Sunday, March 27, 2016

4th quarter GDP revision, February durable goods, new and existing home sales, state jobs, et al

the key report released this week was the 3rd and final estimate of 4th quarter GDP from the Bureau of Economic Analysis, released on Friday by the  Bureau of Economic Analysis...other widely watched reports released earlier in the week included the February advance report on durable goods and the February report on new home sales, both from the Census bureau, and the February report on existing home sales from the National Association of Realtors...on Friday we also saw the Regional and State Employment and Unemployment report for February from the Bureau of Labor Statistics, as they're catching up after that same report for January was issued 4 weeks later than normal last week...

other releases from this week included the Chicago Fed National Activity Index (CFNAI) for January, which is a weighted composite index of 85 different economic metrics, constructed such that a zero value indicates economic growth at the historical trend rate; the CFNAI rose to fell to –0.29 in February from +0.41 in January., which left the 3 month average at –0.07 , indicating that national economic activity has been slightly below its historical trend this winter...the week also saw the results of two more regional Fed manufacturing surveys: the Richmond Fed March Survey of Manufacturing Activity, covering an area that includes Virginia, Maryland, the Carolinas, the District of Columbia and West Virginia, reported its broadest composite index rose to 22, following February's reading of  -4, the largest one month spike ever, indicating that manufacturing growth in the district has suddenly picked up after several sluggish months, while the Kansas City Fed manufacturing survey for March, which covers western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico, reported its broadest composite index rose to -6 in March, up from readings of -12 in February, and -9 in both January and December, but still indicating that the regional contraction, mostly in energy related industries, continues for the thirteenth month in a row...

4th Quarter GDP Growth Rate Revised to 1.4%

the Third Estimate of our 4th Quarter GDP from the Bureau of Economic Analysis indicated that our real output of goods and services increased at a 1.4% annual rate in the quarter, revised from the 1.0% growth rate reported in the second estimate last month, as the output of consumers services, exports, and residential investment were greater than previously estimated...in current dollars, our fourth quarter GDP grew at a 2.3% annual rate, increasing from what would extrapolate to $18,060.2 billion annually in the 3rd quarter to an annualized $18,164.8 billion in the 4th quarter, with the headline 1.4% annualized rate of increase in real output resulting after the application of an inflation adjustment of 0.9% to that current dollar change...

while we cover the details, remember that the press release for GDP reports all quarter over quarter percentage changes at an annual rate, which means that they're expressed as a change a bit over 4 times of that what actually occurred over the 3 month period, and that the prefix "real" is used to indicate that each change has been adjusted for inflation using price changes chained from 2009, and then that all percentage changes in this report are calculated from those 2009 dollar figures, which would be better thought of as a quantity indexes than as any reality based dollar amounts...given the misunderstanding evoked by the oversimplified press release, all the data that we'll use in reporting the changes here will come from the pdf for the 3rd estimate of 4th quarter GDP, which is linked to on the sidebar of the BEA press release...specifically, we refer to table 1, which shows the real percentage change in each of the GDP components annually and quarterly since 2012, table 2, which shows the contribution of each of the components to the GDP figures for those months and years, table 3, which shows both the current dollar value and inflation adjusted value of each of the GDP components, table 4, which shows the change in the price indexes for each of the components, and table 5, which shows the quantity indexes for each of the components, which are used to convert current dollar figures into units of output represented by chained dollar amounts...the pdf for the 2nd estimate for the 4th quarter, which this estimate revises, is here...

real personal consumption expenditures (PCE), the largest component of GDP, were revised to show growth at a 2.4% annual rate in the 4th quarter, rather than the 2.0% growth rate reported last month, as a 2.7% increase in the rate of personal spending was deflated with an annualized 0.3% increase in the PCE price index, an inflation adjustment which was revised from the 0.4% PCE price index reported in the second estimate....real consumption of durable goods grew at a 3.8% annual rate, which was revised from 3.4% in the second estimate, and added 0.28 percentage points to GDP, as real output of recreational equipment and vehicles consumed rose at a 13.1% annual rate even as real consumption of automotive vehicles fell at a 5.7% rate.....real consumption of nondurable goods by individuals rose at a 0.6% annual rate, revised from the 1.2% increase reported in the 2nd estimate, and added 0.09 percentage points to 4th quarter growth, as real consumption of both food and energy goods decreased and real consumption of clothing was unchanged while the other categories of non-durable consumption saw modest growth...meanwhile real consumption of services rose at a 2.8% annual rate, revised from the 2.1% rate reported last month, and added 1.30 percentage points to the final GDP tally...an increase in the real output of recreational services at a 14.2% rate led the services increase, as real consumption of housing and utilities fell and output of financial services was slightly lower than it was in the third quarter...

seasonally adjusted real private domestic investment contracted at a 1.0% annual rate in the 4th quarter, revised from the 0.7% contraction estimate made last month, as growth real private fixed investment was revised from a 0.1% rate to indicate growth at a 0.4% rate, while the contraction in inventory growth was larger than reported in the 2nd estimate...the contraction in investment in non-residential structures was revised from shrinking at a 6.6% rate to a contraction at a 5.1% rate, investment in equipment contracted at a 2.1% rate, not the 1.8% rate previously reported, and investment in intellectual property products, which had previously been estimated as growing at a 1.3% rate, was revised to show contraction at a 0.2% rate...meanwhile, growth in residential investment was revised higher, from a 8.0% rate to growth at an 10.1% rate annually…after those revisions, the contraction in investment in non-residential structures subtracted 0.14 percentage points from the 4th quarter growth rate, lower investment in equipment subtracted 0.12 percentage points from 4th quarter growth, lower investment in intellectual property subtracted 0.01 percentage points, while the growth in residential investment added 0.33 percentage points to 4th quarter GDP...

meanwhile, the growth in real private inventories was revised from the previously reported $81.7 billion real growth rate to show inventory growth at an inflation adjusted $78.3 billion rate, which came after inventories had grown at an inflation adjusted $85.5 billion rate in the 3rd quarter, and hence the $7.2 billion smaller real inventory growth than in the 3rd quarter subtracted 0.22 percentage points from the 4th quarter's growth rate, in contrast to the 0.14 percentage point subtraction due to slower inventory growth reported in the second estimate....since less growth in inventories indicates that less of the goods produced during the quarter were left "sitting on the shelf”, their decrease by $7.2 billion meant that real final sales of GDP were actually greater by that much, and hence real final sales of GDP grew at a 1.6% rate in the 4th quarter, revised from the 1.2% growth in real final sales reported in the 2nd estimate...

the previously reported decrease in our real exports was revised lower with this estimate, while the previously reported decrease in real imports was revised slightly higher, and as a result our net trade was a smaller subtraction from GDP rather than was previously reported...our real exports fell at a 2.0% rate rather than the 2.7% rate reported in the second estimate, and since exports are added to GDP because they are part of our production that was not consumed or added to investment in our country, their contraction subtracted 0.25 percentage points from the 4th quarter's growth rate....meanwhile, the previously reported 0.6% decrease in our real imports was revised to a 0.7% decrease, and since imports subtract from GDP because they represent either consumption or investment that was not produced here, their decrease meant that 0.11 percentage points was added to 4th quarter GDP....thus, our weakening trade balance subtracted a net 0.14% percentage points from 4th quarter GDP, rather than the 0.25% percentage points subtraction from GDP by our trade deficit that was indicated in the second estimate...

finally, there were also small revisions to real government consumption and investment in this 3rd estimate, that turned the total government contribution positive, as it was in the 1st estimate...real federal government consumption and investment was seen to have grown at a 2.3% rate from the 3rd quarter in this estimate, revised from the 2.2% growth rate of the federal government reported in the 2nd estimate....real federal spending for defense was revised to show it growing at a 2.8% rate, rather than the 2.7% rate last reported, adding 0.11 percentage points to 4th quarter GDP, while all other federal consumption and investment grew at a 1.5% rate, which was unrevised from the 2nd estimate, and thus added 0.04 percentage points to GDP.....note that federal government outlays for social insurance are not included in this GDP component; rather, they are included within personal consumption expenditures only when such funds are spent on goods or services, indicating an increase in the output of those goods or services....mostly offsetting the federal growth, real state and local consumption and investment was revised from shrinking at a 1.4% rate in the second estimate to a contraction at a 1.2% rate in this estimate, as state and local investment spending fell at a 7.8% rate and subtracted 0.16 percentage points from 4th quarter GDP, while state and local consumption spending grew at a 0.3% rate and added 0.03 percentage points to GDP...

our FRED bar graph below, which can also be viewed as an interactive at the FRED site, has been updated with these latest GDP revisions...each color coded bar shows the real inflation adjusted change, expressed in billions of chained 2009 dollars, in one of the major components of GDP over each quarter since the beginning of 2012...in each quarterly grouping of seven bars on this graph, the quarterly changes in real personal consumption expenditures are shown in blue, the changes in real gross private investment, including structures, equipment and intangibles, are shown in red, the quarterly change in real private inventories is in yellow, the real change in imports are shown in green, the real change in exports are shown in purple, while the real change in state and local government spending and  investment is shown in pink, and the real change in Federal government spending and investment is shown in grey...those components of GDP that contracted in a given quarter are shown below the zero line and subtract from GDP, those that are above the line grew during that quarter and added to GDP; the exception to that is imports in green, which subtract from GDP, and which are shown on this chart as a negative, so that when imports shrink, they will appear above the line as an addition to GDP, and when they increase, as they did in the recent quarter, they'll appear below the zero line...it’s fairly clear from this graph that our personal consumption expenditures has underpinned GDP growth over this period, and especially in the quarter just ended…

