Sunday, March 19, 2017

February consumer and producer prices, retail sales, industrial production, & new homes sales: January business inventories and JOLTS

major monthly reports this week included the Retail Sales report for February and Business Sales and Inventories for January from the Census Bureau, the February Producer Price Index and the February Consumer Price Index from the Bureau of Labor Statistics, the February report on Industrial Production and Capacity Utilization from the Fed, and the February report on New Residential Construction from the Census Bureau...in addition, the BLS oddly released both the Job Openings and Labor Turnover Survey (JOLTS) for January and the Regional and State Employment and Unemployment Report for January in the same week... this week also saw the release of the first two regional Fed manufacturing surveys for March: the Empire State Manufacturing Survey from the New York Fed, which covers all of New York state, one county in Connecticut, Puerto Rico and northern New Jersey, reported their headline general business conditions index slipped to +16.4,  down from +18.7 in February, still suggesting a decent growth rate in First District manufacturing... meanwhile, the Philadelphia Fed Manufacturing Survey, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest diffusion index of manufacturing conditions fell to +32.8 in March from +43.3 in February from a  reading + 23.6 in January, still indicating a large plurality of the region's manufacturing firms reported increases in their activity this month...

February Consumer Prices Rise 0.1% on Higher Food, Shelter, and Clothing

the consumer price index increased by 0.1% in February, as lower prices for gasoline and most goods partially offset higher prices for food, clothing and shelter...the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that the seasonally adjusted price index for urban consumers rose 0.1% in February after it had risen 0.6% in January, 0.3% in December, 0.2% in November, 0.4% in October, 0.3% in September, and 0.2% in August....the unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, rose to 243.603 in Febraury from 242.839 in January, which left it statistically 2.738% higher than the 236.916 index reading of February last year...with lower prices for gasoline a drag on the increase in the overall index, seasonally adjusted core prices, which exclude food and energy, rose by 0.2% for the month, with the unadjusted core index rising from 250.083 to 251.143, which left it 2.224% ahead of its year ago reading of 245.680...

the volatile seasonally adjusted energy price index fell by 1.0% in February, after it had risen by 4.0% in January, 1.5% in December, 1.2% in November, 3.5% in October, and 2.9% in September...hence, energy prices are still 15.2% higher than a year ago, after seeing negative year over year comparisons through most of 2015 and 2016...prices for energy commodities were 2.8% lower while the index for energy services rose by 1.0%, after rising 0.3% in January ....the drop in the energy commodity index included a 3.0% decrease in the price of gasoline, the largest component, and a 0.4% decrease in the price of fuel oil, while prices for other fuels, including propane, kerosene and firewood, rose by an average of 1.8%…within energy services, the index for utility gas service rose by 1.5% in its 8th increase in a row, and hence utility gas is now priced 10.9% higher than it was a year ago, while the electricity price index was up 0.8%, after it was unchanged in December and January....energy commodities are still priced 29.8% above their year ago levels, with gasoline prices averaging 30.7% higher than they were a year ago.…meanwhile, the energy services price index is now 3.8% higher than last February, as even electricity prices have increased by 1.9% over that period..

the seasonally adjusted food price index rose 0.2% in February, after rising 0.1% in January, but after being unchanged for the 6 prior months, as prices for food purchased for use at home rose 0.3% while prices for food bought to eat away from home rose 0.2%, with average prices at fast food outlets up 0.1% while average prices at full service restaurants rose 0.3%...in the food at home categories, the price index for cereals and bakery products decreased by 0.4% as prices for cookies fell 2.1% and prices for flour and mixes were 1.0% lower...the price index for the meats, poultry, fish, and eggs group rose by 0.2% as pork prices rose 1.5% and processed seafood prices rose 2.8%, while the index for dairy products was 0.8% higher on a 1.0% increase in the price of milk....the fruits and vegetables index was 0.7% higher on a 2.3% increase in prices for fresh vegetables, led by a 6.5% increase in the price of lettuce...the beverages index was 1.5% higher as carbonated drink prices rose 2.1% and coffee prices rose 1.8%....lastly, prices in the ‘other foods at home’ category were on average 0.4% lower, as olives, pickles and relishes averaged a 2.5% decrease.....among food at home line items, eggs, which are still priced 23.3% lower than a year ago, tomatoes, which are 13.3% lower, and fruits other than apples, bananas and citrus, which are 10.6% lower than last year, have seen price changes greater than 10% over the past year...the itemized list for price changes in over 100 separate food items is included at the beginning of Table 2, which gives us a line item breakdown for prices of more than 200 CPI items overall...

