Sunday, October 15, 2017

September's retail sales, consumer prices and producer price index; August's business inventories and job openings

the key reports released this past week were Retail Sales for September and Business Sales and Inventories for August from the Census Bureau, and the September Consumer Price Index and the September Producer Price Index from the Bureau of Labor Statistics...in addition, the BLS also released the Job Openings and Labor Turnover Survey (JOLTS) for August...

September CPI up 0.5% on Gasoline Price Spike

the consumer price index increased by 0.5% in September, as gasoline prices spiked after the Texas Gulf Coast refineries were shut down by Hurricane Harvey, accounting for about three-fourths of the month’s overall price increase...the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that the seasonally adjusted price index rose 0.5% in September after rising 0.4% in August. 0.1% in July, being unchanged in June and after falling 0.1% in May....the unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, rose from 245.519 in August to 246.819 in September, which left it statistically 2.233% higher than the 241.428 index reading of last September, which is reported as a 2.2% year over year increase...with higher prices for gasoline driving the gain 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 252.460 to 252.941, which put it 1.69% ahead of its year ago reading of 248.731...

the volatile seasonally adjusted energy price index increased by 6.1% in September, after it had risen 2.8% in August but after it fell by 0.1% in July, 1.6% in June, and 2.7% in May...however, energy prices are now averaging 10.1% higher than a year ago, after seeing negative year over year comparisons through most of 2015 and 2016...prices for energy commodities were up by 12.6% in September, while the index for energy services fell by 0.2%, after falling 0.1% in August, 0.2% in July and 0.5% in June... the increase in the energy commodity index included a 13.0% jump in the price of gasoline, the largest component, and a 8.2% increase 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 fell by 0.8% after decreasing by 0.5% in August and 2.3% in July, but utility gas is still priced 3.8% higher than it was a year ago, while the electricity price index was unchanged for the second month in a row....energy commodities are now priced 18.9% above their year ago levels, with gasoline prices averaging 19.3% higher than they were a year ago...meanwhile, the energy services price index is now 2.2% higher than last September, as electricity prices have also risen by 1.7% over that period..

the seasonally adjusted food price index was up 0.1% in September, after rising 0.1% in August, 0.2% in July, being unchanged in June, 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 the index for food purchased for use at home was unchanged in September, while prices for food bought to eat away from home was 0.3% higher, as prices at fast food outlets rose 0.4% and prices at full service restaurants both rose 0.2%, while food prices at schools rose 2.1%...

in the food at home categories, the price index for cereals and bakery products increased by 0.1%, as prices for bread fell 0.7% while other bakery product prices rose 1.0%...the price index for the meats, poultry, fish, and eggs group was down 0.4% as beef prices fell 0.7% and ham prices fell 2.2%, while the index for dairy products was 0.6% lower on 1.6% decrease in the price of fresh milk other than whole...the fruits and vegetables index was 0.2% lower on a 0.8% decrease in prices for fresh vegetables, and a 1.5% decrease in prices for frozen fruits and vegetables...on the other hand, the beverages index was 0.4% higher as roast coffee prices were up 1.3% and carbonated drink prices rose 0.5%....lastly, prices in the ‘other foods at home’ category were 0.3% lower on average, as butter prices fell 2.0% and salad dressing prices were 0.6% lower.......among food at home line items, only bacon, which is now priced 13.4% higher than a year ago, has seen a price change greater than 10% over the past year...the itemized list for price changes in over 100 separate food items is included at the beginning of Table 2, which gives us a line item breakdown for prices of more than 200 CPI items overall...

among the seasonally adjusted core components of the CPI, which rose by 0.1% in September after rising by 0.2% in August and by 0.1% in each of the prior 4 months, the composite of all goods less food and energy goods fell by 0.2%, 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 September retail sales for inflation in national accounts data, the index for household furnishings and supplies was 0.4% lower on a 1.5% decrease in prices for laundry appliances and a 3.2% drop in prices for dishes and flatware, while the apparel price index was 0.1% lower as a 3.2% increase in prices for men's suits and outerwear was offset by a 5.1% decrease in prices for women's outwear...prices for transportation commodities other than fuel were down 0.3%, as prices for new cars were down 0.5% while prices for motor oil, coolant, and fluids fell 0.9%...meanwhile, prices for medical care commodities were 0.8% lower on a 1.4% decrease in nonprescription drug prices...on the other hand, the recreational commodities index was unchanged as another 1.5% drop in TV prices was offset by a 1.0% increase in prices for film and photographic supplies and a 1.2% increase in the index for toys, games, hobbies and playground equipment...at the same time, the education and communication commodities index was 1.2% lower on 1.9% decreases in prices for college textbooks and for computer software and accessories...lastly, a separate price index for alcoholic beverages was up 0.4% on 0.8% higher beer prices, while the price index for ‘other goods’ was up 0.5% on a 1.1% increase in the index for hair, dental, shaving, and other personal care products and a 1.7% increase in prices for stationery, gift wrap and other personal paper supplies..

