Sunday, November 20, 2016

October’s retail sales, consumer prices, industrial production, producer prices, and new housing; September’s business inventories..

agency reports released this week included Retail Sales for October and Business Sales and Inventories for September from the Census Bureau, the October Import-Export Price Index, the October Producer Price Index and the October Consumer Price Index from the Bureau of Labor Statistics, the October report on Industrial Production and Capacity Utilization from the Fed, and the October report on New Residential Construction, also from the Census Bureau...in addition, the BLS also released the Regional and State Employment and Unemployment for October on Friday, which breaks down the establishment survey and household survey data from the monthly jobs report released two weeks ago by region and by state..

this week also saw the release of three regional Fed manufacturing surveys for November: 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 from -6.8 in October to +1.5 in November, it's first positive reading in 4 months, suggesting that the contraction in First District manufacturing may be ending...the Philadelphia Fed Manufacturing Survey, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest diffusion index of manufacturing conditions edged down, from a reading of +9.7 in October to +7.6 in November, suggesting that the region's manufacturing continues to expand, albeit at a more moderate pace, while the Kansas City Fed manufacturing survey, covering western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico, which reported its broadest composite index fell to +1 in September, down from +6 in both September and October, suggesting weak expansion in that region for the third month in a row, following 18 months of contraction mostly in energy related industries...

Retail Sales Rise 0.8% in October after September Increase Revised up to 1.0%

seasonally adjusted retail sales increased in October after retail sales for August and September were both revised higher...the Advance Retail Sales Report for October (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $465.9 billion during the month, which was up 0.8 percent (±0.5%) from September's revised sales of $462.1 billion and 4.3 percent (±0.7%) above the adjusted sales in October of last year...September's seasonally adjusted sales were revised from $459.8 billion to $462.1 billion, while August's sales were also revised a bit higher, from $457.0 billion to $457.2 billion, with this release....estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated sales rose 1.5%, from $447,774 million in September to $454,520 million in October, while they were up 2.2% from the $444,959 million of sales in October a year ago...the total $2.5 billion upward revision to August and September sales should boost previous estimates of the personal consumption expenditures contribution to 3rd quarter GDP by about 0.22 percentage points...

included below is the table of the monthly and yearly percentage changes in retail sales by business type taken from the October Census Marts pdf....the first double column below gives us the seasonally adjusted percentage change in sales for each kind of business from the September revised figure to this month's October "advance" report in the first sub-column, and then the year over year percentage sales change since last October in the 2nd column...the second double column pair below gives us the revision of the September advance estimates (now called "preliminary") as of this report, with the new August to September percentage change under "Aug 2016 r" (revised) and the September 2015 to September 2016 percentage change as revised in the last column shown...for your reference, the table of last month’s advance estimate of September sales, before this month's revisions, is here.….

October 2016 retail sales table

from the above table, we can see that the 1.1% increase to $94,683 million in seasonally adjusted sales at motor vehicle and parts dealers was not a major factor in the October sales increase, because without automotive sales, retail sales were still up 0.8%...car sales for September, however, were revised higher, from $92,862 million to $93,681 million, and were responsible for most of the upward revision to that month's sales...also note that there was an 2.4% increase to $33,860 million in sales at gas stations, which we figure to be mostly due to higher prices....however, if we take out both gas station sales and motor vehicles and parts sales, retail sales were still up 0.7%...we'll be able to ascertain the net economic impact of this nominal jump in retail sales once we adjust them for the price data from the CPI..

October CPI up 0.4% on Higher Priced Gasoline

the consumer price index increased by 0.4% in October, as higher prices for energy and housing were only partially offset by lower prices for groceries...the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that the seasonally adjusted price index rose 0.4% in October after it had risen 0.3% in September, 0.2% in August, been unchanged in July, and rose 0.2% in both May and June....the unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, rose from 241.428 in September to 241.729 in October, which left it statistically 1.636% higher than the 237.838 index reading of last October, which is reported as a 1.6% YoY increase....regionally, prices for urban consumers have risen 2.3% in the West, 1.6% in the Northeast, 1.5% in the South, and 1.0% in the Midwest over the past year, with greater price increases within regions in cities of more than 1,500,000 people everywhere except in the Northeast, where the largest cities averaged just a 1.5% price increase...with higher prices for gasoline alone accounting for more than half the gain in the overall index, seasonally adjusted core prices, which exclude food and energy, rose by just 0.1% for the month, with the unadjusted core index rising from 248.731 to 249.218, which put it 2.144% ahead of its year ago reading of 243.985...