4th quarter 2015 GDP 3rd estimate

February Durable Goods New Orders Down 2.8%, Shipments Down 0.9%, Inventories Down 0.3%

the Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders for February (pdf) from the Census Bureau reported that the widely watched new orders for manufactured durable goods fell by $6.6 billion or 2.8% to $229.4 billion in February, following a revised increase of $9.5 billion, or 4.2%, in Janaury new orders, which had been originally reported as a 4.9% increase from December...however, year to date orders are now 2.6% higher than they were a year ago, despite the fact that new orders have decreased 5 out of the last 7 months...as is usually the case, the volatile monthly change in new orders for transportation equipment drove the February headline change, as those transportation equipment orders fell $4.9 billion or 6.2% to $74.2 billion, on a 27.1% decrease to $10,147 million in orders for commercial aircraft coupled with a 29.2% decrease to $3,743 million in new orders for defense aircraft....excluding those new orders for transportation equipment, other new orders still fell by 1.0% in February, as the important new orders for nondefense capital goods excluding aircraft, a proxy for equipment investment, fell 1.8% to $67,350 million, after the January change in orders for such capital goods was revised from a 3.9% increase to a 3.1% increase....

meanwhile, the seasonally adjusted value of January shipments of durable goods, which which will be inputs into various components of 1st quarter GDP after adjusting for changes in prices, fell by $2.1 billion or 0.9 percent to $238.3 billion, after January's shipments were revised from a increase of 1.9% to a increase of 1.3%, while the change in December's shipments were revised from a 1.6% decrease to a decrease of 1.8%...again, lower shipments of transportation equipment drove the February change, as they fell $1.0 billion or 1.2 percent to $79.0 billion, as the value of shipments of commercial aircraft fell 8.0% to $12,983 million; excluding that volatile sector, the value of other shipments of durable goods still fell 0.7%, but is nonetheless 1.5% higher year to date than a year ago....meanwhile, the value of seasonally adjusted inventories of durable goods, also a major GDP contributor, fell for the 7th time in 8 months, decreasing by $1.1 billion or 0.3 percent to $394.3 billion, following a 0.2% decrease in January that was originally reported as a 0.1% decrease...inventories excluding transportation equipment were also down 0.3% in February, as the decline in durable inventories was led by a $0.4 billion or 1.2 percent decrease to $33.2 billion in inventories of primary metals...

finally, unfilled orders for manufactured durable goods, which we consider a better measure of industry conditions than the widely watched but volatile new orders, fell for the second time in three months, decreasing by $4.2 billion or 0.4 percent to $1,183.7 billion, after the 0.1% decrease reported for January was revised to virtually unchanged...a 0.6% decrease to $789,105 million in unfilled orders for transportation equipment was responsible for the drop, as unfilled orders excluding transportation equipment rose 0.2% to $394,562 million....compared to a year ago, the unfilled order book for durable goods is still 1.6% below last February's level, with unfilled orders for transportation equipment 1.7% below their year ago level, on a 5.6% decrease in the backlog of orders for motor vehicles.....

New Homes Continue to Sell at a Half Million a Year Rate in February

the Census report on New Residential Sales for February (pdf) estimated that new single family homes were selling at a seasonally adjusted rate of 512,000 new homes a year in February, which was 2.0 percent (±18.8%)* above the revised January rate of 502,000 new single family homes a year, but still 6.1 percent (±17.9%)* below the estimated annual rate that new homes were selling at in February of last year....the asterisks indicate that based on their small sampling, Census could not be certain whether February new home sales rose or fell from those of January or even from those of a year ago, with the figures in parenthesis representing the 90% confidence range for reported data in this report, which has the largest margin of error and subject to the largest revisions of any census construction series....hence, these initial reports are not very reliable and often see significant revisions...with this report; sales of new single family homes in January were revised from the annual rate of 494,000 reported last month to a 502,000 a year rate, while the annual rate of December's sales were revised from the revised 544,000 annually reported last month to an annual rate of 540,000...

the annual rates of sales reported here are extrapolated from the estimates of Census field reps, which showed that approximately 44,000 new single family homes sold in February, up from the estimated 38,000 new homes that sold in January, which was revised from 37,000, while the unadjusted estimate for December home sales was unrevised at 38,000, and the estimate for November sales, first reported at 34,000, was revised up from last month's revised 35,000 estimate to 36,000.....the raw numbers from Census field agents further estimated that the median sales price of new houses sold in February was $301,400, up from $283,900 in January, which was originally reported as $278,800, while the average new home sales price was $348,900, down from $363,400 in January, and down from the average sales price of $355,900 in February a year ago....a seasonally adjusted estimate of 240,000 new single family houses remained for sale at the end of February, which represents a 5.6 month supply at the February sales rate, down from a 5.8 month supply in January...for more details and 6 FRED graphs on this report, see New Home Sales Down -6.1% From a Year Ago from Robert Oak at the Economic Populist...

Existing Home Sales Fall 7.1% in February, Prices Fall 1.4%

the National Association of Realtors (NAR) reported that seasonally adjusted existing home sales fell 7.1% in February, projecting that 5.08 million homes would sell over an entire year if February's home sales pace was extrapolated over that year, which was 2.2% greater than the annual sales rate projected in February of a year ago...that came after an annual sales rate of 5.47 homes in January, unrevised, and after January had scored the largest year-over-year home sales gain since July of 2013...the NAR also reported that the median sales price for all existing-home types in February was $210,800, which was 4.4% higher than a year earlier, which they promote as "the 48th consecutive monthly year over year increase in home prices" even though home prices are down 5.6% over the past two months and at the lowest average since March of last year...the NAR press release, which is titled Existing-Home Sales Fizzle in February, is in easy to read plain English, so if you're interested in the details on housing inventories, cash sales, distressed sales, first time home buyers, etc., you can easily find them in that press release...as sales of existing properties do not add to our national output, neither these sales nor the prices for which these homes sell are included in GDP, except insofar as real estate, local government and banking services are rendered…

since this report is entirely seasonally adjusted and at a not very informative annual rate, we usually look at the raw data overview (pdf), which gives us a close approximation to the actual number of homes that sold each month...this indicates that roughly 314,000 homes sold in February, actually up 4.0% from the 302,000 homes that sold in January and up 6.4% from the 295,000 homes that sold in February of last year, so we can see there was a large seasonal adjustment applied to arrive at the lower headline numbers...home sales increased in every region of the country except the West, where they were down 1,000 to 69,000, while the South saw a 7.8% increase to 138,000 homes sold....that same pdf indicates that the median home selling price for all housing types fell 1.4% from a revised $213,700 in January to $210,800 in February, while the average home sales price was $253,900, also down 1.4% from the $257,700 average in January, but up 2.5% from the $247,800 average home sales price of February a year ago, with the regional average home sales prices ranging from a low of $196,900 in the Midwest to a high of $346,300 in the West...for additional coverage with long term graphs on this report, see Existing Home Sales Plunge -7.1% from Robert Oak at the Economic Populist..

State and Regional Employment Report for February

the Regional and State Employment and Unemployment Summary for February expands on the national employment situation summary of three 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 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....New Hampshire and South Dakota are now tied at 2.7% as the states with the lowest unemployment rate, while Alaska had the highest unemployment rate at 6.6%, followed closely by Mississippi and West Virginia, both with a 6.5% rate..

for a breakdown of payroll employment by job type for each state over the past 3 months, and the change in employment for each since last February, 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 blog post for this week 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…)

Sunday, March 20, 2016

February retail sales, consumer and producer prices, industrial production, new home construction, January business inventories and JOLTS

  you had to know that after there were no major releases last week, we'd get hit with a bunch of them this week...major reports released this week included Retail Sales for February and Business Sales and Inventories for January, both released by the Census bureau, the February Consumer Price Index and the February Producer Price Index, both from the Bureau of Labor Statistics, the report on Industrial Production and Capacity Utilization for February from the Fed, and the February report on New Residential Construction from the Census Bureau....in addition, the BLS released two monthly employment reports that normally don't coincide: the Regional and State Employment and Unemployment report for January and the Job Openings and Labor Turnover Survey (JOLTS), also for January.....

this week also saw the release of the first two regional Fed manufacturing indexes for March: 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 -16.6 to +0.6, its first positive reading since July of last year, indicating a bottoming out of the recession in First District manufacturing, and the Philadelphia Fed Manufacturing Survey, covering most of Pennsylvania, southern New Jersey, and Delaware, which reported its broadest diffusion index of manufacturing conditions rose from -2.8 in February to +12.4 in March, its first positive reading in seven months, implying an end to the contraction in that region's manufacturing...

