Sunday, January 14, 2018

December's consumer & producer prices and retail sales; November's business inventories and job openings survey

reports released this past week included the the December Consumer Price Indexthe December Producer Price Index and the December Import-Export Price Index from the Bureau of Labor Statistics, and reports on Retail Sales for DecemberWholesale Trade, Sales and Inventories for November, and Business Sales and Inventories for November, all from the Census Bureau...in addition, the BLS also released the Job Openings and Labor Turnover Survey (JOLTS) for November and the Fed released the Consumer Credit Report for November...the later showed that overall consumer credit, a measure of non-real estate debt, expanded by a seasonally adjusted $27.9 billion, or at a 8.8% annual rate, as non-revolving credit expanded at a 7.2% rate to $2,804.5 billion and revolving credit outstanding rose at a 13.3% rate to $1,022.7 billion (NB: Zero Hedge reports the November credit expansion was a 16 year high; see their graph below)...this week's major private report was the Mortgage Monitor for November (pdf) from Black Knight Financial Services, which indicated that 4.55% of US mortgages were delinquent in November, up from 4.44% in October and up from 4.46% in November a year ago, and that 0.66% of all mortgages were in the foreclosure process at the end of the month, down from 0.68% of mortgages in October and down from the 0.98% of mortgages that were in foreclosure in November a year ago...

November 2017 consumer credit

December Consumer Prices up 0.1% as Lower Energy Costs offset Higher Rents

the consumer price index increased by just 0.1% in December, as higher prices for food and shelter were partially offset by lower prices for energy and clothing... the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that the seasonally adjusted price index rose 0.1% in December after it had risen 0.4% in November, 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, actually fell to 246.524 in December to 246.669 in November, which left it statistically 2.109% higher than the 241.432 index reading of last December, which is reported as a 2.1% year over year increase...with a large decrease in energy prices the major drag on this month's index, seasonally adjusted core prices, which exclude food and energy, rose by 0.3% for the month, with the unadjusted core index rising from 253.492 to 253.558, which put it 1.776% ahead of its year ago reading of 249.227, which is rounded to a 1.8% increase...

the volatile seasonally adjusted energy price index fell by 1.2% in December, after it had risen by 3.9% in November, 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 2.5% lower while the index for energy services rose by 0.3%, after rising by 0.6% in November....the decrease in the energy commodity index was led by a 2.7% drop in the retail price of gasoline, the largest component, while the price of fuel oil rose 3.0%, and while prices for other fuels, including propane, kerosene and firewood, fell by an average of 0.6%…nonetheless, energy commodities are still priced 10.8% above their year ago levels, with gasoline prices averaging 10.7% higher than they were a year ago…within energy services, the index for utility gas service rose by 1.2% after rising 0.6% in November and 0.3% in October, and hence utility gas is now priced 4.7% higher than it was a year ago, while the electricity price index rose by 0.1%, after rising 0.5% in November and in October...as a result, the energy services price index is now 3.1% higher than last November, as even electricity prices have increased by 2.6% over that period.

the seasonally adjusted food price index rose 0.2% in December, after being unchanged in October and November, 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 had been unchanged in each of the prior 6 months, as the index for food purchased for use at home was 0.1% higher in December, while prices for food bought to eat away from home were 0.2% higher, as prices at fast food outlets rose 0.1% and prices at full service restaurants rose 0.2%, while food prices at schools rose 4.1%...

in the food at home categories, the price index for cereals and bakery products increased by 0.2%, as prices for bread rose 0.7%, prices for cakes and cookies rose 0.7%, and prices for biscuits, rolls and muffins rose 1.2%...the price index for the meats, poultry, fish, and eggs group was up 0.9% as egg prices rose 3.8 %, poultry prices rose 1.6%, and beef and veal prices rose 1.2%, while at the same time the index for dairy products was 0.4% lower on a 0.5% decrease in the price of fresh whole milk...the fruits and vegetables index was 0.2% lower on a 0.7% decrease in prices for fresh fruits and a 2.1% decrease in prices for canned vegetables....on the other hand, the beverages index was 1.5% higher as roast coffee prices rose 2.5% and noncarbonated juices and drink prices rose 1.7%....lastly, prices in the ‘other foods at home’ category were 0.1% lower on average, as butter prices fell 1.4% and peanut butter prices were 4.0% lower....among food at home line items, only eggs, which were up 11.6% over 2017, have seen a price change greater than 10% over the past year...the itemized list for price changes in over 100 separate food items is included at the beginning of Table 2, which gives us a line item breakdown for prices of more than 200 CPI items overall...

