Sunday, February 26, 2017

new home sales and existing home sales for January

the only two widely watched reports that were released this past week were the January report on new home sales from the Census bureau and the Existing Home Sales Report for January from the National Association of Realtors (NAR)…we also saw the release of the Chicago Fed National Activity Index (CFNAI) for January, a weighted composite index of 85 different economic metrics, which fell to -0.05 in January from +0.18 in December, which was revised from the +0.14 reported last month...at the same time, the 3 month average of that index rose to -0.02 in January, up from a revised  -0.03 in December, which still indicates that national economic activity has been slightly below the historical trend over recent months...in addition, this week also saw the release of the Kansas City Fed manufacturing survey for February, covering western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico, which reported its broadest composite index at +14, up from +9 in January, its highest reading since June 2011, indicating an ongoing expansion in that region's manufacturing...

New Home Sales Little Changed in January

the Census report on New Residential Sales for January (pdf) estimated that new single family homes were selling at a seasonally adjusted pace of 555,000 homes annually, which was 3.7 percent (±18.5%)* above the revised December annual sales rate of 535,000 new single family homes and 5.5 percent (±25.4 percent)* above the estimated annual rate that new homes were selling at in January of last year....the asterisks indicate that based on their small sampling, Census could not be certain whether January new home sales rose or fell from those of December, or even from January sales of a year ago, with the figures in parenthesis representing the 90% confidence range for reported data in this report, which has the largest margin of error and is subject to the largest revisions of any census construction series....with this report; sales of new single family homes in December were revised from the annual rate of 536,000 reported last month to an annual rate of 535,000, and new home sales in November, initially reported at an annual rate of 592,000 and revised to a 598,000 rate last month, were revised down to a 575,000 a year rate with this report, while October's annualized new home sales rate, initially reported at an annual rate of 563,000 and revised up to a 571,000 a year rate last month, were revised back down to a 568,000 rate with this release...

the annual rates of sales reported here are seasonally adjusted after extrapolation from the estimates of canvassing Census field reps, which indicated that approximately 41,000 new single family homes sold in January, up from the estimated 38,000 new homes that sold in December but down from the 46,000 that sold in November.....the raw numbers from Census field agents further estimated that the median sales price of new houses sold in January was $312,900, down from the median sale price of $316,200 in December but up from the median sales price of $291,100 in January a year ago, while the average January new home sales price was $360,900, down from the $378,900 average sales price in December, and down from the average sales price of $365,600 in January a year ago....a seasonally adjusted estimate of 265,000 new single family houses remained for sale at the end of January, which represents a 5.7 month supply at the January sales rate, down from the 5.8 months of new home supply reported in December...for graphs and additional commentary on this report, see the following two posts by Bill McBride at Calculated Risk: New Home Sales increase to 555,000 Annual Rate in January and A few Comments on January New Home Sales...

January Existing Home Sales 3.3% Higher

the National Association of Realtors (NAR) reported that existing home sales rose by 3.3% from December to January on a seasonally adjusted basis, projecting that 5.69 million existing homes would sell over an entire year if the January home sales pace were extrapolated over that year, a pace that was just 0.7% above the annual sales rate projected in January of a year ago...December sales are now shown to have been at a 5.51 million annual rate, revised up from the 5.49 million annual rate indicated by last month's report...the NAR also reported that the median sales price for all existing-home types was $228,900 in January, down from $233,300 in December, but 7.1% higher than in January a year earlier, which they report as "the 59th consecutive month of year-over-year gains".....the NAR press release, which is titled "Existing-Home Sales Jump in January", is in easy to read plain English, so if you're interested in the details on housing inventories, cash sales, distressed sales, first time home buyers, etc., you can easily find them in that press release...as sales of existing properties do not add to our national output, neither these home sales nor the prices for which these homes sell are included in GDP, except insofar as real estate, local government and banking services are rendered during the selling process…

since this report is entirely seasonally adjusted and at a not very informative annual rate, we usually look at the raw data overview (pdf) to see what actually transpired during the month...this unadjusted data indicates that roughly 320,000 homes sold in January, down by 26.8% from the 437,000 homes that sold in December, but up by 6.0% from the 302,000 homes that sold in January of last year, so we can see that it was a seasonal adjustment that caused the annualized published figures to show a month over month increase....that same pdf indicates that the median home selling price for all housing types fell 1.9%, from a revised $233,300 in December to $228,900 in January, while the average home sales price was $271,000, down 1.4% from the $274,900 average sales price in December, but up 5.2% from the $257,700 average home sales price of January a year ago...for both seasonally adjusted and unadjusted graphs and additional commentary on this report, see the following two posts from Bill McBride at Calculated Risk: NAR: "Existing-Home Sales Jump in January" and A Few Comments on January Existing Home Sales...

 

(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…)                    

Sunday, February 19, 2017

January retail sales, consumer and producer prices, industrial production, business inventories, housing starts

this week brought us a half dozen of the regular monthly agency reports, including the Retail Sales report for January and Business Sales and Inventories for December from the Census Bureau, the January Producer Price Index and the January Consumer Price Index from the Bureau of Labor Statistics, the January report on Industrial Production and Capacity Utilization from the Fed, and the January report on New Residential Construction, also from the Census Bureau...this week also saw the release of the first two regional Fed manufacturing surveys for February: the Empire State Manufacturing Survey from the New York Fed, which covers all of New York state, one county in Connecticut, Puerto Rico and northern New Jersey, reported their headline general business conditions index rose to +18.7,  up from +6.5 in January, suggesting an accelerating growth rate in First District manufacturing....meanwhile, the Philadelphia Fed Manufacturing Survey, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest diffusion index of manufacturing conditions rose to +43.3 in February from a  reading + 23.6 in January, indicating an overwhelming plurality of the region's manufacturing firms reported increases in their activity this month...

