Sunday, February 18, 2018

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

this week saw the release of seven of the regular monthly agency reports, namely the Retail Sales report for January and Business Sales and Inventories for December from the Census Bureau, the January Consumer Price Indexthe January Producer Price Index and the January Import-Export 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 fell to +13.1, down from +17.7 in January, suggesting decelerating growth in First District manufacturing....meanwhile, the Philadelphia Fed Manufacturing Survey, covering most of Pennsylvania, southern New Jersey, and Delaware, reported their broadest diffusion index of manufacturing conditions rose to +25.8 in February from a  reading +22.2 in January, indicating an larger plurality of that region's manufacturing firms reported increases in their activity this month..

January Consumer Prices Rise 0.5% on Higher Fuel, Clothing, and Medical Services

the consumer price index increased by 0.5% in January, led by higher prices for fuels, clothing and medical services….the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that the seasonally adjusted price index for urban consumers rose 0.5% in January after it had risen 0.1% in December, 0.4% in November, 0.1% in October, 0.5% in September, 0.4% in August, and 0.1% in July....the unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, rose from 246.524 in December to 247.867 in January, which left it statistically 2.071% higher than the 241.432 index reading of last January, which is reported as a 2.1% year over year increase...with a large increase in energy prices a major reason for this month's CPI increase, seasonally adjusted core prices, which exclude food and energy, rose by 0.3% for the month, with the unadjusted core index rising from 253.558 to 254.638, which put it 1.821% ahead of its year ago reading of 250.083, which is rounded to a 1.8% increase...

the volatile seasonally adjusted energy price index rose by 3.0% in January, after it had fallen by 0.2% in December, but after it had risen by 3.2% in November and by 2.0% in October, and is now 5.5% higher than in January a year ago....prices for energy commodities were 5.8% higher for the month, while the index for energy services fell by 0.8%, after rising by 0.4% in December....the increase in the energy commodity index was led by a 5.7% increase in the retail price of gasoline, the largest component, while the price of fuel oil rose 9.5%, and while prices for other fuels, including propane, kerosene and firewood, rose by an average of 2.2%…as a result, energy commodities are now priced 9.0% above their year ago levels, with gasoline prices averaging 8.5% higher than they were a year ago…within energy services, the index for utility gas service fell by 2.6% after rising 1.0% in December and 0.7% in November, leaving utility gas priced just 0.2% higher than it was a year ago, while the electricity price index fell by 0.2%, after rising 0.2% in December and 0.5% in November...the energy services price index is now 1.9% higher than last January, as electricity prices have increased by 2.4% over that period...

the seasonally adjusted food price index rose 0.2% in January, after rising 0.2% in December, 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% last January, as the index for food purchased for use at home was 0.1% higher in January, while prices for food bought to eat away from home were 0.4% higher, as prices at fast food outlets rose 0.5% and prices at full service restaurants rose 0.2%, while other food prices away from home rose 0.8%...

in the food at home categories, the price index for cereals and bakery products increased by 0.3%, even as prices for bread fell 0.5%, as prices for cakes and cookies rose 1.6%, and prices for rice rose 1.9%...the price index for the meats, poultry, fish, and eggs group was down 0.2% as poultry prices fell 1.3% and beef and veal prices fell 1.2%, while at the same time the index for dairy products was unchanged despite a 1.2% decrease in the price of fresh whole milk...the fruits and vegetables index was 0.5% higher on a 1.9% increase in prices for fresh fruits and a 2.1% increase in prices for canned vegetables....meanwhile, the beverages index was unchanged as roast coffee prices fell 2.6% while noncarbonated juices and drink prices rose 1.0%....lastly, prices in the ‘other foods at home’ category was also unchanged, as peanut butter prices rose 1.6% while frozen and freeze dried prepared food prices were 1.5% lower....among food at home line items, only tomatoes, which have risen 16.5% since last January, 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 January after rising by 0.3% in December, 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 0.4%, 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 was 0.2% higher on a 4.1% increase in the index for window and floor coverings and a 3.4% increase in prices for laundry equipment...the apparel price index was 1.7% higher on a 4.8% increase in prices for women's suits and separates, a 4.5% increase in prices for boy's apparel, and a 4.2% increase in prices for men's shirts and sweaters....at the same time, prices for transportation commodities other than fuel were up 0.2%, as prices for used cars and trucks were up 0.4% and prices for tires rose 0.6%...on the other hand, prices for medical care commodities were 0.1% lower on a 0.2% decrease in prescription drug prices, while the recreational commodities index was 0.3% lower on another 3.8% drop in TV prices and a 1.8% decrease in the index for toys....meanwhile, the education and communication commodities index was 0.8% higher, on a 2.5% increase in the index for telephone hardware, calculators, and other consumer information items and a 2.9% increase 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 up 0.5% on a 1.4% increase in the index for miscellaneous personal goods..