among the seasonally adjusted core components of the CPI, which rose by 0.3% in December after rising by 0.1% in November, 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 rose by 0.2%, 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 December retail sales for inflation in national accounts data, the index for household furnishings and supplies was 0.1% higher on a 2.2% increase in the index for major appliances, while floor covering prices fell 1.9%...the apparel price index was 0.5% lower on a 5.3% decrease in prices for women's outerwear, a 3.3% decrease in prices for men's footwear, and a 4.8% decrease in prices for watches....on the other hand, prices for transportation commodities other than fuel were up 0.9%, as prices for used cars were up 1.4% while prices for new cars rose 0.7%...at the same time, prices for medical care commodities were 1.0% higher on a 1.0% increase in prescription drug prices, while the recreational commodities index was 0.4% lower on another 1.2% drop in TV prices, a 5.4% drop in the index for audio equipment, and a 1.7% decrease in the index for toys, games, hobbies and playground equipment....meanwhile, the education and communication commodities index was down 0.6%, on a 1.2% decrease in prices for college textbooks and a 1.2% decrease in prices for computer software and accessories...lastly, a separate price index for alcoholic beverages was unchanged, while the price index for ‘other goods’ was down 0.6% on a 0.9% decrease in the index for cosmetics, perfume, bath, nail preparations and implements and a 1.3% decrease in the index for stationery, gift wrap and other personal paper supplies..

within core services, which rose by 0.3%, the price index for shelter rose 0.4% on a 0.4% increase in rents, a 0.3% increase in homeowner's equivalent rent, and a 0.8% increase in costs for lodging away from home at hotels and motels, while the sub-index for water, sewers and trash collection rose 0.3% and other household operation costs were on average unchanged....at the same time, the index for medical care services was up 0.2%, as prices for physicians' services rose 0.3% and hospital services were also priced 0.3% higher...meanwhile, the transportation services index was 0.3% higher on a 0.7% increase in car and truck rental and 0.6% higher motor vehicle insurance....the recreation services index rose 0.3% as video discs and other media services rose 3.4% and the index for club membership for shopping clubs, fraternal, or other organizations, or participant sports fees rose 0.9%, while the index for education and communication services rose 0.2% as delivery services rose 0.4% and land line telephone services rose 0.7%...lastly, the index for other personal services was up 0.2% as the index for financial services rose 0.9%...among core line items, only prices for audio equipment, which are now 16.2% lower than last December, 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 nothing has seen prices rise by a double digit magnitude over that span...

Retail Sales Up 0.4% in December after Prior Months Revised Higher

seasonally adjusted retail sales increased in December after retail sales for October and November were revised higher...the Advance Retail Sales Report for December (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $495.4 billion during the month, which was up 0.4 percent (±0.5%)* from November's revised sales of $493.6 billion and 5.4 percent (±0.7 percent) above the adjusted sales in December of last year...November's seasonally adjusted sales were revised up from $492.7 billion to $493.6 billion, while October's sales were also revised higher, from $488.9 billion to $489.47 billion; as a result, the October to November change was revised up from up 0.8 percent (±0.5%) to up 0.9 percent (±0.2%), and the year over year increase for the 4th quarter came in at 5.5%.....estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated sales rose 12.8%, from $500,177 million in November to $563,953 million in December, while they were up 4.0% from the $542,055 million of sales in December a year ago, so we can see how the large seasonal adjustment to holiday sales brought the headline sales into line vis-a-vis the large holiday sales increase that one would normally expect in December...

since it's the end of the quarter and the end of the year for retail sales, we'll include the entire table from this report showing retail sales by business type, including the quarter over quarter data...again, to explain what this table shows, the first double column below shows us the seasonally adjusted percentage change in sales for each kind of business from the November revised figure to this month's December "advance" report in the first sub-column, and then the year over year percentage sales change since last December in the 2nd column; the second double column pair below gives us the revision of the November advance estimates (now called "preliminary") as of this report, with the new October to November percentage change under "Oct 2017 r" (revised) and the November 2016 to November 2017 percentage change as revised in the 2nd column of the pair (for your reference, the table of last month’s advance estimate of November sales, before this month's revisions, is here).... then, the third pair of columns shows the percentage change of the most recent 3 months of this year's sales (October, November and December) from the preceding three months of the 3rd quarter (July, August and September) and then from the same three months (October, November and December) of a year earlier....that first column of the last pair thus gives us a snapshot comparison of 3rd quarter sales to fourth quarter sales, which is useful in estimating the impact of this report on 4th quarter GDP after adjusting those sales for inflation….

