Sunday, December 17, 2017

November’s consumer and producer prices, retail sales, industrial production, & job openings; October business inventories

major reports released this week included the the November Producer Price Index, the November Consumer Price Index, and the November Import-Export Price Index from the Bureau of Labor Statistics, Retail Sales for November and Business Sales and Inventories for October from the Census Bureau, and the November report on Industrial Production and Capacity Utilization from the Fed...in addition, the BLS also released the the Job Openings and Labor Turnover Survey (JOLTS) for October, while the New York Fed released the Empire State Manufacturing Survey for December, which covers all of New York state, one county in Connecticut, Puerto Rico and northern New Jersey...they reported that their headline general business conditions index slipped from +19.4 in November to +18.0 in December, still suggesting an ongoing broad-based expansion of First District manufacturing....

November Consumer Prices up 0.4% on Higher Energy Costs

the consumer price index increased by 0.4% in November, as higher prices for energy were only slightly offset by lower prices for groceries and clothing... the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that the seasonally adjusted price index rose 0.4% in November after it had risen 0.1% in October, 0.5% in September, 0.4% in August, 0.1% in July, and after it was unchanged in June and had fallen 0.1% in May....the unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, inched up from 246.663 in October to 246.669 in November, which left it statistically 2.203% higher than the 241.353 index reading of last November, which is reported as a 2.2% year over year increase...with an increase in energy prices accounting for three-fourths of the CPI increase, seasonally adjusted core prices, which exclude food and energy, rose by just 0.1% for the month, with the unadjusted core index actually falling from 253.638 to 253.492, which put it 1.711% ahead of its year ago reading of 249.227...

the volatile seasonally adjusted energy price index rose by 3.9% in November, after it had fallen by 1.0% in October, risen by 6.1% in September and by 2.8% in August, but after it had fallen by 0.1% in July, 1.6% in June, and 2.7% in May...prices for energy commodities were 7.1% higher while the index for energy services rose by 0.6%, after rising by 0.4% in October....the increase in the energy commodity index included a 7.3% jump in the retail price of gasoline, the largest component, and a 5.0% increase in the price of fuel oil, while prices for other fuels, including propane, kerosene and firewood, rose by an average of 1.4%…as a result of this month's price hikes, energy commodities are now priced 16.4% above their year ago levels, with gasoline prices averaging 16.5% higher than they were a year ago….within energy services, the index for utility gas service rose by 0.6% after increasing by 0.3% in October, meaning utility gas is now priced 3.6% higher than it was a year ago, while the electricity price index rose by 0.5%, after rising 0.5% in October...hence, the energy services price index is now 2.8% higher than last November, as even electricity prices have increased by 2.5% over that period..

the seasonally adjusted food price index was unchanged for the second month in a row in November, after rising 0.1% in September, 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 0.1% lower in November, while prices for food bought to eat away from home was 0.1% higher, as prices at fast food outlets rose 0.2% and prices at full service restaurants rose 0.1%, while food prices at schools were unchanged...