January Consumer Prices Rise 0.6% on Higher Fuel, Shelter, and Clothing

the consumer price index increased by 0.6% in January, the largest increase since February 2013, as higher prices for gasoline accounted for nearly half the increase...the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that the seasonally adjusted price index for urban consumers rose 0.6% in January after it had risen 0.3% in December, 0.2% in November, 0.4% in October, 0.3% in September, and 0.2% in August....the unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, rose from 241.432 in December to 242.839 in January, which left it statistically 2.500% higher than the 236.916 index reading of last January....regionally, prices for urban consumers have risen by 2.5% in the West, by 2.6% in the South, 2.5% in the Northeast and by 2.2% in the Midwest over the past year, with higher price increases in the South and Midwest in cities of less than 1,500,000 people , while the largest cities saw the greater price increases in the West...with higher prices for gasoline responsible for half the increase in the index, seasonally adjusted core prices, which exclude food and energy, rose by 0.3% for the month, with the unadjusted core index rising from 249.134 to 250.083, which left it 2.272% ahead of its year ago reading of 244.528...

the volatile seasonally adjusted energy price index increased by 4.0% in January, after it had risen by 1.5% in December, 1.2% in November, 3.5% in October, and 2.9% in September...as a result, energy prices are now 10.8% higher than a year ago, after seeing negative year over year comparisons through most of 2015 and 2016...prices for energy commodities were 7.6% higher while the index for energy services rose by 0.3%, after slipping 0.1% in December ....the increase in the energy commodity index included a 7.8% increase in the price of gasoline, the largest component, and a 3.5% increase in the price of fuel oil, while prices for other fuels, including propane, kerosene and firewood, rose by an average of 4.0%…within energy services, the index for utility gas service rose by 1.5% in its 7th increase in a row, and hence utility gas is now priced 10.1% higher than it was a year ago, while the electricity price index was unchanged, just as it was in November  and December....energy commodities are now priced 20.0% above their year ago levels, with gasoline prices averaging 20.3% higher than they were a year ago.…meanwhile, the energy services price index is now 2.9% higher than last January, as even electricity prices have increased by 1.0% over that period..

the seasonally adjusted food price index rose 0.1% in January, after it had been unchanged for 6 consecutive months, as prices for food purchased for use at home was unchanged while prices for food bought to eat away from home rose 0.4%, as average prices at fast food outlets rose 0.3% while average prices at full service restaurants rose 0.5%...the food price index is still 0.2% lower than a year ago, as a 1.9% drop in the price of food at home has been mostly offset by a 2.5% increase in prices for food away from home, which included a 2.6% increase in prices of food at employee sites and schools...

in the food at home categories, the price index for cereals and bakery products decreased by 0.1% as 1.1% higher prices for cookies and a 1.3% increase in the index for rice, pasta, cornmeal were more than offset by a 1.2% decrease in prices for breakfast cereal and a 1.5% decrease in prices for crackers...the price index for the meats, poultry, fish, and eggs group rose by 0.7% as beef prices rose 0.3% and egg prices rose 14.3%, while the index for dairy products was 0.8% higher on a 1.6% increase in the price for cheese....the fruits and vegetables index was 1.7% lower on a 1.8% drop in prices for fresh fruits and a 2.4% drop in prices for fresh vegetables...the beverages index was 0.3% lower as carbonated drinks saw an average 1.0% price cut...lastly, prices in the ‘other foods at home’ category were on average 0.2% higher, as butter prices rose 3.9% and olives, pickles and relishes averaged a 5.1% increase.....among food at home line items, eggs, which are still priced 19.4% lower than a year ago, tomatoes, which are 18.4% lower, and lettuce, which is 16.8% lower than last year, have seen price changes greater than 10% over the past year...the itemized list for price changes in over 100 separate food items is included at the beginning of Table 2, which gives us a line item breakdown for prices of more than 200 CPI items overall...

among the seasonally adjusted core components of the CPI, which rose by 0.3% in January after rising by  0.2% in December, 0.2% in November, 0.1% in October, 0.1% in September, 0.3% in August, 0.1% in July and by 0.2% in April, in May and in June, the composite of all goods less food and energy goods rose 0.4%, while the more heavily weighted composite for all services less energy services was 0.3% higher....among the goods components, which will be used by the Bureau of Economic Analysis to adjust January retail sales for inflation in national accounts data, the index for household furnishings and supplies rose by 0.4% as prices for infants' furniture was up 7.6%, prices for dishes and flatware were 7.2% higher, and laundry equipment prices rose 2.2%...the apparel price index was 1.4% higher on a 3.8% increase in prices for men's furnishings and a 5.2% increase in prices for women's dresses....prices for transportation commodities other than fuel were up 0.4%, as prices for new cars rose 0.9%, while prices for medical care commodities were 0.3% higher on 0.7% higher drug prices....meanwhile, the recreational commodities index fell 0.2% on 0.4% lower priced toys and sporting goods, while the education and communication commodities index was 0.1% higher as a 2.9% increase in prices for computer software and accessories was only partially offset by a 1.5% increase in prices for educational books and supplies....lastly, a separate price index for alcoholic beverages was up 0.2% on 1.4% higher prices for whiskey bought for drinking at home, while the price index for ‘other goods’ was down 0.1% on a 1.2% decrease in the index for stationery, stationery supplies, and gift wrap...

within core services, the price index for shelter rose 0.2% on a 0.2% increase in rents, a 0.2% increase in owner's equivalent rent, and a 0.2% decrease in lodging away from home at hotels and motels, while the household operations services index increased 0.1%....meanwhile, the index for medical care services was up 0.2% as services of medical professionals other than doctors and dentists rose 0..7%...in addition, the transportation services index was 0.3% higher on a 1.8% increase in intercity bus fare, a 2.0% increase in airline fares, and a 0.8% increase for motor vehicle insurance...at the same time, the recreation services price index was up 0.7% as admissions to sporting events rose 5.5%, while the index for education and communication services was unchanged as delivery services increased prices 2.8% while college tuition and internet services were both 0.1% lower...lastly, the index for other personal services was up 0.3% as legal service fees were 2.0% higher...among core prices, only televisions, which are now 21.8% cheaper than a year ago, have seen prices drop by more than 10% over the past year, while nothing has seen prices rise by that double digit magnitude.. 

