Sunday, July 14, 2019

June’s consumer & producer prices; May’s wholesale inventories & JOLTS

Major reports released this past week included the June Consumer Price Index, the June Producer Price Index, and the Job Openings and Labor Turnover Survey (JOLTS) for May, all of which came from the Bureau of Labor Statistics, and the May report on Wholesale Trade, Sales and Inventories from the Census Bureau....the week also saw the Consumer Credit Report for May from the Fed, which indicated that overall consumer borrowing expanded by a seasonally adjusted $17.1 billion, or at a 5.0% annual rate, as non-revolving credit expanded at a 3.9% rate to $3,016.2 billion while revolving credit outstanding grew at a 8.2% rate to $1,071.7 billion...

Consumer Prices Up 0.1% in June on Higher Housing & Clothing Costs

The consumer price index was 0.1% higher in June, as lower prices for groceries and energy partially offset higher prices for housing, clothing, used vehicles, and most services ...the Consumer Price Index  Summary from the Bureau of Labor Statistics indicated that seasonally adjusted prices rose by 0.1% in June after rising 0.1% in May, 0.3% in April, 0.4% in March, 0.2% in February, and after it had been unchanged in January, in December and in November, and had risen 0.3% in October, 0.1% in September, 0.1% in August, and 0.2% last July...the unadjusted CPI-U index, which was set with prices of the 1982 to 1984 period equal to 100, rose from 256.092 in May to 256.143 in June, which left it statistically 1.648% higher than the 251.989 index reading of June of last year, which is reported as a 1.6% year over year increase....with flat prices for food and lower prices for energy offsetting the overall index, seasonally adjusted core prices, which exclude food and energy, rose by 0.3% for the month, as the unadjusted core price index rose from 262.590 to 263.177, which left the core index 2.127% ahead of its year ago reading of 257.697, which is reported as a 2.1% year over year increase, up from the 2.0% year over year increase shown in May...

The volatile seasonally adjusted energy price index fell 2.3% in June, after falling 0.6% in May, rising 2.9% in April, rising 3.5% in March, rising 0.4% in February, falling 3.1% in January, falling 2.6% in December, falling 2.8% in November, rising by 2.1% in October, and falling by 1.0% in September, and is now 3.4% lower than in June a year ago...the price index for energy commodities was 3.5% lower in June, while the index for energy services fell 0.7%, after falling by 0.8% in May....the energy commodity index was down 3.5% due to a 3.6% decrease in the price of gasoline, the largest component, and a 2.3% decrease in the index for fuel oil, while prices for other energy commodities, including propane, kerosene, and firewood, averaged 1.7% lower...within energy services, the price index for utility gas service fell 0.3% after falling 1.0% in May and is now 2.1% lower than it was a year ago, while the electricity price index fell 0.8% for the second month in a row....energy commodities are now 5.4% lower than their year ago levels, with gasoline prices also averaging 5.4% lower than they were a year ago, while the energy services price index is 0.7% lower than last June, as electricity prices are now also 0.3% lower than a year ago…

The seasonally adjusted food price index was unchanged in June, after rising 0.3% in May, falling 0.1% in April, but after rising 0.3% in March, 0.4% in February, 0.2% in January, 0.3% in December, 0.2% in November, being unchanged in October, rising 0.1% in September, 0.1% in August, and 0.1% last July, as the price index for food purchased for use at home fell 0.2% in June, while the index for food bought to eat away from home was 0.3% higher, as prices at fast food outlets were unchanged while prices at full service restaurants rose 0.6% and food  at employee sites and schools were on average 0.9% higher...

In the food at home categories, the price index for cereals and bakery products was 0.6% lower as average bread prices fell 1.0%, the price index for sweetrolls, coffeecakes, doughnuts fell 1.3%, and the price index for fresh biscuits, rolls, & muffins fell 1.5%...at the same time, the price index for the meats, poultry, fish, and eggs group was 0.7% lower, as beef and veal prices fell 1.3%, ham prices fell 4.0%, egg prices fell 2.0%, and fresh fish & seafood prices averaged 1.1% lower...on the other hand, the seasonally adjusted index for dairy products was 0.3% higher, even as ice cream prices fell 2.2%, as milk prices rose by an average of 0.5% on a 1.4% increase in prices for fresh whole milk...meanwhile, the fruits and vegetables index was 0.5% lower on a 1.4% decrease in the price index for fresh vegetables, led by a 3.0% drop in potato prices....in addition, the beverages index was 0.6% lower, even though roast coffee prices rose 2.2%, as carbonated drink prices were 2.0% lower and the index for other beverage materials including tea fell 1.3%...lastly, the index for the ‘other foods at home’ category was 0.7% higher, as the index for sugar and sweets rose 1.3%, peanut butter prices rose 3.2%, and the snack food index rose 0.7%....the itemized list for price changes of over 100 separate food items is included at the beginning of Table 2 for this release, which also gives us a line item breakdown for prices of more than 200 CPI items overall...since last June, just prices for eggs, which are down 12.4% from a year ago, is the only line item in the ‘food at home’ category with a price change of more than 10% over the past year...

