Sunday, July 16, 2017

June’s retail sales, consumer & producer prices, & industrial production; May’s wholesale & business inventories, & JOLTS

most of the past week's important reports were released on Friday, including Retail Sales for June and Business Sales and Inventories for May, both from the Census bureau, the June Consumer Price Index from the Bureau of Labor Statistics, and the report on Industrial Production and Capacity Utilization for June from the Fed...before those, Thursday saw the June Producer Price Index from the BLS, while earlier in the week the BLS also released the June Import-Export Price Index, and the Job Openings and Labor Turnover Survey (JOLTS) for May, while the Census Bureau released the May report on Wholesale Trade, Sales and Inventories leading up to the composite business inventories report of Friday...the week also saw the Consumer Credit Report for May from the Fed, which indicated that overall credit expanded by a seasonally adjusted $18.4 billion, or at a 5.8% annual rate, as non-revolving credit expanded at a 4.7% rate to $2,824.1 billion and revolving credit outstanding grew at a 8.7% rate to $1,018.5 billion, and the Mortgage Monitor for May (pdf) from Black Knight Financial Services, which indicated that 3.79% of all mortgages nationally were delinquent in May, down from 4.08% in April and down from 4.25% in May a year ago, and that 0.83% of all mortgages remained in the foreclosure process, down from 0.85% in April and down from 1.13% in foreclosure a year ago...

Consumer Prices Unchanged in June as Lower Energy Costs Pulls Down Index

the consumer price index was unchanged in June, as lower prices for energy offset modestly higher priced housing and medical care...the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that seasonally adjusted prices were statistically unchanged in June, after falling 0.1% in May but after rising 0.2% in April....the unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, rose from 244.733 in May to 244.955 in June, which left it statistically 1.633% higher than the 241.018 index reading in June of last year...with lower prices for energy a major reason for the decrease in the overall index, seasonally adjusted core prices, which exclude food and energy, rose by 0.1% for the month, with the unadjusted core index rising from 251.835 to 252.014, which left the core index 1.703% ahead of its year ago reading of 247.794...

the volatile seasonally adjusted energy price index decreased by 1.6% in June, after it had dropped 2.7% in May, risen 1.1% in April, fell by 3.2% in March and by 1.0% in February, but after it had risen by 4.0% in January, 1.5% in December, 1.2% in November, 3.5% in October, and by 2.9% in September...thus, energy prices are still averaging 2.3% higher than a year ago, after seeing negative year over year comparisons through most of 2015 and 2016...prices for energy commodities were 2.7% lower in June, while the index for energy services fell by 0.5%, after rising 0.7% in May....the decrease in the energy commodity index included a 2.8% drop in the price of gasoline, the largest component, and a 3.7% seasonally adjusted decrease in the index for fuel oils, while prices for other energy commodities, such as propane, kerosene, and firewood, averaged 0.6% lower...within energy services, the index for utility gas service fell by 0.2% after rising by 1.9% in May and by 2.2% in April, and hence utility gas is still priced 12.8% higher than it was a year ago, while the electricity price index was down 0.6%, after it rose 0.3% in May....energy commodities are now unchanged from their year ago levels, with gasoline prices averaging 0.4% lower than they were a year ago, while the energy services price index is 4.6% higher than last June, as electricity prices have also increased by 2.5% over that period…