among the seasonally adjusted core components of the CPI, which rose by 0.2% in February after rising by 0.3% in January, 0.2% in December, 0.2% in November, 0.1% in October, 0.1% in September, 0.3% in August, 0.1% in July and by 0.2% in April, in May and in June, the composite of all goods less food and energy goods was statistically unchanged, while the more heavily weighted composite for all services less energy services was 0.3% higher....among the goods 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 0.1% as prices for major appliances fell 1.4%...the apparel price index was 0.6% higher led by a 1.6% increase in prices for men's apparel and a 8.0% increase in prices for women's outwear....prices for transportation commodities other than fuel were down 0.3%, as prices for new vehicles fell 0.2% and prices for used cars and trucks fell 0.6%...prices for medical care commodities were 0.2% lower on 0.2% lower prescription drug prices....meanwhile, the recreational commodities index fell 0.1% on 0.6% lower priced pets, pet supplies, and accessories, while the education and communication commodities index was 0.2% lower on a 1.1% decrease in prices for computer software and accessories...lastly, a separate price index for alcoholic beverages was up down 0.2% on 0.7% lower prices for distilled spirits other than whiskey bought for drinking at home, while the price index for ‘other goods’ was up 0.2% on a 0.4% increase in cigarette prices...

within core 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 0.6% increase in lodging away from home at hotels and motels, while the household operations services index was unchanged....meanwhile, the index for medical care services was up 0.1% as nursing homes and adult day care services rose 1.0%...in addition, the transportation services index was 0.7% higher on a 2.3% increase in car and truck leasing prices...at the same time, the recreation services price index was up 0.9% as admissions to sporting events rose 2.1%, while the index for education and communication services was 0.2% lower as wireless telephone services were priced 1.4% lower and internet services fell 1.0%...lastly, the index for other personal services was up 0.1% as tax return preparation and other accounting fees were 1.1% higher...among core prices, only televisions, which are now 20.1% cheaper than a year ago, have seen prices drop by more than 10% over the past year, while nothing has seen prices rise by a double digit magnitude.. 

Retail Sales Up 0.1% in February after January Sales Revised Higher

seasonally adjusted retail sales increased 0.1% in February after retail sales for January were revised higher...the Advance Retail Sales Report for February (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $474.0 billion during the month, which was up 0.1 percent (±0.5%) from January's revised sales of $473.6 billion and 5.7 percent (±0.9%) above the adjusted sales in February of last year...January's seasonally adjusted sales were revised up from $472.1 billion to $473.6 billion, while December's sales were revised from $470.46 billion to $470.616 billion; as a result, the December to January change was revised up from up 0.4 percent (±0.5%) to up 0.6 percent (±0.2%).....estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated sales were down fractionally, from $422,761 million in January to $422,072 million in February, while they were up 2.1% from the $413,554 million of sales in the 29 day February of a year ago..

included below is the table of the monthly and yearly percentage changes in retail sales by business type taken from the February Census Marts pdf....the first pair of columns below gives us the seasonally adjusted percentage change in sales for each kind of business from the January revised figure to this month's February "advance" report in the first sub-column, and then the year over year percentage sales change since last February is in the 2nd column...the second double column pair below gives us the revision of the January advance estimates (now called "preliminary") as of this report, with the new December to January percentage change under "Dec 2016 (r)" (revised) and the January 2016 to January 2017 percentage change as revised in the last column shown...for your reference, our copy of the table of last month’s advance estimate of January sales, before this month's revisions, is here.….