Among the seasonally adjusted core components of the CPI, which rose by 0.3% in June after rising by 0.1% in May, 0.1% in April, 0.1% in March, 0.1% in February, and by 0.2% for the five months prior to that, after rising by 0.1% in August 0.2% in July, and by 0.2% last June, the composite price index of all goods less food and energy goods was 0.4% higher, 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 June retail sales for inflation in national accounts data, the price index for household furnishings and supplies was up 0.3%, as the price index for dishes and flatware rose 6.1%, the price index for living room, kitchen, and dining room furniture rose 1.3%, while the price index for laundry equipment was 0.7% lower....at the same time, the apparel price index was 1.1% higher on a 6.3% increase in the price index for women's outerwear, a 6.8% increase in the index for girl's apparel and a 2.0% increase in the price index women's footwear... in addition, the price index for transportation commodities other than fuel was 0.6% higher as prices for new cars rose 0.2%, prices for used cars and trucks rose 1.6%, and the index for motor oil, coolant, and fluids rose 0.7%...on the other hand, prices for medical care commodities averaged 0.2% lower as prescription drugs prices fell 0.6%....meanwhile, the recreational commodities index was 0.1% lower on a 2.4% decrease in TV prices, even as the index for photographic equipment and supplies rose 1.1% and the price index for sports vehicles including bicycles rose 1.0%....in addition, the education and communication commodities index was 0.8% lower on a 1.6% decrease in the index for computers, peripherals, and smart home assistant devices and a 0.8% decrease in the index for telephone hardware, calculators, and other consumer information items...lastly, a separate price index for alcoholic beverages was 0.3% higher, while the price index for ‘other goods’ fell 0.3% on a 1.7% decrease in the price index for miscellaneous personal goods...

Within core services, the price index for shelter rose 0.3% on a 0.3% increase in rents, a 0.3% increase in homeowner's equivalent rent, and despite a 0.7% decrease in lodging away from home at hotels and motels, as the shelter sub-index for water, sewers and trash collection rose 0.3%, and household operation costs were on average 2.8% higher on a 6.1% increase in gardening and lawncare services....at the same time, the price index for medical care services was 0.4% higher, as dental services rose 1.1% and health insurance rose 1.3%...meanwhile, the transportation services index was unchanged as car and truck rentals rose 4.0% while ship fares fell 2.9% and airline fares fell 0.9%....the recreation services price index was 0.2% lower as the index for photo processing fell 1.8% and the index for entertainment admissions fell 0.9%....on the other hand, the index for education and communication services was 0.2% higher as child care and nursery school tuitions rose 0.4% and technical and business school tuition and fees rose 0.5%....lastly, the index for other personal services was up 0.1% as the price index for apparel services other than laundry and dry cleaning rose 1.0%...among core line items, prices for televisions, which are now 19.7% cheaper than a year ago, and the price index for telephone hardware, calculators, and other consumer information items, which is down by 14.0% since last June, have both seen prices drop by more than 10% over the past year, while the cost of health insurance, which is now up by 13.7% over the past year, and the price index for infants' furniture, which has increased 11.3% year over year, are the only line items to have increased by a double digit magnitude over that span....

Producer Prices Up 0.1% in June on Higher Margins for Trade Services

the seasonally adjusted Producer Price Index (PPI) for final demand was up 0.1% in June, as prices for finished wholesale goods decreased 0.4%, while margins of final services providers increased by 0.4%...this followed a May report that indicated the PPI was 0.1% higher, as prices for finished wholesale goods averaged 0.2% lower while average margins of final services providers rose 0.3%, an April report that had the PPI 0.2% higher, as prices for finished wholesale goods averaged 0.3% higher, while average margins of final services providers rose 0.1%, a revised March report that showed the PPI had increased by 0.6%, with prices for finished wholesale goods up 1.0% and margins of final services providers up 0.3%, and a revised February report that showed the PPI had increased by 0.2%, with prices for finished wholesale goods on average 0.3% higher, while margins of final services providers rose by 0.2%....on an unadjusted basis, producer prices are 1.7% higher than a year ago, down from the 1.8% year over year increase that had been indicated by last month's report...meanwhile, the core producer price index, which excludes food, energy and trade services, was unchanged for the month, and is now 2.1% higher than in June a year ago, down from the 2.3% YoY increase shown for May...