the seasonally adjusted food price index was unchanged in June, after rising 0.2% in May, 0.2% in April, 0.3% in March, 0.2% in February, and 0.1% in January, but after being unchanged in each of the prior 6 months, as prices for food purchased for use at home fell 0.1% in June while prices for food bought to eat away from home was unchanged, despite 0.2% higher prices at fast food outlets, as food prices at elementary and secondary schools fell 3.6%...in the food at home categories, the price index for cereals and bakery products decreased by 0.1% as prices for flour and mixes were 1.4% higher...the price index for the meats, poultry, fish, and eggs group was up 0.6% as beef and veal prices rose 2.9%, and fresh fish and seafood prices rose 1.1%, while the index for dairy products was 0.5% lower on 1.7% decrease in the price of ice cream....the fruits and vegetables index was 0.1% lower as a 1.1% increase in prices for fresh fruits was offset by a 1.6% decrease in prices for fresh vegetables, with lettuce down 8.2%...the beverages index was 0.6% lower as coffee was down 1.2% and carbonated drink prices fell 0.7%....lastly, prices in the ‘other foods at home’ category were on average 0.3% lower, even as sugar prices rose 1.1%, as soup prices were 1.3% lower.....among food at home line items, only eggs, which are still priced 10.0% lower than a year ago, 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 0.1% in June and in May and in April after falling by 0.1% in March, the composite of all goods less food and energy goods was down 0.1% in June, while the more heavily weighted composite for all services less energy services was 0.2% higher....among the goods components, which will be used by the Bureau of Economic Analysis to adjust June retail sales for inflation in national accounts data, the index for household furnishings and supplies fell by 0.2%, as the index for window and floor coverings fell 1.5%...the apparel price index was 0.1% lower, as prices for boy's apparel fell 4.4%....prices for transportation commodities other than fuel were down 0.4%, as prices for new vehicles fell 0.3% and prices for used cars and trucks fell 0.7%...on the other hand, prices for medical care commodities were 0.7% higher on a 1.0% increase in prices for prescription drugs...but the recreational commodities index fell 0.2% on 1.5% lower prices for audio equipment and 1.1% lower priced toys...however, the education and communication commodities index was 0.6% higher on 0.7% increases in prices personal computers and peripheral equipment and for computer software and accessories...lastly, a separate price index for alcoholic beverages was up 0.2%, while the price index for ‘other goods’ was unchanged as a 0.3% increase in the index for personal care products was offset by a 0.4% decrease in the index for tobacco and smoking products...

within core services, the price index for shelter rose 0.2% as a 0.3% increase in rents and a 0.3% increase in homeowner's equivalent rent were offset by a 0.1% decrease in the household operations services index....the index for medical care services was up 0.3% as hospital prices rose 0.9% and nursing home prices rose 1.1%, while the transportation services index was 0.2% higher on a 9.9% increase in car and truck rental....meanwhile, the recreation services price index was unchanged as the index for rentals of video discs and other media fell 2.1%, and the index for education and communication services was also unchanged as college tuition and fees rose 0.4% while wireless telephone services services were 0.8% lower...lastly, the index for other personal services was 0.3% higher as legal services were 1.2% higher...among core prices, only televisions, which are still 11.4% cheaper than a year ago, and wireless phone services, which have now dropped 13.2% from 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..  

June Retail Sales Down 0.2% After May Sales Revised Higher

seasonally adjusted retail sales fell 0.2% in June after retail sales in May fell 0.1%, revised from the 0.3% drop reported a month ago....the Advance Retail Sales Report for May (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $473.5 billion for the month, which was a decrease of 0.2 percent (±0.5%)* from May's revised sales of $474.2 billion, but still 2.8 percent (± 0.9 percent) above the adjusted sales of June of last year...May's seasonally adjusted sales were revised from the $473.8 billion originally reported to $474.2 billion, while April sales were revised lower, from $474.9 billion, to $474.55 billion, with this release....estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated sales actually fell 3.2%, from $496,904 million in May to $481,015 million in June, while they were up 3.2% from the $465,901 million of sales in June a year ago...

included below is the table of the monthly and yearly percentage changes in sales by business type taken from the Census pdf....the first pair of columns below gives us the seasonally adjusted percentage change in sales for each type of retail business from May to June and the year over year percentage change for those businesses since last June; the second pair of columns gives us the revised figures for May's report, with April to May and the May 2016 to May 2017 change shown; for your reference, our copy of this table as it appeared in the May report, before this month's revisions, is here....lastly, the third pair of columns shows the percentage change of the recent 3 months of sales (April, May and June) from the preceding three months (January, February and March) and from the same three months of a year ago....

