Sunday, August 20, 2017

July’s retail sales, industrial production, and new home construction; June’s business inventories

the past week's key reports were the Retail Sales for July and Business Sales and Inventories for June, both from the Census bureau, the July report on Industrial Production and Capacity Utilization from the Fed, and the July report on New Residential Construction from the Census Bureau...other reports released this week included Regional and State Employment and Unemployment for July from the BLS, and the first two regional Fed manufacturing surveys for August: the Empire State Manufacturing Survey from the New York Fed, which covers New York and northern New Jersey, reported their headline general business conditions index rose from +9.8 in July to +25.2 in August, its highest reading in three years, suggesting a broad based expansion of First District manufacturing, while the Philadelphia Fed Manufacturing Survey for August, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest diffusion index of manufacturing conditions slipped from +19.5 in July to +18.9 in August, also still suggesting ongoing growth of that region's manufacturing industries...

July Retail Sales Up 0.6% After May and June Sales Revised Higher

seasonally adjusted retail sales were 0.6% higher in July after retail sales for May and June were revised higher....the Advance Retail Sales Report for July (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $478.9 billion during  the month, which was 0.6 percent (± 0.5 percent) than June's revised sales of $476.0 billion and 4.2 percent (± 0.9 percent) above the adjusted sales in July of last year...June's seasonally adjusted sales were revised from the $473.5 billion originally reported to $476.0 billion, while May sales were revised from $474.2 billion to $474.76 billion with this release....estimated unadjusted sales, extrapolated from a survey of a small sampling of retailers, indicated sales actually fell 0.8%, from $463,844 million in June to $479,912 million in July, while they were up 3.6% from the $463,245 million of sales in July a year ago...revisions to May and June indicate that 2nd quarter sales were roughly $3.1 billion higher than previously reported, which would add about $12.3 billion to the BEA's calculation of personal consumption expenditures at an annual rate, which should be enough to lift 2nd quarter GDP by 0.07 percentage points when the 2nd estimate is published at the end of the month…

included below is the table of the monthly and yearly percentage changes in retail sales by business type taken from the July Census pdf....the first double column below gives us the seasonally adjusted percentage change in sales for each type of retail business from June to July in the first sub-column, and then the year over year percentage change for those businesses since last July in the 2nd column; the second pair of columns gives us the revision of last month’s June advance monthly estimates (now called "preliminary") as revised in this report, likewise for each business type, with the May to June change under "May 17 (r)evised" and the revised June 2016 to June 2017 percentage change in the last column shown...for your reference, our copy of the table of last month’s advance June sale estimates, before this month's revision, is here....

July 2017 retail sales table

clearly, July's retail sales were boosted by the 1.2% increase to $100,076 million in seasonally adjusted sales at vehicle and parts dealers, but even without that increase, other retail sales still rose 0.5%...and that too is stronger than it appears, because prices for all goods less food and energy goods were down 0.1% in July, which means that these dollar sales bought 0.1% more merchandise, which thus means that much more merchandise was produced or imported...particularly noteworthy is the boost that 3rd quarter GDP will get from automobile sales, as prices for new cars fell 0.7% and prices for used cars and trucks fell 0.5%, which means real PCE of vehicles was up by nearly 2.0% in July, which will work out to an 8% annual rate for GDP purposes even if vehicle sales remain flat for the rest of the quarter...

Industrial Production Up 0.2% in July After Prior Months Revised Modestly Higher

the Fed's G17 release on Industrial production and Capacity Utilization for July indicated that industrial production rose by 0.2% in July after rising by 0.4% in June and being unchanged in May...industrial production is now up 2.2% from a year ago, as compared to last month's year over year increase of 2.0%...the industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, rose to 105.5 in July from 105.3 in June, which was revised from the 105.2 reported for June a month ago...at the same time, the May reading for the index was revised up from 104.8 to 104.9, the April reading for the index was revised up 104.7 to 104.9, and the March index reading was revised from 103.8 to 103.9...

the manufacturing index, which accounts for more than 77% of the total IP index, was unchanged at 103.4 in July, after June's manufacturing index was revised up from 103.3, May's manufacturing index was revised from 103.1 to 103.2, April's manufacturing index was revised from 103.5 to 103.8, and the manufacturing index March was revised up from 102.5 to 102.6.... meanwhile, the mining index, which includes oil and gas well drilling, rose from 110.4 in June to 111.0 in July, after the June mining index was revised down from the previously reported 111.0...nonetheless, the mining index still remains 10.2% higher than it was a year ago....finally, the utility index, which often fluctuates due to above or below normal temperatures, rose 1.6% to 104.7 in July after falling a revised 1.2% in June, and still remains 0.6% below its year ago reading of 104.1..

