Sunday, December 4, 2022

2nd Estimate of 3rd Quarter GDP

Major economic reports released this week included the Employment Situation Summary for November and the Job Openings and Labor Turnover Survey (JOLTS) for October, both from the Bureau of Labor Statistics, the 2nd estimate of 3rd quarter GDP and the October report on Personal Income and Spending, both from the Bureau of Economic Analysis, and the October report on Construction Spending (pdf)...

3rd Quarter GDP Grew at a 2.9% Rate, Revised from 2.6%, on Upward Revisions to PCE Goods, Fixed Investment, and Exports

The Second Estimate of our 3rd Quarter GDP from the Bureau of Economic Analysis indicated that our real output of goods and services grew at a 2.9% annual rate over the quarter, revised from the 2.6% growth rate reported in the advance estimate a month ago, as both personal consumption expenditures for goods and fixed investment shrunk less than was previously estimated, and net exports and government grew more than was previously reported, more than offsetting a downward revision to private inventories....in current dollars, our third quarter GDP grew at a 7.33% annual rate, increasing from what would work out to be a $25,248.5 billion a year output rate in the 2nd quarter to a $25,699.0 billion annual rate in the 3rd quarter, with the headline 2.9% annualized rate of increase in real output arrived at after annualized GDP inflation adjustments averaging 4.3% were computed from the price changes of the components and applied to their current dollar change....that "GDP deflator" had been reported at 4.1% in the advance estimate..

As we review this month's revisions, remember that the GDP news release reports all quarter over quarter percentage changes at an annual rate, which means that they're expressed as a change a bit over 4 times of that what actually occurred from one 3 month period to the next, and that the prefix "real" is used to indicate that each change has been adjusted for inflation using price changes chained from 2012, and then that all percentage changes in this report are calculated from those 2012 dollar figures, which would be better thought of as a quantity indexes than as any reality based dollar amounts....for our purposes, all the data that we'll use in reporting the changes here comes directly from the pdf for the 2nd estimate of 3rd quarter GDP, which we find linked on the BEA GDP landing page, a page which also offers links to just the GDP tables on Excel and other technical notes...specifically, we reference table 1, which shows the real percentage change in each of the GDP components annually and quarterly since the 4th quarter of 2018; table 2, which shows the contribution of each of the components to the GDP change for those quarters and years; table 3, which shows both the current dollar value and inflation adjusted value of each of the GDP components; and table 4, which shows the change in the price indexes for each of the components....the pdf for the 3rd quarter advance estimate, which this estimate revises, is here...

Growth of real personal consumption expenditures (PCE), the largest component of GDP, was revised from the 1.4% growth rate that was shown in the advance estimate to a 1.7% rate in this 2nd estimate…that growth rate figure comes from deflating the 6.061% growth rate in the dollar amount of consumer spending with the PCE price index, which indicated personal consumption inflation grew at a 4.3% annual rate in the 3rd quarter, which was revised from the 4.2% PCE inflation rate reported a month ago...real consumption of durable goods shrunk at a 0.3% annual rate, which was revised from the 0.8% contraction rate shown in the advance report, and subtracted 0.04 percentage points from the GDP growth rate, as real consumption of motor vehicles and parts shrunk at a 12.1% annual rate and more than offset growth in other durable goods....real consumption of nondurable goods by individuals shrunk at a 0.1% annual rate, which was revised from the 1.4% contraction rate reported in the 1st estimate, and subtracted 0.01 percentage points from the 3rd quarter’s economic growth rate, as decreased consumption of food and beverages and of gasoline offset growth in consumption of other non-durables....at the same time, consumption of services rose at a 2.7% annual rate, revised from the 2.8% growth rate reported last month, and added 1.22 percentage points to the final GDP growth tally, as health care services grew at a 5.0% rate and accounted for nearly half of the quarter’s broad based growth in services...

Meanwhile, seasonally adjusted real gross private domestic investment shrunk at a 9.1% annual rate, which was revised from the 8.5% contraction rate reported a month ago, as real private fixed investment shrunk at a 4.1% rate, revised from the 4.9% contraction rate reported in the advance estimate, while the negative change in inventory investment was greater than previously estimated...investment in non-residential structures was revised to show contraction at a 6.9% rate, not as steep as the 15.3% contraction rate previously reported, and subtracted 0.18 percentage points from the 3rd quarter's growth rate, while real investment in equipment grew at 10.7% rate, revised from the 10.8% rate shown in last month's estimate and added 0.53 percentage points to the growth rate of 3rd quarter GDP....at the same time, the quarter's investment in intellectual property products was revised from growth at a 6.9% rate to growth at a 5.8% rate, and added 0.31 percentage points to GDP growth, while real residential investment was shown to be shrinking at a 26.8% annual rate, revised from the 26.4% contraction rate shown in the previous report, and that contraction in residential investment subtracted 1.40 percentage points from the growth rate of GDP...

At the same time, investment in real private inventories grew by an inflation adjusted $49.6 billion in the 3rd quarter, revised from the originally reported inventory growth at an inflation adjusted $61.9 billion rate...that came after inventories had grown at an inflation adjusted $110.2 billion rate in the 2nd quarter, and hence the $60.6 billion negative change in real inventory growth from that of the 2nd quarter reduced the growth of investment and subtracted 0.97 percentage points from the 2nd quarter's growth rate, revised from the 0.70 percentage point subtraction to GDP growth due to lower inventory growth shown in the advance estimate.....however, since growth in inventories indicates that more of the goods produced during the quarter would have been left in storage or "sitting on the shelf”, the $60.6 billion reduction in their growth conversely means real final sales of GDP were actually greater by that amount, and therefore the BEA found that real final sales of GDP grew at a 4.0% rate in the 3rd quarter, revised from the 3.3% rate of increase in real final sales shown in the advance estimate, and up from the 1.3% real final sales growth rate of the second quarter....

The previously reported increase in real exports was revised higher with this estimate, while the previously reported decrease in real imports was revised even lower, and as a result the change in our net trade was a greater addition to GDP than was previously reported...our real exports grew at a 15.3% rate, rather than the 14.4% rate reported in the first estimate, and since exports are added to GDP because they are part of our production that was not consumed or added to investment in our country, their growth added 1.72 percentage points to the 3rd quarter's growth rate, up from the 1.63 percentage point addition shown in the advance report....meanwhile, the previously reported 6.9% decrease in our real imports was revised to a 7.3% decrease, and since imports are subtracted from GDP because they represent either consumption or investment that was added to another GDP component that shouldn't have been because it was not produced domestically, their decrease conversely added 1.21 percentage points to 3rd quarter GDP growth, revised from the 1.14 percentage point addition shown last month....thus, our improving trade balance added a net 2.93 percentage points to 3rd quarter GDP, rather than the rounded 2.77 percentage point addition that had been indicated by the advance estimate..

Finally, the entire government sector grew at a 3.0% rate, revised from the 2.4% growth rate previously reported, even as federal government consumption and investment grew slower than was indicated in the initial estimate, while real state & local government consumption and investment grew quite a bit faster than had been previously indicated....real federal government consumption and investment was seen to have grown at a 3.4% rate from the 2nd quarter in this estimate, revised from the 3.7% growth rate reported in the advance estimate, as real federal outlays for defense rose at a 4.4% rate, revised from the 4.7% growth rate shown previously, and added 0.16 percentage points to 3rd quarter GDP, while all other federal consumption and investment grew at a 2.1% rate, revised from the 2.3% growth rate shown previously, and added 0.06 more percentage points to 3rd quarter GDP growth....meanwhile, real state and local consumption and investment grew at a 2.8% rate in the quarter, which was revised from the 1.7% growth rate reported in the 1st estimate, and added 0.31 percentage points to the 3rd quarter's growth rate, as an increase in real state and local investment at a 8.7% rate accounted for 0.15 percentage points of the state and local contribution.....note that government outlays for social insurance are not included in this GDP component; rather, they are included within personal consumption expenditures only when such funds are spent on goods or services, indicating an increase in the output of those goods or services.



(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 of which are picked from the aforementioned GGO posts, contact me…)  

Sunday, November 27, 2022

October’s durable goods and new home sales

There were just two widely watched economic reports released this week: the Advance Report on Durable Goods for October and the October report on new home sales, both from the Census bureau. The week also saw the release of the Chicago Fed National Activity Index (CFNAI) for October, a weighted composite index of 85 different economic metrics, which fell to –0.05 in October from +0.17 in September, which was revised up from the +0.10 reading reported for September last month....at the same time, the more often cited 3 month average of the CFNAI slipped to +0.09 in October, down from a revised +0.19 in September, which still indicates that national economic activity has been above the historical trend over those recent months, as would any positive index number....meanwhile, the Richmond Fed Survey of Manufacturing Activity for November, covering an area that includes Virginia, Maryland, the Carolinas, the District of Columbia and West Virginia, reported its broadest composite index remained negative but edged up from −10 in October to −9 in November, which still suggests an ongoing contraction of that region's manufacturing...

October Durable Goods: New Orders Up 1.0%, Shipments Up 0.4%, Inventories Up 0.2%

The Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders for October (pdf) from the Census Bureau reported that the value of the widely followed new orders for manufactured durable goods increased by $2.8 billion or 1.0 percent to $277.4 billion in October, the seventh increase in eight months, after the value of September's new orders was revised from the $274.7 billion reported a month ago to $274.6 billion, which now indicates a 0.3% increase from August, rather than the 0.4% increase previously reported...,year to date new orders are still running 10.9% above those of 2021, same as the year to date increase we saw in this report last month.....