within core services, the price index for shelter rose 0.3% on a 0.2% increase in rents, a 0.2% increase in owner's equivalent rent, and a 1.7% increase in costs for lodging away from home at hotels and motels, while costs for water, sewers and trash collection rose 0.3% and other household operation costs were unchanged....meanwhile, the index for medical care services was up 0.1%, as prices for both hospital services and physicians' services were up 0.2% while health insurance was 0.2% lower...at the same time, the transportation services index was 0.3% higher on an 1.8% increase in intracity mass transit fees and 0.8% higher motor vehicle repairs....the recreation services index rose 0.2% as film processing rose 2.1% and video & audio rental services rose 1.2%, while the index for education and communication services also rose 0.2% as wireless telephone services rose 0.4% and college tuitions rose 0.6%...lastly, the index for other personal services was unchanged as tax return services rose 0.1% and legal services fell 0.2%...among core prices, only the index for clocks, lamps, and decorator items, which is now 13.1% lower than a year ago, and prices for wireless phone services, which are now 11.7% lower than a year ago, have seen prices drop by more than 10% over the past year, while no core line item has seen prices rise by a double digit magnitude in that span..  

Retail Sales Increased by 1.6% in September after July and August Sales were Revised Higher

seasonally adjusted retail sales increased in September after retail sales for July and August were both revised higher...the Advance Retail Sales Report for September (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $483.9 billion during the month, which was 1.6 percent (±0.5%) higher than August's revised sales of $476.5 billion and 4.4 percent (±0.7%) above the adjusted sales in September of last year...August's seasonally adjusted sales were revised from $474.8 billion to $476.5 billion, while July sales were also revised higher, from $475.8 billion to $476,752 million, with this release....estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated sales actually fell 4.8%, from $491,572 million in August to $468,192 million in September, while they were up 4.1% from the $449,948 million of sales in September a year ago...

since it's the end of the quarter for retail sales, we'll include the entire table from this report showing retail sales by business type, including the quarter over quarter data...again, to explain what it shows, the first double column below shows us the seasonally adjusted percentage change in sales for each kind of business from the August revised figure to this month's September "advance" report figure in the first sub-column, and then the year over year percentage sales change since last September in the 2nd column; the second double column pair below gives us the revision of the August advance estimates (now called "preliminary") as of this report, with the new July to August percentage change under "Jul 2017 (r)" (revised) and the August 2016 to August 2017 percentage change as revised in the 2nd column of the pair; for your reference, the table of last month’s advance estimate of August sales, before this month's revisions, is here.... then, the third pair of columns shows the percentage change of the most recent 3 months of this year's sales (July, August and September) from the preceding three months of the 2nd quarter (April, May and June) and then from the same three months (July, August and September) of a year ago....that first column of that pair gives us a snapshot comparison of 2nd quarter sales to third quarter sales which, when adjusted for price changes, can useful in estimating the impact of this report on 3rd quarter GDP:

September 2017 retail sales table

from this table, we can see that the 1.6% increase in September sales was underpinned by a 3.6% increase to $100,061 million in seasonally adjusted sales at motor vehicle and parts dealers; without which retail sales would have shown a 1.0% increase for the month...given that last week's September light vehicle sales report from Wards Automotive indicated a 15.2% increase in vehicles sales as hurricane victims replaced their damaged cars, we'd think even that 3.6% increase is an underestimation based on limited data and will likely be revised higher over the next two months....also note that there was an 5.8% increase to $39,414 million in sales at gas stations, which was driven by 13% higher prices for gasoline, which means retail sales ex vehicles and gasoline were only up 0.5%...since many gas stations in Texas and Florida were closed or out of fuel after the hurricanes, real gasoline sales almost certainly fell during the month, despite the higher dollar volume of sales...

nonetheless, this report will change the complexion of the first estimate of 3rd quarter GDP, which will be out in a couple weeks...as we saw when we reviewed the Consumer Price report earlier, the composite of all goods less food and energy goods fell by 0.2%, which means real sales will be on average 0.2% higher than the percentage increase reported here....that boost in unit sales from lower prices is especially true for the new car component, which saw prices fall 0.5% in September...when we looked at the August report Personal Income and Outlays from the BEA a couple weeks back, we computed that 3rd quarter real PCE had grown at a 1.41% annual rate for the two months of the 3rd quarter, and would only add 0.98 percentage points to the growth rate of GDP...although we did not note it at the time, that weakness in the first two months of the 3rd quarter was due to falling personal consumption expenditures of durable goods, and specifically of automobile sales in August...hence, this report not only shows the reversal of the decline in auto sales and strong real growth overall, it also revises the goods component of PCE for July and August higher at the same time...