February Retail Sales Down 0.1% after January Sales Revised Down 0.4%

seasonally adjusted retail sales fell 0.1% in February after retail sales for January were revised more than 0.4% lower, in one of the larger revisions we've seen for this report....the Advance Retail Sales Report for February (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $447.3 billion, which was a decrease of 0.1 percent (±0.5%) from January's revised sales of $447.9 billion and 3.1 percent (±0.7%) above the adjusted sales of February of last year...January's seasonally adjusted sales were revised from the $449.9 billion originally reported to $448.0 billion, while December's sales, which were revised up to $449.1 billion from the originally reported $448.1 billion last month, were revised higher again, to $449,744 million with this report....estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated unadjusted sales rose 2.3%, from $400,249 million in January to $409,600 in February, while they were up 6.2% from the $385,731 million of sales in February a year ago, with the caveat that this February had one more day than last year...while it's obvious that lower sales of January will reduce prior estimates of retail’s contribution to 1st quarter GDP, the revision to December sales would add about 0.02 percentage point to the previously published figure for 4th quarter GDP...

to look at February sales, we'll include below the table of monthly and yearly percentage changes in sales by business type taken from the Census pdf, which you should all be familiar with by now....the first double column below gives us the seasonally adjusted percentage change in sales for each type of retail business type from January to February in the first sub-column, and then the year over year percentage change for those businesses since last February in the 2nd column; the second pair of columns gives us the revision of last month’s January advance monthly estimates (now called "preliminary") as revised in this report, likewise for each business type, with the December to January change under "Dec 2015 revised" and the revised January 2015 to January 2016 percentage change in the last column shown...for your reference, our copy of the table from last month’s advance January estimates, before this month's large revision, is here....

February 2016 retail sales

in the second line of the above table, we see that even without the 0.2% lower sales at automobile and parts dealers, seasonally adjusted retail sales were still down by 0.1% in February, so it wasn't lower auto sales that was the drag, as it often is...on the other hand, about half way down we see that seasonally adjusted sales at gas stations of $31,048 million were 4.4% lower than they were in January, undoubtedly due to lower gasoline prices...excluding those gas station sales from the totals, retail sales would have risen a modest 0.2% in February and would have been up 4.8% on a year over year basis...still, there were some other areas of weakness in February; sales at furniture stores were off 0.5% to $8,696 million, sales at grocery stores were down by 0.3% to $50,925 million, sales at department stores were down 0.4% to $13,437 million, and nonstore (online sales) were down 0.2% to $42,090 million...on the other hand, sales at building material and garden supply dealers were up 1.6% to $29,865 million, sales at specialty shops, such as sporting goods stores and bookstores, saw their sales rise 1.2% to $7,621 million, and sales at bars and restaurants rose by 1.0% to $53,717 million...for those interested in visualizations of February's retail sales,Robert Oak's 10 graph coverage of this report at the Economic Populist includes a bar graph showing the above retail sales categories by dollar amounts, and a pie graph showing each retail sales category as a percentage of the total sales amount.

February CPI down 0.2% on Cheaper Gasoline; 0.3% Rise in Core Prices Reduces Real PCE

consumer prices for food and most goods and services were all up in February, but another big drop in energy prices dragged the overall index down....the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that seasonally adjusted prices fell by 0.2% in February after they had been unchanged in January and fallen 0.1% in December...the unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, actually rose to 237.111 in February from 236.916 in January, which left it statistically 1.0% higher than the 234.722 index reading of last February....regionally, prices for urban consumers have risen 2.1% in the West, 0.7% in the South, 0.4% in the Midwest, and 0.7% in the Northeast over the past year, with generally greater price increases within regions in cities of more than 1,500,000 people...with lower energy prices alone responsible for the lower CPI, seasonally adjusted core prices, which exclude food and energy, rose by 0.3% for the month, with the unadjusted core index rising from 244.528 to 245.680, which is now 2.33% ahead of its year ago reading of 240.083 ...

the seasonally adjusted energy price index fell by 6.0% in February after falling by a 2.8% in both December and January, but the energy index is still just 12.5% lower than it was in February a year ago, because the 9.7% energy index drop of January 2015 is no longer included in the year over year comparison.....prices for energy commodities were 12.5% lower in February while the index for energy services saw a 0.1% increase, after decreasing by 0.7% in January....the decrease in the energy commodity index included a 13.0% drop in the price of gasoline, the largest component, while fuel oil prices fell 2.9% and prices for other fuels, including propane, kerosene and firewood, averaged a 0.2% increase…within energy services, the index for utility gas service rose by 1.0%, but utility gas was still priced 10.3% lower than a year ago, while the electricity price index fell by 0.2%, after it fell by 0.7% in January...energy commodities are now priced 20.9% below their year ago levels, with gasoline 20.7% lower priced than it was a year ago, as it was last January that the gasoline index fell 18.7% in one month, and hence the year over year comparisons going forward from there are from that lower price level...meanwhile, the energy services price index is 4.6% lower than last February, as even electricity prices have fallen 3.0% over that period..

the seasonally adjusted food price index rose 0.2% in February, after it had been unchanged in January and fell by 0.2% in December, as prices for food purchased for use at home rose 0.2% while prices for food away from home rose 0.1%, as average prices at fast food outlets rose 0.2% while average prices at full service restaurants rose 0.1% ...0.8% higher prices for fruits and vegetables led the price increase in foods at home, as fresh fruit prices rose 2.3% and dried beans, peas, and lentils prices rose 1.7%, while fresh vegetable prices pulled back 0.4% on a 6.1% drop in the price of tomatoes, and prices for both canned and frozen fruits and vegetables were also lower...in other categories of food at home, the price index for cereals and bakery products rose 0.2% as breakfast cereal prices rose 1.5% and bread other than white bread prices rose 0.6%, more than offsetting a 1.2% decrease in prices for fresh biscuits, rolls, and muffins...at the same time,  the price index for the meats, poultry, fish, and eggs group fell by 0.1% after falling 1.3% in January and 1.1% in December as prices changes within the group were broadly mixed, with fresh whole chickens up 2.2% while fresh chicken parts were down 1.3%, and with beef roasts up 2.3% while ground beef was priced 0.7% lower...likewise mixed were prices for dairy products, as the index was unchanged as fresh whole milk prices fell 0.9% while other milk prices rose 0.7%...meanwhile, the index for beverages and beverage materials was 0.6% higher as prices for frozen juices and drinks rose 2.5% and instant and freeze dried coffee prices rose 1.0% while roast coffee prices fell 0.2%... lastly, prices in the other foods at home category averaged 0.1% lower as prices for sauces and gravies were down 2.0% while prices for frozen and freeze dried preparations were marked up 1.3% and salad dressings were 1.1% higher...only two food line items have seen price changes greater than 10% over the past year; ham prices, which were down 0.7% in February, are now 10.7% lower than they were in February a year ago, while tomatoes are 10.8% higher than last year, despite the 6.1% drop this month....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 0.3% in both February and January, the composite of all commodities less food and energy commodities also rose by 0.3%, as did the composite for all services less energy services....among the commodity components, which will be used by the Bureau of Economic Analysis to adjust February retail sales for inflation in national accounts data, the index for household furnishings and supplies fell by 0.2% on a 2.1% decrease in prices for major appliances, a 1.2% decrease in prices for bedroom furniture and a 2.4% decrease in prices for other furniture, which were were partially offset by a 1.0% increase in prices for other appliances....apparel prices were up 1.6% on a 4.0% increase in prices for men's shirts and sweaters, a 3.5% increase in prices for men's footwear, a 2.7% increase in prices for women's outerwear, an 8.5% increase in prices for watches, and a 3.2% increase in prices for jewelry, which were only partially offset by 2.6% lower prices for boys apparel and a 1.9% decrease in prices for men's suits, sport coats, and outerwear...at the same time, prices for transportation commodities other than fuel were up 0.2%, as prices for both new cars and trucks and used cars and trucks were up 0.2% while prices for tires fell 0.1%....in addition, prices for medical care commodities were up 0.6% on 1.1% higher drug prices, while the recreational commodities index was 0.5% lower as prices for toys fell 1.8%, prices for photographic equipment fell 1.2% and prices for TVs were 1.4% lower...likewise, the education and communication commodities index was 0.7% lower on a 1.3% decrease in prices for personal computers and an 0.8% decrease in prices for college textbooks, while lastly the separate index for alcoholic beverages rose 0.2%, and the index for other goods rose 0.3%...

within services, the price index for shelter rose 0.3% on a 0.3% increase in rents, a 0.3% increase in owner's equivalent rent and a 0.9% increase in costs for lodging away from home, while costs for household operations rose 0.5% on a 3.1% increase in moving, storage, and freight expenses....medical care services rose 0.5% on a 1.3% increase in health insurance, a 0.9% increase in inpatient hospital services, and an 0.8% increase in dental services, while transportation services index rose 0.2% on a 3.0% increase in car and truck rentals and a 0.8% increase in intercity train fares which were partially offset by an 0.8% decrease in ship fares...meanwhile, the recreation services index rose 0.5% as club dues and fees for participant sports and group exercises rose 0.9% and cable and satellite television and radio services rose 0.8%, while education and communication services were 0.1% lower on a 1.0% decrease in prices for wireless telephone services and 0.8% lower delivery services which were partially offset by 1.5% higher technical and business school tuition and fees......lastly, other personal services were up 0.1% on a 0.6% increase in checking account and other bank services....among core prices, a 12.3% increase in moving and storage expenses was the only line item with a year over year increase greater than 10%, while only telephones, which were priced 16.2% lower, and televisions, which are now 15.0% cheaper, saw their prices drop by more than 10% over the past year...