As usual, the volatile monthly change in the value of new orders for transportation equipment led October's new orders increase, as new transportation equipment orders rose $2.0 billion or 2.1 percent to $97.8 billion, on a 7.4% increase to $19,816 million in new orders for commercial aircraft and a 21.7% increase to $5,424 million in new orders for defense aircraft....excluding orders for transportation equipment, the value of other new orders rose 0.5%, while excluding just new orders for defense equipment, new orders increased 0.8%....meanwhile, the value of new orders for non-defense capital goods less aircraft, a proxy for equipment investment, rose by $530 million or 0.7% to $75,323 million, after falling by a downwardly revised 0.8% in September...

At the same time, the seasonally adjusted value of October's shipments of durable goods, which will be included as inputs into various components of 4th quarter GDP after adjusting for any changes in prices, increased by $1.1 billion or 0.4 percent to $275.4 billion, the seventeenth increase in eighteen months, after the value of September shipments was revised from $274.2 billion to $274.3 billion, still up 0.3% from August...a $0.5 billion or 1.3 percent increase to $38.9 billion in the value of shipments of machinery, which rose for the nineteenth time in twenty months, led the October increase, while the value of shipments of transportation equipment rose $0.3 billion or 0.3% to $90,871 million on a 1.0% increase in the value of shipments of commercial aircraft.....meanwhile, the value of shipments of nondefense capital goods less aircraft rose 1.3% to $75,019 million, after the value of September capital goods shipments was revised from $73,778 million to $74,036 million, still a 0.1% decrease from August..

Meanwhile, the value of seasonally adjusted inventories of durable goods, also a major GDP contributor, rose for the 21st month in a row, increasing by $0.9 billion or 0.2 percent to $489.5 billion, after the value of September's inventories were revised from $488.7 billion to $488.64 billion, still 0.2% higher than the prior month...an increase in the value of inventories of machinery, up twenty-four consecutive months, led the October inventory increase, rising $0.9 billion or 1.1 percent to $86.6 billion, while the value of inventories of transportation equipment fell 0.2% to $156.8 billion...

Finally, the value of unfilled orders for manufactured durable goods, which are probably a better measure of industry conditions than the widely watched but volatile new orders, rose for the 26th consecutive month, increasing by $$7.0 billion or 0.6 percent to $1,144.3 billion, after the value of September’s unfilled orders was revised from $1,137.5 billion to $1,137.3 billion, still a 0.5% increase from August....a $6.9 billion or 1.0 percent increase to $671.1 billion in unfilled orders for transportation equipment was responsible for the October increase, while unfilled orders excluding transportation equipment were up just $106 million, or statistically unchanged at $473,156 million....compared to a year earlier, the unfilled order book for durable goods is 7.2% above the level of last October, with the value of unfilled orders for transportation equipment 9.8% above their year ago level, largely due to a 14.2% increase in the value of the backlog of orders for commercial aircraft......

New Home Sales Reported Higher in October After Prior Months Revised Lower; Median Sales Price at $493,000, an All Time High

The Census report on New Residential Sales for October (pdf) estimated that new single family homes were selling at a seasonally adjusted pace of 632,000 homes annually, which was 7.5 percent (±20.8 percent)* above the revised annual rate of 588,000 new single family home sales in September, but 5.8 percent (±19.6 percent)* below the estimated annual rate that new homes were selling at in October of last year....the asterisks indicate that based on their small sampling, Census could not be certain whether October new home sales rose or fell from those of September, or even from October of last year, 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 September were revised from the annual rate of 603,000 reported last month down to a 588,000 annual rate, while home sales in August, initially reported at an annual rate of 685,000 and revised down to a 677,000 a year rate last month, were revised to a 661,000 a year rate with this report, and while July's home sale rate, initially reported at an annual rate of 511,000 three months ago and revised from a 532,000 a year rate to a 534,000 a year rate last month, were revised but remained at a 534,000 annual rate with this release...

The annual rates of sales reported here were seasonally adjusted after extrapolation from the estimates of canvassing Census field reps, which indicated that approximately 48,000 new single family homes sold in October, up from the 47,000 estimated new homes that sold in September but down from the 51,000 homes that sold in October a year ago.....the raw numbers from Census field agents further estimated that the median sales price of new houses sold in October was a record high $493,000, up from the revised median sale price of $455,700 in September and up from the median home sales price of $427,300 in October a year ago, while the average new home sales price in October was $544,000, up from the $516,400 average sales price in September, and up from the average sales price of $487,700 in October a year ago....a seasonally adjusted estimate of 470,000 new single family houses remained for sale at the end of October, which represents a 8.9 month supply at the October sales rate, down from the revised 9.4 months of new home supply in September...for graphs and additional commentary on this report, see the following posts by Bill McBride at Calculated Risk: New Home Sales Increase to 633,000 Annual Rate in October and New Home Sales Increased in October; Completed Inventory Increased. which in turn links to his thorough coverage of this report in his real estate newsletter

 

 

(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 of which are picked from the aforementioned GGO posts, contact me…)  

Monday, November 21, 2022

October’s retail sales, industrial production, producer prices, housing starts and existing home sales; September’s business inventories..

Major reports released over the past week included Retail Sales Report for October and the associated Business Sales and Inventories Report for September, both from the Census Bureau,the October report on Industrial Production and Capacity Utilization from the Fed, the October Producer Price Index and the October Import-Export Price Index, both from the Bureau of Labor Statistics, the October report on New Residential Construction, also from the Census bureau, andthe Existing Home Sales Report for October from the National Association of Realtors....in addition, the BLS also released the Regional and State Employment and Unemployment for October, a report which breaks down the two employment surveys from the monthly national jobs report by state and region....while the text of that report provides a useful summary of this data, the serious statistics aggregation can be found in the tables linked at the end of the report, where one can find the civilian labor force data and the change in payrolls by industry for each of the 50 states, the District of Columbia, Puerto Rico, and the Virgin Islands...

This week also saw the release of the first three regional Fed manufacturing survey for November: the Empire State Manufacturing Survey from the New York Fed, which covers all of New York state, a suburban NYC county in Connecticut, Puerto Rico and northern New Jersey, reported their headline general business conditions index rose from -9.1 in October to +4.5 in November, suggesting that First District manufacturing resumed growing slowly in November after contracting for the past five out of the past six months; the Philadelphia Fed Manufacturing Survey, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest diffusion index of manufacturing conditions fell from a reading of -8.7 in October to -19.4 in November, the third consecutive negative reading, which they clearly explain means "Nearly 36 percent of the firms reported decreases [in activity], (up from 24 percent last month), exceeding the 17 percent of firms reporting increases.", and the Kansas City Fed manufacturing survey, covering western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico, who reported their broadest composite index was at -7 in November, down from -6 in October and down from +1 in September, which means that the region's manufacturing activity continued to decrease for a second month in a row...

Retail Sales Rose 1.3% in October after August & September Sales Were Revised Higher

Seasonally adjusted retail sales increased 1.3% in October after retail sales for August and September were revised higher...the Advance Retail Sales Report for October (pdf) from the Census Bureau estimated that seasonally adjusted retail and food services sales totaled $694.5 billion during the month, which was 1.3 percent (±0.5%) higher than September's revised sales of $685.8 billion and 8.3 percent (±0.7 percent) above the seasonally adjusted sales in October of last year... September's adjusted sales were revised from the $684.0 billion reported last month to $685.8 billion, while August's sales were revised from $684.0 billion to $685.7 billion, and hence the combination of those two nearly equal upward revisions left the August to September percentage change statistically insignificant (±0.2 percent)....estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated sales actually rose 3.6%, from $664,134 million in September to $688,177 million in October, while they were up 7.9% from the $638,069 million of sales in October a year ago....the total $3.5 billion upward revision to August and September's retail sales would indicate an upward revision of around $14.0 billion at an annual rate in 3rd quarter sales, and should increase the previous estimate of the personal consumption expenditures contribution to 3rd quarter GDP by about 0.23 percentage points, assuming the distribution of price adjustments in the revised figures is similar to that of those originally published...

Included below is the table of the monthly and yearly percentage changes in retail sales by business type taken from the October Census Marts pdf....the first double column below gives us the seasonally adjusted percentage change in sales for each kind of business from the September revised figure to this month's October "advance" report in the first sub-column, and then the year over year percentage sales change since last October in the 2nd column...the second double column pair below gives us the revision of the September advance estimates (now called "preliminary") as of this report, with the new August to September percentage change under "Aug 2022 r" (revised) and the September 2021 to September 2022 percentage change as revised in the last column shown...for your reference, the table of last month’s advance estimate of September sales, before this month's revisions, is here...