the volatile seasonally adjusted energy price index increased by 3.5% in October, after it had risen 2.9% in September, been unchanged in August and fell by 1.6% in July...that October increase was also enough to push the year over year energy index into positive territory at +0.1% for the first time in almost 2 years....prices for energy commodities were 6.7% higher while the index for energy services rose by 0.5%, after rising by 0.7% in September....the increase in the energy commodity index included a 7.0% hike in the price of gasoline, the largest component, and a 5.9% increase in the price of fuel oil, while prices for other fuels, including propane, kerosene and firewood, fell by an average of 0.2%…within energy services, the index for utility gas service rose by 0.9% after increasing by 0.8% in September, 2.1% in August and by 3.1% in July, and hence utility gas is now priced 4.8% higher than it was a year ago, while the electricity price index rose by 0.4%, after increasing by 0.7% in September...however, energy commodities are still priced 0.9% below their year ago levels, with gasoline prices also averaging 0.9% lower than they were a year ago.…meanwhile, the energy services price index is now 1.3% higher than last October, as even electricity prices have increased by 0.4% over that period..

the seasonally adjusted food price index was unchanged in October, just as it was in July, August and in September, as 0.2% lower prices for food purchased for use at home offset 0.1% higher prices for food bought to eat away from home, where average prices at fast food outlets rose 0.2% while average prices at full service restaurants was unchanged...the food price index is now 0.4% lower than a year ago, as a 2.3% decrease in the price of food at home has been mostly offset by a 2.4% increase in prices for food away from home, which included a 1.9% increase in prices of lunches at elementary and secondary schools...

in the food at home categories, the price index for cereals and bakery products was unchanged as 2.7% higher prices for rice and a 0.5% increase in prices for bread were offset by a 2.7% decrease in prices for fresh sweetrolls, coffeecakes, doughnuts and a 1.0% decrease in flour and prepared flour mixes...the price index for the meats, poultry, fish, and eggs group fell by 0.7% as beef prices fell 1.5%, egg prices fell 1.2%, and pork prices fell 1.1%, while the index for dairy products was 0.3% higher as a 0.9% increase in prices for milk was offset by 0.2% drop in prices for other dairy products...the fruits and vegetables index was 0.2% higher, as a 2.2% increase in prices for frozen fruits and vegetables and a 0.9% increase for canned fruits and vegetables more than offset 1.5% lower prices for oranges and 2.0% lower priced lettuce....the beverages index was 0.4% lower as a 1.1% drop in the price of roast coffee more than offset 0.7% higher prices for carbonated drinks...lastly, prices in the other foods at home category were on average 0.1% lower, as 2.0% lower priced butter and 1.0% lower salad dressings were offset by higher prepared frozen foods and 0.5% higher peanut butter......among food at home line items, only eggs, which are now priced 35.5% lower than a year ago, and lettuce, which is 11.9% lower than last year, have seen a price change greater than 10% over the past year...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 October after rising by 0.1% in September, 0.3% in August, 0.1% in July and by 0.2% in April, in May and in June, the composite of all goods less food and energy goods increased by 0.1%, while the 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 October retail sales for inflation in national accounts data, the index for household furnishings and supplies was unchanged as a 2.5% drop in prices for laundry equipment was offset by 2.5% higher prices for living room, kitchen, and dining room furniture, while the apparel price index was 0.3% higher on a 1.0% increase in prices for footwear and a 0.3% increase in prices for women's apparel...prices for transportation commodities other than fuel were up 0.1%, as prices for new cars rose 0.2%, prices for new trucks rose 0.3%, while prices for used cars and trucks were down 0.1% after falling 0.3% in September, 0.6% in August,1.0% in July, 1.1% in June and 1.3% in May...meanwhile, prices for medical care commodities were 0.1% higher on a 0.2% increase in prescription drug prices...on the other hand, the recreational commodities index fell 0.4% on a 1.2% drop in TV prices and 1.3% lower toy prices, and the education and communication commodities index was 0.6% lower as a 2.1% cut in prices for personal computers and a 1.8% price drop for telephone hardware more than offset a 0.3% increase in prices for college textbooks....lastly, a  separate price index for alcoholic beverages was up 0.4% on 0.6% higher prices for beer and 0.9% higher prices for distilled spirits at home, while the price index for ‘other goods’ was down 0.1% as a 0.4% increase in cigarette prices was more than offset by 0.3% decreases in prices for cosmetics, perfume, bath, nail preparations and implements and for hair, dental, shaving, and miscellaneous personal care products...