Producer Prices Up 0.4% in September on Higher Priced Gasoline, Trade Services

the seasonally adjusted Producer Price Index (PPI) for final demand rose 0.4% in September, as prices for finished wholesale goods increased 0.7%, while margins of final services providers increased by 0.4%...this followed an August report that indicated the PPI was up 0.2%, with prices for finished wholesale goods up 0.5%, and margins of final services providers up 0.1%, and a July report that indicated the PPI was down 0.1%, with prices for finished wholesale goods down 0.1%, and margins of final services providers down 0.2%....excluding food, energy and trade services, core producer prices were up 0.2% in September, after rising 0.2% in August and being unchanged in July...on an unadjusted basis, producer prices are now 2.6% higher than a year earlier, the highest annual producer inflation reading since February 2012, while the core producer price index increased to 2.1% higher than a year earlier...

as we noted, the price index for final demand for goods, aka 'finished goods', rose 0.7% in September, after rising 0.5% in August, slipping 0.1% in July, being unchanged in June, falling by a revised 0.5% in May, rising by 0.5% in April, falling by 0.2% in March, and rising by 0.4% in February and by 1.0% in January... the index for wholesale energy prices rose 3.4% in September after rising 3.3% in August, while the price index for wholesale foods was unchanged and the index for final demand for core wholesale goods (ex food and energy) was 0.3% higher...the largest wholesale energy price change was a 10.9% increase in the wholesale price of gasoline, which by itself accounted for two-thirds of the increase in the September goods index....meanwhile, a 20.6% increase in the wholesale price of eggs was offset by lower wholesale prices for beef and veal, chicken, seafood and dairy products....among wholesale core goods, wholesale prices for motor homes rose 1.5% and the index for appliances was up 0.9%…

at the same time, the index for final demand for services rose 0.4% in September, after rising 0.1% in August, falling by 0.2% in July, and rising by a revised 0.3% in May and in June, as the September index for final demand for trade services rose 0.8%, the index for final demand for transportation and warehousing services rose 1.0%, while the index for final demand for services less trade, transportation, and warehousing services was 0.1% higher....among trade services, seasonally adjusted margins for food and alcohol wholesalers increased 2.5%, while margins for chemicals and allied products wholesalers rose 2.3%... among transportation and warehousing services, margins for airline passenger services were 1.4% higher...in the core final demand for services index, margins for passenger car rentals rose 9.7%, the index for deposit services (partial) increased 3.3% while prices for residential real estate loans (partial) fell 2.6%..

this report also showed the price index for processed goods for intermediate demand was 0.5% higher, after rising 0.5% in August, falling 0.1% in July, but after rising by a revised 0.1% June and falling by a revised 0.1% in May....the price index for intermediate energy goods rose 2.4% on a 10.9% increase for gasoline, while prices for intermediate processed foods and feeds fell 0.6% on a 3.5% drop in wholesale prices for processed poultry, and the core price index for processed goods for intermediate demand less food and energy was 0.2% higher...prices for intermediate processed goods are now 4.3% higher than in September a year ago, now the eleventh consecutive year over year increase, after 16 months of negative 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 fell 0.4% in September, after falling 0.7% in August and 0.4% in July, but after rising a revised 0.5% in June and falling a revised 1.0% in May....the price index for crude energy goods fell 0.8%, even as crude oil prices rose 1.1%, while the index for unprocessed foodstuffs and feedstuffs fell 1.7%, as prices for slaughter hogs dropped 18.4% and prices for raw milk fell 3.9%...however, the index for core raw materials other than food and energy materials rose 2.0%, as prices for nonferrous metal ores rose 6.5% and wholesale prices for copper scrap rose 7.2% ...this raw materials index is still up 7.0% from a year ago, up from the year over year increase of 6.8% that we saw in August...

lastly, the price index for services for intermediate demand rose 0.1% in September after rising 0.2% in August, but after falling 0.3% in July, which had been its first decrease since last September... the index for trade services for intermediate demand was 0.4% higher, as margins for intermediate machinery and equipment parts and supplies wholesalers rose 1.8 percent…the index for transportation and warehousing services for intermediate demand was up 0.6%, as intermediate prices for air mail and package delivery services other than USPS rose 1.3%...on the other hand, the core price index for services less trade, transportation, and warehousing for intermediate demand was 0.1% lower, as margins for business loans (partial) fell 3.7%, and intermediate prices for loan services (partial) fell 2.9%...over the 12 months ended in September, the year over year price index for services for intermediate demand, which has never turned negative on an annual basis, is now 2.7% higher than it was a year ago...