To compute October's initial estimate of real personal consumption of goods data for national accounts from this October retail sales report, the BEA will use the corresponding price changes for each type of sales from the October consumer price index, which we reviewed last week...to estimate what they will find, we’ll start by pulling out the usually volatile sales of gasoline from the other totals...from the third line on the above table, we can see that October retail sales excluding the 4.1% increase in sales at gas stations were up by 1.0%....then, subtracting the figures representing the 1.4% increase in grocery & beverage sales and the 1.6% increase in food services sales from that total, we find that core retail sales were up by almost 0.8% for the month....since the CPI report showed that the composite price index for all goods less food and energy goods was 0.4% lower in October, we can thus approximate that real retail sales, excluding food and energy sales, were on average about 1.2% higher for the month...however, the actual adjustment 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 up by 1.3%, the price index for transportation commodities other than fuel was 0.9% lower, which would imply that real unit sales at auto & parts dealers would actually be around 2.2% higher...likewise, while sales at furniture stores were up 1.1%, the price index for household furnishings and supplies decreased by 0.2%, which would suggest that real sales at furniture stores actually rose by around 1.3%…..on the other hand, while nominal sales at sporting goods, hobby, music and book stores fell 0.3%, the price index for recreational commodities rose 0.7%, so real sales of recreational goods were actually down around 1.0%...

In addition to figuring those core retail sales, to make a complete estimate of real October’ PCE for goods, we'll need to adjust food and energy retail sales for their price changes separately, just as the BEA will do....the CPI report showed that the food price index was 0.6% higher in October, with the price index for food purchased for use at home 0.4% higher, while prices for food bought to eat away from home were 0.9% higher... hence, with nominal sales at food and beverage stores 1.4% higher, real sales of food and beverages would this be roughly 1.0% higher in light of the 0.4% higher prices…likewise, the 1.6% increase in nominal sales at bars and restaurants, once adjusted for 0.9% higher prices, suggests that real sales at bars and restaurants rose 0.7%...meanwhile, while nominal sales at gas stations were up 4.1%, there was a 4.0% increase in the retail price of gasoline, which would suggest real sales of gasoline were on the order of just 0.1% higher, with the caveat that gasoline stations do sell more than gasoline, and we aren’t accounting for those other sales...by reweighing and averaging the real sales changes that we have thus estimated back together, and excluding food services, we can estimate that the income and outlays report for October will show that real personal consumption of goods rose by almost 1.1% for the month, after rising by a revised 0.7% in September, and by a revised 0.3% in August, but after falling by 0.4% in July, and rising by 0.5% in June, but after falling by 0.5% in May, and after rising by 0.2% in April....at the same time, the 0.7% increase in real sales at bars and restaurants will have a positive impact of about half of 0.1% on October's real personal consumption of services..

Industrial Production Fell 0.1% in October after Previous Months' Output was Revised Lower

The Fed's G17 release on Industrial production and Capacity Utilization reported that industrial production fell by 0.1% in October after rising by 0.1% in September, which was revised down from the 0.4% increase previously reported, as reported increases in computer and electronic products and motor vehicles and parts output were largely revised away….the industrial production index, with the benchmark now set for average 2017 production to equal to 100.0, fell to 104.7 in October from 104.8 in September, after September's index was revised down from 105.2 to 104.8, August's index was revised down from 104.8 to 104.7, and July's index was revised down from 104.9 to 104.8.…despite those downwards revisions, the industrial production was still 3.3% higher than a year ago, albeit down from the 5.5% year over year increase reported a month ago..

The manufacturing index, which accounts for more than 75% of the total IP index, increased by 0.1%, from 102.1 in September to 102.3 in October, and was 2.4% above its level of a year ago, after September's manufacturing index was revised down from 102.8 to 102.1, August's manufacturing index was revised down from 102.3 to 101.9, and July's manufacturing index was revised down from 102.0 to 101.8....meanwhile, the mining index, which includes oil and gas well drilling, fell by 0.4%, from 117.9 in September to 117.4 in October, after the September index was revised up from 117.7 to 117.9, which leaves the mining index 6.9% higher than it was a year ago....at the same time, the utility index, which often fluctuates due to above or below normal temperatures, fell by 1.5% on mild weather in October, from 104.6 to 103.0, after the September utility index was revised from 103.8 to 104.6 and August's utility index was revised from 104.2 to 106.3, thus revising the September drop in utility output from 0.3% to 1.7%, and still leaving the utility index 2.6% higher than it was a year earlier..

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 from 80.1% in September to 79.9% in October...capacity utilization of NAICS durable goods production facilities rose from 78.1% in September to 78.4% in October, after September's figure was revised down from 78.2%, while capacity utilization for non-durables producers fell from 81.3% in September to 81.1% in October, after September's nondurables utilization was revised down from 82.1%...capacity utilization for the mining sector fell to 88.4% in October from 88.9% in September, which was originally reported as 88.8%, while utilities were operating at 72.1% of capacity during October, down from their 73.3% of capacity during September, which was revised from the 72.8% shown in the previous report...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 Rose 0.2% in October on Higher Energy Prices, Up 8.0% YoY

The seasonally adjusted Producer Price Index (PPI) for final demand rose 0.2% in October, as average prices for finished wholesale goods rose 0.6%, while final demand for services was 0.1% lower....that October increase followed a downwardly revised 0.2% increase in September, which now shows a 0.3% increase in average prices for finished wholesale goods while final demand for services was unchanged, an August PPI that was revised up to unchanged, with average prices for finished wholesale goods 1.1% lower while the more heavily weighted final demand for services was 0.5% higher, a revised 0.4% decrease in July, when average prices for finished wholesale goods fell 1.8% while final demand for services was 0.2% higher, and a revised 0.9% increase in June, when average prices for finished wholesale goods rose by 2.2% while final demand for services was 0.3% higher....on an unadjusted basis, producer prices are still 8.0% higher than a year ago, albeit down from the revised 8.4% year over year increase now indicated for September's producer price index, while the core producer price index, which excludes food, energy and trade services, also rose by 0.2% for the month, and is still 5.4% higher than it was a year ago, albeit down from the 5.6% year over year core PPI increase that is now indicated for September....note that the BLS is now revising the PPI going back five months, so the figures we'll cite for those months were revised, whether we note it or not..

As we noted, the producer price index for final demand for goods, which was previously aggregated as 'finished goods', was 0.6% higher in October after being 0.3% higher in September, 1.1% lower in August, 1.8% lower in July, 2.2% higher in June, 1.5% higher in May, 1.3% higher in April, 2.4% higher in March, to 2.2% higher in February, and 1.6% higher in January, and after being 0.1% lower in December, 0.9% higher in November, and 1.3% higher in October of last year, and hence is still up by 10.5% from a year ago....the final demand goods price index rose 0.6% in October as the price index for wholesale energy goods was 2.7% higher, after it had risen by 0.6% in September, but after it had fallen by 5.4% in August and by 9.1% in July, while the price index for wholesale foods was 0.5% higher, after rising by 1.3% in September, falling 0.1% in August, and rising 1.3% in July, while the index for final demand for core wholesale goods (excluding food and energy) was 0.1% lower, after being unchanged in September, rising 0.2% in August, and by 0.1% in July…

wholesale energy prices averaged 2.7% higher in October on a 5.7% increase in wholesale prices for gasoline, a 9.5% increase in wholesale prices for diesel fuel, a 9.4% increase in wholesale prices for home heating oil, and a 2.0% increase in wholesale prices for residential electric power, while the final demand food price index was 0.5% higher on a 22.4% increase in the wholesale price index for fresh and dry vegetables, a 15.0% increase in the wholesale price index for eggs for fresh use, an 11.5% increase in the wholesale price index for fresh fruits and melons, and a 3.0% increase in the wholesale price index for pasta products.... among core wholesale goods, the wholesale price index for passenger cars fell 1.5%, the final demand price index for transformers and power regulators fell 2.7%, and the final demand price index for iron and steel scrap fell 4.6%, while the final demand price index for oil and gas field machinery rose 4.8%, and the wholesale price index for sanitary paper products rose 1.7%...

Meanwhile, the price index for final demand for services was 0.1% lower in October, the first services price decline since November 2020, after it had risen by a revised 0.2% in September, by 0.5% in August, by 0.2% in July, 0.3% in June, and by 0.4% in May, and is still 6.3% higher than a year ago, down from the 6.6% year over year increase shown in September, and down from the record 9.2% year over year increase that was reported for March....the price index for final demand for trade services fell 0.5% and the price index for final demand for transportation and warehousing services fell 0.2%, but the core index for final demand for services less trade, transportation, and warehousing services was 0.2% higher...among trade services, seasonally adjusted margins for fuel and lubricants retailers fell 7.7%, margins for automobile retailers fell 3.8%, margins for furniture retailers fell 3.6%, margins for lawn, garden, and farm equipment and supplies retailers fell 3.5%, margins for apparel, jewelry, footwear, and accessories retailers fell 1.9%. and margins for cleaning supplies and paper products retailers also fell 1.9%....among transportation and warehousing services, average margins for margins for truck transportation of freight fell 1.4%, margins for air transportation of freight fell 0.8%, and margins for rail transportation of freight and mail fell 0.7%...among the components of the core final demand for services index, the price index for arrangement of cruises and tours rose 5.4%, the price index for securities brokerage, dealing, investment advice, and related services rose 3.9%, the price index for passenger car rental rose 2.7%, the price index for traveler accommodation services rose 2.4%, the price index for bundled wired telecommunications access services rose 1.3%, the price index for hospital inpatient care rose 0.8%, and the price index for deposit services rose 1.5%, while the price index for the price index for portfolio management fell 1.9%...