within core services, which rose by 0.3%, the price index for shelter rose 0.2% on a 0.3% increase in rents and a 0.3% increase in homeowner's equivalent rent, while costs for lodging away from home at hotels and motels fell 2.5%, the sub-index for water, sewers and trash collection rose 0.2%, and other household operation costs were on average 1.5% higher....at the same time, the index for medical care services was up 0.6%, as prices for eyeglasses and eye care rose 0.9% and hospital services were priced 1.2% higher...meanwhile, the transportation services index was 0.8% higher on a 1.3% increase in car and truck leasing, 1.3% higher prices for motor vehicle insurance, and 1.5% higher parking....the recreation services index rose 0.1% as video discs and other media services rose 5.4% while film processing fell 4.1%, while the index for education and communication services was unchanged as delivery services rose 1.5% while tuition and fees at technical and business schools fell 0.3%...lastly, the index for other personal services was up 0.4% as the index for legal services rose 1.1% and tax return preparation and other accounting fees rose 0.8%...among core line items, the index for toys, which has now fallen 10.0% over the past year, the index for clocks, lamps, and decorator items, which has fallen 10.8%, prices for infants furniture, which are down 11.9%, prices for televisions, which are now 10.7% cheaper than a year ago, the index for audio equipment, which is now 15.1% lower than last January, and prices for wireless phone services, which are still 10.2% lower than a year ago, have all 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 Down 0.3% in January after November and December Revised Lower

seasonally adjusted retail sales decreased 0.3% in January after retail sales for November and December were revised lower...the Advance Retail Sales Report for January (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $492.0 billion during the month, which was down 0.3 percent (±0.5%) from December's revised sales of $493.3 billion but 3.6 percent (±0.7%) above the adjusted sales in January of last year...December's seasonally adjusted sales were revised down from $495.4 billion to $493.3 billion, while November's sales were also revised lower, from $493.6 billion to $493,168 million; as a result, the November to December change was revised up from up 0.4 percent (±0.5%)* to virtually unchanged (±0.3 percent)*.....the revisions to November and December sales would indicate that 4th quarter personal consumption expenditures were lower at a rate greater than a $10.1 billion annually, which would thereby reduce 4th quarter GDP by at least 0.23 percentage points....estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated sales actually fell 20.9%, from $541,774 million in December to $444,632 million in January, while they were up 5.1% from the $423,111 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, compared to the big sales decrease that would normally 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 2017 r" (revised) and the December 2016 to December 2017 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 2018 retail sales table

even with nominal sales down 0.3% for the month, this January report is worse than it looks, because prices for most items were higher...as we saw when we reviewed the CPI report, the composite price index for all goods except food and energy was 0.4% higher, which means real gross sales of such core goods averaged 0.7% lower for the month; particularly had hit were clothing stores, which saw sales decrease 0.5% despite the 1.7% increase in prices for apparel...outside of core goods, we'd note that gas station sales were down 0.6% despite a 5.7% increase in the retail price of gasoline, suggesting a large drop in real sales of gasoline...similarly, we see that sales at restaurants and bars were down 0.1% despite a 0.4% increase in prices for food away from home, implying a 0.5% drop in real sales at bars and restaurants...even groceries stores would have seen a decrease in real sales, as nominal sales were unchanged with 0.1% higher prices...