Retail Sales Up 0.4% in January after December Revised Higher

seasonally adjusted retail sales increased 0.4% in January after retail sales for December were revised higher...the Advance Retail Sales Report for January (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $472.1 billion during the month, which was up 0.4 percent (±0.5%) from December's revised sales of $470.5 billion and 5.9 percent (±0.9%) above the adjusted sales in January of last year...December's seasonally adjusted sales were revised up from $469.1 billion to $470.46 billion, while November's sales were revised lower, from $466.2 billion to $466.0 billion; as a result, the November to December change was revised up from up 0.6 percent (±0.5%) to up 1.0 percent (±0.2%).....estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated sales actually fell 22.4%, from $541,774 million in December to $420,638 million in January, while they were up 4.9% from the $400,928 million of sales in January a year ago, so we can see how a large seasonal adjustment to holiday and post holiday sales brought the headline sales into line vis-a-vis the normal decrease that would be expected in January...

included below is the table of the monthly and yearly percentage changes in retail sales by business type taken from the January 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 December revised figure to this month's January "advance" report in the first sub-column, and then the year over year percentage sales change since last January in the 2nd column...the second double column pair below gives us the revision of the December advance estimates (now called "preliminary") as of this report, with the new November to December percentage change under "Nov 2016 r" (revised) and the December 2015 to December 2016 percentage change as revised in the last column shown...for your reference, the table of last month’s advance estimate of December sales, before this month's revisions, is here.….

January 2017 retail sales table

despite the apparent improvement in sales, this January report is much worse than it looks...for starters, the 2.3% increase to $37,156 million in gasoline station sales accounted for half the increase, and that was only due to higher gas prices...take that, and the 1.4% increase to $55,987 million in sales at bars and restaurants out, and January retail sales were flat...moreover, as we saw in the report on consumer prices, the composite of all goods less food and energy goods rose an unusual 0.4% for the month, which means real core sales were actually down by that 0.4%...especially hard hit were the auto dealers; with sales down by 1.2% and prices for new cars and trucks up 0.9%, that means their real sales fell by more than 2% for the month...and even in store types where the apparent sales were much higher, such as clothing where we see a 1.0% increase in nominal sales, prices for apparel concurrently rose by 1.4%, meaning real clothing store sales were actually down 0.4%...we would not be surprised to see real PCE for January, which will be released at the end of the February, turn negative for the first time in months…

Producer Prices Up 0.6% in January on Higher Energy Prices

the seasonally adjusted Producer Price Index (PPI) for final demand rose 0.6% in January, the largest increase since May 2015, as prices for finished wholesale goods increased 1.0%, while margins of final services providers increased by 0.3%...this followed a revised December report that indicated the PPI was 0.2% higher, with prices for finished goods up 0.6% while final demand for services rose 0.1%, and a November report that indicated the overall PPI had increased 0.5%, with prices for finished goods up 0.2% while final demand for services rose 0.5%...note that monthly PPI readings for the entirety of 2016 were revised with this report to reflect a recalculation of seasonal adjustment factors...on an unadjusted basis, producer prices remain 1.6% higher than a year earlier, same as in December...

as noted, the price index for final demand for goods, aka 'finished goods', rose by 1.0% in January, after rising by 0.6% in December, 0.2% in November, 0.3% in October, and 0.5% in September, as the index for wholesale energy prices rose 4.7% from December to January while the price index for wholesale foods was unchanged and the index for final demand for core wholesale goods (ex food and energy) rose 0.4%...major wholesale energy price increases in December included a 14.5% increase in wholesale prices for heat oil, and a 12.9% increase in wholesale gasoline prices, while among wholesale food prices, a 7.0% increase in the wholesale price of pork was partially offset by a 7.2% decrease for wholesale beef...among wholesale core goods, prices for women's, girls', and infants' apparel increased 2.4% and wholesale prices for appliances rose 1.8%, while wholesale prices for tires were down 1.3%...

meanwhile, the index for final demand for services rose by 0.4% in January after rising by 0.1% in December, by 0.5% in November and falling by 0.4% in October, as the index for final demand for trade services rose 0.9%, the index for final demand for transportation and warehousing services rose 1.1%, while the index for final demand for services less trade, transportation, and warehousing services was 0.1% lower....among trade services, seasonally adjusted margins for apparel, jewelry, footwear, and accessories retailers increased 4.8% and accounted for nearly half of the January increase in the index for final demand services, while margins for TV, video, and photographic equipment retailers increased 14.1% after rising 6.3% in December and  6.0% in November... among transportation and warehousing services, margins for airline passenger services rose 3.7%... in the core final demand for services index, margins for securities brokerage, dealing, and investment advisers rose 2.5%, while margins for passenger car rentals were 10.4% lower...

this report also showed the price index for processed goods for intermediate demand was 1.1% higher, the largest increase since February 2013, after rising 0.4% in December, 0.3% in November and by a revised 0.4% in October...prices for intermediate processed goods are now 3.8% higher than in January a year ago, the third year over year increase after 16 months of lower year over year comparisons, as intermediate goods prices fell every month from July 2015 through March 2016.... in January, the price index for intermediate energy goods rose 4.8%, prices for intermediate processed foods and feeds rose 0.5%, while the core price index for processed goods for intermediate demand less food and energy was 0.3% higher...

at the same time, the price index for intermediate unprocessed goods rose 3.8 in January, after rising 8.4% in December, but falling by 0.4% in November, 0.5% in October, 0.6% in September, and 2.1% in August....the index for crude energy goods rose 6.7% as prices for raw natural gas rose 23.6%, and the price index for unprocessed foodstuffs and feedstuffs rose 2.2%, as the index for slaughter hogs rose 10.3 percent and raw milk prices rose 15.2%…moreover, the index for core raw materials other than food and energy materials rose 3.2%, on an 14.8% increase in wholesale prices for iron and steel scrap... this raw materials index is now up 17.6% from year ago, in contrast to a prior year over year decrease of 26.4% that we saw just 14 months ago, in November of 2015...

lastly, the price index for services for intermediate demand was 0.3% higher in January, after being 0.4% higher in December and 0.1% higher in November and October.. the index for trade services for intermediate demand was 0.2% lower as margins for intermediate building materials, paint, and hardware wholesalers fell 3.2%…the index for transportation and warehousing services for intermediate demand was also down 0.2%, as pricing for intermediate courier and messenger services fell 4.6%, while the core price index for services less trade, transportation, and warehousing for intermediate demand rose 0.4%, as a 5.5% increase in the index for business loans (partial) accounted for much of the increase in the intermediate services index...over the 12 months ended in January, the year over year price index for services for intermediate demand, which has never turned negative on an annual basis, is now 1.5% higher than it was a year ago...  