June 2017 retail sales table

as we saw in our review of the consumer price index, the composite price index for all goods less food and energy goods was down 0.1% in May, which suggests that real retail sales will be down by about 0.1% month over month...the 2.8% drop in the price of gasoline more than accounts for the 1.3% decrease in sales at gas stations, but both of the food sales categories are problematic; note that sales at grocery stores were down 0.5% and sales at bars and restaurants were down 0.6%; with the overall food price index unchanged, as prices for food purchased for use at home slipped 0.1% and prices for food at full services restaurants were up by 0.1% and prices for fast food were up 0.2%, there will be real decreases in personal consumption expenditures for both of those major food sales categories... meanwhile, the upward revision to May retail sales was almost completely offset by the downward revision to April sales, so the revisions, on net, will have a negligible effect on previously published 2nd quarter personal consumption expenditures covering those months...

Industrial Production Up 0.4% in June After Prior Months Revised Lower

the Fed's G17 release on Industrial production and Capacity Utilization indicated that industrial production rose by 0.4% in June after rising by a revised 0.1% in May and 0.8% in April...industrial production is now up 2.0% from a year ago, as it rose at a 4.7% annual rate in the 2nd quarter, the 3rd consecutive quarterly increase...to the extent that this report plays into GDP, that quarterly increase suggests a net addition to GDP of that magnitude in the components that this report influences...the industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, rose to 105.2 in June from 104.8 in May, which was originally reported at 105.0...at the same time, the April reading for the index was revised down from 105.0 to 104.7, and the index for March was revised from 103.9 to 103.8...

the manufacturing index, which accounts for more than 77% of the total IP index, increased by 0.2%, from 103.1 in May to 103.3 in June, after the May index was revised from 103.3 to 103.1, the April manufacturing index was revised from 103.7 to 103.5, the March manufacturing index was revised from 102.6 to 102.5, and the February manufacturing index was revised from 103.4 to 103.3....meanwhile, the mining index, which includes oil and gas well drilling, increased for the 4th time in 5 months, rising from 109.2 in May to 111.0 in June, and is now 9.9% higher than it was a year ago....finally, the utility index, which often fluctuates due to above or below normal temperatures, was unchanged at 102.5 in June, after rising a revised 0.8% in May, while it still remains 2.2% below its year earlier reading...

this report also includes capacity utilization figures, which are expressed as the percentage of our  plant and equipment that was in use during the month…seasonally adjusted capacity utilization for total industry rose to 76.6% in June from 76.4% in May, which had originally been reported at 76.6%....capacity utilization by NAICS durable goods production facilities rose from 74.6% in May to 74.8 in June, while capacity utilization for non-durables was unchanged at 77.1%....capacity utilization for the mining sector rose to 84.8% in June, up from 83.7% in May, which was originally reported as 84.3%, while utilities were operating at 74.6% of capacity during June, unchanged from the revised May figure, which was originally published as 76.6%...for more details on capacity utilization by type of manufacturer, see Table 7: Capacity Utilization: Manufacturing, Mining, and Utilities, which shows the historical capacity utilization figures for a dozen types of durable goods manufacturers, 8 classifications of non-durable manufacturers, mining, utilities, and capacity utilization for a handful of other special categories....   

Producer Prices Up 0.1% in June as Higher Margins for Core Services Offset Lower Wholesale Energy Prices

the seasonally adjusted Producer Price Index (PPI) for final demand was up 0.1 in June, as prices for finished wholesale goods increased 0.1%, while margins of final services providers increased by 0.2%...this followed a May report that indicated the PPI was unchanged, with prices for finished wholesale goods down 0.5%, while margins of final services providers increased by 0.3%, and an April report that indicated the PPI was 0.5% higher, with prices for finished wholesale goods up 0.5%, while margins of final services providers increased by 0.4%....on an unadjusted basis, producer prices are now 2.0% higher than a year earlier, down from the 2.4% YoY increase indicated a month ago, and the 2.5% YoY increase seen in April, which had been the largest year over year increase in the PPI since February 2012...

