Sunday, September 15, 2019

August’s consumer prices, producer prices, and retail sales; July’s business inventories and JOLTS

Major reports released this past week included the August Consumer Price Index, the August Producer Price Index, the August Import-Export Price Index, and the Job Openings and Labor Turnover Survey (JOLTS) report for July, all from the Bureau of Labor Statistics; the Retail Sales Report for August, Wholesale Trade, Sales and Inventories for July and Business Sales and Inventories for July, all from the Census Bureau; and the Consumer Credit Report for July from the Fed...that Fed report indicated that overall consumer credit, a measure of non-real estate debt, expanded by a seasonally adjusted $23.3 billion in July, or at a 6.8% annual rate, as non-revolving credit expanded at a 5.3% rate to $3,041.6 billion while revolving credit outstanding expanded at a 11.2% rate to $1,081.2 billion, its largest jump since November 2017....

Consumer Prices Up 0.1% in August on Higher Housing & Health Care Costs

The consumer price index was 0.1% higher in August, as higher prices for housing, used vehicles, and health care were mostly offset by lower prices for energy & groceries ...the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that seasonally adjusted prices rose by 0.1% in August after rising 0.3% in July, 0.1% in June, 0.1% in May, 0.3% in April, 0.4% in March, 0.2% in February, and after they had been unchanged in January, in December and in November, and had risen 0.3% in October, 0.1% in September, and 0.1% last August...the unadjusted CPI-U index, which was set with prices of the 1982 to 1984 period equal to 100, actually fell from 256.571 in July to 256.558 in August, which left it statistically 1.7498% higher than the 252.146 index reading of August of last year, which is reported as a 1.7% year over year increase....with prices for groceries and most forms of energy being lower, seasonally adjusted core prices, which exclude food and energy, rose by 0.3% for the month, as the unadjusted core price index rose from 263.566 to 264.169, which left the core index 2.3863% ahead of its year ago reading of 258.012, which is reported as a 2.4% year over year increase, up from the 2.2% year over year increase reported for July...

The volatile seasonally adjusted energy price index fell 1.9% in August, after rising 1.3% in July, falling 2.3% in June, falling 0.6% in May, rising 2.9% in April, rising 3.5% in March, rising 0.4% in February, falling 3.1% in January, falling 2.6% in December, falling 2.8% in November, rising by 2.1% in October, and falling by 1.0% last September, and hence is now 4.4% lower than in August a year ago...the price index for energy commodities was 3.3% lower in August, while the index for energy services was 0.2% lower, after being unchanged in July....the energy commodity index was down 3.3% due to a 3.5% decrease in the price of gasoline, the largest component, and a 0.6% decrease in the index for fuel oil, while prices for other energy commodities, including propane, kerosene, and firewood, were on average 0.8% lower...within energy services, the price index for utility gas service rose 0.1% after falling 1.8% in July and is now 3.5% lower than it was a year ago, while the electricity price index fell 0.3% after rising 0.6% in July....energy commodities are now 7.1% lower than their year ago levels, with gasoline prices also averaging 7.1% lower than they were a year ago, while the energy services price index is 0.8% lower than last August, as even electricity prices are 0.1% lower than a year ago…

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

In the food at home categories, the price index for cereals and bakery products was 0.3% lower as average bread prices fell 0.7%, breakfast cereal prices fell 1.5%, and the price index for flour and prepared flour mixes fell 0.8%...at the same time, the price index for the meats, poultry, fish, and eggs group was 0.7% lower, as the beef and veal price index fell 0.8%, average pork prices fell 1.0%, and egg prices were 2.6% lower...on the other hand, the seasonally adjusted index for dairy products was 0.2% higher, as average prices for milk rose 0.3% and cheese prices rose 0.6%...however, the fruits and vegetables index was 0.5% lower on a 1.4% decrease in the price index for fresh fruits and a 1.2% decrease in the price index for frozen fruits and vegetables...meanwhile, the beverages index was unchanged, as prices for beverage materials including tea fell 1.1% while carbonated drink prices were 0.6% higher....lastly, the index for the ‘other foods at home’ category was 0.3% higher, as prices for olives, pickles, relishes rose 2.6%, baby food prices rose 0.6%, and the snack food index rose 0.5%....the itemized list for price changes of over 100 separate food items is included at the beginning of  Table 2 for this release, which also gives us a line item breakdown for prices of more than 200 CPI items overall...since last July, only prices for eggs, which are down 15.9% from a year ago, have seen a price change of more than 10% over the past year...