Industrial Production Slips 0.3% in January on Mild Weather

the Fed's G17 release on Industrial production and Capacity Utilization indicated that industrial production fell by 0.3% in January after rising by a revised 0.6% in December, which left it unchanged from a year ago...the industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, was actually unchanged from the previously published 104.6 in January, after the December index was revised up from there to 104.8, the November index was revised from the 103.7 reported last month to 104.2, while at the same time the index for September was revised from 104.2 to 104.1....

the manufacturing index, which accounts for more than 77% of the total IP index, rose to 103.8 in January, after the December index was revised from 103.2 to 103.5, the November index was revised from 103.0 to 103.3, the October index was revised from 103.2 to 103.3, the September index was revised from 102.9 to 103.0, and the August index was revised from 102.8 to 102.9....meanwhile, the mining index, which includes oil and gas well drilling, rose from 105.7 in December to 108.3 in January after the December index was revised down from 107.1, which left the mining index 0.4% than it was a year earlier...finally, the utility index, which often fluctuates due to above or below normal temperatures, fell by 5.7% in January, from 104.8 to 98.8, after the December utility index was revised from 104.0 to 104.8...with January 2016 heating requirements somewhat closer to normal, the utility index is now 2.6% lower than it was a year ago...

this report also includes capacity utilization data, which is expressed as the percentage of our plant and equipment that was in use during the month, and which indicated that seasonally adjusted capacity utilization forutotal industry fell to 75.3% in January from 75.6% in December, which was revised from the 75.5% reported last month ...capacity utilization of NAICS durable goods production facilities fell from a upwardly revised 76.4% in December to 76.2% in January, while capacity utilization for non-durables producers rose from an upwardly revised 74.6% to 75.0%...capacity utilization for the mining sector rose to 78.1% in January from 77.1% in December, which was originally reported as 78.1%, while utilities were operating at 75.1% of capacity during January, down from their 79.7% of capacity during December, which was previously reported at 79.1%...for more details on capacity utilization by type of manufacturer, see Table 7: Capacity Utilization: Manufacturing, Mining, and Utilities, which shows the historical capacity utilization figures for a dozen types of durable goods manufacturers, 8 classifications of non-durable manufacturers, mining, utilities, and capacity utilization for a handful of other special categories.... 

December Business Sales Up 2.0%, Business Inventories Up 0.4%

after the release of the January retail sales report, the Census Bureau released the composite Manufacturing and Trade, Inventories and Sales report for December (pdf), which incorporates the revised December retail data from that December report and the earlier published December 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 $1,356.0 billion in December, up 2.0 percent (±0.2%) from November's revised sales, and up 5.2 percent (±0.4%) from December sales of a year earlier...note that total November sales were concurrently revised up from the originally reported $1,326.7 billion to $1,328.8 billion, so gross sales in this report were actually up 2.2% from what was reported last month ....manufacturer's sales rose 2.2% to $475,843 million in December; retail trade sales, which exclude restaurant & bar sales from the revised December retail sales reported earlier, rose 1.2% t0 $415,242 million, and wholesale sales rose 2.6% to $464,905 million...

meanwhile, total manufacturer's and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $1,835.7 billion at the end of December, up 0.4 percent (±0.2%) from November, and 2.0 percent (±0.5%) higher than in December a year earlier...at the same time, the value of end of November inventories was revised from the $1,827.5 reported last month to $1828.97 billion....seasonally adjusted inventories of manufacturers were estimated to be valued at $625,585 million, up 0.1% from November, while inventories of retailers were valued at $609,010 million, also 0.1% more than in November, and inventories of wholesalers were estimated to be valued at $601,147 million at the end of December, 1.0% higher than in November...

January Housing Starts Down from December, Permits Up

the January report on New Residential Construction (pdf) from the Census Bureau estimated that their widely watched count of new housing units started in January was at a seasonally adjusted annual rate of 1,285,000, which was 2.6 percent (±11.0 percent)* below the revised estimated December annual rate of 1,279,000, but was 10.5 percent (±15.3%)* above last January's rate of 1,160,000 housing starts a year...the asterisks indicates that the Census does not have sufficient data to determine whether housing starts actually rose or fell during the month or even over the past year, with the figures in parenthesis the most likely range of the change indicated; in other words, January housing starts could have been down by 4.8% or up by as much as 25.8% from those of last January, with revisions of a greater magnitude in either direction possible...in this report, the annual rate for December housing starts was revised from the 1,226,000 reported last month to 1,285,000, while November starts, which were first reported at a 1,090,000 annual rate, were revised from last month's initial revised figure of 1,102,000 annually up to a 1,149,000 annual rate with this report....these annual rates of starts reported here were extrapolated from a survey of a small percentage of US building permit offices visited by canvassing Census field agents, which estimated that 82,500 housing units were started in January, down from the 87,000 units that were started in December and the 87,700 units that were started in November

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 January, Census estimated new building permits for housing units were being issued at a seasonally adjusted annual rate of 1,285,000, which was 4.6 percent (±2.0 percent) above the revised December rate of 1,228,000 permits, and 8.2 percent (±1.6 percent) above the rate of building permit issuance in January a year earlier...the annual rate for housing permits issued in December was revised up from the originally reported 1,210,000....again, these annual estimates for new permits reported here were extrapolated from the unadjusted estimates collected monthly by canvassing census agents, which showed permits for roughly 86,800 housing units were issued in January, down from the revised estimate of 91,400 new permits issued in December.... for graphs and commentary on this report, see the following two posts by Bill McBride at Calculated Risk: Housing Starts at 1.246 Million Annual Rate in January and Comments on January 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…)                    

Sunday, February 12, 2017

December’s trade deficit, wholesales sales and inventories, and job openings

the key economic release of the past week was the December report on our International Trade from the Census Bureau...the Census also released the Wholesale Trade, Sales and Inventories report for December this week, while the Bureau of Labor Statistics released the Job Openings and Labor Turnover Survey (JOLTS) for December and the Import-Export Price Index for January...in addition, the Fed released the Consumer Credit Report for December, which showed that overall consumer credit, a measure of non-real estate debt, expanded by a seasonally adjusted $14.2  billion, or at a 4.5% annual rate, as non-revolving credit expanded at a 5.1% rate to $2,767.4 billion and revolving credit outstanding rose at a 2.9% rate to $992.4 billion...the Mortgage Monitor for December (pdf) Black Knight Financial Services, a private report that we usually review, was also released this week…