As we noted, the price index for final demand for goods, aka 'finished goods', was 0.4% lower in June, after being 0.2% lower in May, 0.3% higher in April, 1.0% higher in March, 0.3% higher in February, 0.6% lower in January, 0.6% lower in December, 0.5% lower in November, 0.8% higher in October, and 0.1% lower in September....the finished goods index fell in June because the price index for wholesale energy was 3.6% lower, after falling 1.0% in May, rising 1.8% in April and 5.6% in March, while the price index for wholesale foods rose 0.6% after falling 0.3% in May, and while the index for final demand for core wholesale goods (excluding food and energy) was unchanged for the third month in a row....wholesale energy prices fell on a 5.0% decrease in wholesale prices for gasoline, a 13.3% drop in wholesale prices for diesel fuel, and 22.2% lower wholesale prices for liquefied petroleum gas, while the wholesale food price index rose on a 24.7% increase in wholesale prices for fresh eggs, a 19.9% increase in wholesale corn, and a 13.7% increase in wholesale prices for fresh fruits and melons....among wholesale core goods, the wholesale price index for industrial chemicals rose 0.6% while wholesale prices for iron and steel scrap fell 8.9%..

At the same time, the index for final demand for services rose 0.4% in June, after rising 0.3% in May, 0.1% in April, 0.3% in March, and 0.2% in February, as the index for final demand for trade services rose 1.3% in June and the index for final demand for transportation and warehousing services rose 0.3%, while the core index for final demand for services less trade, transportation, and warehousing services was unchanged.... among trade services, seasonally adjusted margins for fuels and lubricants retailers rose 12.2%, margins for health, beauty, and optical goods retailers rose 4.0%, margins for computer hardware, software, and supplies retailers rose 2.2%, and margins for automobile retailers rose 3.1%, while margins for cleaning supplies and paper products retailers fell 2.6%... among transportation and warehousing services, margins for truck transportation of freight rose 1.0% and margins for airline passenger services  fell 0.6%...among the components of the core final demand for services index, margins for consumer loan services (partial) rose 2.5% while margins for traveler accommodation services fell 4.0%..

This report also showed the price index for intermediate processed goods fell 1.1% in June, after falling 0.2% in May, 0.1% in April, rising a revised 0.7% in March, and rising a revised 0.1% in February...the price index for intermediate energy goods fell 4.9%, as refinery prices for gasoline fell 5.0% and refinery prices for residual fuels fell 14.8%, while producer prices for liquefied petroleum gas fell 22.2%...at the same time, prices for intermediate processed foods and feeds fell 0.3%, as the producer price index for meats fell 2.6%... in addition, the core price index for intermediate processed goods less food and energy fell 0.1% as producer prices for steel mill products decreased 2.0% and producer prices for softwood lumber fell 1.7%... prices for intermediate processed goods are now 2.7% lower than in June a year ago, the second year over year decrease following 29 months of year over year increases, which had been preceded by 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 fell 3.3% in June, after falling 5.1% in May, rising 2.7% in April, but after the previously reported 2.3% March increase was revised to unchanged, while the February decrease was revised from 4.7% to 2.5%....that was as the May price index for crude energy goods fell 7.2% as crude oil prices fell 14.7%, and as the price index for unprocessed foodstuffs and feedstuffs fell 0.1% as an 18.5% decrease in producer prices for slaughter hogs and a 10.1% drop in producer prices for slaughter chickens were mostly offset by a 19.9% increase in producer prices for corn...at the same time, the index for core raw materials other than food and energy materials fell 0.5%, as wastepaper prices fell 15.8% and prices for iron & steel scrap declined 8.9%...this raw materials index is now 11.0% lower than a year ago, the largest year over year decrease in more than 3 years...

Lastly, the price index for services for intermediate demand rose 0.2% in June, after being unchanged in May, rising 0.3% in April, 0.4% in March, being unchanged in February, rising 0.2% in January, and rising 0.1% in December and in November...the price index for intermediate trade services was 1.1% higher, as margins for intermediate paper and plastic product wholesalers rose 1.3% and margins for intermediate machinery and equipment parts and supplies wholesalers rose 2.5%…at the same time, the index for transportation and warehousing services for intermediate demand rose 0.1%, as the intermediate index for truck transportation of freight rose 1.0% while the intermediate index for air transportation of freight fell 0.6%...meanwhile, the core price index for intermediate services less trade, transportation, and warehousing also rose 0.1%, as the index for radio advertising time sales rose 2.2% and the intermediate index for loan services rose 2.1% while the index for portfolio management dropped 1.8%....over the 12 months ended in June, the year over year  price index for services for intermediate demand, which has never turned negative on an annual basis, is now 2.6% higher than it was a year ago...

