the advance 4th quarter GDP report, which will be released at the end of January...

Industrial Production Down 0.6% in November on Warm Weather, Lower Coal and Oil Drilling

industrial production fell again in November, but two thirds of the drop was due to a warm month, reducing the need for heating...the Fed's G17 release on Industrial production and Capacity Utilization indicated that industrial production fell by 0.6% in November after falling by a revised 0.4% in October and 0.1% in September, and is now 1.2% below it's year ago level...the industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, fell to 106.5 in November from 107.1 in October, which was originally reported at 107.2...meanwhile, the September reading for the index was revised up from 107.4 to 107.5, and the August reading was revised from 106.6 to 106.7...thus, to the extent that this report plays into GDP, the increases in August and September industrial production imply an upward revision to 3rd quarter growth in those market group where production was revised, while the weaker 4th quarter index levels imply a subtraction from 4th quarter growth in those GDP components responsible, such as household utilities consumption expenditures...

the manufacturing index was unchanged at 106.2 in November, as the index for October was revised down from 106.3, the manufacturing index for September was left unchanged at 105.9, while the manufacturing index for August was revised from 106.0 to 106.1...however, the year over year increase in the manufacturing index has now been reduced to 0.9% from last month's 1.9%, as last November had seen a 1.1% increase... meanwhile, the mining index, which includes oil and gas well drilling, fell by 1.1% in November after falling a revised 2.4% in October, and at 111.3 it's now 8.2% below its level of November a year ago...finally, the utility index, which often fluctuates wildly due to above or below normal temperatures, fell by 4.3% in November after a 2.8% drop in October, as the decreases in both months were due to warmer than normal temperatures, reducing the need for heating...at 97.6, the utility index is now 7.6% lower than it was in November a year ago, and at the lowest level since the extraordinarily warm month of March 2012...

production among the major market groups was broadly lower in November, with a 0.2% increase in production of business equipment, led by a 0.7% increase in output of Information processing equipment, the only market group to see an increase...production of consumer goods fell 0.5%, as output of consumer durable goods was down 0.2% on an 0.8% decrease in production of automotive products, a 0.9% decrease in output of household durables such as furniture and appliances, and a 1.4% drop in output of home electronics, while production of non-durables fell by 0.6% on a 4.8% drop in the output of consumer energy products and a 1.1% decrease in production of clothing...production of defense and space equipment was down 0.2%, production of construction supplies also slipped 0.2%, and production of business supplies fell 0.7%...in addition, output of intermediate materials to be used in later industrial processes fell 0.8% on a 2.4% drop in production of consumer parts... further details for industrial production by market group, including the changes for each of the last 6 months, 3 quarters and 3 years, can be found on Table 1 and Table 4 of the report, with table 1 showing the percentage change from the prior month, quarter or year, and table 4 giving the new index and subindex values for the same...

this report also gives us capacity utilization data, which is expressed as the percentage of our plant and equipment that was in use during the month, and which fell from 77.5% in October to 77.0% in November.... seasonally adjusted capacity utilization for all manufacturing industries was down 0.1% to 76.2% in November as manufacturing capacity utilization for October was revised from 76.4% to 76.3%...after a 0.2% upward  revision to October, utilization of NAICS durable goods production facilities fell from 76.4% in October to 76.1% in November, while capacity utilization for non-durables rose from 77.5% to 77.9% after October capacity utilization for non-durables was revised down 0.4%....capacity utilization for mining fell from 80.5% in October to 79.4% in November, while utilities were operating at 74.5% of capacity during November, down from the revised 77.9% usage rate in October...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....

New Housing Starts and New Building Permits Increased in November

the November report on New Residential Construction (pdf) from the Census Bureau estimated that the widely watched count of new housing unit starts was at a seasonally adjusted annual rate of 1,173,000 in November, which was 10.5 percent (±8.6%) above the revised October estimated rate of 1,161,000 housing units started annually and 19.5 percent (±2.0%) above last November's rate of 1,079,000 housing starts a year...the figures in parenthesis show the most likely range of the change indicated; in other words, November housing starts could have been up as little as 1.9% or as much as 19.1% from those of October, with even larger revisions subsequently possible...in this report, the annual rate for October housing starts was revised from the 1,060,000 reported last month to 1,161,000, while September starts, which were first reported at 1,206,000 annually, were revised from last month's initial revised figure of 1,191,000 annually back up to 1,207,000 annually with this report.....those annual rates of starts indicated by the annualized headline change were extrapolated from a survey of a small percentage of permit offices visited by Census field agents, which estimated that 89,800 housing units were started in November, down from 89,900 units started in October, which was initially estimated at 92,200 housing starts...of those housing units started in November, an estimated 55,500 were single family homes and 38,800 were units in structures with more than 5 units, down from 58,800 single family starts but up from 30,100 units started in structures with more than 5 units in October....the unadjusted estimates also show that housing starts were down in the Northeast and in the Midwest, while they were up in the South and statistically unchanged in the West, with only the 4,700 increase to 46,300 starts in the South greater than the statistical margin of error for its region....

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 starts data...in November, Census estimated new building permits were being issued at a seasonally adjusted annual rate of 1,289,000 housing units, which was 11.0 percent (±1.6%) above the revised October rate of 1,161,000 permits annually and 19.5 percent (±2.0%) above the rate of permit issuance in November a year earlier...again, the estimates for new permits reported here were extrapolated from the unadjusted estimate, which showed permits for 90,800 housing units were issued in November, which was actually down from the estimated 98,200 new permits issued in October, with permits in the South down 7,100 to 42,700, and permits in the West showing the only monthly increase...the November permits included 49,000 permits for single family homes, down from 59,400 single family permits in October, and 39,800 permits for housing units in apartment buildings with 5 or more units, up from 35,700 such multifamily permits a month earlier...for charts and additional analysis on this report, see Bill McBride's coverage in two posts: Housing Starts increased to 1.173 Million Annual Rate in November and Comments on November Housing Starts....

State and Regional Employment Report for November

the Regional and State Employment and Unemployment Summary for November expands on the national employment situation summary of two weeks ago by breaking down the state and regional details...as with most BLS reports, the press release is very readable & self explanatory, with BLS referring to appropriate tables linked to at the bottom of the press release wherever relevant, and with tables and complete coverage of all 50 states, it's more detailed than we can meaningfully cover in a short synopsis....the BLS table corresponding to household survey data, including the seasonally adjusted count of the unemployed and the unemployment rate for each state, is here....North Dakota at 2.7% continues as the state with the lowest unemployment rate despite the troubles in the oil patch, largely through a reduction of their labor force, while New Mexico had the highest unemployment rate at 6.8%, as West Virginia, last month's worst state, saw their unemployment rate fall from 6.9% to 6.5%..

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 latter two tables are very detailed, giving you both actual and seasonally adjusted totals for jobs in each state and the District of Columbia in several categories, including construction, manufacturing, trade, transportation and utilities, financial, professional and business services, education and health services, leisure and hospitality and government....the 20 page pdf version of this report has even more detail also includes map graphics for both the employment rate and the year over year payroll jobs increase by state and region...


(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…)

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