This report also showed the price index for intermediate processed goods fell 0.2% in October, after being unchanged in September, falling by 1.5% in August and by 2.3% in July, but after rising by 2.0% in June, by 2.3% May, by 2.0% in April, by 2.3% in March, by 1.5% in February, and by 2.2% in January....the price index for intermediate energy goods rose 1.7% in October, as refinery prices for diesel fuel rose 9.0%, and refinery prices for gasoline rose 5.7%, but producer prices for liquefied petroleum gas fell 16.7%... on the other hand, the price index for intermediate processed foods and feeds fell 0.5%, as the producer price index for processed poultry fell 10.3% and the producer price index for fats and oils fell 3.2%...at the same time, the core price index for intermediate processed goods less food and energy goods fell 0.8%, as the producer price index for steel mill products fell 6.6%, the producer price index for hardwood lumber fell 5.4%, the producer price index for copper and brass mill shapes fell 4.9%, the producer price index for primary nonferrous metals fell 2.7%, the producer price index for secondary nonferrous metals fell 2.3% and the producer price index for aluminum mill shapes fell 3.3%, while the producer price index for cement rose 2.7%...average prices for intermediate processed goods are still 10.1% higher than in October a year ago, but are well off their 26.6% year over year increase in November 2021, which had been a 46 year high...

At the same time, the price index for intermediate unprocessed goods fell 11.7% in October, after falling 0.9% in September, rising by a revised 4.5% in August, after falling a revised 9.2% in July, but after rising a revised 4.8% in June, a revised 5.4% in May, and by 5.5% in April....that was as the October price index for crude energy goods fell 19.8%, as unprocessed natural gas prices fell 37.8%, while crude oil prices rose 2.0% and coal prices were 4.5% higher...at the same time, the price index for unprocessed foodstuffs and feedstuffs was 3.1% lower on a 13.2% decrease in producer prices for slaughter hogs, a 9.5% decrease in producer prices for oilseeds, an 8.8% decrease in producer prices for corn, a 7.6% decrease in producer prices for raw milk, and a 4.7% decrease in producer prices for slaughter chickens....meanwhile, the index for core raw materials other than food and energy materials was 5.3% lower on a 39.5% decrease in the price index for recyclable paper, a 4.6% decrease in the price index for iron & steel scrap, an 8.1% decrease in the price index for aluminum base scrap, a 2.9% decrease in the price index for copper base scrap, and a 4.6% decrease in the price index for nonferrous metal ores.....this raw materials price index is still 9.7% higher than a year ago, albeit down from the 32.1% year over year increase in September, and way down from the record 59.2% annual increase in April 2021, and now the twenty-fourth consecutive year over year increase for this index, after the annual change on this index had been negative from the beginning of 2019 through October of 2020...

Lastly, the price index for services for intermediate demand was 0.3% higher in October, after being a revised 0.4% higher in September, 0.6% higher in August, 0.3% higher in July, 0.3% lower in June, and 0.5% higher in May, 0.9% higher in April, 1.3% higher in March, and 0.2% higher in February….the price index for intermediate trade services fell 0.3%, as margins for machinery and equipment parts and supplies wholesalers fell 0.9%, margins for chemicals and allied products wholesalers fell 0.9%, and margins for intermediate hardware, building material, and supplies retailers also fell 0.9%...on the other hand, the index for transportation and warehousing services for intermediate demand was 0.6% higher, as the intermediate price index for arrangement of freight and cargo was 9.8% higher and the intermediate price index for transportation of passengers rose 2.1%, while the intermediate price index for truck transportation of freight fell 1.4%.... at the same time, the core price index for intermediate services other than trade, transportation, and warehousing services rose 0.5%, as the intermediate price index for business loans rose 6.0%, the intermediate price index for television advertising time sales rose 4.1%, the intermediate price index for executive search services rose 5.0%, and the intermediate price index for securities brokerage, dealing, investment advice, and related services rose 3.9%, while the intermediate price index for nonresidential real estate rents fell 1.7%...over the 12 months ended in October, the year over year price index for services for intermediate demand is 6.5% higher than it was a year ago, the twenty-fifth consecutive annual increase in this index change after it briefly turned negative year over year at the onset of the pandemic, from April to August of 2020, while it is still lower than the record 9.5% year over year increase indicated for July 2021....

Business Sales Up 0.2% in September, Business Inventories Up 0.4%

After the release of the October retail sales report, the Census Bureau released the composite Manufacturing and Trade Inventories and Sales report for September (pdf), which incorporates the revised September retail data from that October report and the earlier published September wholesale and factory data to give us a complete picture of businesses’ 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 $1,847.9 billion in September, up 0.2 percent (±0.2 percent)* from August's revised sales, and up 11.5 percent (±0.2 percent) from September sales of a year earlier...note that total August sales were concurrently revised up from the originally reported $1,843.2 billion to $1,844.8 billion, but are still up 0.3% from July, as originally reported....seasonally adjusted manufacturer's sales were up 0.2% to $550,270 million in September, and retail trade sales, which exclude restaurant & bar sales from the revised September retail sales that we reported earlier, slipped 0.1% to $597,720 million, while wholesale sales rose 0.4% to $699,949 million...

Meanwhile, total manufacturer's and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $2,464.4 billion at the end of September, up 0.4 percent (±0.1 percent) from August, and 17.8 percent (±0.4 percent) higher than in September a year earlier...the value of end of August inventories were revised from the $2,453.2 billion reported last month to $2,455.0 billion, and are now up 0.9% from July, revised from the 0.8% increase reported last month....seasonally adjusted inventories of manufacturers were estimated to be valued at $801,626 million, 0.2% higher than in August, inventories of retailers were valued at $744,271 million, 0.4% more than in August, while inventories of wholesalers were estimated to be valued at $918,506 million at the end of September, 0.6% higher than in August...

We had previously estimated that 3rd quarter GDP was overestimated by around 0.22 percentage points based on what the wholesale inventory report showed, but that the factory inventories report indicated a negligible impact on 3rd quarter GDP revisions....in the advance report on 3rd quarter GDP of three weeks ago, retail inventories were estimated based on the sketchy Advance Report on Wholesale and Retail Inventories which was released the day before the GDP release...that report estimated that our seasonally adjusted retail inventories were valued at $743,968 million at the end of September, up 0.2% from a revised $740,727 million valuation in August....that's $0.836 billion less than the $744,271 million and $741,260 million for those two months that this report shows, which would mean that the quarterly change in 3rd quarter retail inventories was underestimated at roughly a $3.3 billion annual rate, meaning 3rd quarter GDP would be revised 0.05 percentage points higher based on the revision to retail inventories...combined with our previous figures on factory and wholesale inventories, then, this report would suggest that the growth rate of 3rd quarter GDP should be revised downwards by around 0.17 percentage points when the 2nd estimate is released on the 30th of November...

Housing Starts and Building Permits Issued Both Reported Lower in October

The October 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 1,425,000 units during the month, which was 4.2 percent (±12.7 percent)* below the revised September estimated annual rate of 1,488,000 housing unit starts, and was 8.8 percent (±12.7 percent)* below last October's pace of 1,553,000 housing starts a year...the asterisks indicate that the Census does not have sufficient data to determine whether housing starts actually rose or fell from September, or even from October of a year ago, with the figures in parenthesis the most likely range of the change indicated; in other words, in other words, October's housing starts could have been up by 8.5% or down by as much as 16.9% from those of September, with even larger revisions possible after a number of months...with this report, the annual rate for September housing starts was revised from the 1,439,000 reported last month up to 1,488,000, while the annual rate for August’s housing starts, which was initially reported at 1,575,000 and revised to 1,566,000 last month, was further revised down to 1,508,000 with this report...

Those 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 120,600 housing units were started in October, down from the 129,700 units that were started in September...of those housing units started in October, an estimated 71,300 were single family homes and 48,200 were units in structures with more than 5 units, down from the revised 77,700 single family starts in September, and down from the 50,400 units started in structures with more than 5 units in September...

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, which can also be impacted by the weather....in October, Census estimated new building permits were being issued at a seasonally adjusted annual rate of 1,526,000 housing units, which was 2.4 percent below the September rate of 1,564,000 permits, and was 10.1 percent below the rate of building permit issuance in October a year earlier.…the annual rate for housing permits issued in September was unrevised from last month's report....

Again, these annualized estimates for new permits reported here were extrapolated from the unadjusted estimates provided monthly by canvassing census agents, which indicated that permits for 122,300 housing units were issued in October, down from the revised estimate of 129,600 new permits issued in September...the October permits included 65,700 permits for single family homes, down from 70,800 single family permits issued in September, and 51,800 permits for housing units in apartment buildings with 5 or more units, down from 54,600 such multifamily permits a month earlier...