December Trade Deficit Down 3.2% on Higher Exports of Aircraft and Aircraft Engines

our trade deficit fell by 3.2% in December as the value of both our exports and our imports increased....the Census report on our international trade in goods and services for December indicated that our seasonally adjusted goods and services trade deficit fell by $1.47 billion to $44.26 billion in December from a revised November deficit of $45.73 billion...the value of our December exports rose by $5.0 billion to $190.7 billion on a $4.8 billion increase to $126.9 billion in our exports of goods and a $0.2 billion increase to $63.8 billion in our exports of services, while our imports rose $3.6 billion to $235.0 billion on a $3.6 billion increase to $192.6 billion in our imports of goods, while our imports of services were nearly unchanged at $42.3 billion...the November trade deficit was revised higher from the originally reported $45.24 billion to $45.73 billion, and trade figures for every prior month of 2016 were also revised, meaning that prior quarter over quarter figures for GDP will have to be revised as well...export prices were on average 0.3% higher in December, so our real December exports would be less than the nominal value by that percentage, while import prices were 0.4% higher, meaning real imports were smaller than the nominal dollar values reported here by that percentage....

much of the increase in our December exports of goods was as a result of higher exports of capital goods, but an increase in our exports of industrial supplies also contributed...referencing the Full Release and Tables for December (pdf), in Exhibit 7 we find that our exports of capital goods rose by $3,332 million to $45,367 million on a $1,012 million increase in our exports of civilian aircraft, a $978 million increase in our exports of engines for civilian aircraft, a $463 million increase in our exports of industrial engines, a $293 million increase in our exports of other industrial machines, and a $256 million increase in our exports of generators and accessories...we also find that our exports of industrial supplies and materials rose by $731 million to $35,878 million on a $241 million increase in our exports of natural gas liquids and a $191 million increase in our exports of fuel oil, and that our exports of other goods not categorized by end use rose by $722 million to $5,940 million...in addition, our exports of automotive vehicles, parts, and engines rose by $167 million to $12,283 million on a $427 million increase in our exports of parts and accessories of vehicles other than engines, body chassis and tires, and our exports of consumer goods rose by $76 million to $16,487 million despite a $336 million decrease in our exports of pharmaceuticals, as exports of most other consumer goods line items increased...on the other hand, our exports of foods, feeds and beverages fell by $95 million to $10,626 million on a $181 million decrease in our exports of nuts...

Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our goods imports and shows that higher imports of automotive vehicles, parts, and engines, industrial supplies and materials, and capital goods were responsible for the increase in December imports...our imports of automotive vehicles, parts and engines rose by $1617 million to $30,860 million on a $1,351 million increase in our imports of new and used passenger cars, and our imports of industrial supplies and materials rose by $1,092 million to $41,015 million as our imports of natural gas rose by $914 million, our imports of organic chemicals rose by $313 million and our imports of fertilizers rose by $353 million....in addition, our imports of capital goods rose by $982 million to $50,426 million on a $216 million increase in our imports of computers and a $206 million increase in our imports of photo servicing equipment, our imports of foods, feeds, and beverages rose by $157 million to $11,306 million, and our imports of consumer goods rose by $142 million to $49,655 million despite decreases of $457 million in our imports of pharmaceuticals and $448 million in our imports of cellphones, as our imports of artwork, antiques and other collectibles rose by $244 million and our imports in most other categories of consumer goods rose as well...only slightly offsetting those import increases, our imports of other goods not categorized by end use fell by $291 million to $7,679 million...

in the advance report on 4th quarter GDP of two weeks ago, our December trade deficit was estimated based on the sketchy Advance Report on our International Trade in Goods which was released just before the GDP release...that report estimated that our December goods trade deficit was at $65.0 million, on goods exports of $125.5 billion and goods imports of $190.5 billion...this report revises that and shows that our actual goods trade deficit in December was at $65.7 billion on adjusted goods imports of $192.6 billion and adjusted goods exports of $126.9 billion...in addition, the November trade deficit was revised higher by nearly $0.5 billion…just those two revisions from the previously published data mean that the 4th quarter trade deficit in goods was roughly $1.2 billion more than was included in last week's GDP report, or roughly $4.9 billion on an annualized basis, which would subtract about 0.11 percentage points from 4th quarter GDP....

however, trade in goods for July, August, September and October, which all go into figuring the change in GDP, were also revised with this report as well...to assess those changes, we can view the all previously published trade details in the pdf for November's trade report, and then compare them to the revised numbers in the pdf for December's trade report....without going into too much detail or attempting to adjust for fractional inflation factors, the net trade deficit for July was revised from $39,626 million to $39,977 million, the net trade deficit for August was revised from $39,626 million to $39,977 million, the net trade deficit for September was revised from $39,626 million to $39,977 million, and the net trade deficit for October was revised from $39,626 million to $39,977 million...that means the trade deficit in the 3rd quarter was roughly $1.05 billion more than was reported by the GDP report, which they would have reported at a $4.2 billion annual rate, and hence the change in the deficit from the 3rd quarter to the 4th quarter was that much smaller ...those 3rd quarter revisions would thus add about 0.10 percentage points back to the change 4th quarter GDP, ie, make it less negative than was reported in the advance report...

December Wholesale Sales Up 2.4%, Wholesale Inventories Up 1.0%

the December report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at $464.9 billion, up by 2.6 percent (+/0.7%) from the revised November level of $453.2 billion, and 6.8 percent (±0.9 percent) above the value of wholesale sales of a year earlier...the November preliminary sales estimate was revised up by $0.6 billion, which now means November sales were 0.5% (±0.5%) more than those of October, rather than 0.4% as reported last month....wholesale sales of durable goods were up 2.4 percent (+/-0.7%) from last month and were up 4.7 percent (+/-1.4%) from a year earlier, with wholesale sales of automotive equipment 5.5% higher than in November and wholesale sales of electrical and electronic goods up 3.7%...wholesale sales of nondurable goods were up by 2.8 percent (+/-0.8%) from November, and were up 8.7 percent (+/-1.4%) from last December, with wholesale sales of petroleum and petroleum products up 15.0%, and wholesale sales of apparel up 3.5% for the month...as an intermediate activity, wholesale sales are not included in GDP except as a trade service, since they do not represent an increase in the output of the goods sold....