December 2017 retail sales table

the important thing to keep in mind when viewing this table of the nominal percentage change in retail sales for each of the categories above is how much they are impacted by changes in price...for instance, although we know that seasonally adjusted sales at vehicle and parts dealers rose 0.2% to $102,064 million, we also know from the CPI report that prices for used cars rose 1.4% and prices for new cars rose 0.7%, which when combined with sales of tires and parts left the transportation commodities index 0.9% higher...applying that price increase to nominal sales would thus suggest that real sales at vehicle and parts dealers were 0.7% lower for the month...on the other hand, while we see that sales at clothing stores were down 0.3%, the apparel price index was 0.5% lower the same time, suggesting that real sales at clothing stores were 0.2% higher...for December retail sales as a whole, both the food price index and the composite price index of all goods less food and energy goods rose by 0.2%, suggesting that real retail sales, ex gasoline, rose at a 0.2% pace for the month...

Producer Prices Down 0.1% in December on Lower Gas Station Margins

the seasonally adjusted Producer Price Index (PPI) for final demand fell 0.1% in December, as prices for finished wholesale goods were on average unchanged, while margins of final services providers decreased by 0.2%...this followed a November report that indicated the overall PPI had increased by 0.4%, as prices for finished goods had increased 1.0%, while margins of final services providers increased by 0.2%, and an October report that showed the overall PPI had increased by 0.4%, as prices for finished goods increased 0.3%, while margins of final services providers increased by 0.5%....excluding food, energy and trade services, core producer prices were up 0.1% in December, after rising 0.4% in November and 0.2% in both October and September...on an unadjusted basis, producer prices thus ended 2017 2.6% higher than a year earlier, with the core producer price index 2.3% higher for the year, up from an overall PPI increase of 1.7% and a core PPI increase of 1.8% during 2016...

as we noted, the price index for final demand for goods, aka 'finished goods', was unchanged in December, after rising 1.0% in November, 0.3% in October, and by a revised 0.6% in both September and in August...the index for wholesale energy prices was unchanged after it had jumped 4.6% in November, and after it had been unchanged in October, but after rising a revised 3.6% in September and a revised 3.3% in August, while the price index for wholesale foods fell 0.7% and the index for final demand for core wholesale goods (ex food and energy) was 0.2% higher...the wholesale energy price increase was unchanged because a 3.9% decrease in the wholesale price of gasoline was offset by 13.3% higher wholesale prices for heating oil and 0.8% higher residential natural gas, while for wholesale foods, higher prices for pork and chicken were more than offset by a 6.3% drop in wholesale prices for beef and veal and a 7.8% decrease in the index for fresh and dry vegetables....among wholesale core goods, prices for basic organic chemicals rose 3.9% while the wholesale price index for household appliances was down 0.9%…

at the same time, the index for final demand for services fell 0.2% in December, after rising 0.2% in November, 0.5% in October, and a revised 0.2% in both August and September, as the December index for final demand for trade services fell 0.6%, the index for final demand for transportation and warehousing services fell 0.4%, while the index for final demand for services less trade, transportation, and warehousing services was 0.1% higher....among trade services, seasonally adjusted margins for fuels and lubricants retailers decreased 10.7% and margins for TV, video, and photographic equipment and supplies retailers fell 5.8%, while margins for major household appliance retailers rose 5.8%... among transportation and warehousing services, margins for airline passenger services were 4.3% higher and margins for truck transportation of freight rose 0.9%...in the core final demand for services index, the index for inpatient care rose 0.7% and the index for deposit services (partial) rose 3.8%..

this report also showed the price index for intermediate processed goods was 0.5% higher, after rising 0.5% in November, 1.0% in October, and a revised 0.5% in both August and September....the price index for intermediate energy goods rose 0.8% as refinery prices for jet fuel rose 9.1% and residual fuels rose 13.4%, while prices for intermediate processed foods and feeds fell 0.1% as processed meat prices fell 2.4% while processed poultry prices rose 1.6%....the core price index for processed goods for intermediate demand less food and energy was 0.5% higher on a 3.1% increase in the index for plastic resins and materials and a 1.3 % increase in prices for plastic packaging products...prices for intermediate processed goods are now 5.1% higher than in November a year ago, now the fourteenth 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 2.1% in December, after rising 3.2% in November, being unchanged in October, but after falling a revised 0.5% in September and a revised 1.2% in August....the price index for crude energy goods rose 4.7% as raw natural gas prices rose 13.7% and crude oil prices rose 1.8%, while the index for unprocessed foodstuffs and feedstuffs rose 0.5%, as prices for slaughter hogs rose 6.0% and prices for raw milk rose 4.5%...in addition, the index for core raw materials other than food and energy materials rose 1.4%, as prices for iron and steel scrap rose 7.6% and prices for wastepaper rose 3.0%...this raw materials index is now up 5.2% from a year ago, but down by more than half from the year over year increase of 10.6% that we saw in November...