For graphs and commentary on this report, see the following two posts by Bill McBride at Calculated Risk: Housing Starts Decreased to 1.425 Million Annual Rate in October and October Housing Starts: Record Number of Housing Units Under Construction which links to his free housing newsletter article with the same title, and which discusses a serious underlying problem with US housing construction over the past year or more, in that the widely watched housing starts are not leading to housing completions, because of construction component shortages and other supply chain problems…

Existing Home Sales Fell 5.9% in October on Lower Prices for the 4th Month in a Row

The National Association of Realtors (NAR) reported that their seasonally adjusted count of existing home sales decreased 5.9% from September to October, the ninth straight decline, projecting that 4.43 million existing homes would sell over an entire year if the October home sales pace were extrapolated over that year, a pace that was also 28.4% below the 6.19 million annual sales rate projected in October of a year ago...September's sales, at a 4.71 million annual rate, were revised but unchanged from last month's report....the NAR also reported that the median sales price for all existing-home types was $379,100 in October, 6.6% higher than in October a year earlier, which they say "marks 128 consecutive months of year-over-year increases, the longest-running streak on record.".....the NAR press release, which is titled "Existing-Home Sales Slumped 5.9% in October", 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 like to look at the raw data overview (pdf), which gives us a close approximation of the actual number of homes that sold each month...this unadjusted data indicates that roughly 371,000 homes sold in October, down by 13.3% from the 428,000 homes that sold in September, and down by 29.5% from the 526,000 homes that sold in October of last year, so we can see there was a modest boost from the seasonal adjustment to this month’s annualized published figures...that same pdf indicates that the median home selling price for all housing types was 1.1% lower in October, the fourth consecutive price decease, falling from a revised $383,500 in September to $379,100 in October, while still up 6.6% from the $355,700 median home sales price of October a year ago...by region, median home sales prices ranged from a low of $274,500 in the Midwest to a high of $588,400 in the West, with all regions showing consistent decreases in their median sales price for past four months...for both seasonally adjusted and unadjusted graphs and additional commentary on this report, see the following posts from Bill McBride at Calculated Risk:NAR: Existing-Home Sales Decreased to 4.43 million SAAR in October and More Analysis on October Existing Home Sales, which in turn links to a more complete analysis in his real estate newsletter: NAR: Existing-Home Sales Decreased to 4.43 million SAAR in October...

 

 

(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 of which are picked from the aforementioned GGO posts, contact me…)  

Monday, November 14, 2022

October's consumer price index and September's wholesale sales & inventories

There were just two major reports released this past week: the October Consumer Price Index from the Bureau of Labor Statistics, and the September report on Wholesale Trade, Sales and Inventories from the Census Bureau...

CPI Rose 0.4% in October on Higher Prices for Food, Housing, & Fuel

The consumer price index rose 0.4% in October, as higher prices for food, rent, fuel, new vehicles, and vehicle insurance were partly offset by lower prices for gas utilities, health insurance, clothing, used cars and trucks, furniture and appliances, and phones....the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that the average of seasonally adjusted prices were 0.4% higher in October, after rising by 0.4% in September, by 0.1% in August, being unchanged in July, but after rising by 1.3% in June, by 1.0% in May, by 0.3% in April, by 1.2% in March, by 0.8% in February, by 0.6% in January. by 0.6% in December, by 0.7% in November, and by 0.9% in October of last year....the unadjusted CPI-U index, which was originally set with prices of the 1982 to 1984 period equal to 100, rose from 296.808 in September to 298.012 in October, which left it statistically 7.7454% higher than the index reading of 276.589 in October of last year, which is reported as a 7.7% year over year increase, down from the 8.2% year over year increase reported for September, and down from the forty year high year over year increase of 9.1% reported for June....with higher food and fuel prices partly responsible for the increase in the overall price index, seasonally adjusted core prices, which exclude food and energy, were up by 0.3% for the month, as the unadjusted core price index rose from 298.442 to 299.315, which left the core index 6.2844% ahead of its year ago reading of 281.617, which is reported as a 6.3% year over year increase, down from the 6.6% year over year core price increase that was reported in September, which had been a forty year high...

The volatile seasonally adjusted energy price index rose 1.8% in October, after falling by 2.1% in September, by 5.0% in August and by 4.6% in July, but after rising by 7.5% in June, by 3.9% in May, falling by 2.7% in April, rising by 11.0% in March, by 3.5% in February, by 0.9% in January, by 0.9% in December, by 2.4% in November, and by 3.7% last October, and hence is still 17.6% higher than in October of a year ago....the price index for energy commodities was 4.4% higher in October, while the price index for energy services was 1.2% lower, after it had risen by 1.1% in September....the energy commodity index was up 4.4% on a 4.0% increase in the price of gasoline and a 19.8% jump in the price of fuel oil, while the price index for other energy commodities, including propane, kerosene, and firewood, was unchanged....within energy services, the price index for utility gas service fell 4.6% after rising 2.9% in September, but is still 20.0% higher than it was a year ago, while the electricity price index rose 0.1% in October after rising 0.4% in September and 1.5% in August.... energy commodities are still averaging 19.3% higher than their year ago levels, with gasoline prices averaging 17.5% higher than they were a year ago, while the energy services price index is up 15.6% from last October, as electricity prices are still averaging 14.1% higher than a year ago…

Meanwhile, the seasonally adjusted food price index rose 0.6% in October, after rising by 0.8% in September, by 0.8% in August, by 1.1% in July, by 1.0% in June, by 1.2% in May, by 0.9% in April, by 1.0% in March, by 1.0% in February, by 0.9% in January, by 0.5% in December, by 0.8% in November, and by 0.9% in October a year ago, as the price index for food purchased for use at home was 0.4% higher in October, after rising by 0.7% in August and September, and by 1.3% in July, 1.0% in June, 1.4% in May, 1.0% in April, 1.5% in March, and by 1.4% in February, while the index for food bought to eat away from home was 0.9% higher, as average prices at fast food outlets rose 0.8%, prices at full service restaurants rose 1.1%, and food prices at employee sites and schools averaged 3.8% higher...

In the food at home categories, the price index for cereals and bakery products was 0.8% higher, as average bread prices rose 0.9%, the price index for flour and prepared flour mixes rose 2.0%, the price index for rice, pasta & cornmeal rose 1.3%, the price index for frozen and refrigerated bakery products, pies, tarts, and turnovers rose 2.2%, and the price index for crackers and bread and cracker products rose 2.1%....at the same time, the price index for the meats, poultry, fish, and eggs food group was 0.2% higher as the price index for lunchmeats rose 3.4% and egg prices rose 10.1%, but prices for beef, pork and chicken were all lower....meanwhile, the seasonally adjusted price index for dairy products was 0.1% lower as milk prices fell 0.2% and the price index for cheese and related products fell 0.5%....in addition, the fruits and vegetables price index was 0.9% lower, as the price index for fresh fruits fell 2.4% and the price index for fresh vegetables fell 0.5% while the price index for canned fruits and vegetables rose 1.8%...on the other hand, the beverages price index was 0.5% higher, as the price index for carbonated drinks rose 1.2%, the price index for frozen noncarbonated juices and drinks rose 1.3%, and the price index for coffee rose 1.2%....lastly, the price index for the ‘other foods at home’ category was 0.9% higher, as the price index for sugar and sugar substitutes rose 0.7%, the price index for fats and oils rose 2.1%, the price index for snacks rose 1.3%, and the price index for baby foods was 1.8% higher....

Among the seasonally adjusted core components of the CPI, which rose by 0.3% in October, after rising by 0.6% in September, by 0.6% in August, by 0.3% in July, by 0.7% in June, by 0.6% in May, by 0.6% in April, by 0.3% in March, by 0.5% in February, by 0.6% in January, by 0.6% in December, by 0.5% in November, and by 0.6% last October, the composite price index of all goods less food and energy goods was 0.4% lower in October, while the more heavily weighted composite for all services less energy services was 0.5% higher....

Among the goods components of the core index, which will be used by the Bureau of Economic Analysis to adjust September’s retail sales for inflation in national accounts data, the price index for household furnishings and supplies was 0.2% lower, as the price index for living room, kitchen, and dining room furniture fell 1.9%, the price index for bedroom furniture fell 0.9%, the price index for laundry equipment fell 7.8%, the price index for other appliances fell 1.0%, the price index for floor coverings fell 1.4%, the price index for window coverings fell 1.2%, and the price index for dishes and flatware fell 3.7%...at the same time, the apparel price index was 0.7% lower on a 2.4% decrease in the price index for men's shirts and sweaters, a 2.0% decrease in the price index for men's suits, sport coats, and outerwear, a 3.8% decrease in the price index for women's outerwear, a 2.4% decrease in the price index for women's dresses, a 1.7% decrease in the price index for boys' apparel, a 1.6% decrease in the price index for girls' apparel. and a 3.2% decrease in the price index for infants' and toddlers' apparel.....in addition, the price index for transportation commodities other than fuel was 0.9% lower, even though prices for new vehicles were 0.4% higher, as prices for used cars and trucks fell 2.4% and tire prices were 0.1% lower....meanwhile, the price index for medical care commodities was unchanged, as prescription drug prices fell 0.1%, nonprescription drug prices rose 0.4%, and the price index for medical equipment and supplies was 0.6% lower...on the other hand, the recreational commodities index was 0.7% higher on a 2.9% increase in the price index for audio equipment, a 1.3% increase in the price index for pets and pet products, a 2.6% increase in the price index for sports vehicles including bicycles and a 2.0% increase in the price index for recorded music and music subscriptions...however, the education and communication commodities index was 0.9% lower on a 5.9% decrease in the price index for smartphones, a 2.1% decrease in the price index for computer software and accessories, and a 1.8% decrease in the price index for telephone hardware, calculators, and other consumer information items…lastly, a separate price index for alcoholic beverages was 0.8% higher, while the price index for ‘other goods’ was 0.6% higher on a 0.8% increase in the price index for hair, dental, shaving, and miscellaneous personal care products and a 1.9% increase in the price index for miscellaneous personal goods....