February 2017 retail sales table

despite the weak headline, this February report is better than it appears, because much of the weakness was due to lower prices...for instance, while there was a 0.1% drop to $90,547 million in sales at motor vehicle dealers, prices for new vehicles fell 0.2% and prices for used cars and trucks fell 0.6%, which means weighted real unit sales of vehicles were actually up on the order of 0.2%...without that decrease in car sales, other retail sales rose 0.2%...similarly, there was a 2.8% drop in nominal electronics and appliance stores sales, but the CPI tells us that major appliances were 1.4% cheaper during the month, thus partially ameliorating the real decrease...likewise, the 0.6% drop in gas station sales can easily be explained by the 3.0% drop in gasoline prices...on the other hand, clothing store sales fell 0.5% while the apparel index was up 0.6%, meaning real clothing store sales were down 1.1%, and by a similar calculation we can see that real grocery store and restaurant sales were down as well...still, January sales were revised 0.2% higher, which should partially reverse the negative 0.26% personal consumption expenditures for the month, and February PCE for goods should be up on the order of 0.15% from there...

January Business Sales Up 0.2%, Business Inventories Up 0.3%

after the release of the February 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 from that February report and the earlier published January 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 $1,359.3 billion in January, up 0.2 percent (±0.2%)* from December's revised sales, and up 6.4 percent (±0.4%) from January sales of a year earlier...note that total December sales were concurrently revised up from the originally reported $1,356.0 billion to $1,356.64 billion, now a 2.1% increase from November....manufacturer's sales rose 0.2% to $478,316 million in January; retail trade sales, which exclude restaurant & bar sales from the revised January retail sales reported earlier, rose 0.5% to $417,362 million, while wholesale sales fell 0.1% to $463,649 million...

meanwhile, total manufacturer's and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $1,841.4 billion at the end of January, up 0.3 percent (±0.2%) from the end of December, and 2.3 percent (±0.3%) higher than in January a year earlier...at the same time, the value of end of December inventories was revised from the $1,835.7 reported last month to $1,836.17 billion....seasonally adjusted inventories of manufacturers were estimated to be valued at $627,890 million, up 0.2% from December, and inventories of retailers were valued at $613,489 million, 0.8% more than in December, while inventories of wholesalers were estimated to be valued at $600,030 million at the end of January, 0.2% lower than in December...

Producer Prices Up 0.3% in February on Higher Electricity Prices

the seasonally adjusted Producer Price Index (PPI) for final demand rose 0.3% in February, as prices for finished wholesale goods increased 0.3%, while margins of final services providers increased by 0.4%...this followed a revised January report that indicated the PPI was 0.6% higher, with prices for finished goods up 1.0% while final demand for services rose 0.3%, and a December report that indicated the overall PPI had increased 0.2%, with prices for finished goods up 0.6% while final demand for services rose 0.1%....on an unadjusted basis, producer prices are now 1.8% higher than a year earlier, up from the 1.6% YoY increase indicated a month ago...

as noted, the price index for final demand for goods, aka 'finished goods', rose by 0.3% in February, after rising by 1.0% in January, 0.6% in December, 0.2% in November, 0.3% in October, and 0.5% in September, as the index for wholesale energy prices rose 0.6%, the price index for wholesale foods rose 0.3%, and the index for final demand for core wholesale goods (ex food and energy) rose 0.1%...the major wholesale energy price increase was a 1.6% increase in wholesale prices for electric power, while the wholesale food price index moved up on a 16.2% increase in prices fresh and dry vegetables..among wholesale core goods, prices for pharmaceutical preparations increased 1.0%, while wholesale prices for computers and computer equipment were down 1.1%..

meanwhile, the index for final demand for services rose by 0.4% in February after rising by 0.3% in January, and by 0.1% in December, in November and in October, as the index for final demand for trade services rose 0.4%, the index for final demand for transportation and warehousing services rose 0.3%, while the index for final demand for services less trade, transportation, and warehousing services was 0.5% higher....among trade services, seasonally adjusted margins for TV, video, and photographic equipment retailers increased 11.3% after rising 14.1% in January, 6.3% in December and  6.0% in November, while margins for fuels and lubricants retailers fell 8.0%...in the core final demand for services index, margins for traveler accommodation services rose 4.3% as margins for arrangement of flights rose 9.8%..

this report also showed the price index for processed goods for intermediate demand was 0.4% higher, after rising 1.1% in January, 0.4% in December, and by a revised 0.4% in November...prices for intermediate processed goods are now 5.0% higher than in February a year ago, the fourth year over year increase after 16 months of lower year over year comparisons, as intermediate goods prices fell every month from July 2015 through March 2016.... in February, the price index for intermediate energy goods rose 0.6%, prices for intermediate processed foods and feeds fell 0.1%, and the core price index for processed goods for intermediate demand less food and energy was 0.5% higher...