with this release, we can now attempt to estimate the economic impact of the retail sales report we covered earlier...for the most accurate estimate, and the way the BEA will be figuring 1st quarter GDP at the end of April, 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, February's clothing store sales, which rose by 0.9% in dollars, should be adjusted with the price index for apparel, which was up by 1.6%, to show us that real retail sales of clothing were actually down 0.7% in February...then, to get a GDP relevant quarterly change, we'd have to compare such adjusted real clothing sales of January and February with real clothing consumption for the months of October, November and December, 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 ballpark estimate of real sales is to apply the composite price index of all commodities less food and energy commodities, which was up 0.3%, to retail sales less grocery, gas station, and restaurant sales, which accounts for nearly 70% of the aggregate sales...while those sales were up more than 0.1% in January, their price index was up 0.3%, so real retail sales excluding food and energy sales were down by nearly 0.2%...then, for the rest of the retail aggregate, we find sales at grocery stores were down 0.3%, while prices for food at home were up 0.2%, suggesting a real decrease of around 0.5% in the quantity of food purchased in February....next, sales at bars and restaurants were up 1.0% in dollars, but those dollars bought 0.2% less, so real sales at bars and restaurants were only up 0.8%...and while gas station sales were down 4.4%, gasoline prices were down 13.0%, suggesting a solid real increase in the amount of gasoline sold, with the caveat that gas stations sell more than gasoline, and we don't have the details on that...weighing the food and energy components at roughly 30% of total retail sales, we can estimate that real retail sales in February were down almost 0.1% from January…

however, that January data is further complicated by the 0.43% downward revision to January retail sales...Table 7 of the January income and outlays report (pdf) showed that real personal consumption expenditures of goods, which excludes sales at bars and restaurants from the goods sales reported by the retail sales report, were originally reported to be up 0.7% in January, after falling 0.2% in December, rising 0.8% in November, and falling 0.2% in October...including the revised 1.1% decrease in January sales at bars and restaurants and reducing that by the revised 0.4% decrease in other January retail sales would likely revise the aggregate increase in real January PCE to something on the order of 0.1% from December, which will now probably be revised to down 0.1% from November...that means real January sales would in turn be virtually unchanged from real November sales but 0.8% higher than real October sales...averaging +0.1, 0.0, and +0.8, then suggests real January sales were ~0.3% higher than those of the 4th quarter, while February real sales were 0.1% lower than January's...that means that so far in the 1st quarter, real personal consumption expenditures for goods is running at a rate a bit more than 0.2% greater than those of the 4th quarter, such that their contribution to first quarter GDP growth will be on the order of just 0.04 percentage points..

Wholesale Prices 0.6% Lower in February, Margins of Service Providers Unchanged

the seasonally adjusted Producer Price Index (PPI) for final demand decreased by 0.2% in February as prices for finished wholesale goods fell by 0.6%, while margins of final services providers were essentially unchanged...this followed a January report that showed the overall PPI had increased 0.1%, with prices for finished goods down 0.7% while final demand for services was up 0.5%....producer prices are now virtually unchanged from a year ago, and 0.6% lower than two years ago, as the producer price index was down 0.6% over the span from February 2014 to February 2015, following the large crash of oil prices at the beginning of last year...

as we noted, the index for final demand for goods, aka 'finished goods', fell by 0.6% in February after falling by 0.7% in both January and in December, as the index for wholesale energy prices fell 3.4% on a 15.1% drop in wholesale prices for gasoline that was partially offset by a 37.9% increase in wholesale prices for home heating oil, which had oddly dropped by 41.0% in January, as seasonal kicked in before prices did...at the same time, the price index for wholesale foods was 0.3% lower as a 19.0% drop in wholesale price index for fresh and dried vegetables was offset by a 28.9% increase in wholesale prices of eggs for fresh use...excluding food and energy, the index for final demand for core wholesale goods rose by 0.1% in February, as a 1.7% drop in wholesale prices for pharmaceutical preparations and a 0.9% drop in price for printing equipment were offset by a 1.3% increase in wholesale prices for paper industries machinery and a 1.2% increase in wholesale prices for soaps and detergents..

meanwhile, the index for final demand for services was unchanged in February after rising by 0.5% in January, as the index for final demand for trade services fell 0.4%, the index for final demand for transportation and warehousing services fell 0.7%, while the core services index for final demand for services less trade, transportation, and warehousing services was 0.3% higher....noteworthy among trade services, seasonally adjusted margins for fuels and lubricants retailers were 11.6% lower and margins for appliance retailers fell 5.8%, while margins for TV, video, and photographic equipment and supplies retailers were 2.7% higher after falling 10.1% in January and 27.4% in December...among transportation and warehousing services, passenger airlines saw their margins decrease 0.9% as did freight truckers, while freight airline margins rose 1.2%...in the core final demand services index, margins for securities brokerage, dealing, investment advice, and related services rose 4.8% after rising 11.8% in January and 9.2% in December...

this report also showed the price index for processed goods for intermediate demand fell by 0.7% after a 1.2% decrease in January, as intermediate processed goods prices have now been down 17 out of the last 19 months and are 5.6% lower than in January a year ago.... the price index for processed foods and feeds rose 0.1% in the first increase by any intermediate goods index in seven months, while prices for intermediate energy goods were 2.9% lower and the price index for processed goods for intermediate demand less food and energy was down 0.4%...meanwhile, the price index for intermediate unprocessed goods was down 2.1% in February after falling 0.7% in January, 3.4% in December and 4.9% in November, with the index for crude energy goods down 3.2%, the index for unprocessed foodstuffs and feedstuffs down 2.4%, while producer prices for raw materials other than food and energy materials was up 0.3% in its first increase in eight months... this raw materials index remains 16.8% lower than it was a year ago, as most commodity prices remain near their lows...

lastly, the price index for services for intermediate demand was up 0.3% in February after it rose 1.1% in January, as a 0.2% decrease in the index for transportation and warehousing services for intermediate demand was offset by a 0.4% increase in the the core price index for services less trade, transportation, and warehousing for intermediate demand, while the index for trade services for intermediate demand was unchanged...driving the core services for intermediate demand index higher were increases in the index for business loans, which rose 1.1%, while the indexes for intermediate securities brokerage, dealing, investment advice; co-employment staffing services, legal services; paper and plastics products wholesaling; and the Postal Service were also higher...the decrease in the index for transportation and warehousing services for intermediate demand was precipitated by a 0.9% decrease in the intermediate demand index for truck transportation of freight...over the 12 months ended in February, the year over year price index for services for intermediate demand, which has never turned negative, is now 1.9% higher than it was a year ago...  

January Business Inventories up 0.1%; Real Growth at a Pace Greater than 4th Quarter

following the release of the retail sales report, the Census Bureau released the composite Manufacturing and Trade Inventories and Sales report for January (pdf), which incorporates the revised January retail data and previously published 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 $1,296.2 billion in December, down 0.4 percent (±0.3%) from December's revised sales, and down 1.1 percent (±0.5%) from January sales of a year earlier...note that total December sales were also revised down by less than 0.1%, from $1,302.3  billion to $1,302.0 billion....manufacturer's sales rose by 0.4% from December to $468,386 million in January, while retail trade sales, which exclude restaurant & bar sales from the revised January retail sales we reported earlier, fell 0.3% to $394,759 million, and wholesale sales fell 1.3% to $433,093 million...

meanwhile, total manufacturer's and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $1,812.3 billion at the end of January, up 0.1 percent (±0.2%)* from December and 1.8 percent (±0.5%) higher than in January a year earlier...the value of end of December inventories was revised down by 0.1%, from the $1,813.1 billion reported last month to $1,811,272 million with this report...seasonally adjusted inventories of manufacturers were estimated to be valued at $637,472 million, 0.4% lower than in December, inventories of retailers were valued at $590,544 million, 0.3% greater than December, while inventories of wholesalers were estimated to be valued at $584,249 million at the end of January, also up 0.3% from December...

before the change to inventories are included in GDP data, they must first be adjusted any changes in price to determine the real change in inventories...two weeks ago we reviewed factory inventories as compared to BEA estimates and judged that they will likely show a real January increase on the order of 0.3%...looking at the wholesale component of business inventories, which were released last week, we judged that their real change in January had already nearly doubled that of the 4th quarter, to the extent that they would already add 0.04 basis points to 1st quarter GDP...the retail component of January business inventories, released with this week's retail sales report for February, would be adjusted for inflation with the producer price indices for finished goods, which was down 0.7% on the aggregate in January...that suggests an increase in real retail inventories on the order of 1.0%, again greater than the 4th quarter pace, and thus also adding incrementally to 1st quarter GDP growth...