within core services, the price index for shelter rose 0.4% on a 0.4% increase in rents, a 0.3% increase in owner's equivalent rent, and a 1.8% increase in costs for lodging away from home at hotels and motels, while costs for water, sewers and trash collection rose 0.1% and other household operation costs were 0.3% higher....meanwhile, the index for medical care services was unchanged as prices for hospital services rose 0.2% while prices for both physicians' services and health insurance were 0.1% lower...at the same time, the transportation services index was 0.2% lower on a 2.2% drop in airfares and 0.5% lower car and truck leasing...the recreation services index was unchanged as pet services rose 0.4% while video & audio rental services fell 2.4%, and the index for education and communication services was also unchanged as internet services providers cut prices 1.0%, wireless telephone services were 0.5% lower, while elementary and high school tuition and fees rose 0.8% and college tuitions rose 0.4%...lastly, the index for other personal services was also unchanged as tax return services fell 0.2% while apparel services other than laundry and dry cleaning were 0.5% higher...among core prices, televisions, which are now 21.7% cheaper than a year ago, internet services, which are down by 10.1% since last October, wireless telephone services, which are 10.2% lower, and automobile service club membership fees, which are now down 10.8% from a year ago, all saw prices drop by more than 10% over the past year, while no line item showed an increase of that magnitude...

Estimating the Real Change in October Retail Sales Using the October CPI

with this CPI release for October, we can now attempt to estimate the economic impact of the October retail sales figures which we reviewed earlier, which saw nominal sales rise 0.8%...for the most accurate estimate, and the way the BEA will be figuring 4th quarter GDP at the end of January, we would have to take each type of retail sales and adjust it with the appropriate change in price to determine real sales; for instance, October's clothing store sales, which were up by 0.6% in dollars, should be adjusted with the price index for apparel, which indicated prices for clothing were up by 0.3%, which tells us that real retail sales of clothing were only up by 0.3% October...then, to get a GDP relevant quarterly change, we'd have to compare such adjusted real clothing sales for October with the similarly adjusted real clothing consumption for the 3 months of the third quarter (July, August and September), and then repeat that process for each other type of retailer, obviously quite a tedious task to undertake manually.  The short cut we usually take to get a quick and dirty estimate of the change in real sales for the month is to apply the composite price index of all commodities less food and energy commodities, which was up 0.1%, to retail sales less grocery, gas station, and restaurant sales, which accounts for nearly 70% of aggregate retail sales…in dollars, those sales were up by roughly 0.9% in October, while as we noted their composite price index was up 0.1%, meaning that real retail sales excluding food and energy sales were up by around 0.8%.  then, for the rest of the retail aggregate, we find sales at food and beverage stores were up 0.9% in September, while prices for food at home were down 0.2%, suggesting a real increase of around 1.1% in the quantity of food & beverages purchased for the month.  Next, sales at bars and restaurants were down 0.7% in dollars, but those dollars also bought 0.2% less “food away from home”, so real sales at bars and restaurants were really down by about 0.9%.  And while gas station sales were up 2.2%, gasoline prices were up 7.0%, suggesting a 4.8% real decrease in the amount of gasoline sold, with the caveat that gas stations sell more than gasoline, and since we don't have a detailed breakout on that, we'll just zero out that obviously wrong decrease in gasoline consumption from our calculation...thus, weighing the food and energy components at roughly 30% of total retail sales, and core sales at 70%, we can estimate that the aggregate of real retail sales in October were up about 0.6% from those of September…