lastly, the price index for services for intermediate demand fell 0.1% in December after rising 0.7% in November, 0.3% in October, but after falling a revised 0.2% in September and rising a revised 0.4% in August...the index for trade services for intermediate demand was unchanged, as margins for metals, minerals, and ores wholesalers rose 1.5% while margins for intermediate retailers of automotive parts including tires fell 1.5%…the index for transportation and warehousing services for intermediate demand was also unchanged, as the intermediate index for transportation of passengers (partial) fell 1.4% and truck transportation of freight rose 0.9%...at the same time, the core price index for services less trade, transportation, and warehousing for intermediate demand was 0.1% higher, as margins for for loan services (partial) dropped 5.4%...over the 12 months ended in December, the year over year price index for services for intermediate demand, which has never turned negative on an annual basis, is still 2.9% higher than it was a year ago...

November Business Sales Up 1.2% Business Inventories Up 0.4%

after the release of the December retail sales report, the Census Bureau released the composite Manufacturing and Trade, Inventories and Sales report for November (pdf), which incorporates the revised November retail data from that December report and the earlier published November 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 $1,420.1 billion in November, up 1.2 percent (±0.2%) from October's revised sales, and up 7.9 percent (±0.3%) from November sales of a year earlier...note that total October sales were concurrently revised up from the previously reported $1,400.8 billion to $1,403.2 billion, now up 0.8% from September....manufacturer's sales rose 1.2% to $491,177 million in November; retail trade sales, which exclude restaurant & bar sales from the revised November retail sales reported earlier, rose 0.9% to $436,500 million, and wholesale sales rose 1.5% to $492,385 million.

meanwhile, total manufacturer's and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $1,895.4 billion at the end of November, up 0.4 percent (±0.1%)* from October, and 3.2 percent (±0.3%) higher than in November a year earlier...at the same time, the value of end of October inventories was revised from the $1,885.7 billion reported last month to $1887.2 billion....seasonally adjusted inventories of manufacturers were estimated to be valued at $666,149 million, up 0.4% from October, while inventories of retailers were valued at $650,235 million, 0.1% more than in October, and inventories of wholesalers were estimated to be valued at $617,721 million at the end of November, 0.8% higher than in October...

Job Openings and Hiring Decrease In November, Layoffs and Quitting Little Changed

the Job Openings and Labor Turnover Survey (JOLTS) report for November from the Bureau of Labor Statistics estimated that seasonally adjusted job openings decreased by 46,000, from 5,925,000 in October to 5,879,000 in November, after October job openings were revised 71,000 lower, from 5,996,000 to 5,925,000...November's jobs openings were 4.4% higher than the 5,631,000 job openings reported in November a year ago, as the job openings ratio expressed as a percentage of the employed fell to 3.8% in November from 3.9% October, while it was still up from 3.7% in November a year ago....the largest decrease in November openings was a 60,000 job opening decrease to 150,000 openings in the transportation, warehousing, and utilities sector, while the retail trade sector saw openings increase by 88,000 to 711,000 (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 November, seasonally adjusted new hires totaled 5,488,000, down by 104,000 from the revised 5,592,000 who were hired or rehired in October, as the hiring rate as a percentage of all employed fell to 3.7% in November from 3.8% October, while it was still up from 3.6% in November a year ago (details of hiring by sector since March are in table 2)....meanwhile, total separations fell by 49,000, from 5,251,000 in October to 5,202,000 in November, as the separations rate as a percentage of the employed fell from 3.6% to 3.5%, which was the same rate as in November a year ago (see table 3)...subtracting the 5,202,000 total separations from the total hires of 5,488,000 would imply an increase of 282,000 jobs in November, a bit more than the revised payroll job increase of 252,000 for November reported in the December establishment survey last week, but still within the expected +/-115,000 margin of error in these incomplete samplings...

breaking down the seasonally adjusted job separations, the BLS finds that 3,174,000 of us voluntarily quit our jobs in November, down by 13,000 from the revised 3,187,000 who quit their jobs in October, while 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 1,686,000 were either laid off, fired or otherwise discharged in November, down by 7,000 from the revised 1,693,000 who were discharged in October, as the discharges rate still managed to slip to 1.1% of all those who were employed during the month, which was the same as the discharges rate of 1.1% a year earlier....meanwhile, other separations, which includes retirements and deaths, were at 341,000 in November, down from 372,000 in October, for an 'other separations rate’ of 0.2%, which was down from 0.3% in October but the same as in November 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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