Sunday, May 19, 2019

April retail sales, industrial production and new housing starts; March business inventories

Regular monthly reports that were released this week included the Retail Sales report for April and the Wholesale Trade, Sales and Inventories report for March, both from the Census Bureau, the April report on Industrial Production and Capacity Utilization from the Fed, the April report on New Residential Construction from the Census Bureau, and the Regional and State Employment and Unemployment Summary for April and the April Import-Export Price Index, both from the Bureau of Labor Statistics...the week also saw the release of the first two regional Fed manufacturing surveys for May: 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 +17.8, up from +10.1 in April, indicating an accelerating pace of growth for 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 +16.6 in May from +8.5 in April, indicating a larger plurality of the region's manufacturing firms also reported increases in their activity this month..

Retail Sales Down 0.2% in April after Negligible Revisions to Prior Months Sales

Seasonally adjusted retail sales decreased by 0.2% in April after retail sales March were revised slightly higher while sales for February were revised slightly lower ...the Advance Retail Sales Report for April (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $513.4 billion for the month, which was a decrease of 0.2 percent (±0.5%)* from revised March sales of $514.3 billion but 3.1 percent (±0.7 percent) above the adjusted sales of April of last year...March sales were originally reported at $514.1 billion, up 1.6% from February; they are now indicated to have risen 1.7% to $514.3 billion...February adjusted sales were concurrently revised from $506.1 billion to $505.8 billion....those revisions would have a negligible impact on 1st quarter GDP, since the downward revision to February sales virtually offsets the upward revision to March sales...estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated unadjusted sales fell 2.3%, from $520,027 in March to $507,985 in April, while they were up 5.0% from the $483,951 million of sales in April a year ago....

We are again including below the table of monthly and yearly percentage changes in sales by business type taken from the Census marts pdf....the first double column below gives us the seasonally adjusted percentage change in sales for each type of retail business type from March to April in the first column, and then the year over year percentage change for those businesses since last April in the 2nd column; the second pair of columns gives us the revision of last month’s March advance monthly estimates (now called "preliminary") as revised in this report, likewise for each business type, with the February to March change under "Feb 2019 r (revised)" and the revised March 2018 to March 2019 percentage change in the last column shown...for your reference, our copy of the table of last month’s advance March estimates, before this report's revision, is here....

April 2019 retail sales table

To compute April's real personal consumption of goods data for national accounts from this April retail sales report, the BEA will use the corresponding price changes from the April consumer price index, which we reviewed when it was released last week...to estimate what they will find, we’ll first separate out the volatile sales of gasoline from the other totals...from the third line on the above table, we can see that March retail sales excluding the 1.8% price-related increase in sales at gas stations were down by 0.4%....then, pulling the 0.2% increase in grocery & beverage sales and the 0.2% increase in food services sales out from that total, we find that core retail sales were down by nearly 0.6% for the month...since the April CPI report showed that the the composite price index of all goods less food and energy goods was 0.3% lower in April, we can thus figure that real retail sales excluding food and energy will show an decrease of around 0.3%...however, the actual adjustment in national accounts for each of the types of sales shown above will vary by the change in the related price index…for instance, while nominal sales at motor vehicle & parts dealers were down 1.1%, the April price index for transportation commodities other than fuel was 0.4% lower, with prices for new cars and trucks 0.1% higher while prices for used cars and trucks fell 1.3%, which would suggest that real unit sales at auto & parts dealers were probably on the order of 0.7% lower once price decreases are taken into account... on the other hand, while nominal sales at clothing stores were 0.2% lower in April, the apparel price index was 0.8% lower, which means that real sales of clothing likely rose around 0.6%...