next, to see how the change in real October sales impacts the change in 4th quarter GDP, we have to compare those October sales to those of the 3rd quarter...first, to get an approximation of the real adjusted changes for October vis a vis the 3 months of the third quarter, we also have to adjust the October percentage change for the upward revision to September and August sales that were included in the October retail report, which saw September's seasonally adjusted sales revised from $459.8 billion to $462.1 billion and August's sales revised from $457.0 billion to $457.2 billion...percentage-wise, those revisions increased the September sales increase over August from 0.6% to 1.0%, while it left the August percentage change statistically unchanged at 0.1% below July...next, we access Table 7 in the pdf for the September personal income and outlays report, which gives us already inflation adjusted changes for the prior months, where we find that real sales of goods were up 0.6% in July, down 0.8% in August and up 0.5% in September (month over month)...after adjusting those real sales with the blunt instrument of the October retail revisions, we could then estimate that revised real goods would be up 0.6% in July, down 0.8% in August and up 0.9% in September...that means that October real sales, up 0.6% from September, were hence up about 1.5% from August and up 0.7% from July, or up more than 0.9% from the average of the 3rd quarter...that works out to growth in real goods consumption at a 3.75% annual rate, a pace that would add at approximately .82 (+/-10%) percentage points to 4th quarter GDP in the goods portion of personal consumption expenditures alone, even should November and December show no improvement...

Industrial Production Unchanged in October, Capacity Utilization Slips 0.1%

the Fed's G17 release on Industrial production and Capacity Utilization reported that industrial production was unchanged in October by after falling by a revised 0.2 percent in September, as revisions to the index for utilities raised the rate of change in total industrial production in August from down 0.5% to down 0.1%, while it lowered the September change from up 0.1 to down 0.2%….the June to July percentage increase was also revised, from up 0.5% to up 0.4%....the industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, rose to 104.3 in October from 104.2 in September, which was statistically unrevised after the August index was revised from 104.2 to 104.5, and the July index was revised from 104.7 to 104.6...year over year industrial production remains down 0.9%, slightly better than last month's 1.0% decrease....

the manufacturing index, which accounts for more than 77% of the total IP index, increased by 0.2, from 103.0 in September to 103.2 in October, after September's manufacturing index was revised down from 103.1 to 103.0, August's index was revised down from 102.9 to 102.8, and July's index was revised down from 103.5 to 103.4....meanwhile, the mining index, which includes oil and gas well drilling, rose from 104.2 in September to 106.1 in October, after the September index was revised down from 104.3, leaving the mining index 7.0% lower than it was a year ago....finally, the utility index, which often fluctuates due to above or below normal temperatures, fell 2.6% in September, from 104.9 to 102.2, after the September utility index was revised up from 103.8 and the August utility index was revised up from 104.9 to 108.1; as a result of those revisions, the utility index is only 0.1% lower than it was a year earlier..

this report also includes capacity utilization data, which is expressed as the percentage of our plant and equipment that was in use during the month, and which indicated that seasonally adjusted capacity utilization for total industry fell to 75.3% in October from 75.4% in September, which was recalculated but unchanged from last month’s report ...capacity utilization of NAICS durable goods production facilities rose from 76.0% in September to 76.2% in October, after September's figure was revised up from 75.8%, while capacity utilization for non-durables producers was unchanged from a downwardly revised 74.3%...capacity utilization for the mining sector rose to 77.0% in October from 75.2% in September, which was originally reported as 75.5%, while utilities were operating at 77.8% of capacity during October, down from their 79.9% of capacity during September, which was revised up from the previously reported 79.1%...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.... 