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, and which indicated that seasonally adjusted capacity utilization for total industry was unchanged at 76.7% in July, after capacity utilization for June was revised from 76.6% to 76.7%, and after capacity utilization of each of the three prior months was revised up by 0.1% from previously reported levels....capacity utilization by NAICS durable goods production facilities, however, fell from 74.6 in June to 74.4 in July, as capacity utilization of motor vehicles and parts manufacturers fell from 80.7% to 77.8%, while capacity utilization for non-durables producers rose from 77.4% to 77.7% at the same time....capacity utilization for the mining sector rose to 84.6% in July, up from 84.4% in June, which was originally reported as 84.8%, while utilities were operating at 78.1% of capacity during July, up from their 76.9% of capacity during June, a figure that was originally reported at 74.6%...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....

June Business Inventories Up 0.5%, More than Estimated by the BEA

following the release of the July retail sales report, the Census Bureau released the composite Manufacturing and Trade Inventories and Sales report for June (pdf), which incorporates the revised June retail data from that July retail 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 $1,356.8 billion in June, up 0.3 percent (±0.2%) from May revised sales, and up 4.3 percent (±0.4 percent) from June sales of a year earlier...note that total May sales were revised from the originally reported $1,350.2 billion to $1,353.3 billion, now up 0.1% from April....manufacturer's sales were down 0.2% to $471,535 million in June, while retail trade sales, which exclude restaurant & bar sales from the revised June retail sales reported earlier, rose 0.3% to $419,438 million, and wholesale sales rose 0.7% to $465,800 million...

meanwhile, total manufacturer's and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $1,869.3 billion at the end of June, up 0.5 percent (±0.1%) from May, and 2.8 percent (±0.2%)* higher than in June a year earlier...the value of end of May inventories was revised up slightly from the $1,859.7 billion reported last month to $1,860.4 billion...seasonally adjusted inventories of manufacturers were estimated to be valued at $649,086 million, 0.2% higher than those of May, inventories of retailers were valued at $620,809 million, 0.6% more than in May, while inventories of wholesalers were estimated to be valued at $599,389 million at the end of June, up 0.7% from May...

New Housing Starts, Permits, Reportedly Lower in July

the July report on New Residential Construction (pdf) from the Census Bureau estimated that the widely watched count of new housing units started in July was at a seasonally adjusted annual rate of 1,155,000, which was 4.8 percent (±10.2 percent)* below the revised June estimated annual rate of 1,213,000 housing units started, and was also 5.6 percent (±8.5 percent)* below last July's pace of 1,223,000 housing starts a year...the asterisks indicate that the Census does not have sufficient data to determine whether housing starts actually rose or fell over the past month or even over the past year, with the figure in parenthesis the most likely range of the change indicated; in other words, July's housing starts could have been up by 5.4% or down by as much as 16.0% from those of June, with even larger revisions possible...in this report, the annual rate for June housing starts was revised from the 1,215,000 reported last month to 1,213,000, while May starts, which were first reported at a 1,092,000 annual rate, were revised up from last month's initial revised figure of 1,122,000 annually to an annual rate of 1,129,000 with this report....those annual rates of starts reported here were extrapolated from a survey of a small percentage of US building permit offices visited by Census field agents, which estimated that 109,000 housing units were started in July, down from the 116,300 units started in June...of those housing units started in July, an estimated  81,100 were single family homes and 26,700 were units in structures with more than 5 units, down from the revised 84,100 single family starts in June, and down from the 31,600 units started in structures with more than 5 units in June...

as we've pointed out previously, 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 July, Census estimated new building permits were being issued at a seasonally adjusted rate of 1,223,000 housing units per year, which was 4.1 percent (±0.9 percent) below the revised June rate of 1,275,000 permits, but was 4.1 percent (±1.8 percent) above the rate of building permit issuance in July a year earlier...the annual rate for housing permits issued in June was revised from 1,254,000 to 1,275,000 ....again, these annual estimates for new permits reported here were extrapolated from the unadjusted estimates collected by canvassing census agents, which showed permits for 100,400 housing units were issued in July, down from the revised estimate of 127,900 new permits issued in June...the July permits included 61,800 permits for single family homes, down from 74,700 single family permits in June, and 28,500 permits for housing units in apartment buildings with 5 or more units, down from 42,500 such multifamily permits a month earlier... for graphs and commentary on this report, see the following two posts by Bill McBride at Calculated Risk: Housing Starts decreased to 1.155 Million Annual Rate in July and Comments on July Housing Starts...

 

(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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