Within core services, the price index for shelter was 0.8% higher as rents rose 0.7%, homeowner's equivalent rent was 0.6% higher, and prices for lodging away from home at hotels and motels rose 4.9%, while at the same time the shelter sub-index for water, sewers and trash collection services was unchanged...on the other hand, the price index for medical care services was 0.6% lower, as the price index for hospital and related services was 0.2% lower and price index for health insurance fell 4.0%...on the other hand, the transportation services price index was 0.8% higher, as the price index for motor vehicle body work rose 1.4%, the price index for motor vehicle maintenance and servicing rose 1.2%, and the price index for motor vehicle insurance rose 1.7%...at the same time, the recreation services price index was also 0.8% higher, as the price index for cable and satellite television service rose 0.8%, the price index for membership in shopping clubs, fraternal, or other organizations, or participant sports fees rose 1.2%, the price index for pet services rose 0.7%, and the price index for admission to movies, theaters, and concerts rose 0.9%...in addition, the price index for education and communication services was 0.1% higher as the price index for postage rose 4.2%, the price index for residential telephone services rose 0.5%, and the price index for internet services and electronic information providers also rose 0.5%....lastly, the index for other personal services was 0.4% higher, as the price index for funeral expenses rose 1.7% and the price index for apparel services other than laundry and dry cleaning was 1.4% higher..

September Wholesale Sales Up 0.4%, Wholesale Inventories Up 0.6%; Overestimated by GDP Report

The September report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales during the month was $699.9 billion, up 0.4 percent (±0.4 percent) from the revised August level, and 14.4 percent (±0.5 percent) higher than the wholesale sales of September 2021... the August preliminary sales estimate was revised down to $ 697.252 billion from the $698.0 billion in wholesale sales reported last month, which thus revised the July to August change in sales from up 0.1% (±0.4 percent) to virtually unchanged...as an intermediate economic 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, since additional goods left in a warehouse represent goods that were produced but not sold, and this September report estimated that wholesale inventories were valued at a seasonally adjusted $918.5 billion at month end, up 0.6 percent (±0.4 percent) from the revised August level and 24.1 percent (±0.9 percent) higher than in September a year ago....August's inventory value was revised from the $912.6 billion reported last month to $913.5 billion, which meant that the July to August percent change was revised from last month's estimate of up 1.3 percent (+/-0.2%) to up 1.4 percent (±0.2 percent)..

In the advance report on 3rd quarter GDP of two weeks ago, wholesale inventories were estimated based on the sketchy Advance Report on Wholesale and Retail Inventories, which was released the day before the GDP release...that report estimated that our seasonally adjusted wholesale inventories were valued at $921,666 million at the end of September, up 0.8 percent from a revised $913,936 million in August....that's $3.622 billion more than the wholesale inventories values of $918,506 million and $913,474 million for those two months than this report shows, which would imply that the quarterly change in 3rd quarter wholesale inventories was overestimated at roughly a $14.5 billion annual rate....assuming there's no significant imbalance in the inflation adjustments on the component inventories, that would mean that the growth rate of 3rd quarter GDP was overestimated by around 0.22 percentage points, just based on 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 of which are picked from the aforementioned GGO posts, contact me…)  

Monday, November 7, 2022

October's jobs report; September's trade deficit, construction spending, factory inventories, and JOLTS

Major economic reports that were released the past week included the Employment Situation Summary for October and the Job Openings and Labor Turnover Survey (JOLTS) for September, both from the Bureau of Labor Statistics, and three September reports that included metrics which were either estimated or included in last week's release of 3rd quarter GDP: the Commerce Department report on our International Trade for September, and the September report on Construction Spending (pdf) and the Full Report on Manufacturers' Shipments, Inventories and Orders for September, both from the Census Bureau...the week also saw the release of the last regional Fed manufacturing surveys for October: the Dallas Fed Texas Manufacturing Outlook Survey, which covers Texas and adjacent western Louisiana and southeastern New Mexico, reported its general business activity index fell from -17.2 in September to -19.2 in October, a sixth consecutive negative reading, indicating that the Texas area economy continues to contract at a steeper pace than it did in September..

Privately issued reports included the ADP Employment Report for October, which indicated an increase of 239,000 private sector jobs, the light vehicle sales report for October from Wards Automotive, which estimated that vehicles sold at a 14.90 million annual rate in October, up from the 13.48 million annual sales rate reported for September, and up from the 12.99 million annual sales rate of a year ago, and both of the widely followed purchasing manager's surveys from the Institute for Supply Management (ISM): the October Manufacturing Report On Business indicated that the manufacturing PMI (Purchasing Managers Index) slipped to 50.2% in October, down from 50.9% in September, which indicates that just the smallest plurality of manufacturing purchasing managers reported improvement in various facets of their business in October than a month earlier, and the October 2021 Services Report On Business, which saw their Services PMI fall to 54.4%, down from 56.7% in September, indicating a smaller plurality of service industry purchasing managers reported growth in various facets of their business in October than before...

Employers Add 261,000 Jobs in October, Unemployment Rate Rises to 3.7%

The Employment Situation Summary for October indicated the smallest increase in payroll jobs yet this year, even as the increase was still more than were expected, but that the unemployment rate rose by 0.2% to 3.7%, while both the employment rate and the labor force participation rate ticked 0.1% lower…estimates extrapolated from the seasonally adjusted establishment survey data projected that employers added 261,000 jobs in October, after the previously estimated payroll job change for September was revised from an increase of 263,000 jobs to one of 315,000, while the payroll jobs increase for August was revised lower, from 315,000 to 292,000...combined with October's increase, those revisions means that this report shows a total of 290,000 more payroll jobs than last months report, and that October's seasonally adjusted non-farm payrolls are now at a record high of 153,308,000, 796,000 jobs above the 152,504,000 jobs reported for February of 2020, before the first pandemic related layoffs kicked in...meanwhile, the unadjusted data shows that there were actually 1,172,000 more payroll jobs extent in October than in September, as the normal seasonal job increases in the education and retail sectors were washed out of the headline number by the seasonal adjustment...

Seasonally adjusted job increases in October were seen throughout the private goods producing, service providing, and the government sectors, with no major sector indicating a payroll job decrease....since the BLS summary of the job gains by sector is clear and more detailed than our usual synopsis, we'll again just quote from that summary here:

  • In October, employment in health care rose by 53,000, with gains in ambulatory health care services (+31,000), nursing and residential care facilities (+11,000), and hospitals (+11,000). So far in 2022, health care employment has increased by an average of 47,000 per month, compared with 9,000 per month in 2021.
  • Professional and technical services added 43,000 jobs in October. Employment continued to trend up in management and technical consulting services (+7,000), architectural and engineering services (+7,000), and scientific research and development services (+5,000). Monthly job growth in professional and technical services has averaged 41,000 thus far in 2022, compared with 53,000 per month in 2021.
  • Manufacturing added 32,000 jobs in October, mostly in durable goods industries (+23,000). Manufacturing employment has increased by an average of 37,000 per month thus far this year, compared with 30,000 per month in 2021.
  • Employment in social assistance increased by 19,000 in October and is slightly below (-9,000) its pre-pandemic level in February 2020. Within social assistance, employment in individual and family services continued to trend up in October (+10,000).
  • Wholesale trade added 15,000 jobs in October. Employment in wholesale trade has increased by an average of 17,000 per month thus far in 2022, compared with 13,000 per month in 2021.
  • Employment in leisure and hospitality continued to trend up in October (+35,000), with accommodation adding 20,000 jobs. Employment in food services and drinking places changed little over the month (+6,000). Leisure and hospitality has added an average of 78,000 jobs per month thus far this year, less than half of the average gain of 196,000 jobs per month in 2021. Employment in leisure and hospitality is down by 1.1 million, or 6.5 percent, from its February 2020 level.
  • Employment in transportation and warehousing changed little in October (+8,000). Within the industry, job growth occurred in truck transportation (+13,000), couriers and messengers (+7,000), and air transportation (+4,000). These gains were partially offset by a job loss in warehousing and storage (-20,000). Monthly job growth in transportation and warehousing has averaged 25,000 thus far this year, compared with 36,000 per month in 2021.
  • In October, financial activities employment was little changed (+3,000). Within the industry, job gains in insurance carriers and related activities (+9,000) and in securities, commodity contracts, and investments (+5,000) were partially offset by a job loss in rental and leasing services (-8,000). Employment in financial activities has changed little over the past 6 months.
  • Employment changed little over the month in other major industries, including mining, construction, retail trade, information, other services, and government.

I would also note that government sector employment rose by 28,000 due to a 29,000 job increase at the local government level, with 13,500 of those employed by school districts and the rest employed by local governments in other functions...

The establishment survey also showed that average hourly pay for all employees rose by 12 cents an hour to $32.58 an hour in October, after increasing by 10 cents an hour in September, and is now up 4.7% over the past year; meanwhile, the average hourly earnings of production and nonsupervisory employees increased by 9 cents an hour to $27.86 an hour...employers also reported that the average workweek for all private payroll employees was unchanged at 34.5 hours for the fifth month in a row in October, while hours for production and non-supervisory personnel was unchanged at 34.0 hours...at the same time, the manufacturing workweek held steady at 40.4 hours, while average factory overtime fell by 0.1 hour to 3.1 hours...