in the food at home categories, the price index for cereals and bakery products decreased by 0.2%, as prices for bread fell 0.3%, prices for cookies fell 1.4%, and prices for crackers and cracker products fell 1.5%...the price index for the meats, poultry, fish, and eggs group was down 0.3% as egg prices fell 1.9%, ham prices fell 2.3%, and processed fish and seafood prices fell 0.8%, while the index for dairy products was 0.3% higher on a 0.9% increase in the price of fresh whole milk...the fruits and vegetables index was 0.5% lower on a 1.3% decrease in prices for fresh vegetables and a 1.3% decrease in prices for frozen fruits and vegetables....in addition, the beverages index was 0.6% lower as roast coffee prices fell 1.5% and carbonated drink prices fell 1.3%....lastly, prices in the ‘other foods at home’ category were 0.4% higher on average, as butter prices rose 2.3% and sauces and gravies were 2.0% higher....among food at home line items, only oranges, which are up 12.8%, have seen a 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 November after rising by 0.2% in October, 0.1% in September, 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 0.1%, 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 October retail sales for inflation in national accounts data, the index for household furnishings and supplies was 0.2% lower on a 2.7% decrease in the index for window and floor coverings and a 3.7% decrease in prices for laundry equipment...the apparel price index was 1.3% lower on a 4.3% decrease in prices for men's furnishings, a 3.2% decrease in prices for women's underwear, nightwear, sportswear and accessories, and a 2.5 decrease in prices for boy's apparel....on the other hand, prices for transportation commodities other than fuel were up 0.5%, as prices for used cars were up 1.0% while prices for new cars rose 0.4%...meanwhile, prices for medical care commodities were 0.6% higher on a 0.6% increase in prescription drug prices, while at the same time, the recreational commodities index was 0.5% lower on another 1.1% drop in TV prices, a 5.6% drop in the index for audio equipment, and a 1.3% decrease in the index for toys....meanwhile, the education and communication commodities index was unchanged as a 1.7% increase in prices for college textbooks was offset by a 1.4% decrease in prices for computer software and accessories...lastly, a separate price index for alcoholic beverages was up 0.2% on 0.6% higher wine prices, while the price index for ‘other goods’ was unchanged as a 1.5% increase in the index for cosmetics, perfume, bath, nail preparations and implements was offset by a 1.1% decrease in the index for stationery, gift wrap and other personal paper supplies..

within core services, which rose by 0.2%, the price index for shelter rose 0.2% on a 0.2% increase in rents, a 0.2% increase in homeowner's equivalent rent, and a 1.6% decrease in costs for lodging away from home at hotels and motels, while costs for water, sewers and trash collection rose 0.4% and other household operation costs were up 0.3%....at the same time, the index for medical care services was down 0.1%, as prices for physicians' services fell 0.8% and health insurance policies were priced 0.3% lower...meanwhile, the transportation services index was 0.1% higher on a 1.6% increase in car and truck leasing and 0.8% higher motor vehicle insurance....the recreation services index rose 0.2% as cable and satellite television service rose 0.4% and photographer fees rose 1.8%%, while the index for education and communication services rose 0.3% as elementary and high school tuition and fees and and telephone services both rose 0.4%...lastly, the index for other personal services was unchanged as bank services rose 2.8% while haircuts fell 0.1%...among core line items, only prices for audio equipment, which are now 11.5% lower than last November, and prices for wireless phone services, which are still 10.2% lower than a year ago, have seen prices drop by more than 10% over the past year, while only the prices of watches, which are 11.2% higher, have seen prices rise by a double digit magnitude in that span...

Retail Sales Up 0.8% in November after October and September are Revised Higher

seasonally adjusted retail sales increased in November after retail sales for October and September sales were revised higher...the Advance Retail Sales Report for November (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $492.7 billion during the month, which was up 0.8 percent (±0.5%) from October's revised sales of $488.9 billion and 5.8 percent (±0.9%) above the adjusted sales in November of last year.…October's seasonally adjusted sales were revised up from $486.6 billion to $488.9 billion, while September's sales were also revised higher, from $485.4 billion to $486.2 billion; as a result, the September to October change was revised from up 0.2 percent (±0.5%) to up 0.5 percent (±0.2%), and the change in September's sales was revised from an increase of 1.9% to an increase of 2.1%.....unadjusted sales, extrapolated from surveys of a small sampling of retailers, were estimated to have risen 4.7%, from $476,895 million in October to $499,149 million in November, while they were up 6.4% from the $469,324 million of sales in November a year ago...the $0.8 billion upward revision to September sales should boost previous estimates of the personal consumption expenditures contribution to 3rd quarter GDP by about 0.07 percentage points...

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

November 2017 retail sales table

the first thing we’ll note from this table is that seasonally adjusted sales at motor vehicle and parts dealers were down 0.2% to $102,445 million in November, but that came after October sales were revised up from $101,919 million to $102,626 million, now 1.2% higher than September...September vehicle sales had been up 4.6% on post hurricane car replacements in flooded out areas, so auto sales remain quite elevated despite this month's small decrease...and excluding those weaker auto sales, retail sales would have shown a 1.0% increase for this month, with a seasonally adjusted 2.5% jump in non-store or online retail sales indicating pre-holiday online buying is running well above prior years...as we saw in reviewing the CPI, the composite of all goods less food and energy goods fell by 0.1%, so real core sales will be roughly 0.1% higher than the nominal sales reported here...on the other hand, the 7.3% jump in the retail price of gasoline is not reflected in the 2.8% increase in sales at gas stations, so real gasoline sales might well be lower...still, this report indicates a strong contribution to 4th quarter GDP, which was evidenced by forecasters raising their GDP estimates 0.3% or 0.4% after its release..