at the same time, the price index for intermediate unprocessed goods fell 0.2% in February, after rising 3.8% in January and 8.4% in December, but after falling by 0.2% in November, 0.7% in October, 0.6% in September, and 2.1% in August....the index for crude energy goods fell 4.3% as prices for raw natural gas fell 18.0%, while the price index for unprocessed foodstuffs and feedstuffs rose 2.2%, as the index for slaughter barrows and gilts rose 18.2%...in addition, the index for core raw materials other than food and energy materials rose 1.4%, as wholesale prices for copper scrap rose 2.8% and wholesale prices for paper scrap rose 2.5% ... this raw materials index is now up 19.4% from year ago, the largest 12-month jump since a 20.0% increase in September 2011, in contrast to a prior year over year decrease of 26.4% that we saw just 15 months ago, in November of 2015...

lastly, the price index for services for intermediate demand was 0.5% higher in February, after being 0.3% higher in January, 0.4% higher in December and 0.1% higher in November and October.. the index for trade services for intermediate demand was 0.6% higher as margins for intermediate chemicals and allied products wholesalers rose 7.1%…the index for transportation and warehousing services for intermediate demand was also up 0.6%, as pricing for intermediate postal services rose 1.9%, while the core price index for services less trade, transportation, and warehousing for intermediate demand rose 0.5%, as a 2.6% increase in the index for legal services accounted for much of the increase in the intermediate services index...over the 12 months ended in February, the year over year price index for services for intermediate demand, which has never turned negative on an annual basis, is now 2.0% higher than it was a year ago...   

Industrial Production Flat in February on Record Warmth

the Fed's February G17 release on Industrial production and Capacity Utilization, which includes revisions back to September, reported that industrial production was unchanged in February after falling by a revised 0.1% in January, which left it 0.3% higher than a year ago...the industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, was at 104.7 in February, after the January index was revised up from 104.6 to 104.7, the December index remained at 104.8, and the November index was revised from the 104.2 reported last month to 104.1..

the manufacturing index, which accounts for more than 77% of the total IP index, rose to 104.5 in February, after the January index was revised from 103.8 to 104.0, and the September index was revised from 103.0 to 102.9...with other months unrevised, the manufacturing index now stands 1.2% above it's year ago level....meanwhile, the mining index, which includes oil and gas well drilling, rose 2.7%, from 107.7 in January to 110.6 in February, after the January index was revised down from 108.3, which left the mining index 1.8% higher than it was a year earlier...finally, the utility index, which often fluctuates due to above or below normal temperatures, fell by 5.7% in February, from 90.0 to 93.4, after the January utility index was revised from 98.8 to 99.0, down 5.8% from December...with February temperatures at record levels across much of the US, the utility index is now at its lowest level since March 2002, 7.0% lower than it was a year ago...

this report also includes capacity utilization data, which is expressed as the percentage of our plant and equipment that was in use during the month, and which indicated that seasonally adjusted capacity utilization for total industry fell to 75.4% in February from 75.5% in January, which was revised up from the 75.3% reported last month ...capacity utilization of NAICS durable goods production facilities rose from a upwardly revised 76.4% in January to 76.7% in February, while capacity utilization for non-durables producers rose from an upwardly revised 75.1% to 75.4%...capacity utilization for the mining sector rose to 80.5% in February from 78.4% in January, which was originally reported as 78.1%, while utilities were operating at 70.9% of capacity during February, down from their 75.3% of capacity during January, which was previously reported at 75.1%...for more details on capacity utilization by type of manufacturer, see Table 7: Capacity Utilization: Manufacturing, Mining, and Utilities, which shows the historical capacity utilization figures for a dozen types of durable goods manufacturers, 8 classifications of non-durable manufacturers, mining, utilities, and capacity utilization for a handful of other special categories..