Industrial Production Slips 0.1% in January on 'Mining' Slowdown

the Fed's G17 release on Industrial production and Capacity Utilization indicated that industrial production fell by 0.1% in January after rising by a revised 0.4% in December, which left it 3.7% higher than a year ago...the industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, fell to 107.2 in January from 107.3 in December, after the December index was revised from 107.5 to 107.3 and the November index was revised from the 106.5 reported last month to 106.9....as a result, industrial production grew 0.3% in November, rather than falling 0.1%, while industrial production grew 0.4% in December rather than the 0.9% growth that was previously reported...

the manufacturing index, which accounts for more than 77% of the total IP index, rose from 104.7 to 104.8 in January but was reported unchanged, after the December index was revised from 105.0 to 104.7, the November index was revised from 104.9 to 104.8, and the September index was revised from 103.1 to  103.2, while the October index remained at 104.6....meanwhile, the mining index, which includes oil and gas well drilling, fell from 113.5 in December to 112.4 in January after the December index was revised down from 113.6, which still left the mining index 8.8% higher than it was a year earlier...finally, the utility index, which often fluctuates due to above or below normal temperatures, rose 0.6% in January, from 108.5 to 109.2, after the December utility index was revised from 108.1 to 108.5...with January 2018’s heating requirements somewhat above those of January 2017, the utility index is now 10.8% higher 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 for total industry fell to 77.5% in January from 77.7% in December, which was revised from the 77.9% that was reported last month ...capacity utilization of NAICS durable goods production facilities was unchanged at 76.1% in January, while capacity utilization for non-durables producers rose from an downwardly revised 77.5% to 77.4%...capacity utilization for the mining sector fell to 84.2% in January from 85.6% in December, which was originally reported as 86.5%, while utilities were operating at 81.1% of capacity during January, up from their 80.8% of capacity during December, which was previously reported at 80.4%...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....

Producer Prices Up 0.4% in January on Higher Priced Energy

with the release of the Producer Price Index for January 2018 from the BLS, price changes over 2017 were recalculated to reflect seasonal adjustment factors that changed over the year; hence all prior months that we'll refer to in reviewing this release have been revised to reflect those changes....for January, the seasonally adjusted Producer Price Index (PPI) for final demand rose 0.4%, as prices for finished wholesale goods increased by 0.7%, while margins of final services providers increased by 0.3%...this followed a revised December report that indicated the overall PPI was on average unchanged, as prices for finished goods rose by 0.1%, while margins of final services providers decreased by 0.1%, and a revised November report that showed the overall PPI had increased by 0.4%, as prices for finished goods had increased 0.9%, while margins of final services providers increased by 0.2%....excluding food, energy and trade services, core producer prices were also up 0.4% in January, after rising 0.1% in December, 0.3% in both November and October and 0.2% in September...on an unadjusted basis, producer prices are now 2.7% higher than a year earlier, with the core producer price index 2.5% higher for the year, up from the year over year figures of 2.6% for the PPI and 2.3% for core indicated last month..

as noted, the price index for final demand for goods, aka 'finished goods', was up 0.4% in January, after being unchanged in December, rising 0.9% in November, 0.2% in October, 0.6% in September and 0.5% in August...the price index for wholesale energy was up 3.4% in January after rising 0.5% in December and 3.6% in November, while the price index for wholesale foods fell 0.2% and the index for final demand for core wholesale goods (ex food and energy) was 0.2% higher...driving the wholesale energy price index increase was a 7.7% increase in the wholesale price of gasoline and 5.5% higher wholesale prices for heating oil, while wholesale residential natural gas prices fell 2.7%...for wholesale foods, higher prices for vegetables and grain were more than offset by a 36.7% drop in wholesale prices for fresh eggs....among wholesale core goods, prices for construction machinery and equipment fell 2.1% while the wholesale price index for household appliances was up 2.0%…

at the same time, the index for final demand for services rose 0.3% in January, after falling 0.1% in December, rising 0.2% in November, 0.5% in October, and by 0.2% in both August and September, as the January index for final demand for trade services rose 0.3%, the index for final demand for transportation and warehousing services rose 0.4%, while the index for final demand for services less trade, transportation, and warehousing services was also 0.4% higher....among trade services, seasonally adjusted margins for TV, video, and photographic equipment retailers increased 10.3% while margins for chemicals and chemical products wholesalers fell 2.3%... among transportation and warehousing services, margins for airline passenger services were 1.6% lower and margins for truck transportation of freight rose 1.4%...in the core final demand for services index, the index for hospital inpatient care rose 1.0% while the index for cell phone and wireless telecommunication services fell 2.6%..