Meanwhile, the October household survey indicated that the seasonally adjusted extrapolation of those who would report being employed fell by an estimated 328,000 to 158,608,000, while the estimated number of those unemployed and looking for work increased by 306,000 to 6,059,000; and hence the labor force decreased by a net total of 22,000....since the working age population had grown by 179,000 over the same period, that meant the number of employment aged individuals who were not in the labor force rose by 201,000 to 99,868,000...meanwhile, the small decrease in the labor force was apparently enough to lower the labor force participation from 62.3% to 62.2%, still up from 61.7% in October a year ago...in addition, the decrease in number employed was enough to lower the employment to population ratio, which we could think of as an employment rate, from 60.1% in September to 60.0% in October...similarly, the corresponding increase in the number unemployed was enough to cause the unemployment rate as a percentage of the labor force to increase from 3.5% to 3.7%...meanwhile, the number of those who reported they were forced to accept just part time work fell by 183,000, from 3,843,000 in September to 3,660,000 in October, which was enough to limit the increase in the alternative measure of unemployment, U-6, which includes those "employed part time for economic reasons", to 0.1%, as it rose from a record low of 6.7% in September to 6.8% of the labor force in October...

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..

Job Openings Jumped in September, Hiring, Layoffs and Job Quitting All Fell

The Job Openings and Labor Turnover Survey (JOLTS) report for September from the Bureau of Labor Statistics estimated that seasonally adjusted job openings increased by 437,000, from 10,280,000 in August to 10,717,000 openings in September, after August's job openings were revised 227,000 higher, from 10,053,000 to 10,280,000...September jobs openings were also 0.4% higher than the 10,673,000 job openings reported for September a year ago, as the job opening ratio expressed as a percentage of the employed was up from 6.3% in August to 6.5% in September, while it was down from 6.8% in September a year ago...the largest percentage job opening changes included a 215,000 job opening increase to 1,419,000 openings in accommodation and food services and a 104,000 decrease to 238,000 job openings in the wholesale trade sector (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 then linked to 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 September, seasonally adjusted new hires totaled 6,082,000, down by 252,000 from the revised 6,334,000 who were hired or rehired in August, as the hiring rate as a percentage of all employed fell from 4.1% in August to 4.0% in September, and it was also down from the 4.4% hiring rate of September a year earlier (details of hiring by sector since March are in table 2)....meanwhile, total separations fell by 370,000, from 6,058,000 in August to 5,688,000 in September, while the separations rate as a percentage of the employed fell from 4.0% in August to 3.7% in September, and it was also down from 4.1% in September a year ago (see table 3)...subtracting the 5,688,000 total separations from the total hires of 6,082,000 would imply an increase of 394,000 jobs in September, somewhat more than the revised payroll job increase of 315,000 jobs for September reported in the October establishment survey, but still within the expected +/-110,000 margin of error in these incomplete survey extrapolations.....

Breaking down the seasonally adjusted job separations, the BLS finds that 4,061,000 of us voluntarily quit our jobs in September, down by 123,000 from the revised 4,184,000 who quit their jobs in August, while the quits rate, widely watched as an indicator of worker confidence, remained unchanged at 2.7% of total employment, while it was down from the quits rate of 2.9% a year earlier (see details in table 4)....in addition to those who quit, another 1,328,000 were either laid off, fired or otherwise discharged in September, down by 162,000 from the revised 1,490,000 who were discharged in August, as the discharges rate fell from 1.0% to 0.9% of all those who were employed during the month, which was also down from the discharges rate of 1.0% a year earlier....meanwhile, other separations, which includes retirements and deaths, were at 299,000 in September, down from 383,000 in August, for an 'other separations rate’ of 0.2%, which was down from 0.3% in August but the same as in September 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...

September Trade Deficit Rose 11.6% on Lower Exports of Oil, Soybeans & Gold, Higher Imports of Capital Goods

Our trade deficit rose by 11.6% in September as the value of our exports decreased and value of our imports increased...the Commerce Dept report on our international trade in goods and services for September indicated that our seasonally adjusted goods and services trade deficit rose by a rounded $7.6 billion to $73.3 billion in September, from a revised August deficit of $65.7 billion, which had previously been reported at $67.4 billion...the value of our September exports fell by a rounded $2.8 billion to $258.0 billion on a $3.7 billion decrease to $180.2 billion in our exports of goods, which was partly offset by a $0.9 billion increase to $77.8 billion in our exports of services, while our imports rose by a rounded $4.8 billion to $331.3 billion on a $2.9 billion increase to $272.9 billion in our imports of goods and a $1.9 billion increase to $58.4 billion in our imports of services...prices for our exports averaged 0.8% lower in September, so the decrease in this month's real exports was mostly due to lower prices and real exports only fell 0.3%, while import prices were 1.2% lower, meaning that our real imports were greater than the nominal change reported here by that percentage, or that real imports probably rose about 2.7%...

The decrease in our September exports of goods was due to lower exports of industrial supplies and materials and of foods and feeds, which were partly offset by increased exports of capital goods....referencing the Full Release and Tables for September (pdf), in Exhibit 7 we find that our exports of industrial supplies and materials fell by $2,294 million to $72,928 million on a $956 million decrease in our exports of crude oil, a $760 million decrease in our exports of non-monetary gold, and a $423 million decrease in our exports natural gas liquids, and that our exports of foods, feeds and beverages fell by $2,134 million to $13,601 million on a $1,651 million decrease in our exports of soybeans....in addition, our exports of consumer goods fell by $84 million to $21,526 million despite a $684 million increase in our exports of pharmaceuticals, and our exports of other goods not categorized by end use fell by $705 million to $7,339 million...partially offsetting the decreases in those end use categories, our exports of capital goods rose by $1,177 million to $49,651 million on a $592 million increase of in our exports of telecommunications equipment and a $385 million increase of in our exports of semiconductors, and our exports of automotive vehicles, parts, and engines rose by $646 million to $13,334 million on a $787 million increase in our exports of passenger cars...

Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our goods imports and shows that higher imports of capital goods, of cellphones, and of pharmaceuticals were responsible for the $4.8 billion increase in our goods imports, while they were partially offset by a decrease in our imports of industrial supplies and materials...our imports of capital goods rose by $3,331 million to $74,977 million on a $1,056 million increase in our imports of semiconductors, a $780 million increase in our imports of civilian aircraft, a $661 million increase in our imports of telecommunications equipment, and a $305 million increase in our imports of generators and accessories, partly offset by a $731 million decrease in our imports of computers, while our imports of our imports of consumer goods rose by $1,134 million to $69,158 million, as a $1,389 million increase in our imports of cell phones and a $1,375 million increase in our imports of pharmaceuticals, were partly offset by a $564 million decrease in our imports of artwork and collectibles, a $348 million decrease in our imports of toys, games, and sporting goods, and a $315 million decrease in our imports of gem diamonds...in addition, our imports of automotive vehicles, parts and engines rose by $611 million to $34,899 million on a $479 million increase in our imports of automotive parts other than tires, engines, bodies and chassis...partially offsetting the increases in those end-use categories, our imports of industrial supplies and materials fell by $1,960 million to $64,719 million on a $814 million decrease in our imports of fuel oil, a $564 million decrease in our imports of crude oil, a $535 million increase in our imports of petroleum products other than fuel oil, and a $420 million decrease in our imports of iron and steel mill products, which in turn were offset by a $487 million increase in our imports of precious metals other than gold and a $385 million increase in our imports of organic chemicals....in addition, our imports of foods, feeds, and beverages fell by $223 million to $17,191 million on a $204 million decrease in our imports of fruits and juices, while our imports of other goods not categorized by end use fell by $181 million to $9,350 million....

The News Release for this month's report also summarizes Exhibit 19 in the full release, which gives us surplus and deficit details on our goods trade with selected countries:

The September figures show surpluses, in billions of dollars, with South and Central America ($6.9), Netherlands ($4.3), Singapore ($2.5), Hong Kong ($1.8), Australia ($1.6), United Kingdom ($1.3), Brazil ($1.2), and Belgium ($0.3). Deficits were recorded, in billions of dollars, with China ($32.1), European Union ($16.0), Mexico ($11.9), Vietnam ($10.1), Germany ($7.1), Ireland ($5.5), Canada ($5.3), Japan ($5.2), South Korea ($4.2), Taiwan ($3.8), Italy ($3.6), Malaysia ($3.4), India ($2.5), Switzerland ($1.9), France ($0.8), Saudi Arabia ($0.8), and Israel ($0.5).

  • The deficit with the European Union increased $2.5 billion to $16.0 billion in September. Exports decreased $0.3 billion to $29.9 billion and imports increased $2.2 billion to $45.9 billion.
  • The deficit with Mexico increased $2.1 billion to $11.9 billion in September. Exports decreased $1.4 billion to $27.6 billion and imports increased $0.7 billion to $39.6 billion.
  • The deficit with China decreased $1.4 billion to $32.1 billion in September. Exports decreased $0.9 billion to $12.2 billion and imports decreased $2.3 billion to $44.3 billion.