as noted, the price index for final demand for goods, aka 'finished goods', rose by 0.1% in June, after falling by 0.5% in May, rising by 0.5% in April, falling by 0.2% in March, and rising by 0.4% in February, and 1.0% in January... the index for wholesale energy prices fell 0.5%, while the price index for wholesale foods rose 0.6% and the index for final demand for core wholesale goods (ex food and energy) rose 0.1%...the largest wholesale energy price change was a 5.9% decrease in the wholesale price of LP gas, while the wholesale food price index moved up on increases of 7.0% for beef and veal and of 5.1% for pork....among wholesale core goods, the index for pharmaceutical preparations was up 0.9%, while wholesale prices for industrial chemicals were 2.8% lower…

at the same time, the index for final demand for services rose by 0.2% in June, after rising by 0.3% in May, 0.4% in April, 0.4% in March but after after falling by a revised 0.3% in February, as the June index for final demand for trade services was down 0.2%, while the index for final demand for transportation and warehousing services rose 0.1%, and the index for final demand for services less trade, transportation, and warehousing services was 0.3% higher....among trade services, seasonally adjusted margins for TV, video, and photographic equipment retailers decreased 7.1% while margins for RVs, trailers, and campers retailers rose 3.4%...among transportation and warehousing services, margins for air transportation of freight were 2.6% higher...in the core final demand for services index, margins for securities brokerage, dealing, investment advice, and related services rose 4.0% and margins for arrangement of vehicle rentals and lodging fell 4.0%..

this report also showed the price index for processed goods for intermediate demand was 0.2% lower, after rising 0.1% in May, 0.5% in April, 0.1% but falling by a revised 0.3% in March....the price index for intermediate energy goods fell 0.6%, while prices for intermediate processed foods and feeds rose 1.2%, and the core price index for processed goods for intermediate demand less food and energy was 0.2% lower, as prices for primary basic organic chemicals fell 2.3%...prices for intermediate processed goods are still 3.8% higher than in May a year ago, now the eighth consecutive 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....

meanwhile, the price index for intermediate unprocessed goods rose 1.5% in June, after falling 3.0% in May, rising 3.3% in April, falling 4.2% in March and 0.2% in February, but after rising 4.0% in January and 7.3% in December...the index for crude energy goods rose 3.6%, as crude oil prices rose 8.9%, while the price index for unprocessed foodstuffs and feedstuffs rose 0.3%, as unprocessed wheat prices rose 10.3% and the index for slaughtered hogs rose 6.5%...in addition, the index for core raw materials other than food and energy materials rose 0.5%, as the index for logs, bolts, timber, pulpwood, and woodchips rose 1.1% and wholesale prices for paper scrap rose 8.0% ... however, this raw materials index is now up just 6.3% from a year ago, in contrast to the year over year increase of 19.3% that we saw in February, just 4 months ago..

lastly, the price index for services for intermediate demand rose 0.6% in June, after being unchanged in May, 0.9% higher in April, 0.2% lower in March, and a revised 0.4% higher in February and in January.. the index for trade services for intermediate demand was 0.3% higher, as margins for metals, minerals, and ores wholesalers rose 3.3 percent…the index for transportation and warehousing services for intermediate demand was unchanged, as intermediate prices for air transportation of freight rose 2.6% while the intermediate warehousing and storage index fell 1.6%...meanwhile, the core price index for services less trade, transportation, and warehousing for intermediate demand was 0.8% higher, as margins for intermediate services related to securities brokerage and dealing rose 4.0%...over the 12 months ended in June, the year over year price index for services for intermediate demand, which has never turned negative on an annual basis, is now 2.9% higher than it was a year ago...  

May Wholesale Sales Down 0.5%, Wholesale Inventories Up 0.4%

in advance of the composite business inventories release on Friday, the Census released their report on Wholesale Trade, Sales and Inventories for May (pdf) on Tuesday, which indicated that seasonally adjusted sales of wholesale merchants fell 0.5 percent (+/-0.5%)* to $460.8 billion from the revised April estimate of $463.1 billion, but were still up 6.2 percent (±1.1 percent) from sales in May a year earlier...April's preliminary wholesale sales estimate was revised upward $0.8 billion or more than 0.1 percent, which caused the March to April percent change to be revised from down 0.4 percent (±0.5 percent)* to down 0.3 percent (±0.5 percent)*...at the same time, this release reported that seasonally adjusted wholesale inventories were valued at $593.9 billion at the end of May, 0.4% (+/-0.4%)* higher than the revised April level and 1.9 percent (+/-0.7%)* above last May's level...at the same time, April's preliminary inventory estimate was revised upward $0.6 billion or 0.1% to $591.6 billion, now 0.4% lower than March...