Producer Prices Up 0.4% in October on Higher Priced Gasoline and Loan Services Margins

the seasonally adjusted Producer Price Index (PPI) for final demand rose 0.4% in November, as prices for finished wholesale goods increased 1.0%, while margins of final services providers increased by 0.2%...this followed a October report that indicated the overall PPI had increased by 0.4%, as prices for finished goods hed increased 0.3%, while margins of final services providers increased by 0.5%, and a September report that showed the overall PPI had increased by 0.4%, as prices for finished goods had increased 0.7%, while margins of final services providers increased by 0.4%....excluding food, energy and trade services, core producer prices were up 0.4% in November, after rising 0.2% in both October and September...on an unadjusted basis, producer prices are now 3.1% higher than a year earlier, the highest annual producer inflation reading since the same increase was logged in January 2012, while the core producer price index increased to 2.4% higher than a year earlier...

as we noted, the price index for final demand for goods, aka 'finished goods', rose 1.0% in November, after rising 0.3% in October, 0.7% in September, 0.5% in August, but after slipping 0.1% in July, by a revised 0.1% June, and falling by 0.5% in May...the index for wholesale energy prices jumped 4.6% after it had been unchanged in October, but after rising 3.4% in September and a revised 3.5% in August, while the price index for wholesale foods rose 0.3% and the index for final demand for core wholesale goods (ex food and energy) was also 0.3% higher...the wholesale energy price increase was driven by a 15.8% increase in the wholesale price of gasoline, while for wholesale foods, a 3.9% increase in wholesale prices of fresh fruits and a 3.4% increase in the wholesale price of pork were partially offset by a 3.2% decrease in wholesale prices for turkeys....among wholesale core goods, wholesale prices for household appliances rose 1.4% and the index for household furniture was up 1.1%…

at the same time, the index for final demand for services rose 0.2% in November, after rising 0.5% in October, 0.4% in September, but after August's increase was revised to unchanged, after a revised 0.1% increase in July, as the November index for final demand for trade services fell 0.3%, the index for final demand for transportation and warehousing services rose 0.6%, while the index for final demand for services less trade, transportation, and warehousing services was 0.4% higher....among trade services, seasonally adjusted margins for fuels and lubricants retailers decreased 7.0% and margins for TV, video, and photographic equipment and supplies retailers fell 11.0%, while margins for book retailers rose 9.5%... among transportation and warehousing services, margins for airline passenger services were 1.2% higher and margins for air transportation of freight rose 0.6%...in the core final demand for services index, the index for loan services (partial) rose 3.1% and accounted for almost half the month's increase in final demand for services...

this report also showed the price index for intermediate processed goods was 0.5% higher, after rising 1.0% in October, 0.5% in September, a revised 0.4% in August, but after falling by a revised  0.1% in July....the price index for intermediate energy goods rose 1.7% as diesel fuel rose 1.8% and gasoline rose 15.8%, while prices for intermediate processed foods and feeds rose 0.3% as processed meat prices rose 2.3% while processed poultry prices fell 4.6%....the core price index for processed goods for intermediate demand less food and energy was also 0.3% higher on a 0.5% increase in the index for primary basic organic chemicals and a 2.7% increase in prices for plastic construction products...prices for intermediate processed goods are now 5.3% higher than in November a year ago, now the thirteenth 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 rose 3.2% in November, after being unchanged in October, falling 0.4% in September, falling a revised 1.3% in August, but after rising a revised 0.7% in July....the price index for crude energy goods rose 5.5% as crude oil prices rose 11.0%, while the index for unprocessed foodstuffs and feedstuffs rose 2.7%, as prices for slaughter hogs rose 34.1% and prices for for slaughter cattle rose 4.2%...in addition, the index for core raw materials other than food and energy materials rose 0.8%, as prices for copper base scrap rose 3.3% and prices for wastepaper rose 14.9%...this raw materials index is now up 10.6% from a year ago, up from the year over year increase of 7.7% that we saw in October...