on the other hand, the monthly change in private wholesale inventories is a major factor in GDP, as additional goods in a warehouse or “on the shelf” represent more goods that had been produced, and the Census estimated they were valued at $601.1 billion at the end of December, 1.0 percent (±0.4 percent) higher than the revised November level and 2.6 percent (±1.4 percent) above the valuation of last December's inventories...November's preliminary inventory estimate was revised but statistically unchanged from the previously reported $595.3 billion, and hence the November change in wholesale inventories remained at +1.0%.....wholesale durable goods inventories were up 0.7 percent (+/-0.4%) from November and were 0.8 percent (+/-0.8%) higher than a year earlier, as the value of automotive inventories was 2.0% higher, while the value of inventories of computers and related equipment was up 1.1%...inventories of nondurable goods were valued 1.4 percent (+/-0.7%) higher than in November and were valued 5.5 percent (+/-1.4%) higher than last November, as the value of inventories of petroleum and petroleum products was up 10.1% and the value of inventories of chemicals and chemical products was 3.3% higher than in November...

in the advance report on 4th quarter GDP of two weeks ago, wholesale inventories were estimated based on the sketchy Advance Report on Wholesale and Retail Inventories which was released just before the GDP release...that report estimated that our December wholesale inventories were valued at $601.1 billion, which just happens to be what this report shows...since the revisions to prior months were also statistically insignificant, that means that this report does not indicate any changes to the previously published figures on 4th quarter GDP.

Just Small Changes in Job Openings, Hiring, Layoffs and Quitting In December

the Job Openings and Labor Turnover Survey (JOLTS) report for December from the Bureau of Labor Statistics estimated that seasonally adjusted job openings decreased by 4,000, from 5,505,000 in November to 5,501,000 in December, after November job openings were revised 53,000 higher, from 5,451,000 to 5,505,000...December's jobs openings were 4.2% higher than the 5,281,000 job openings reported in December a year ago,  as the job opening ratio expressed as a percentage of the employed at 3.6% was down from the 3.7% logged in November, while it was unchanged from December a year ago...the health care and social assistance sector, with a 35,000 job opening increase to 1,100,000, saw the largest increase, while the accommodation and food services sector saw job openings decrease by 52,000 to 604,000 (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 December, seasonally adjusted new hires totaled 5,252,000, up by 40,000 from the revised 5,212,000 who were hired or rehired in November, as the hiring rate as a percentage of all employed remained unchanged at 3.6% in December, but was down from 3.8% in December a year earlier (details of hiring by sector since March are in table 2)....meanwhile, total separations fell by 50,000, from 5,018,000 in November to 4,968,000 in December, as the separations rate as a percentage of the employed fell from 3.5% to 3.4%, which also down from 3.6% in December a year ago (see table 3)...subtracting the 4,968,000 total separations from the total hires of 5,252,000 would imply an increase of 282,000 jobs in December, quite a few more than the revised payroll job increase of 157,000 for December reported in the January establishment survey last week and outside the expected +/-115,000 margin of error in these incomplete samplings, so one or both of these surveys was off by more than would normally be expected...

breaking down the seasonally adjusted job separations, the BLS finds that 2,979,000 of us voluntarily quit our jobs in December, down from the revised 3,077,000 who quit their jobs in November, while the quits rate, widely watched as an indicator of worker confidence, slipped back 0.1% to 2.0% of total employment, while it was also down from 2.2% a year earlier (see details in table 4)....in addition to those who quit, another 1,635,000 were either laid off, fired or otherwise discharged in December, up by 16,000 from the revised 1,619,000 who were discharged in November, as the discharges rate remained unchanged at 1.1% of all those who were employed during the month, which was down from the discharges rate of 1.2% a year earlier....meanwhile, other separations, which includes retirements and deaths, were at 355,000 in November, up from 322,000 in November, for an 'other separations rate’ of 0.2%, the same as in November bu down from 0.3% in December 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 picked from the aforementioned GGO posts, contact me…)

Sunday, February 5, 2017

January jobs report; December’s income and outlays, construction spending and factory inventories..

with the first Friday in February, the key economic release this week was the Employment Situation Summary for January from the Bureau of Labor Statistics...in addition, the week also saw the release of three December reports that included metrics which were either estimated or included in last week's advance estimate of 4th quarter GDP: the December report on Personal Income and Spending from the Bureau of Economic Analysis, and the December report on Construction Spending (pdf), and the Full Report on Manufacturers' Shipments, Inventories and Orders for December, both from the Census Bureau...the week also saw the January Dallas Fed Texas Manufacturing Outlook Survey, which reported their general business activity composite index rose to +22.1 from last month's +15.5, it's highest reading since April 2010, suggesting a return to booming growth in the boom-bust Texas oil patch economy...

the week’s privately issued reports included the ADP Employment Report for January, the light vehicle sales report for January from Wards Automotive, which estimated that vehicles sold at a 17.48 million annual rate in January, down 4.5% from the 18.29 million annual rate in December, but up slightly from the 17.46 million annual rate in January a year ago, and the Case-Shiller Home Price Index for November from S&P Case-Shiller, which reported that home prices nationally during September, October and November averaged 5.6% higher than prices for the same homes that sold during the same 3 month period a year earlier....in addition, the week saw both of the widely followed purchasing manager's surveys from the Institute for Supply Management (ISM): the January Manufacturing Report On Business indicated that the manufacturing PMI (Purchasing Managers Index) rose to 56.0% in January, up from 54.5% in September, which suggests a stronger expansion in manufacturing firms nationally, and the January Non-Manufacturing Report On Business; which saw the NMI (non-manufacturing index) slip to 56.4%, from 56.5% in December, indicating a marginally smaller plurality of service industry purchasing managers reported expansion in various facets of their business in January...both of those ISM reports are easy to read and include anecdotal comments from purchasing managers from the 34 business types who participate in those surveys nationally...