Producer Prices Flat in October as Higher Energy Prices are Offset by Lower Trade and Core Services

the seasonally adjusted Producer Price Index (PPI) for final demand was unchanged in October as prices for finished wholesale goods increased 0.4%, while margins of final services providers fell by 0.3%...this followed a September report that indicated the overall PPI had increased by 0.3%, with prices for finished goods up 0.7% while final demand for services rose 0.1%, and a August report that indicated the PPI was statistically unchanged, with prices for finished goods down 0.4% while final demand for services rose 0.1%....producer prices are now up 0.8% from a year ago, since most of the price decreases relating to lower oil and commodity prices went by the boards in early 2015...

as noted, the price index for final demand for goods, aka 'finished goods', rose by 0.4% in October, after rising 0.7% in September but falling by 0.4% in both July and August, as the index for wholesale energy prices rose 2.5% from September to October while the price index for wholesale foods was 0.8% lower and the index for final demand for core wholesale goods (ex food and energy) rose 0.1%...major wholesale price changes for September included a 20% increase for liquefied petroleum gas and a 9.7% increase for gasoline, while wholesale prices for eggs fell 21.1%, after rising 24.2% in September..

meanwhile, the index for final demand for services fell by 0.3% in October after rising by 0.1% in both August and September, falling by 0.3% in July and rising 0.4% in June, as the index for final demand for transportation and warehousing services rose 0.2% while the index for final demand for trade services fell 0.3% and the core services index for final demand for services less trade, transportation, and warehousing services was also 0.3% lower....among transportation and warehousing services, margins for air transport of freight rose 0.5% and margins for truck transport of freight rose 0.3% ..among trade services, seasonally adjusted margins for fuels and lubricants retailers were down 7.4%, margins for TV, video, and photographic equipment and supplies retailers were down 5.1%, and margins for food and alcohol retailers were 3.0% lower, while margins for major household appliances retailers were up 10.2%.. in the core final demand services index, 5.7% lower margins for securities brokerage, dealing, investment advice, and related services was the major factor in the October drop in the index…

this report also showed the price index for processed goods for intermediate demand was 0.3% higher, after rising 0.5% in September, falling 0.1% in August, and rising 0.2% in July, 0.9% in June, and 0.8% in May...however, prices for intermediate processed goods still remain 0.5% lower than in October a year ago, as they fell every month from last July through March....the price index for intermediate energy goods rose by 1.2% in October, while prices for intermediate processed foods and feeds fell 0.7%, and the core price index for processed goods for intermediate demand less food and energy was 0.2% higher...

at the same time, the price index for intermediate unprocessed goods was 0.6% lower in October, after rising by 1.3% in September, falling by 2.8% in August and 0.4% in July but after rising by 2.8% in June, 1.3% in May, 3.0% in April and 1.6% in March, in the only increases in that index since June of last year...contributing to the October decrease was a 5.7% drop in the price index for unprocessed foodstuffs and feedstuffs, as slaughter livestock prices fell 11.5%, and a 1.1% decrease in the index for core raw materials other than food and energy materials, while the index for crude energy goods rose 5.8% as prices for crude oil rose 10.4%... this raw materials index is still 4.2% lower than it was a year ago, but most of the year over year decrease of 26.4% that was seen in November 2015 has now been retraced...

lastly, the price index for services for intermediate demand was 0.6% lower in October, after being 0.4% higher in September, unchanged in August but after rising 0.3% higher in July and 0.8% in June, in only the second decrease for this index in the past year... the index for trade services for intermediate demand was 0.5% lower and the core price index for services less trade, transportation, and warehousing for intermediate demand was down 0.8%, while the index for transportation and warehousing services for intermediate demand was 0.2% higher...a major factor in the decrease in prices for core services for intermediate demand was a 3.1% decrease in the index for intermediate services related to business loans (partial); in addition, the indexes for securities brokerage, dealing, investment advice, and related services and marketing consulting services were also lower…margins for minerals and ores wholesaling, chemicals and allied products wholesaling, and fuels and lubricants retailing pulled the intermediate trade services down, while a 0.4% increase in prices for courier, messenger, and U.S. postal services led the intermediate transportation and warehousing services higher…over the 12 months ended in October, the year over year price index for services for intermediate demand, which has never turned negative on an annual basis, is now 2.3% higher than it was a year ago...