In last week's advance report on 3rd quarter GDP, the contribution of September trade in goods was estimated based on the sketchy Advance Report on our International Trade in Goods which was released last week, just before the GDP release...that report estimated that our seasonal adjusted September goods trade deficit was at $92,221 million on a Census basis, up from the $87,279 million goods deficit in August, on goods exports valued at $177,624 million and goods imports valued at $269,845 million...this report revises that and shows that our actual goods trade deficit in September was $92,747 billion on a balance of payments basis, and $91,914 million on a Census basis, on Census adjusted goods exports of $178,379 million and Census adjusted goods imports of $270,293 million...in addition, the Census basis August goods trade deficit was revised from $88,164 million to $85,766 million...together, those revisions from the previously published data mean that the 3rd quarter trade deficit in goods was on the order of $1,870 million less than was included in last week's GDP report, or roughly $7.3 billion on an annualized basis, which would increase the 3rd quarter's GDP by about 0.13 percentage points when the 2nd estimate of GDP is released at the end of November...

For our trade in services, the BEA's Key source data and assumptions (xls) for the advance estimate of third quarter GDP provides aggregate exports and imports of services at annual rates on an international-transactions-accounts basis, indicating that the BEA assumed a $14.0 billion increase in exports of services and a $30.8 billion increase in imports of services on an annual basis in September when computing 3rd quarter GDP...while there is no comparable annualized metric or adjusted data in this trade report that we could directly compare that to, this release does show that exports of services rose $0.9 billion in September after August's exports of services were revised $0.5 billion higher, and that imports of services rose $1.9 billion in September after August's imports of services were revised $0.3 billion higher...after multiplying those monthly figures by 12 to approximate an annualized change, that suggests that the annual rate for September exports of services used in the GDP report was on the order of $2.8 billion too low, while the annual rate for September imports of services used in the GDP report was about $4.4 billion too high...applying those annualized differences, and also annualizing the services trade revisions for August vis a vis those reported in the GDP report in the same manner, the annual rate for 3rd quarter services exports would be revised about $8.8 billion higher, while the annual rate for 3rd quarter services imports would be revised about $0.8 billion lower...a resulting upward revision of $9.6 billion to our total services surplus in NIPA terms should be enough to add about 0.17 percentage points to 3rd quarter GDP....combining our estimated revisions to goods trade with those services revisions, it appears that this report will therefore add about 0.31 percentage points to 3rd quarter GDP revisions when they're released on November 30th...

Construction Spending Rose 0.2% in September, Revisions Boost Q3 GDP by 65 Basis Points

The Census Bureau's report on construction spending for September (pdf) estimated that the month's seasonally adjusted construction spending would work out to $1,811.1 billion annually if extrapolated over an entire year, which was 0.2 percent (±1.0 percent)* above the revised annualized August estimate of $1,807.0 billion, and 10.9 percent (±1.5 percent) above the estimated annualized level of construction spending in September of last year...the annualized August construction spending estimate was revised 1.4% higher, from $1,781.3 billion to $1,807.0 billion, while the annual rate of construction spending for July was also revised 1.4% higher, from $1,793.5 billion to $1,817.9 billion....for the first nine months of this year, construction spending amounted to $1,353.7 billion, which was 11.4 percent (±1.0 percent) above the $1,215.6 billion spent on construction over the same period in 2021…

A further breakdown of the different subsets of construction spending is provided in a Census summary, which precedes the detailed spreadsheets:

  • Private Construction: Spending on private construction was at a seasonally adjusted annual rate of $1,450.3 billion, 0.4 percent (±0.5 percent)* above the revised August estimate of $1,444.9 billion. Residential construction was at a seasonally adjusted annual rate of $918.0 billion in September, virtually unchanged from (±1.3 percent)* the revised August estimate of $918.0 billion. Nonresidential construction was at a seasonally adjusted annual rate of $532.3 billion in September, 1.0 percent (±0.5 percent) above the revised August estimate of $526.9 billion.
  • Public Construction: In September, the estimated seasonally adjusted annual rate of public construction spending was $360.9 billion, 0.4 percent (±1.8 percent)* below the revised August estimate of $362.1 billion. Educational construction was at a seasonally adjusted annual rate of $78.2 billion, virtually unchanged from (±2.6 percent)* the revised August estimate of $78.2 billion. Highway construction was at a seasonally adjusted annual rate of $108.4 billion, 1.7 percent (±4.3 percent)* above the revised August estimate of $106.6 billion.

The BEA's key source data and assumptions that accompanied the 3rd quarter GDP report indicates that they had estimated that September's residential construction would decrease by an annualized $10.8 billion from the previously published figures, that nonresidential construction would decrease by an annualized $0.7 billion from last month's report, and that September's public construction would increase by an annualized $0.7 billion from last month's report....hence, the total of the figures used by the BEA for total September construction in the 3rd quarter GDP report were a net $10.8 billion lower than the previously published August figure...since this report indicates that September construction was up by $4.1 billion from an August figure that was revised $25.7 billion higher, that means that the net September construction figures used in the GDP report were a total of $40.6 billion too low...averaging that underestimation with the $25.7 billion upward revision to August construction spending and the $24.4 billion upward revision to July's construction spending means the aggregate annualized nominal construction figures used in the 3rd quarter GDP report were roughly $30.2 billion too low, suggesting an upward revision of about 0.65 percentage points to 3rd quarter GDP to account for what this report shows...

Factory Shipments Up 0.2% in September, Factory Inventories Up 0.2%

The Full Report on Manufacturers' Shipments, Inventories, & Orders (pdf) for September from the Census Bureau reported that the seasonally adjusted value of new orders for manufactured goods rose by $1.5 billion or 0.3 percent to $551.0 billion in September, following an increase of 0.2% to $549.5 billion in August, which was revised from the decrease of less than $0.1 billion to $548.4 billion that was reported for August 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 revised updates to the September advance report on durable goods we reported on last week...on those durable goods revisions, the Census Bureau's own summary, which precedes their detailed spreadsheet of the metrics included in this report, is quite clear and complete, so we'll just quote directly from that summary here:

  • Summary New orders for manufactured goods in September, up eleven of the last twelve months, increased $1.5 billion or 0.3 percent to $551.0 billion, the U.S. Census Bureau reported today. This followed a 0.2 percent August increase. Shipments, up eighteen of the last nineteen months, increased $1.1 billion or 0.2 percent to $550.3 billion. This followed a 0.7 percent August increase. Unfilled orders, up twenty-five consecutive months, increased $5.9 billion or 0.5 percent to $1,137.8 billion. This followed a 0.5 percent August increase. The unfilled orders-to-shipments ratio was 6.04, up from 5.98 in August. Inventories, up following two consecutive monthly decreases, increased $1.3 billion or 0.2 percent to $801.6 billion. This followed a 0.1 percent August decrease. The inventories-to-shipments ratio was 1.46, unchanged from August.
  • New orders for manufactured durable goods in September, up six of the last seven months, increased $1.1 billion or 0.4 percent to $274.9 billion, unchanged from the previously published increase. This followed a 0.2 percent August increase. Transportation equipment, up five of the last six months, drove the increase, $2.0 billion or 2.2 percent to $95.5 billion. New orders for manufactured nondurable goods increased $0.5 billion or 0.2 percent to $276.1 billion.
  • Shipments of manufactured durable goods in September, up sixteen of the last seventeen months, increased $0.6 billion or 0.2 percent to $274.1 billion, down from the previously published 0.3 percent increase. This followed a 1.3 percent August increase. Transportation equipment, up eleven of the last twelve months, drove the increase, $1.1 billion or 1.2 percent to $90.6 billion. Shipments of manufactured nondurable goods, up eighteen of the last nineteen months, increased $0.5 billion or 0.2 percent to $276.1 billion. This followed a 0.2 percent August increase. Petroleum and coal products, up following two consecutive monthly decreases, drove the increase, $0.7 billion or 1.0 percent to $65.5 billion.
  • Unfilled orders for manufactured durable goods in September, up twenty-five consecutive months, increased $5.9 billion or 0.5 percent to $1,137.8 billion, unchanged from the previously published increase. This followed a 0.5 percent August increase. Transportation equipment, up nineteen of the last twenty months, led the increase, $4.9 billion or 0.7 percent to $663.9 billion.
  • Inventories of manufactured durable goods in September, up twenty consecutive months, increased $1.2 billion or 0.2 percent to $488.7 billion, unchanged from the previously published increase. This followed a 0.2 percent August increase. Machinery, up twenty-three consecutive months, led the increase, $0.9 billion or 1.0 percent to $85.3 billion. Inventories of manufactured nondurable goods, up following two consecutive monthly decreases, increased $0.1 billion or virtually unchanged to $313.0 billion. This followed a 0.7 percent August decrease. Food products, up thirteen of the last fourteen months, drove the increase, $0.5 billion or 0.8 percent to $63.6 billion. By stage of fabrication, September materials and supplies increased 0.3 percent in durable goods and 1.0 percent in nondurable goods. Work in process decreased 0.1 percent in durable goods and 0.5 percent in nondurable goods. Finished goods increased 0.6 percent in durable goods and decreased 0.5 percent in nondurable goods.

The BEA's key source data and assumptions (xls) for 3rd quarter GDP indicates that they had estimated that the value of non-durable goods inventories would increase by $0.1 billion on a Census basis in September before they estimated the 3rd quarter’s output, so the actual $0.1 billion increase reported here shouldn't impact the 3rd quarter GDP revisions when they're released on November 23rd...

 

 

(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 of which are picked from the aforementioned GGO posts, contact me…)