February Housing Starts Up from December, Permits Down

the February report on New Residential Construction (pdf) from the Census Bureau estimated that their widely watched count of new housing units started in February was at a seasonally adjusted annual rate of 1,288,000, which was 3.0 percent (±13.0 percent)* above the revised estimated January annual rate of 1,251,000, and was 6.2 percent (±10.4 percent)* above last February's rate of 1,213,000 housing starts a year...the asterisks indicates that the Census does not have sufficient data to determine whether housing starts actually rose or fell during the month or even over the past year, with the figures in parenthesis the most likely range of the change indicated; in other words, February housing starts could have been down by 10.0% or up by as much as 16.0% from those of January, with revisions of a greater magnitude in either direction possible...in this report, the annual rate for January housing starts was revised from the 1,285,000 reported last month to 1,251,000, while December starts, which were first reported at a 1,226,000 annual rate, were revised from last month's initial revised figure of 1,285,000 annually back to a 1,275,000 annual rate with this report....these annual rates of starts reported here were extrapolated from a survey of a small percentage of US building permit offices visited by canvassing Census field agents, which estimated that 87,100 housing units were started in February, up from the 82,800 units that were started in January and the 86,500 units that were started in December

the monthly data on new building permits, with a smaller margin of error, are probably a better monthly indicator of new housing construction trends than the volatile and often revised housing starts data...in February, Census estimated new building permits for housing units were being issued at a seasonally adjusted annual rate of 1,213,000, which was 6.2 percent (±1.8 percent) below the revised January rate of 1,293,000 permits, but 4.4 percent (±1.3 percent) above the rate of building permit issuance in February a year earlier...the annual rate for housing permits issued in January was revised up from the originally reported 1,285,000....again, these annual estimates for new permits reported here were extrapolated from the unadjusted estimates collected monthly by canvassing census agents, which showed permits for roughly 84,500 housing units were issued in February, down from the revised estimate of 87,300 new permits issued in January.... for graphs and commentary on this report, see the following two posts by Bill McBride at Calculated Risk: Housing Starts increased to 1.288 Million Annual Rate in February and Comments on February Housing Starts... 

Job Openings, Hiring, and Job Quitting Up In January, Layoffs Unchanged

the Job Openings and Labor Turnover Survey (JOLTS) report for January from the Bureau of Labor Statistics estimated that seasonally adjusted job openings decreased by 87,000, from 5,539,000 in December to 5,626,000 in January, after December job openings were revised 38,000 higher, from 5,501,000 to 5,539,000...January's jobs openings were also 87,000 lower than the 5,713,000 job openings reported in January a year ago, as the job opening ratio expressed as a percentage of the employed was unchanged from the 3.7% logged in December, while it was down from the 3.8% rate of January a year ago...(details on job openings by industry and region can be viewed in Table 1)...like most BLS releases, the press release for this report is easy to understand and also refers us to the associated table for the data cited, which are 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 5,440,000, up by 137,000 from the revised 5,303,000 who were hired or rehired in December, as the hiring rate as a percentage of all employed rose from 3.6% in December to 3.7% in January, and was also up from the 3.6% rate in January a year earlier (details of hiring by sector since March are in table 2)....meanwhile, total separations rose by 174,000, from 5,084,000 in December to 5,258,000 in January, as the separations rate as a percentage of the employed rose from 3.5% to 3.6%, which was also up from 3.5% in January a year ago (see table 3)...subtracting the 5,258,000 total separations from the total hires of 5,440,000 would imply an increase of 182,000 jobs in January, somewhat less than the revised payroll job increase of 238,000 for January reported in the February establishment survey last week but still within the expected +/-115,000 margin of error in these incomplete samplings...

breaking down the seasonally adjusted job separations, the BLS finds that 3,220,000 of us voluntarily quit our jobs in January, up from the revised 3,085,000 who quit their jobs in December, while the quits rate, widely watched as an indicator of worker confidence, rose by 0.1% to 2.2% of total employment, while it was also up from the 2.0% rate of a year earlier (see details in table 4)....in addition to those who quit, another 1,625,000 were either laid off, fired or otherwise discharged in January, up by 1,000 from the revised 1,624,000 who were discharged in December, as the discharges rate remained unchanged at 1.1% of all those who were employed during the month, which was down from the discharges rate of 1.2% a year earlier....meanwhile, other separations, which includes retirements and deaths, were at 413,000 in January, up from 375,000 in December, for an 'other separations rate’ of 0.3%, the same as in December and as in January of last year....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 weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most from the aforementioned GGO posts, contact me…)                    

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