October Housing Starts Jump Most in 34 Years, New Permits Rise

the report on New Residential Construction for October (pdf) from the Census Bureau estimated that new housing units were being started at a seasonally adjusted annual rate of 1,323,000 units during the month, which was 25.5 percent (±12.6%) above the revised September estimated annual rate of 1,154,000 housing unit starts, and was 23.3 percent (±14.4%) above last October's pace of 1,073,000 housing starts a year...the figures in parenthesis are the most likely range of the change indicated; in other words, October's housing starts could have been up by as little as 12.9% or by as much as 38.1% from those of September, with even larger revisions possible after a number of months...in this report, the annual rate for September housing starts was revised up more than 10%, from the 1,047,000 reported last month to 1,154,000, while July starts, which were first reported at a 1,142,000 annual rate, were revised up from last month's initial revised figure of 1,150,000 annually to 1,164,000 annually with this report....

those annual rates of 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 114,900 housing units were started in October, up from the 94,800 units that were started in September...of those housing units started in October, an estimated 73,500 were single family homes and 40,500 were units in structures with more than 5 units, up from the revised 67,700 single family starts in September, and up from the 25,700 units started in structures with more than 5 units in September...

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 October, Census estimated new building permits were being issued at a seasonally adjusted annual rate of 1,229,000 housing units, which was 0.3 percent (±2.0%)* above the September rate of 1,225,000 permits, and was 4.6 percent (±1.4%) above the rate of building permit issuance in October a year earlier...the annual rate for housing permits issued in September was unrevised at 1,225,000....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 97,900 housing units were issued in October, actually down from the revised estimate of 107,700 new permits issued in September...the October permits included 60,500 permits for single family homes, down from 63,300 single family permits issued in September, and 35,000 permits for housing units in apartment buildings with 5 or more units, down from 41,000 such multifamily permits a month earlier... for more graphs and commentary on this report, see the following two posts by Bill McBride at Calculated Risk: Housing Starts increased to 1.323 Million Annual Rate in October and Comments on October Housing Starts... 

September Business Sales Up 0.7% Business Inventories Up 0.1%

after the release of the October retail sales report, the Census Bureau released the composite Manufacturing and Trade Inventories and Sales report for September (pdf), which incorporates the revised September retail data from that October report and the earlier published September 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 $1,314.6 billion in September, up 0.7 percent (±0.2%) from August's revised sales, and up 0.8 percent (±0.4%) from September sales of a year earlier...note that total August sales were concurrently revised up from the originally reported  $1,304.1 billion to $1,305.9 billion....manufacturer's sales were up 0.8% to $463,012 million in September, and retail trade sales, which exclude restaurant & bar sales from the revised September retail sales reported earlier, rose 1.0% to $406,691 million, while wholesale sales rose 0.2% to $444,945 million...

meanwhile, total manufacturer's and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $1,818.7 billion at the end of September, up 0.1 percent (±0.1%)* from August, and 0.6 percent (±0.6%)* higher than in September a year earlier...the value of end of August inventories, although recalculated, remained statistically unrevised at the $1,816.9 billion reported last month...seasonally adjusted inventories of manufacturers were estimated to be valued at $621,350 million, statistically unchanged from August, inventories of retailers were valued at $607,205 million, 0.2% more than in August, while inventories of wholesalers were estimated to be valued at $590,176 million at the end of September, 0.1% higher than in August...

in assessing the impact of the components of this report on 3rd quarter GDP, we looked at the September factory inventories reported two weeks ago and now included herein and judged that 3rd quarter GDP would have to be adjusted upwards by 0.09 percentage points to account for the differences between that factory report and GDP estimates; conversely, last week we judged that September wholesale inventories were over-estimated at a $2.06 billion rate, implying an downward revision of 0.06 percentage points to 3rd quarter GDP...for retail inventories, the BEA's technical note for 3rd quarter GDP indicates that they had estimated that the value of June retail inventories in September to be $607.6 billion, up from $605.8 billion in August...this report thus revises that and reports that September retail inventories were actually at $607.2 billion, meaning the end of 3rd quarter retail inventories were lower, at a $1.6 billion annual rate, than the BEA had estimated in the advance report of 3rd quarter GDP, thus suggesting a downward revision of 0.04 percentage points to 3rd quarter GDP, based on those overestimated retail inventories....together, the BEA's net overestimation of 3rd quarter business inventories would thus imply a 0.01 percentage point reduction to 3rd quarter GDP when the 2nd estimate is released at the end of November...

 

(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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