In addition to figuring those core retail sales, to make an estimate we'll need to adjust food and energy retail sales for their price changes separately, just as the BEA will do…the April CPI report showed that the food price index was 0.1% lower, as the price index for food purchased for use at home fell 0.5% while the index for food bought away from home was 0.3% higher...thus, while nominal sales at food and beverage stores were 0.2% higher, real sales of food and beverages would have been around 0.7% higher in light of the 0.5% lower prices…on the other hand, the 0.2% increase in nominal sales at bars and restaurants, once adjusted for 0.3% higher prices, suggests that real sales at bars and restaurants actually fell around 0.1% during the month...and while sales at gas stations were up 1.8%, there was a 5.7% increase in price of gasoline during the month, which would suggest that real sales of gasoline were down on the order of 3.9%, with a caveat that gasoline stations do sell more than gasoline, and the price index for motor oil, coolant, and fluids was 5.2% lower, which renders our estimates for real gasoline station sales questionable.…so considering those questionable real gas station sales as flat and excluding food services, we’d estimate that the income and outlays report for April will show that real personal consumption of goods fell by around 0.1% in April, after rising by a revised 1.5% in March, but after falling by a revised 0.6% in February and rising by 0.6% in January...at the same time, the 0.1% decrease in real sales at bars and restaurants would have a negligible impact on April's real personal consumption of services...

Industrial Production Falls 0.5% in April after Prior Months Revised Lower

Industrial production decreased in April after production for the prior three months was revised lower...the Fed's G17 release on Industrial production and Capacity Utilization for April reported that industrial production fell 0.5% in April after rising by a revised 0.2% in March, which left our total output a scant 0.9% higher than a year ago...the industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, came in at 109.2 in April, after the March index value was revised from the 110.2 reported last month down to 109.7, the February index was revised from 110.3 to 109.6, and the January index was revised down from 110.2 to 110.1...

The manufacturing index, which accounts for more than 77% of the total IP index, also fell 0.5% to 104.7 in April, after the March manufacturing index was revised from 105.5 to 105.2, the February index was revised from 105.6 to 105.2, the January index was revised up from 105.9 to 105.7, and the December index was revised from 106.5 to 106.4...with the output of automotive products now 3.5% lower than a year ago and the index for appliances and furniture 5.1% lower, the manufacturing index is now 0.2% below its year ago level....meanwhile, the mining index, which includes oil and gas well drilling, rose 1.6%, from 130.3 in March to 132.4 in April, after the March index was revised down from from the originally reported 131.2, which left the mining index 10.4% higher than it was a year earlier...finally, the seasonally adjusted utility index, which typically fluctuates due to deviations from normal temperatures, fell by 3.5% due to our warmer than normal April, from 107.4 to 103.7, after the March utility index was revised from 108.4 to 107.4, now up 2.2% from February, because the February index was revised from 108.2 to 105.1, now up just 1.0% from January....after this month's revisions, the utility index is now 4.7% below that of a year ago, largely due to a much colder April last year than this year..

This report also includes capacity utilization stats, which are expressed as a percentage of our plant and equipment that was in use during the month…seasonally adjusted capacity utilization for total industry fell to 77.9% in April from 78.5% in March, after capacity utilization for March was revised down from 78.8%, and  capacity utilization for both January and February were also revised lower...capacity utilization of NAICS durable goods production facilities fell from a revised 76.1% in March to 75.3% in April, while capacity utilization for non-durables producers fell from a revised 77.2% to 77.1%...capacity utilization for the mining sector rose to 91.4% in April from 90.3% in March, which was previously reported as 90.9%, while utilities were operating at 76.2% of capacity during April, down from their 79.1% of capacity during March, which was previously reported at 79.9%...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..  

March Business Sales Rose 1.6%, Business Inventories Were Unchanged

After the release of the April retail sales report, the Census Bureau also released the composite Manufacturing and Trade, Inventories and Sales report for March  (pdf), which incorporates the revised March retail data from that April retail report and the earlier published March wholesale and factory data to give us a complete picture of the business impact on 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 $1,470.1 billion in March, up 1.6 percent (±0.2 percent) from February's revised sales, and up 3.7 percent (±0.3 percent) from March sales of a year earlier...note that total February sales were concurrently revised up from the originally reported $1,446.8 billion to $1,447,237 million, now a 0.2% increase from January....manufacturer's sales rose 0.7% to $509,701 million in March; retail trade sales, which exclude restaurant & bar sales from the revised March retail sales reported earlier, rose 1.8% to $453,019 million, while wholesale sales rose 2.3% to $507,371 million...