Employers Add 227,000 Jobs in January, Unemployment Rate Rises to 4.8%

the Employment Situation Summary for January indicated modest job creation over the month, offset by revisions to prior months, while the household survey saw upticks in those unemployed and those who had their hours reduced to part time…estimates extrapolated from the seasonally adjusted establishment survey data projected that employers added 227,000 jobs in January, after the previously estimated payroll job increase for November was revised down from 204,000 to 164,000, while the payroll jobs increase for December was revised up from 156,000 to 157,000…that means that this report represents a total of 188,000 more seasonally adjusted payroll jobs than were reported last month, a bit better than the 6 month average of 183,000 jobs per month, but below the past year's average of 195,000 jobs per month...the unadjusted data, however, shows that there were actually 2,948,000 fewer payroll jobs extant in January than in December, as the normal post holiday seasonal layoffs in areas such as retail, wholesale, goods transportation, leisure and hospitality were smoothed over by the seasonal adjustments..

as is usual for January, this report included the results of the annual benchmark revision, which revised prior reports and set March 2016 (the benchmark) at 143,673,000 payroll jobs, 60,000 less than previously reported, and which changed job totals for every month in 2016 by statistically insignificant amounts (as shown in Table A of the press release)...as a result, 2016 job growth totaled 2,242,000 payroll jobs, up from the previously published total of 2,157,000, while job growth in earlier years was revised slightly as well...since all the newly revised figures are incorporated into this months report as if previously reported totals had never been reported, that's the way we'll cover it...

seasonally adjusted job increases in January were spread through through both the goods producing and the private service sectors, with only the government sector seeing a loss as great as 10,000 jobs...after the seasonal adjustment which added 592,200 retail jobs, 45,900 adjusted jobs were added in the sector, with 18,300 of those in clothing stores...another 36,000 seasonally adjusted jobs were added in construction, with 11,300 of those working for residential specialty trade contractors...the broad professional and business services sector added 39,000 jobs, as temporary help agencies employed 15,000 more than in December and 12,500 jobs were added in computer systems design....in addition, employment in the finance sector increased by 32,000 jobs in January, with 10,200 more jobs in real estate, 9,000 more with insurance carriers, and 8,900 in credit intermediation... employment in health care and social assistance rose by 32,100, with the addition of 11,100 jobs in individual and family social assistance services...another 25,700 seasonally adjusted jobs were added in accommodation and food services, with the addition of 29,900 jobs in bars and restaurants...other major industries, including resource extraction, manufacturing, wholesale trade, and information all saw job gains of less than 10,000, while the transportation and warehousing sector shed a net of 4,000 employees..

the establishment survey also showed that average hourly pay for all employees rose by 3 cents an hour to $26.00 an hour in January, after it had increased by a revised 6 cents an hour in December; at the same time, the average hourly earnings of production and non-supervisory employees increased by 4 cents to $21.84 an hour...employers also reported that the average workweek for all private payroll employees was unchanged at 34.4 hours in January, while hours for production and non-supervisory personnel was unchanged at 33.6 hours for the sixth consecutive month...at the same time, the manufacturing workweek increased by 0.1 hour to 40.8 hours, while average factory overtime was down a tenth of an hour at 3.2 hours...

meanwhile, the January household survey indicated that the seasonally adjusted extrapolation of those who reported being employed fell by an estimated 30,000 to 152,081,000, while the estimated number of those unemployed rose by 106,000 to 7,635,000; which led to a 176,000 increase in the total labor force...however, the benchmark revision to the civilian noninstitutional population showed that December's population had been overstated by 660,000, which meant that population dependent metrics had to be adjusted for that revision....that meant the number of employment aged individuals who were not in the labor force was reduced to 94,366,000, the labor force participation rate increased up to 62.9%, and the employment to population ratio, which we could think of as an employment rate, rose to 59.9% in January.....at the same time, the increase in the number unemployed was large enough to increase the unemployment rate from 4.7% to 4.8%...meanwhile, the number of those who reported they were forced to accept just part time work rose by 242,000, from 5,598,000 in December to 5,840,000 in January, which was enough to raise the alternative measure of unemployment, U-6, which includes those "employed part time for economic reasons" by 0.2%, up to 9.4%of the labor force in January, from 9.2% in December ....

like most reports from the Bureau of Labor Statistics, the employment situation press release itself is easy to read and understand, so you can get more details on these two reports from there...note that almost every paragraph in that release points to one or more of the tables that are linked to on the bottom of the release, and those tables are also on a separate html page here that you can open it along side the press release to avoid the need to scroll up and down the page..  

December Personal Income Rose 0.3%, Personal Spending Rose 0.5%

the Monday release of the December Income and Outlays report from the Bureau of Economic Analysis was actually concurrent with the release of the advance report 4th quarter GDP on the prior Friday, and much of the data in this report has already been included in that report...and like that report, all the dollar values reported here are at an annual rate and seasonally adjusted, ie, they tell us what income, spending and saving would be for a year if December's adjusted income and spending were extrapolated over an entire year...however, the percentage changes are computed monthly, from one annualized figure to the next, and in this case of this month's report they give us the percentage change in each annualized metric from November to December....thus, when the opening line of the press release for this report tell us "Personal income increased $50.2 billion (0.3 percent) in December...", they mean that the annualized figure for all types of personal income in December, $16,290.2 billion, was $50.2 billion, or a bit more than 0.3% greater than the annualized personal income figure for November; the actual increase in personal income in December over November is not given....similarly, disposable personal income, which is income after taxes, also rose by a bit more than 0.3%, from an annual rate of $14,237.5 billion in November to an annual rate of $14,281.2 billion in December...

meanwhile, seasonally adjusted personal consumption expenditures (PCE) for December, which were included in the change in real PCE in 4th quarter GDP that we reviewed last week, rose at a $63.5 billion annual rate to a level of $13,032.1 billion in consumer spending annually, almost 0.5% higher than in November, which itself was slightly revised from the originally reported annual rate of $12,970.4 billion to $12,969.0 billion...the current dollar increase in December spending included a $37.8 billion annualized increase to an annualized $8,832.1 billion spending for services, an $19.7 billion increase to $1,450.4 billion in annualized spending for durable goods, and a $5.7 billion increase to $2,749.6 billion in annualized spending for non durable goods...total personal outlays for December, which includes interest payments, and personal transfer payments in addition to PCE, rose by an annualized $66.4 billion to $13,512.7 billion, which left personal savings, which is disposable personal income less total outlays, at a $768.4 billion annual rate in December, down from the revised $791.2 billion in annualized personal savings in November...as a result, the personal saving rate, which is personal savings as a percentage of disposable personal income, fell to 5.4%, from 5.6% in November, which itself was originally reported at 5.5%..