lastly, the price index for services for intermediate demand rose 0.7% in November after rising 0.3% in October, 0.1% in September and 0.2% in August, but after falling a revised 0.1% in July...the index for trade services for intermediate demand was 1.0% higher, as margins for machinery and equipment parts and supplies wholesalers rose 1.9%…the index for transportation and warehousing services for intermediate demand was up 0.5%, as intermediate prices for transportation of passengers (partial) rose 1.4% and warehousing, storage, and related services rose 2.4%...at the same time, the core price index for services less trade, transportation, and warehousing for intermediate demand was 0.6% higher, as margins for securities brokerage, dealing, and investment advice rose 1.5%...over the 12 months ended in November, the year over year price index for services for intermediate demand, which has never turned negative on an annual basis, is now 3.2% higher than it was a year ago...

Industrial Production Up 0.2% in November

the Fed's G17 release on Industrial production and Capacity Utilization reported that industrial production rose 0.2% in November after rising by a revised 1.2% in October and by 0.3% in September, as a jump in the mining index offset a drop in the utility index....the total industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, rose to 106.4 in November from 106.1 in October, which was statistically unrevised from last month, despite the Fed's summary noting that it saw an "upwardly revised increase"...the reason the increase in October index was greater than previously reported was that the September index was revised down from 105.2 to 104 9...at the same time, the August index was revised from 104.7 to 104.6, the July index was revised from 105.2 to 105.1, and the June index was revised from 105.2 to 105.3....year over year industrial production is now up 3.4%, an improvement from last month's 2.9% YoY decrease....

the manufacturing index, which accounts for more than 77% of the total IP index, increased from 104.7 in October to 104.8 in November but was reported 0.2% higher, after the change from September to October was revised from a 1.3% increase to a 1.4% increase because the index for October was revised from 104.8 to 104.7 while the index for September was revised from 103.5 to 103.2; in addition, the August manufacturing index was revised from 103.1 to 103.0, and July's manufacturing index was revised down from 103.3 to 103.2....meanwhile, the mining index, which includes oil and gas well drilling, rose from 109.7 in October to 111.9 in November, after the October index was revised up from 108.9, which meant the mining index is now 9.4% higher than it was a year earlier...finally, the utility index, which often fluctuates due to above or below normal temperatures, fell 1.9% in November, from an unrevised 103.6 in October to 101.6 in November, and is now 2.3% higher than it was a year earlier..

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 rose to 77.1% in November from 77.0% in October, which was unrevised from last month ...capacity utilization of NAICS durable goods production facilities rose from 75.7% in October to 75.9% in November, while capacity utilization for non-durables producers fell from 78.1% to 78.0%...at the same time, capacity utilization for the mining sector rose to 84.5% in November from 83.0% in October, which was originally reported as 82.4%, while utilities were operating at 75.1% of capacity during November, down from their 77.1% of capacity during October, which was revised down from the previously reported 77.2%...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....  

October Business Sales Up 0.6% Business Inventories Down 0.1%

after the release of the November retail sales report, the Census Bureau released the composite Manufacturing and Trade, Inventories and Sales report for October (pdf), which incorporates the revised October retail data from that November report and the earlier published October 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 $1,400.8 billion in October, up 0.6 percent (±0.2%) from September's revised sales, and up 6.5 percent (±0.3 percent) from October sales of a year earlier...note that total September sales were concurrently revised up from the originally reported $1,389.7 billion to $1,392,347 million....manufacturer's sales were up 0.6% to $484,223 million in October; retail trade sales, which exclude restaurant & bar sales from the revised October retail sales reported earlier, also rose 0.6% to $432,041 million, and wholesale sales rose 0.7% to $484,582 million...