May Business Sales Down 0.2%, Business Inventories Up 0.3%

on Friday, following the release of the June retail sales report, the Census Bureau released the composite Manufacturing and Trade Inventories and Sales report for May (pdf), which incorporates the revised May retail data from that June report and the earlier 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 $1,350.2 billion in May, down 0.2 percent (±0.2%)* from April revised sales, but up 5.1 percent (±0.4 percent) from May sales of a year earlier...note that total April sales were revised from the originally reported $1,352.0 billion to $1,350.2 billion...manufacturer's sales were up 0.1% from April at $471,513 million in May, while retail trade sales, which exclude restaurant & bar sales from the revised May retail sales reported earlier, fell 0.1% to $417,911 million, and wholesale sales fell 0.5% to $460,776 million...

meanwhile, total manufacturer's and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $1,859.7 billion at the end of May, up 0.3 percent (±0.1%) from April, and 2.4 percent (±0.3%) higher than in May a year earlier...the value of end of April inventories was revised up from the $1,854.2 billion reported last month to $1,854.65 billion...seasonally adjusted inventories of manufacturers were estimated to be valued at $648,904 million, 0.1% lower than in April, while inventories of retailers were valued at $616,938 million, 0.5% more than in April, and inventories of wholesalers were estimated to be valued at $593,874 million at the end of May, up 0.4% from April...

all categories of business inventories are adjusted for price changes for national accounts data using item appropriate price indexes from the producer price index....the May producer price index indicated that prices for finished goods decreased 0.5%, prices for intermediate processed goods were 0.1% higher, while prices for unprocessed goods were 3.0% lower, which together generally indicate that real inventories will be higher than the nominal amounts by those percentages...since 1st quarter business inventories were virtually unchanged and a large drag on GDP, any inventory increases in the 2nd quarter will boost 2nd quarter GDP almost in their entirety...

Job Openings Down, Hiring and Firing Up in May

the Job Openings and Labor Turnover Survey (JOLTS) report for May from the Bureau of Labor Statistics estimated that seasonally adjusted job openings fell by 301,000, from 5,967,000 in April to 5,666,000 in May, after April job openings were revised lower, from 6,044,000 to 5,967,000...May jobs openings were still 1.5% higher than the 5,582,000 job openings reported in May a year ago, as the job opening ratio expressed as a percentage of the employed fell from 3.9% in April to 3.7% in May, while it was unchanged from a year ago...the greatest drop in job openings was in finance, where openings fell by 66,000 to 332,000, while job openings in retail rose by 72,000 to 638,000 (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, 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 May, seasonally adjusted new hires totaled 5,472,000, up by 429,000 from the revised 5,043,000 who were hired or rehired in April, as the hiring rate as a percentage of all employed was rose from 3.5% to 3.7%, and was also up from the hiring rate of 3.6% in May a year earlier (details of hiring by industry since January are in table 2)....meanwhile, total separations also rose, by 251,000, from 5,008,000 in April to 5,259,000 in May, while the separations rate as a percentage of the employed rose from 3.4% to 3.6%, which was was also up from the separations rate of 3.5% in May a year ago (see table 3)...subtracting the 5,259,000 total separations from the total hires of 5,472,000 would imply an increase of 213,000 jobs in May, somewhat more than the revised payroll job increase of 152,000 for May reported by the June establishment survey last week, 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 3,221,000 of us voluntarily quit their jobs in May, up by 187,000 from the revised 3,044,000 who quit their jobs in April, while the quits rate, widely watched as an indicator of worker confidence, rose from 2.1% to 2.2% of total employment, which was also up from 2.1% a year earlier (see details in table 4)....in addition to those who quit, another 1,661,000 were either laid off, fired or otherwise discharged in May, up by 56,000 from the revised 1,605,000 who were discharged in April, as the discharges rate remained at 1.1% of all those who were employed during the month, down from 1.2% a year earlier....meanwhile, other separations, which includes retirements and deaths, were at 377,000 in May, down from 359,000 in April, for an 'other separations' rate of 0.3%, which was up from 0.2% in April and in May a year ago....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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