while our personal consumption expenditures accounted for 68.8% of our fourth quarter GDP, before they were included in the measurement of the change in our output they were first adjusted for inflation, to give us the real change in consumption, and hence the real change in goods and services that were produced for that consumption.....that's done with the price index for personal consumption expenditures, which is also included in this report, which is a chained price index based on 2009 prices = 100....from Table 9 in the pdf for this report, we find that that index rose from 111.475 in November to 111.651 in December, giving us a month over month inflation rate of 0.1579%, which the BEA reports as an increase of +0.2%….at the same time, Table 11 gives us a year over year PCE price index increase of 1.6%, and a core price increase, excluding food and energy, of 1.7% for the year, both still below the Fed's inflation target...applying the December inflation adjustment to the change in December PCE shows that real PCE was up 0.328%, which BEA reports as a 0.3% increase in their tables...note that when those PCE price indexes are applied to a given month's annualized current dollar PCE, it yields that month's annualized real PCE in chained 2009 dollars, which aren't really dollar amounts at all, but merely the means that the BEA uses to compare one month's or one quarter's real goods and services produced to another....those results are shown in tables 7 and 8 of the PDF, where the quarterly figures given are identical to those shown in table 3 in the GDP report, and which were used to compute the contribution of real personal consumption of goods and services to GDP...

Construction Spending Fell 0.2% in December after Prior Months Were Revised Higher

the Census Bureau's report on construction spending for December (pdf) estimated that the month's seasonally adjusted construction spending would work out to $1,181.5 billion annually if extrapolated over an entire year, which was 0.2 percent (±1.0%)* below the revised annualized November estimate of $1,184.4 billion, but 4.2 percent (±1.3%)* above the estimated annualized level of construction spending in December of last year...the annualized November construction spending estimate was revised 0.2% higher, from $1,182.1 billion to $1,184.4 billion, while the annual rate of construction spending for October was revised 0.6% higher, from $1,166.5 billion to $1,173.75 billion...for all of 2016, construction spending totaled $1,162.4 billion, 4.5 percent (±1.0%) above the $1,112.4 billion spent in 2015.

private construction spending was at a seasonally adjusted annual rate of $897.0 billion in December, 0.2 percent (±0.8%)* above the revised November estimate of $894.8 billion, with residential construction spending at an annual rate of $466.9 billion in December, 0.5 percent (±1.3%)* higher than the upwardly revised annual rate of $464.8 billion in November, while private non-residential construction spending at an annual rate of $430.1 billion was statistically unchanged (±0.8%)* from the revised November estimate of $430.1 billion, as construction of manufacturing facilities fell 3.5% to an annual rate of $68.1 billion ....at the same time, public construction spending was estimated to be at an annual rate of $284.5 billion, 1.7 percent (±1.8%)* below the revised November estimate of $289.6 billion, with public spending for education down 2.2 percent (±2.3%)* to an annual rate of $70.1 billion, and highway spending down 0.6% (±4.1%)* to an annual rate of $94.3 billion...

with the upward revisions, construction spending for all three months of the 4th quarter was higher than was reported by the BEA in their advance estimate last week....as we saw above, annualized construction spending for October was revised $7.25 billion higher, and annualized construction spending for November was revised $2.3 billion higher...in reporting 4th quarter GDP, the BEA's technical note (pdf) indicated that they had estimated December residential construction would be $2.2 billion more than that of the previously reported November figure, with single family construction valued at $249.4 billion and multifamily valued at $62.3 billion, and that December nonresidential construction would be $428.0 billion, $1.9 billion less than that of the reported November figure...with this report, December residential construction spending at a $466,938 million rate was up by $2.154 billion from the revised November figure, with new single family construction valued at $250,359 million annually and new multifamily construction at $63,725 million, while December nonresidential construction spending was at $430,053 billion, statistically unchanged from the revised November figure...hence, annualized total construction spending in December was roughly $4.5 billion more than the figures used by the BEA to compute 4th quarter GDP...therefore, the annualized figure for 4th quarter construction spending would have thus averaged $4.67 billion more than the figure used by the BEA when computing 4th quarter GDP, which would mean that this report implies a .12 percentage point upward revision to 4th quarter GDP...

Factory Shipments Up 1.3%, Inventories Up 0.1%

the Full Report on Manufacturers' Shipments, Inventories, & Orders for December (pdf) from the Census Bureau reported that the seasonally adjusted value of new orders for manufactured goods increased by $6.1 billion or 1.3 percent to $464.9 billion, the fifth increase in six months, following an decrease of 2.3% in November, which was revised from the 2.4% decrease reported last month....however, since the Census Bureau does not even collect data on new orders for non durable goods for this widely watched "factory orders report", both the "new orders" and "unfilled orders" sections of this report are really only useful as a revised update to the December advance report on durable goods we reported on a week ago...this report showed that new orders for manufactured durable goods fell by $1.1 billion or 0.5 percent to $227.1 billion in December, revised from the previously published 0.4% decrease to $227.0 billion, after durable goods orders for prior months were revised higher....

this report also indicated that the seasonally adjusted value of December factory shipments rose for the ninth time in ten months, increasing by $10.4 billion or 2.2 percent to $475.8 billion, following a 0.3% increase in November,  which revised from the previously published $0.3 billion, 0.1% decrease...shipments of durable goods were up by $3.3 billion or 1.4 percent to $238.1 billion, essentially unrevised from the increase that was published last week...meanwhile, the value of shipments (and hence of "new orders") of non-durable goods were up by $7.2 billion, or 3.1%, to $237.8 billion, after November shipments were revised 0.4% higher, as a $5.4 billion, 14.0% increase in the value of shipments of petroleum and coal accounted for the increase...

meanwhile, the aggregate value of December factory inventories rose for the fifth time in six months, increasing by $0.6 billion or 0.1 percent to $625.6 billion, after a November increase of 0.5%...December inventories of durable goods decreased in value by $0.3 billion or 0.1 percent to $383.9 billion, revised down from last week's published "virtually unchanged increase”, following a revised 0.2% increase in November durable inventories.....the value of non-durable goods' inventories rose by $0.9 billion or 0.4 percent to $241.7 billion, following a revised 1.1% increase in November non-durable inventories...however, the BEA's technical note for 4th quarter GDP indicates that they had estimated that the value of non-durable goods inventories would increase at a seasonally adjusted annual rate of $16.9 billion, so that would indicate that they overestimated the 4th quarter GDP inventory component by about $6.1 billion annualized, which would imply that 4th quarter GDP will have to be adjusted downwards by 0.15 percentage points to account for what this report shows..

 

(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…)