this report also showed the price index for intermediate processed goods was 0.7% higher, after rising 0.5% in December, 0.5% in November, 0.7% in October, and 0.6% in September....the price index for intermediate energy goods rose 2.5% as refinery prices for jet fuel rose 8.1% and prices for unblended gasoline rose 7.1%, while prices for intermediate processed foods and feeds fell 0.3% as the processed eggs index fell 13.2%...meanwhile, the core price index for processed goods for intermediate demand less food and energy was 0.3% higher on a 4.4% increase in the index for primary nonferrous metals and a 5.4% increase in prices for copper and brass mill shapes....prices for intermediate processed goods are now 4.6% higher than in January a year ago, now the fifteenth 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 0.9% in January, after rising 1.9% in December, 3.0% in November, but after falling 0.3% October....the price index for crude energy goods rose 0.5% as raw natural gas prices fell 13.1% while crude oil prices rose 11.6%, while the index for unprocessed foodstuffs and feedstuffs fell 0.8%, as prices for slaughter cattle fell 4.5% and prices for raw milk fell 6.3%...at the same time, the index for core raw materials other than food and energy materials rose 3.8%, as prices for iron and steel scrap rose 12.9% and prices for copper base scrap rose 3.8%...this raw materials index is now up by just 2.5% from a year ago, in contrast to the year over year increase of 10.6% that we saw in November...

lastly, the price index for services for intermediate demand rose 0.1% in January after being unchanged in December, rising 0.5% in November, 0.3% in October, and 0.2% in September...the index for trade services for intermediate demand was down 0.3%, as margins for chemicals and allied products wholesalers fell 2.3% while margins for intermediate wholesalers of paper and plastics products rose 2.4%…the index for transportation and warehousing services for intermediate demand rose, as the intermediate index for long-distance truck transportation of freight rose 1.4%...at the same time, the core price index for services less trade, transportation, and warehousing for intermediate demand was 0.1% higher, as the index for securities brokerage, dealing, investment advice rose 1.6% while the index for internet advertising sold by non-print publishers fell 6.3%....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...

December Business Sales Up 0.6%, 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 $1,431.3 billion in December, up 0.6 percent (±0.3%) from November's revised sales, and up 6.7  percent (±0.4%) from December sales of a year earlier...note that total November sales were concurrently revised up from the originally reported $1,420.1 billion to $1,422.763 billion, now up 1.4% from October....manufacturer's sales rose 0.6% to $495,401 million in December; retail trade sales, which exclude restaurant & bar sales from the revised December retail sales reported earlier, fell 0.1% to $435,673 million, and wholesale sales rose 1.2% to $500,220 million...

meanwhile, total manufacturer's and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $1,902.2 billion at the end of December, up 0.4 percent (±0.1%) from November, and 3.2 percent (±0.3 percent) higher than in December a year earlier...at the same time, the value of end of November inventories was revised from the $1,895.4 reported last month to $1,895.1 billion....seasonally adjusted inventories of manufacturers were estimated to be valued at $669,232 million, up 0.5% from November, while inventories of retailers were valued at $620,850 million, 0.2% more than in November, and inventories of wholesalers were estimated to be valued at $612,122 million at the end of December, 0.4% higher than in November...

January Housing Starts and Building Permits Both Reported Higher

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 1,326,000, which was 9.7 percent (±16.8 percent)* above the revised estimated December annual rate of 1,209,000, and was 7.3 percent (±15.0 percent)* above last January's rate of 1,236,000 housing starts annually...however, the asterisks indicate 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 7.1% or up by as much as 26.5% from those of December, with revisions of a greater magnitude in either direction possible...in this report, the annual rate for December housing starts was revised from the 1,192,000 reported last month to 1,209,000, while November starts, which were first reported at a 1,297,000 annual rate, were unrevised from last month's initial revised figure of 1,299,000 annually....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 90,100 housing units were started in January, up from the 81,300 units that were started in December, but down from the 97,900 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 1,396,000, which was 7.4 percent (±1.2 percent) above the revised December rate of 1,300,000 permits, and also 7.4 percent (±1.9 percent) above the 1,300,000 a year rate of building permit issuance in January a year earlier...the annual rate for housing permits issued in December was revised down from the originally reported 1,302,000....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 98,100 housing units were issued in January, up from the revised estimate of 93,100 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 increased to 1.326 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…)   

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