Industrial Production Down 0.5% in February on Warm Weather and Less Drilling

industrial production was weaker in February after the previously published increase for January was revised lower, following a cumulative upward revision to the previously published decreases of October, November and December....the Fed's G17 release on Industrial production and Capacity Utilization indicated that industrial production fell by 0.5% in February after rising by a revised  0.8% in January and falling by a revised 0.5% in December and a revised 0.7% November...the year over year decrease improved, however from 1.7% below its year ago level last month to just 1.0% below last February in this report...the industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, fell to 106.3 in February from 106.9 in January, which was originally reported at 106.8...at the same time, the December reading for the index was revised up from 105.9 to 106.0, the November index was revised down from 106.6 to 106.5, and the October index was revised down from 107.4 to 107.3...to the extent that this report plays into GDP, the changes to October, November and December industrial production might incrementally decrease the 4th quarter's growth rate, while the average of the January and February index is now exactly equal to the average of the prior three months, suggesting no net change to the 1st quarter GDP components that this index influences...

the manufacturing index, which accounts for more than 75% of the total IP index, increased by 0.2, from 106.2 to 106.4 in February, after the index for December was revised down from 105.7 to 105.5 and the manufacturing index for October was revised down from 106.2 to 106.1, while the index for November was left unchanged at 105.9...as a result of those small changes, combined with a weak reading last January, the year over year increase in the manufacturing index has now increased to 1.6% from last month's 1.2% and from December's 0.8% YoY increase... meanwhile, the mining index, which includes oil and gas well drilling, fell to 108.1 in February from 109.7 in January, which was originally published as 110.1...the mining index has now averaged a 1.3% monthly decrease over the last 6 months and is now 9.9% lower than it was a year ago....finally, the utility index, which often fluctuates due to above or below normal temperatures, fell 4.0%, from an upwardly revised 102.3 in January to 98.2 in February, as temperatures across most of the US were much above normal, reducing the need for heating...with the utility index already depressed by a warmer than normal winter, it's now 9.3% below the level of last February, when record cold temperatures in the population centers of the Midwest and Northeast increased demand for heating...

this report also gives us capacity utilization figures, which are expressed as the percentage of our plant and equipment that was in use during the month, and which saw total capacity utilization fall from an unrevised 77.1% in January to 76.7% in February...seasonally adjusted capacity utilization for all manufacturing industries was unchanged at 76.1% in February after manufacturing capacity utilization for December was revised down 0.1% to 75.7%...utilization of NAICS durable goods production facilities rose 0.1% to 75.7% in February after January's durable goods capacity utilization was revised 0.1% lower, while capacity utilization for non-durables fell from an upwardly revised 78.1% in January to 78.0% in February....capacity utilization for mining fell to 77.5% in February, from 78.5% in January, which was originally published as 78.8%, while utilities were operating at 74.8% of capacity during February, down from the revised 78.0% of capacity during January...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.... 

Housing Starts Ahead of Last Year's Pace; February Permits Down 3.1%

the report on New Residential Construction (pdf) for February from the Census Bureau estimated that the widely watched count of new housing units started was at a seasonally adjusted annual rate of 1,178,000, which was 5.2 percent (±16.9%) above the revised January estimated seasonally adjusted annual rate of 1,120,000 housing units started, and was 30.9 percent (±16.3%) above last February's rate of 900,000 housing starts a year...the asterisk indicates that the Census does not have sufficient data to determine whether housing starts rose or fell over the past month, with the figure in parenthesis the most likely range of the change indicated; in other words, February housing starts could have been down 11.7% or up as much as 22.1% from those of January, with even larger revisions subsequently possible...in this report, the annual rate for January housing starts was revised from the 1,099,000 reported last month to 1,120,000, while December starts, which were first reported at a 1,149,000 annual rate, were revised from last month's initial revised figure of 1,143,000 annually up to 1,157,000 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 73,600 housing units were started in January, up from the 74,300 units started in January...of those housing units started in February, an estimated 56,200 were single family homes and 23,900 were units in structures with more than 5 units, up from 49,700 single family starts and 23,100 units started in structures with more than 5 units in January....the unadjusted estimates also show that the housing start increases were concentrated in the South, where starts rose from 40,400 to 46,600, and in the West, where starts rose from 17,000 to 21,600, while starts in the Northeast fell from 9,700 in January to 4,000 in February, a statistically significant change despite the ±54.4% margin of error on that region's data..

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 February, Census estimated new building permits were being issued for a seasonally adjusted annual rate of 1,167,000 housing units, which was 3.1 percent (±0.8%) below the revised January rate of 1,204,000 permits annually, but 6.3 percent (±2.0%) above the rate of permit issuance in February a year earlier...the annual rate for housing permits issued in January was revised from 1,202,000 to 1,204,000....again, these annual estimates for new permits reported here were extrapolated from the unadjusted estimates, which showed permits for 83,800 housing units were issued in February, actually up from the estimated 74,800 new permits issued in January, with permits in the Northeast up from 5,000 to 7,500....the February permits included 52,800 permits for single family homes, up from 45,700 single family permits in January, and 28,500 permits for housing units in apartment buildings with 5 or more units, up from 27,000 such multifamily permits a month earlier...

January Job Openings, Hiring, Layoffs, and Job Quitting, All Down

the Job Openings and Labor Turnover Survey (JOLTS) report for January from the Bureau of Labor Statistics estimated that seasonally adjusted job openings rose by 260,000, from 5,281,000 in December to 5,541,000 in January, after December's job openings were revised down, from 5,607,000 to 5,281,000, in a major revision to all the data from this release going back to December 2000...January jobs openings were still 11.4% higher than the 4,972,000 job openings reported in January a year ago, as the job opening ratio expressed as a percentage of the employed rose to 3.7% in January from 3.6% in December and from 3.4% a year ago...the greatest increases in job openings were in the broad-professional and business services category and in retail, while openings in private educational services decreased by 40,000 to 53,000 (see table 1 for more details)...like most BLS releases, the press release for report is easy to understand and also refers us to the associated table for the data cited, linked at the end of the release...

the JOLTS release also reports on labor turnover, which consists of hires and job separations, which in turn is further divided into layoffs and discharges, those who quit, and 'other separations', which includes retirements and deaths....in January, seasonally adjusted new hires totaled 5,029,000, down 372,000 from the revised 5,401,000 who were hired or rehired in December, as the hiring rate as a percentage of all employed fell from 3.8% to 3.5%, which was also down from the hiring rate of 3.6% in January a year earlier (details of hiring by industry since September are in table 2)....meanwhile, total separations also fell, by 225,000, from 5,128,000 in November to 4,903,000 in January, as the separations rate as a percentage of the employed fell from 3.6% to 3.4%, which was also down from the separations rate of 3.5% a year ago (see table 3)...subtracting the 4,903,000 total separations from the total hires of 5,029,000 would imply an increase of 126,000 jobs in January, somewhat less than the revised payroll job increase of 172,000 for January reported by the February establishment survey of two weeks ago, but still not an unusual difference and within the expected +/-115,000 margin of error in these incomplete samplings...

breaking down the seasonally adjusted job separations, the BLS finds that 2,804,000 of us voluntarily quit their jobs in January, down 284,000 from the revised 3,088,000 who quit their jobs in December, while the quits rate, widely watched as an indicator of worker confidence, fell from 2.2% to 2.0% of total employment (see details in table 4)....in addition to those who quit, another 1,663,000 were either laid off, fired or otherwise discharged in January, down 9,000 from the revised 1,672,000 who were discharged in December, which left the discharges rate unchanged at 1.2% of all those who were employed during the month, same as a year earlier....meanwhile, other separations, which includes retirements and deaths, were at 437,000 in January, up from 368,000 in December, for an 'other separations' rate of 0.3%, which was unchanged....both seasonally adjusted and unadjusted details by industry and by region on hires and job separations, and on job quits and discharges can be accessed using the links to tables at the bottom of the press release...


(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my blog post for this week 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…)

Sunday, March 13, 2016

January wholesale report, January mortgage delinquencies up, many facing statute of limitations

there were just two regular agency economic reports released this week: the October report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau, and the Consumer Credit Report for January from the Fed, which showed that overall credit expanded by a seasonally adjusted $10.5 billion, or at a 3.6% annual rate, as non-revolving credit expanded at a 5.4% rate to $2,608.3 billion and revolving credit outstanding fell at a 1.3% rate to $935.3 billion...the Fed also released the 4th Quarter Flow of Funds report, a 194 page pdf report that tracks the flow of money throughout the economy as it moves between households, businesses, and government, and which is usually reported on for household net worth, which tends to fluctuate with the stock market and the value of homes, as measured by the CoreLogic Home Price Index…household net worth rose from $85.2 trillion in the 3rd quarter to $86.8 trillion in the 4th quarter of 2015, as the value of real estate owned by households rose by $458 billion and the value of corporate stock owned by households increased by $758 billion…..the week also saw the private release of the Mortgage Monitor for January (pdf) from Black Knight Financial Services, which we'll take a look at after we review the Wholesale Sales report..