Meanwhile, total manufacturer's and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $2,018.1 billion at the end of March, statistically unchanged (±0.1%) from the end of February, but 5.0 percent (±0.5 percent) higher than in March a year earlier...the value of end of February inventories was revised from the $2,017.4 billion reported last month to $2,017.8 billion, still 0.3% higher than January's inventory valuation....seasonally adjusted inventories of manufacturers were estimated to be valued at $690,862 million, up 0.4% from February, while inventories of retailers were valued at $657,414 million, 0.3% less than in February, and while inventories of wholesalers were estimated to be valued at $669,816 million at the end of March, 0.1% less than in February...

We had previously figured that there would be little impact on 1st quarter GDP based on the inventory change the wholesales report showed, and that 1st quarter GDP was underestimated by around 0.07 percentage points based on what the factory inventories report showed...  BEA's Key source data and assumptions (xls) that accompanied the release of the advance estimate of 1st quarter GDP indicates that they had estimated that the value of retail inventories March would increase by $2.2 billion before adjustment with the PPI, so the $2.1 billion decrease that this report shows means that they overestimated the 1st quarter retail inventory component at an annual rate of around $8.6 billion….with a minimal inflation adjustment , that would imply that the contribution of the retail inventory component of 1st quarter GDP was overestimated by around 0.18 percentage points, so after netting out the 3 inventory changes, this report indicates there should be a downward adjustment of around 0.11 percentage points to 1st quarter GDP when the 2nd estimate is released at the end of May...

April Housing Starts and Building Permits Reported Higher

The April report on New Residential Construction (pdf) from the Census Bureau estimated that new housing units were being started at a seasonally adjusted annual rate of 1,235,000 in April, which was 5.7 percent (±13.0 percent)* above the revised March estimated rate of 1,168,000 annually, but was still 2.5 percent (±10.4 percent)* below last April's rate of 1,267,000 housing starts a year...the asterisks indicate that the Census does not have sufficient data to determine whether housing starts actually rose or fell during April, or even over the past year, with the figures in parenthesis the most likely range of the change indicated; in other words, April housing starts could have been down by 8.3% or up by as much as 18.7% from those of March, with revisions of a greater magnitude in either direction from that range possible...with this report, the annual rate for March housing starts was revised from the 1,139,,000 reported last month to 1,168,000, while February starts, which were first reported at a 1,162,000 annual rate, were revised from last month's initial revised figure of 1,142,000 annually to a 1,149,000 annual rate with this report....

These annual rates of housing 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 114,100 housing units were started in April, up from the 95,800 housing units that were started in March and the 80,000 housing units that were started in February...of those housing units started in April, an estimated 81,200 were single family homes and 31,000 were units in structures with more than 5 units, up from the revised 67,300 single family starts in March and up from the 27,500 units started in structures with more than 5 units in March...

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 April, Census estimated new building permits for housing units were being issued at a seasonally adjusted annual rate of 1,296,000, which was 0.6 percent (±2.6 percent)* above the revised March rate of 1,288,000, but was still 5.0 percent (±1.4 percent) below the rate of building permit issuance in April a year earlier...the annual rate for housing permits issued in March was revised from 1,269,000 to 1,288,000....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 119,300 housing units were issued in April, up from the revised estimate of 105,700 new permits issued in March.... for graphs and commentary on this report, see the following two posts by Bill McBride at Calculated Risk: Housing Starts Increased to 1.235 Million Annual Rate in April and Comments on April 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 picked from the aforementioned GGO posts, contact me…)      

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