meanwhile, total manufacturer's and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $1,885.7 billion at the end of October, down 0.1 percent (±0.1%)* from September, but still 3.5 percent (±0.3 percent) higher than in October a year earlier...at the same time, the value of end of September inventories was revised from the $1,888.7 billion reported last month to $1,887.2 billion, now unchanged from August...that $1.5 billion downward revision to September inventories should reduce previous estimates of the inventory component to 3rd quarter GDP by about $6.0 billion annually, which would clip around 0.14 percentage points off 3rd quarter GDP...seasonally adjusted inventories of manufacturers were estimated to be valued at $661,568 million at the end of October, an increase of 0.2% from September, while inventories of retailers were valued at $618,753 million, statistically unchanged from September, and while inventories of wholesalers were estimated to be valued at $605,348 million at the end of October, 0.5% lower than in September...

for GDP purposes, all inventories, including retail, are adjusted for inflation with appropriate component price indices of the producer price index for October, which was up 0.3% for finished goods...last week, we looked at real factory inventories with price adjustments for goods at various stages of production, and judged those inventories would have a negative impact on 4th quarter GDP…also last week, we found that real wholesale inventories were down about 0.8% and hence would subtract substantially from 4th quarter GDP growth….since nominal retail inventories for October have now been shown to be unchanged, real retail inventories for the month, after the 0.3% finished goods price adjustment, thus would have thus decreased by about 0.3% from September, in a third quarter that saw the increase in total inventories add 0.80 percentage points to GDP, before the revision we noted above...therefore, any inventory decrease in the 4th quarter would necessarily subtract that much, if not more, from the growth of 4th quarter GDP...

Job Openings and Discharges Decrease in October, Hiring at a 16 Year High

the Job Openings and Labor Turnover Survey (JOLTS) report for October from the Bureau of Labor Statistics estimated that seasonally adjusted job openings decreased by 181,000, from the record high of 6,177,000 openings in September to 5,996,000 in October, after September job openings were revised 84,000 higher, from 6,093,000 to 6,177,000...October's jobs openings were still 7.3% higher than the 5,587,000 job openings reported in October a year ago, as the job opening ratio expressed as a percentage of the employed fell to 3.9% in October from 4.0% September while it was up from 3.7% in October a year ago...most of the October decrease in openings can be accounted for by the decrease of 137,000 to 1,010,000 job openings in the trade, transportation, and utilities sector, while the accommodation and food services sector saw openings by increase 94,000 to 776,000 (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 October, seasonally adjusted new hires totaled 5,552,000, up by 232,000 from the revised 5,320,000 who were hired or rehired in September, as the hiring rate as a percentage of all employed rose to 3.8% from 3.6% in September, and was also up from from 3.6% in October a year earlier (details of hiring by sector since March are in table 2)....meanwhile, total separations fell by 66,000, from 5,278,000 in September to 5,178,000 in October, while the separations rate as a percentage of the employed fell to 3.5%, down from 3.6% in September but unchanged from October a year ago (see table 3)...subtracting the 5,178,000 total separations from the total hires of 5,552,000 would imply an increase of 374,000 jobs in October, quite a bit more than the revised payroll job increase of 244,000 for October reported in the November establishment survey last week, and outside of the expected +/-115,000 margin of error in these reports, so one or both of these reports is off by a net of 130,000 jobs...

breaking down the seasonally adjusted job separations, the BLS finds that 3,180,000 of us voluntarily quit our jobs in October, unchanged from the number who quit their jobs in September, and hence the quits rate, widely watched as an indicator of worker confidence, remained unchanged at 2.2% of total employment, while it was up from 2.1% a year earlier (see details in table 4)....in addition to those who quit, another 1,631,000 were either laid off, fired or otherwise discharged in October, down by 115,000 from the revised 1,746,000 who were discharged in September, as the discharges rate fell from 1.2% to 1.1% of all those who were employed during the month, which was unchanged from the discharges rate of 1.1% a year earlier....meanwhile, other separations, which includes retirements and deaths, were at 367,000 in October, up from 318,000 in September, for an 'other separations rate’ of 0.2%, which was unchanged from September but down from 0.3% in October 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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