January Wholesale Sales Down 1.3%; Wholesale Inventories Up 0.3%

wholesale sales fell much more than expected in January after December sales were revised lower, while wholesale inventories, which had been expected to fall, rose...the January report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at $433.1 billion, down 1.3 percent (+/-0.9%) from the revised December level, and 3.1% percent (+/-1.2%) lower than wholesale sales of January 2015... the December preliminary estimate was revised down $1.0 billion or 0.2 percent, leaving December's sales 0.6% below the November level... January wholesale sales of durable goods fell 1.9 percent (+/-1.1%) from December and were down 3.4 percent (+/-1.8%) from a year earlier, with a 6.4% decrease in wholesale sales of computers, computer peripheral equipment and software and a 5.3% decrease in wholesale sales of furniture and home accessories leading the decreases for the month...wholesale sales of nondurable goods were down 0.8 percent (+/-0.9%)* from December and were down 2.8 percent (+/-1.6%) from last January, with wholesale sales petroleum and petroleum products down 6.9% on lower prices...as an intermediate activity, wholesale sales are not included in GDP except insofar as they are a trade service, since the traded goods themselves do not represent an increase in the output of the goods sold....

on the other hand, the monthly change in private inventories is a major factor in GDP, as additional goods on the shelf represent goods that were produced but not sold, and this January report estimated that wholesale inventories were valued at $584.2 billion at month end, a increase of 0.3 percent (+/-0.5%)* from the revised December level and 2.0 percent (+/-1.4%) higher than January a year ago, with the December preliminary inventory estimate revised upward by $0.6 billion or 0.1%....inventories of durable goods were valued 0.3 percent (+/-0.4%)* lower than December and were 0.4 percent (+/-1.4%)* lower than January a year earlier, with wholesale inventories of electrical and electronic goods down 3.6% while inventories of motor vehicle and motor vehicle parts and supplies were up 1.5%...meanwhile, the value of wholesale inventories of nondurable goods was up 1.1 percent (+/-0.9%) from December and was up 5.9 percent (+/-1.8%) from last January, as the value of wholesale inventories of paper and paper products rose 4.2% from last month and the value of wholesale inventories of drugs and druggists' sundries was up 3.3%...

the upward revision to December's wholesale inventories will likely add about 0.02 percentage points to 4th quarter GDP, assuming that it doesn't entail significant revisions to components that vary greatly in their December price change...to approximate the contribution of the change in January wholesale inventories, valued here in current dollars, to the change in 1st quarter GDP, we must first convert the dollar figures reported here into an approximation of the change in the quantity of goods that were inventoried during January...the BEA does that by deflating the value of each of the categories of inventories with the appropriate sub-index from the producer price index for January, but since we don't have an easy way to duplicate their computations, we'll just note the aggregate wholesale price changes and their implications...in January, producer prices for finished goods were down 0.7%, producer prices for intermediate goods were down 1.2%, and producer prices for unprocessed goods were down 0.7%...since it appears that more than 50% of wholesale inventories are of finished goods, we'd estimate that aggregate prices for inventories covered here were down by an average of 0.8%...since the value of wholesale inventories rose 0.3% in spite of that, we'd thus estimate that real inventories of wholesale goods were up 1.1% in January, or up at a 14.0% annual rate...since real wholesale inventories were only up on the order of 0.6% over the entire 4th quarter, the real change in wholesale inventories in January already appears to be nearly double that, to the degree that would already add 0.04 basis points to GDP, before any increase in wholesale inventories the next two months is even considered..

January Mortgage Delinquencies up 6.6%; 98,000 Delinquent Mortgages Face Statute of Limitations in 3 States

the Mortgage Monitor for January (pdf) from Black Knight Financial Services (BKFS, formerly LPS) reported that there were 659,237 home mortgages, or 1.30% of all mortgages outstanding, remaining in the foreclosure process at the end of January, which was down from 688,672, or 1.37% of all active loans that were in foreclosure at the end of December, and down from 1.76% of all mortgages that were in foreclosure in January of last year...these are homeowners who had a foreclosure notice served but whose homes had not yet been seized, and the January "foreclosure inventory" is now showing the lowest percentage of homes that were in the foreclosure process since the fall of 2007... new foreclosure starts, which have been volatile from month to month, fell to 71,900 in January from 78,088 in December and from 93,280 in January a year ago, while they were still higher than the 66,626 foreclosure starts we saw in November, which had been the lowest since the crisis began...over the past year, new foreclosure starts have remained in a range about one-third higher than number of new foreclosures we saw in the precrisis year of 2005...

in addition to homes in foreclosure, BKFS data showed that 2,574,560 mortgages, or 5.09% of all mortgage loans, or were at least one mortgage payment overdue but not in foreclosure in January, up from 4.78% of homeowners with a mortgage who were more than 30 days behind in December, but still down from the mortgage delinquency rate of 5.42% in January a year earlier...of those who were delinquent in January, 831,284 home owners, or 1.65% of those with a mortgage, were considered seriously delinquent, meaning they were more than 90 days behind on mortgage payments, but still not in foreclosure at the end of the month, which was up from 807,656 seriously delinquent mortgages in December...combining the totals delinquent mortgages with those in foreclosure, we find that a total of 6.39% of homeowners with a mortgage were either late in paying or in foreclosure at the end of January, and that 2.95% of all homeowners were in serious trouble, ie, either "seriously delinquent" or already in foreclosure at month end...

as those of you who've paid attention to the monthly changes in mortgages delinquencies know, there is a seasonal trend in delinquencies, as late housepayments usually increase before the Holidays as homeowners defer their mortgage payments in order to do Christmas shopping...then we normally see a large drop in mortgages delinquencies during January, February and March, as homeowners catch up on their bills...thus, a 6.62% increase in January mortgage delinquencies is unusual, as January usually sees a decrease of delinquent mortgages ranging from 2.4% to 3.1%....to look at that closer, the graph from page 6 of this month's mortgage monitor we're including below divides into 4 types of mortgage delinquencies the number of mortgages that were farther behind in their mortgage payments than they were in the prior month for each month since 2005...those that were current in the prior month but became delinquent in the reporting month are shown in red; those that transitioned from one month late to two months late are shown in green; while those that transitioned from two months late to 3 months late are shown in violet...finally, of those who were more than 90 days delinquent in the prior month who were foreclosed on in each month is shown in blue...here we can see in red that over 580,000 home mortgages became newly delinquent in January, a 129,000 mortgage or 28% increase from those that became newly delinquent in December...in addition, there was an increase of 21,000 mortgages, or 11% higher than in December, that rolled from 1 month late to 2 months behind on their housepayments, while 7,500 homeowners, or 7% more than those who had rolled from 2 months to 3 months late in December, have rolled to 3 months late in January....lastly, we can see in blue that the number of those who were seriously delinquent who were foreclosed on in January fell by about 7.8%, as our earlier explanation noted...

January 2016 LPS loans rolling to a more delinquent status

as you know, the Mortgage Monitor (pdf) is a mostly graphics presentation from what was once the Analytics division of Lender Processing Services that covers a variety of mortgage related issues each month...one issue they looked at this month was the potential risk exposure that mortgage holders faced in three states where courts are deliberating how statutes of limitations laws should be applied to foreclosures...as you should recall, tens of thousands of homeowners have been stuck in the foreclosure process for years because of the lengthy foreclosure pipelines and difficulty in establishing clear title and right to foreclose after the evisceration of public land records by MERS and the banks during the housing boom, and now courts in Florida, New Jersey and New York are deciding whether statutes of limitations laws should apply to severely delinquent mortgages in those states...according to BKFS, up to 98,000 seriously delinquent home loans with an unpaid principal balance of approximately $30 billion may be subject to such statutes of limitations (ie, mortgages that are more than five years past due in Florida or more than six years past due in New Jersey and New York)...moreover, roughly $1 out of every $10 of principal in private-label securitizations in these three states is tied to such a mortgage...

the bar graph below, from page 11 of the Mortgage Monitor, gives us a graphic representation of the number of seriously delinquent mortgages more than 6 years past due in New York and New Jersey, and the number of seriously delinquent mortgages more than 5 years past due in Florida, with the dark blue bars representing the count as of this January report, and the light blue bars representing the count as of a year earlier...as the callout on the graph notes, Florida still has the most delinquent mortgages subject to statute of limitations law, despite a 38% drop in such mortgages over the past year (ie, suggesting roughly 38% of those foreclosures were completed) but the number of such mortgages is still growing in New York and New Jersey, where they have slow foreclosure courts and extremely long foreclosure pipelines...and this can get worse than shown here, considering that roughly 40% of foreclosures that took place during the crisis have not yet reached the 6 year statute of limitations in those states...if you are a resident of these states or are interested in more detail, page 12 of the mortgage monitor breaks down the number of such mortgages subject to statute of limitation laws by county, and if you are an investor in mortgages, page 13 of the mortgage monitor has a graphic representation, in millions or billions of dollars, of the exposure of such securities to the unpaid principal balance (UPB) of such mortgages in these states...