Business Sales and Business Inventories Both Up 0.7% in August

after the release of the September retail sales report, the Census Bureau released the composite Manufacturing and Trade Inventories and Sales report for August (pdf), which incorporates the revised August retail data from that September report and the earlier published August 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 $1,369.2 billion in August, up 0.7 percent (±0.2%) from July revised sales, and up 5.5 percent (±0.4 percent) from August sales of a year earlier....note that total July sales were concurrently revised up from the originally reported $1,358.8 billion to $1,359.5 billion....manufacturer's sales were 0.5% higher at $475,942 million in August, while retail trade sales, which exclude restaurant & bar sales from the revised August retail sales we reported earlier, fell 0.1% to $419,884 million, while wholesale sales rose 1.7% to $473,383 million...

meanwhile, total manufacturer's and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $1,889.0 billion at the end of August, also up 0.7 percent (±0.1%) from July, and 3.6 percent (±0.3%) higher than in August a year earlier...the value of end of July inventories were revised to $1,875.9 billion from the $1,873.9 billion reported last month...seasonally adjusted inventories of manufacturers were estimated to be valued at $655,564 million, 0.4% higher than in July, inventories of retailers were valued at $625,351 million, 0.7% more than in July, while inventories of wholesalers were estimated to be valued at $608,083 million at the end of August, 0.9% higher than in July...

for GDP purposes, all inventories, including retail, are adjusted for inflation with appropriate component price indices of the producer price index...while we reviewed the September index earlier, the producer price index for August indicated that prices for finished goods increased 0.5%, prices for intermediate processed goods were 0.4% higher, while prices for unprocessed goods were 0.7% lower...retail inventories are all finished goods, as are the lion's share of wholesale inventories, while factory inventories, which we looked at last week, are roughly evenly split between the three stages of production...a gross increase of 0.7% in nominal inventories thus implies an significant real increase in inventories at all stages, in addition to the real increase that was seen in July...since real 2nd quarter inventories were little changed, these real inventory increases in the 3rd quarter will substantially boost 3rd quarter GDP...

Job Openings, Hiring, Layoffs and Job Quitting All Lower in August

the Job Openings and Labor Turnover Survey (JOLTS) report for August from the Bureau of Labor Statistics estimated that seasonally adjusted job openings fell by 58,000, from 6,140,000 in July to 6,082,000 in August, after July job openings were revised 30,000 lower, from 6,170,000 to 6,140,000...August jobs openings were still 10.8% higher than the 5,491,000 job openings reported in August a year ago, as the job opening ratio expressed as a percentage of the employed was unchanged at 4.0% in August, which was still up from 3.7% a year ago...although job openings decreased in many sectors, the the largest percentage drop was the 51,000 job opening decrease to 93,000 openings in the educational services sector (see table 1 for more details)...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 August, seasonally adjusted new hires totaled 5,430,000, down by 91,000 from the revised 5,521,000 who were hired or rehired in July, as the hiring rate as a percentage of all employed fell from 3.8% to 3.7%, the same as in August a year earlier (details of hiring by sector since March are in table 2)....meanwhile, total separations fell by 134,000, from 5,362,000 in July to 5,228,000 in August, while the separations rate as a percentage of the employed fell from 3.7% to 3.6%, which was still up from 3.5% in August a year ago (see table 3)...subtracting the 5,228,000 total separations from the total hires of 5,430,000 would imply an increase of 202,000 jobs in August, somewhat more than the revised payroll job increase of 169,000 for August reported by the September 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 3,124,000 of us voluntarily quit our jobs in August, down by 70,000 from the revised 3,194,000 who quit their jobs in July, while the quits rate, widely watched as an indicator of worker confidence, fell from 2.2% to 2.1% of total employment, the same rate it was at a year earlier (see details in table 4)....in addition to those who quit, another 1,729,000 were either laid off, fired or otherwise discharged in August, down by 60,000 from the revised 1,789,000 who were discharged in July, as the discharges rate remained unchanged at 1.2% of all those who were employed during the month, while it was up from the discharges rate of 1.1% a year earlier....meanwhile, other separations, which includes retirements and deaths, were at 376,000 in August, down from 379,000 in July, for an 'other separations rate’ of 0.3%, the same as in July but up from 0.2% in August 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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