Job Openings, Hiring, Firings, and Job Quitting All Down in May

The Job Openings and Labor Turnover Survey (JOLTS) report for May from the Bureau of Labor Statistics estimated that seasonally adjusted job openings fell by 49,000, from 7,372,000 in April to 7,323,000 in May, after April’s record job openings were revised 126,000 lower, from 7,449,000 to 7,323,000...May jobs openings were still 2.8% higher than the 7,126,000 job openings reported in May a year ago, while the job opening ratio expressed as a percentage of the employed fell from 4.7% in April to 4.6% in May, which is the same as it was in May a year ago...the greatest drop in May job openings was in the transportation, warehousing, and utilities sector, where openings fell by 60,000 to 295,000, while job openings in health care and social assistance rose by 87,000 to 1,194,000 (see table 1 for more details)...like most BLS releases, the press release for 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 May, seasonally adjusted new hires totaled 5,725,000, down by 266,000 from the revised 5,991,000 who were hired or rehired in April, as the hiring rate as a percentage of all employed fell from 4.0% to 3.8%, and was also down from the hiring rate of 3.9% in May a year earlier (details of hiring by industry since January are in table 2)....meanwhile, total separations also fell, by 192,000, from 5,687,000 in April to 5,495,000 in May, while the separations rate as a percentage of the employed fell from 3.8% to 3.6%, while it was also down from the separations rate of 3.7% in May a year ago (see table 3)...subtracting the 5,495,000 total separations from the total hires of 5,725,000 would imply an increase of 230,000 jobs in May, quite a bit more than the revised payroll job increase of 72,000 for May reported by the June establishment survey last week, and outside the expected +/-115,000 margin of error in these incomplete samplings, so one or both of these surveys is off on job creation data by a statistically significant amount for the 2nd month in a row...

Breaking down the seasonally adjusted job separations, the BLS reports that a record 3,425,000 of us voluntarily quit their jobs in May, down by 91,000 from the revised 3,516,000 who quit their jobs in April, while the quits rate, widely watched as an indicator of worker confidence, remained unchanged at 2.3% of total employment, while it was still up from 2.2% a year earlier (see details in table 4)....in addition to those who quit, another 1,760,000 were either laid off, fired or otherwise discharged in May, down by 70,000 from the revised 1,830,000 who were discharged in April, as the discharges rate remained at 1.2% of all those who were employed during the month, same as the 1.2% discharges rate of a year earlier....meanwhile, other separations, which includes retirements and deaths, were at 310,000 in May, down from 341,000 in April, for an 'other separations' rate of 0.2%, same as in April and as in May a year ago....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...

May Wholesale Sales Up 0.1%, Wholesale Inventories Up 0.4%

The May report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at $503.4 billion in May, up 0.1 percent (+/-0.4%) from the revised April level, and up 0.4 percent (±0.9 percent)* from the value of wholesale sales in May 2018... the April preliminary estimate of wholesale sales was revised from the $503.1 billion reported a month ago to $502.9 billion, which left the March to April percent change unrevised from the preliminary estimate of down 0.4 percent (±0.5%)* ...as an intermediate activity, wholesale sales are not included in GDP except insofar as they are a trade service, since the traded goods themselves do not represent an increase in the output of the goods produced or finally sold....

On the other hand, the monthly change in private inventories is a major factor in GDP, as any goods left on the shelf or in intermediate storage represent goods that were produced but not sold, and this May report estimated that wholesale inventories were valued at a seasonally adjusted $678.1 billion at month end, an increase of 0.4 percent (+/-0.2%) from the revised April level and 7.7 percent (±1.1 percent) higher than in May a year ago, with the April preliminary estimate revised from $675.5 billion to $675.7 billion at the same time, still a 0.8% increase from March...

For national accounts purposes, May wholesale inventories will be adjusted for price changes by category with the appropriate components of the May producer price index, which indicated a 0.2% decrease in prices for finished goods, a 0.2% increase in prices for intermediate goods, and a 5.1% decrease in prices for unprocessed goods....thus there will be at least a 0.6% real increase in May wholesale inventories, following the modest real increase we had figured for April...nonetheless, those increases do not appear to be enough to exceed the increase in real first quarter inventories, which had been the largest jump since the second quarter of 2015, and hence it still seems that slower growth in inventories will have a negative impact on 2nd quarter GDP...

 

(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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