January 2016 LPS serious delinquencies more than 6 years over due

for a historical summary of those metrics, and the other data that we have discussed, we're including below that part of the Mortgage Monitor table showing the monthly count of active home mortgage loans and their delinquency status, which comes from the bottom part of page 18 of the pdf....the columns in the table below show the total active mortgage loan count nationally for each month given, number of mortgages that were delinquent by more than 90 days but not yet in foreclosure, the monthly count of those mortgages that are in the foreclosure process (FC), the total non-current mortgages, including those that just missed one or two payments, and then the number of foreclosure starts for each month over the past year, and for each January shown going back to January 2005….in the last two columns, we see the average length of time that those who have been more than 90 days delinquent have remained in their homes without foreclosure, and then the average number of days those in foreclosure have been stuck in that process because of the lengthy foreclosure pipelines…the average length of delinquency for those who have been more than 90 days delinquent without foreclosure has decreased from the April record of 536 days and is now at 495 days, while the average time for those who’ve been in foreclosure without a resolution has now dropped a bit its record high set in November but at 1047 days is still at an average of nearly three years…

January 2016 LPS loan counts and days delinquent table


(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my blog post for this week 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…)

Sunday, March 6, 2016

February's jobs report, January’s trade deficit, construction spending and factory inventories, et al

with the first Friday of the month, the Employment Situation Summary for February from the Bureau of Labor Statistics was obviously the most widely watched release this week...but the week also saw the release of three reports for January from the Census Bureau that input into GDP, all of which hint at revisions to 4th quarter results, in addition to setting the pace for 1st quarter growth: the Census report on our International Trade for January, the Full Report on Manufacturers' Shipments, Inventories and Orders for January and the January report on Construction Spending (pdf)...in addition to the jobs report, the BLS also released the revised 4th Quarter Report on Labor Productivity and Costs, which showed nonfarm business sector labor productivity decreased at a 2.2% annual rate during the fourth quarter, as hours worked increased 3.2% and the output of goods and services from those hours increased just 1.0%...with the 2.2% decrease in labor productivity and a 1.1-percent increase in hourly compensation, unit labor costs thus rose 3.3% in the fourth quarter of 2015..

privately issued reports this week included the report on light vehicle sales for February from Wards Automotive, which estimated that vehicles sold at a 17.43 million annual rate in February, down a bit from the 17.46 million annual pace of January, but 6.7% greater than vehicles sales in February of 2015, and both of the widely followed reports from the Institute for Supply Management (ISM): the January Manufacturing Report On Business indicated that the manufacturing PMI (Purchasing Managers Index) increased from 48.2% in January to 49.5%, which still indicates a slight contraction in manufacturing firms nationally, and the January Non-Manufacturing Report On Business; which saw the NMI (non-manufacturing index) slip to 53.4%, down from 53.5% in January, indicating a slightly smaller plurality of service industry purchasing managers reported expansion in various facets of their business...both of those ISM reports are easy to read and include anecdotal comments from purchasing managers from the 34 business types who participate in those surveys nationally...

February Payroll Jobs Up 242,000; Average Weekly Earnings Drops 0.7%, Most on Record

the Employment Situation Summary for February showed decent payroll job formation which was offset by fewer hours and lower average hourly pay, while the labor force participation rate and employment rate both increased significantly.....

estimates extrapolated from the establishment survey data indicated that employers added a seasonally adjusted 242,000 jobs in February, after the payroll job increase for January was revised up from 151,000 to 172,000, and the December jobs increase was revised up from 262,000 to 271,000, meaning the combined number of jobs created in those months was 30,000 more than was previously reported…seasonally adjusted job increases in February were fairly concentrated in the private service sector, although 19,000 jobs were added in construction, mostly by residential specialty trade contractors, and 12,000 jobs were added by local governments.....57,400 jobs were added in.the health care and social assistance sector, with 23,600 of those spread through ambulatory health care services and another 19,300 in various social services; another 54,900 jobs were added in retail, with 15,100 of those in food and beverage stores and another 12,500 in general merchandise stores, not including department stores, which shed 4,100 employees....the leisure and hospitality sector added 48,000 jobs, including 40,200 spots in bars and restaurants, while the broad professional and business services netted another 23,000 payroll jobs, as 17,600 jobs were added in professional and technical services while temporary help service jobs were reduced by 9,800...at the same time, there were also 15,000 fewer resource extraction jobs, as 15,900 jobs were cut in support activities, while manufacturers reduced payrolls by 16,000, as fabricated metal products producers cut 9,500 jobs...

however, offsetting February's decent job creation numbers were decreases in both hourly pay and the average workweek....the average workweek for all private payroll employees fell by by 0.2 hour to 34.4 hours, while hours for production and non-supervisory personnel fell 0.1 hour to 33.7 hours...meanwhile, with less working, the manufacturing workweek was unchanged at 40.8 hours and factory overtime was 3.3 hours for the third month in a row...employers also reported that average hourly earnings for all employees fell by 3 cents to $25.35, after January's hourly earnings rose 12 cents, leaving us with a 2.2% wage gain over the past 12 months...combining the decrease in pay with the decrease in the workweek meant that average weekly earnings fell from $878.15 to $872.04, the largest decrease for weekly earnings on record

meanwhile, the February household survey estimated that the seasonally adjusted count of those who were employed rose by more than 530,000 to 151,074,000 and the number of unemployed rose by more than 24,000 to 7,815,000, while the labor force increased by 555,000, suggesting that the rounding of the total people who were either employed or unemployed added 1,000 to the labor force...the relatively large increase in the employed was not enough to statistically change the unemployment rate, however, as it remained at 4.9%, same as in January...that odd labor force rounding glitch notwithstanding, since the civilian working age population only rose by 180,000, the count of those not in the labor force fell by 374,000 to 93,688,000, enough to raise the labor force participation rate from 62.7% in January 62.9% in February, its fourth increase in as many months...likewise, with the decent increase in the employed, the employment to population ratio, which we could think of as an employment rate, also rose by 0.2% to 59.8%....at the same time, the number who reported they were involuntarily working part time was unchanged at 5,988,000 in February while the alternative measure of unemployment, U-6, which includes those "employed part time for economic reasons", fell from 9.9% in January to 9.7% in February, as the count of those marginally attached to the labor force fell by 356,000 from a year earlier...

like most reports from the Bureau of Labor Statistics, the employment situation press release itself is easy to read and understand, so you can get more details on these two reports from there...note that almost every paragraph in that release points to one or more of the tables that are linked to on the bottom of the release, and those tables are also on a separate html page here that you can open it along side the press release to avoid the need to scroll up and down the page...thus, when you read a paragraph such as "The average workweek for all employees on private nonfarm payrolls declined by 0.2 hour to 34.4 hours in February... The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged down by 0.1 hour to 33.7 hours. (See tables B-2 and B-7.)", you can quickly open Table B-2. and Table B-7, where you will find tables of the average workweek by industry, and where you'll see that despite the increase in construction jobs, the average workweek for construction workers fell from 39.3 hours in January to 38.9 hours in February...

January's Trade Deficit Up 2.2% After December Revised 3.0% Higher

our trade deficit rose by 2.2% January, while the net value of both our exports and our imports decreased....the Census report on our international trade in goods and services for January indicated that our seasonally adjusted goods and services trade deficit rose by $1.0 billion to $45.7 billion in January from a December deficit which was revised from $43.4 billion to $44.7 billion, as our December exports were revised down by $1.3 billion from last month's report...the value of our January exports fell by $3.8 billion from there to $176.5 billion on a $4.0 billion decrease to $116.9 billion in our exports of goods and a $0.2 billion increase to $59.6 billion in our exports of services, while our imports fell $2.8 billion to $222.1 billion on a $2.9 billion decrease to $180.6 billion in our imports of goods and less than a $0.1 billion increase to $41.5 billion in our imports of services...export prices averaged 0.8% lower in January, so the real growth in exports was greater than the nominal dollar value by that percentage, while import prices were 1.1% lower, similarly incrementally increasing growth in real imports from the dollar values reported here...

the January decrease in our exports of goods resulted from lower exports of capital goods, industrial supplies, consumer goods and foods and feeds, and was only offset by a $19 million increase in our exports of automotive vehicles, parts and engines...referencing the Full Release and Tables for October (pdf), in Exhibit 7 we find that our exports of capital goods fell by $1,214 million to $42,801 million on a $432 million decrease in our exports of oilfield drilling equipment, a $383 million decrease in our exports of civilian aircraft, a $368 million decrease in our exports of telecommunications equipment and a $274 million decrease in our exports of industrial engines....our exports of industrial supplies and materials fell by $932 million to $31,498 million on a $737 million drop in our exports of fuel oil, a $460 million drop in our exports of non-monetary gold, and a $180 million decrease in our exports of fertilizers, which was only partially offset by a $297 million increase in our exports of organic chemicals and a $350 million increase in our exports of other petroleum products...at the same time, our exports of consumer goods fell by $839 million to $15,979 on a $650 million drop in our exports of artwork and antiques and a $126 million decrease in our exports of gem diamonds and our exports of foods, feeds and beverages fell by $472 million to $9,429 million on a $337 million drop in our exports of soybeans...in addition, our exports of other goods not categorized by end use fell by $440 million to $4,365 million....

Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our imports and shows that lower imports of industrial supplies and materials and capital goods together more than accounted for the January decrease in our imports....our imports of industrial supplies and materials fell by $2,076 million to $34,567 million on an $1,848 million drop in our imports of crude oil, a $233 million decrease in our imports of iron and steel mill products, and a $224 million decrease in our imports of non-monetary gold...our imports of capital goods fell $1,811 million to $47,947 million on a $911 million drop in our imports of civilian aircraft, a $404 million decrease in our imports of telecommunications equipment and a $328 million decrease in our imports of computers...at the same time, our imports of consumer goods fell $108 million to $47,876 million on a $722 million drop in our imports of pharmaceutical preparations and a $191 million decrease in our imports of furniture which was partially offset by a $626 million increase in our imports of cell phones and similar household goods, and a $164 million increase in our imports of photography equipment...in addition, our imports of goods not categorized by end use fell by $134 million to $7,068 million...meanwhile, our imports of automotive vehicles, parts and engines rose $508 million to $30,584 million on a $356 million increase in our imports of trucks, buses, and special purpose vehicles and a $236 million increase in our imports of parts and accessories, and our imports of foods, feeds, and beverages rose by $161 million to $10,742 million on a $129 million increase in our imports of alcoholic beverages (not including wine)...

the revised $1.3 billion increase to December's trade deficit will have an impact on 4th quarter GDP, but to properly assess that we'd have to take each changed component, which include a $1.0 billion downward revision to exports of services, a $0.3 billion downward revision to exports of goods, a 0.3 billion upward revision to imports of services, and a $0.2 billion downward revision to imports of goods, and adjust them for inflation vis-a-vis third quarter prices...for now, we'll forego all that detailed computation and just estimate that the reduction in net December exports will subtract about 0.04 percentage points from previously reported 4th quarter GDP....

to assess the impact of January trade on 1st quarter growth figures, we should similarly first adjust the value of January imports and exports for inflation and then compare those figures to the similarly adjusted 4th quarter figures...however, exhibit 10 in the pdf for this report gives us monthly goods trade figures by end use category and in total, already adjusted in chained 2009 dollars, the same inflation adjustment used by the BEA to compute trade figures for GDP, albeit they are not annualized here....from that table, we can estimate that 4th quarter real exports of goods averaged 118,760 million monthly in 2009 dollars, while inflation adjusted January exports were at 116,023 million in the same 2009 dollar quantity index representation...annualizing the change between the two figures, we find that January's real exports are running at a 8.9% annual rate below those of the 4th quarter, or at a pace that would subtract about 0.75 percentage points from 1st quarter GDP.....in a similar manner, we find that our 4th quarter real imports averaged 178,901 million monthly in chained 2009 dollars, while inflation adjusted January imports were at 177,996 million...that would indicate that so far in the 1st quarter, our real imports have decreased at a 2.01% annual rate from those of the 4th quarter...since imports subtract from GDP because they represent the portion of consumption or investment that occurred during the quarter that was not produced domestically, their decrease at a 2.01% rate would thus add about 0.25 percentage points to 1st quarter GDP....hence, if the January trade deficit is maintained throughout the 1st quarter, our deteriorating balance of trade in goods would subtract about 0.50 percentage points from the growth of 1st quarter GDP....note that we have not computed the impact of the less volatile change in services here because the Census does not provide inflation adjusted data on those and we don't have easy access to their price changes...

Construction Spending increased 1.5% in January after December and November Revised Higher

the report on January construction spending (pdf) from the Census Bureau estimated that January's seasonally adjusted construction spending would work out to $1,140.8 billion annually if extrapolated over an entire year, which was 1.5 percent (±1.0%)* above the revised annualized estimate of $1,116.0 billion of construction spending in December and 10.4 percent (±1.6%) above the estimated annualized level of construction spending of January last year...the December spending estimate was revised 0.6% higher, from $1,116.6 billion to $1,123.5 billion, while November's construction spending was revised from $1,116.0 billion to $1,116.9 billion, which together would suggest an upward revision to 4th quarter GDP of 0.19 percentage points...

private construction spending was at a seasonally adjusted annual rate of $831.4 billion in January, 0.5 percent (±0.8%)* above the revised December estimate, with residential spending of $433.2 billion statistically unchanged (±1.3%) from the upwardly revised annual rate of $433.1 billion in December, while private non-residential construction spending rose 1.0 percent (±0.8%) to $398.2 billion on a 4.2% increase in private spending for construction of manufacturing facilities and a 6.7% increase in spending on lodging, which is now up 37.1% year over year...meanwhile, public construction spending was estimated to be at a rate of  $309.4 billion, 4.5 percent (±1.6%) above the revised December estimate, with spending for highway construction up 14.7 percent (±4.3%) to an annual rate of  $110.4 billion, 33.9% higher than a year ago...

construction spending inputs into 3 subcomponents of GDP; investment in private non-residential structures, investment in residential structures, and into government investment outlays, for both state and local and Federal governments.... however, gauging the impact of the January spending reported here on GDP is difficult because all figures given here are nominal and as you know, data used to compute the change in GDP must be adjusted for changes in price...moreover, the National Income and Product Accounts Handbook, Chapter 6 (pdf), lists a multitude of privately published deflators for the various components of non-residential investment, such as the Turner Construction building-cost indices for several types of buildings and the Engineering News Record construction cost index for utilities construction, while it specifies use of the Census Bureau construction price indexes for new one-family houses under construction and for new multi-family homes under construction for residential investment....so to come up with rough estimate on real construction in January, we'll just use the producer price index for final demand construction, which showed that aggregate construction prices were down 0.4% in January, after they were unchanged in December and down 0.3% in November...on that basis, we can estimate real January construction spending to be $22.1 billion, or 1.97% higher than the 4th quarter average, or growing at a 26.3% annual rate, a pace which, if sustained throughout the 1st quarter, would add 1.35 percentage points to 1st quarter GDP...

Factory Shipments Up 0.3% in January, Factory Inventories Down 0.4%

the Census Bureau reported that new orders for manufactured goods rose by $7.5 billion or 1.6 percent to $463.9 billion in January, following decreases of 2.9% in December and 0.7% in November, which were essentially unrevised from the last report...however, as we learned 4 months ago, the Census Bureau does not even collect data on new orders for non durable goods for this widely watched Full Report on Manufacturers’ Shipments, Inventories, & Orders (pdf), aka "the factory orders report"; instead, they use shipments data as a proxy for non-durable orders, in effect leaving both the "new orders" and "unfilled orders" sections of this report useful only as a revised update to the advance report on durable goods we reported on last week...in the case of January's new orders for durable goods, then, the January Full Report showed that new orders for manufactured durable goods rose $10.7 billion or 4.7 percent to $237.1 billion, revised down from the 4.9% increase to $237.5 billion reported last week, which followed a December decrease of 4.6% that was essentially unrevised from last week's advance report...subtracting the $3.2 billion decrease in shipments of non-durable goods from those orders for durables, then, the Census Bureau reported that new orders for manufactured goods rose by $7.5 billion or 1.6%, which thus became the headline for this report carried in the news media...

more importantly, then, this report indicated that the value of January factory shipments rose by $1.4 billion or 0.3 percent to $468.4 billion, the 1st increase in 7 months, following a 1.4 percent drop in December....shipments of durable goods were up $4.7 billion or 2.0 percent to $241.6 billion, revised from the 1.9% increase reported in the durables report, as shipments of transportation equipment led the increase, rising $4.3 billion or 5.6 percent to $79.9 billion, on a 30.4% increase in shipments of commercial aircraft...without those transportation sector shipments, however, factory shipments were actually 0.7% lower, as the value of shipments (and hence of "new orders") of non-durable goods fell by $3.3 billion, or 1.4%, to $226.8 billion with a 11.6% drop in shipments from refineries accounting for all of that decrease and and then some...without the decrease in the value of refinery shipments, the value of shipments of other non-durable goods would have been up 0.9 billion or 0.4%..

meanwhile, the aggregate value of January factory inventories fell by $2.7 billion or 0.4 percent to $637.5 billion, their 7th decrease in a row, following a December decrease of 0.2% that was reported as a 0.2% increase last month, which thus suggests a downward revision to 4th quarter GDP on the order of 0.07 percentage points....inventories of durable goods fell by $0.6 billion or 0.1 percent to $395.7 billion, $0.2 billion lower than was reported last week but unchanged in terms of statistical significance, following a 0.2% decrease in December, which was revised from 0.5% last week and already included in the GDP release.....the value of non-durable goods' inventories fell nearly $1.0 billion or 0.9 percent to $241.74 billion, following a decrease of 0.7% in December...the value of inventories of petroleum and coal products, down in value most of the year, drove the decrease in non-durable inventories, as they fell by $1.9 billion or 5.9% percent to $31.1 billion, which was undoubtedly mostly due to lower prices...producer prices for finished goods were down 0.7% in January, with producer prices for energy goods down 5.0%, so once factory inventories are adjusted for inflation in our national accounts data, they will likely show a real January increase on the order of 0.3%...

(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…)