Among the seasonally adjusted core components of the CPI, which rose by 0.3% in August after rising by 0.3% in July, 0.3% in June, 0.1% in May, 0.1% in April, 0.1% in March, 0.1% in February, and by 0.2% for each of  the five months prior to that, the composite price index of all goods less food and energy goods was 0.2% higher, while the more heavily weighted composite for all services less energy services was 0.3% higher....among the goods components, which will be used by the Bureau of Economic Analysis to adjust June retail sales for inflation in national accounts data, the price index for household furnishings and supplies was down 0.2%, as the price index for living room, kitchen, and dining room furniture fell 1.5%, the index for other furniture fell 4.0%, the price index for nonelectric cookware and tableware fell 3.3%, and the price index for laundry appliances was 4.2% lower....on the other hand, the apparel price index was 0.2% higher on a 3.0% increase in the price index for men's suits, sport coats, and outerwear, a 2.5% increase in the index for boy's apparel, and a 2.3% increase in the price index for men's footwear... in addition, the price index for transportation commodities other than fuel was 0.2% higher even though prices for new cars and trucks fell 0.1%, because prices for used cars and trucks rose 1.1%, and the price index for parts and equipment other than tires rose 0.9%... meanwhile, prices for medical care commodities averaged 0.3% higher as nonprescription drugs prices rose 1.6%....at the same time, the recreational commodities index was 0.2% higher despite a 1.7% decrease in TV prices because the price index for sporting goods rose 0.8%, the price index for newspapers and magazines rose 1.4% and the price index for toys, games, hobbies and playground equipment rose 1.3%....in addition, the education and communication commodities index was 0.9% higher on a 1.2% increase in the price index for computers, peripherals, and smart home assistant devices and a 2.1% price increase for college textbooks...lastly, a separate price index for alcoholic beverages was 0.1% higher, while the price index for ‘other goods’ rose 0.7% on a 3.4% increase in the price index for miscellaneous personal goods...

Within core services, the price index for shelter rose 0.2% on a 0.2% increase in rents, a 0.2% increase in homeowner's equivalent rent, which were offset by a 2.3% decrease in prices for lodging away from home at hotels and motels, while the shelter sub-index for water, sewers and trash collection rose 0.2%, and household operation costs were on average 0.1% lower....at the same time, the price index for medical care services was 0.9% higher, as outpatient hospital services rose 1.5% and health insurance rose 1.9%...meanwhile, the transportation services price index was 0.4% higher as the price index for vehicle maintenance and servicing rose 1.2%, airline fares rose 1.7%, and intercity bus fares rose 2.3%....in addition, the recreation services price index was 0.6% higher as cable and satellite television service rose 1.0% and admission to sporting events rose 0.9%....on the other hand, the index for education and communication services was 0.1% lower as the index for technical and business school tuition and fees fell 2.2%....lastly, the index for other personal services was up 0.2% as the price index for personal care services such as haircuts rose 0.4% and laundry and dry cleaning services were 0.3% higher...

Among core line items, prices for televisions, which now average 20.2% cheaper than a year ago, the price index for telephone hardware, calculators, and other consumer information items, which is down by 14.8% since last August, and the price index for women's dresses, which is down 11.6% year over year, have all seen prices drop by more than 10% over the past year, while the cost of health insurance, which is now up by 18.6% over the past year, the price index for infants' furniture, which has increased 12.2% year over year, and intercity bus-fare, which has increased by 21.8% since last August, are the only line items to have increased by a double digit magnitude over that span....

Retail Sales Up by 0.4% in August after June and July Sales Revised Higher

Seasonally adjusted retail sales rose 0.4% in August after retail sales for June and July were revised higher...the Advance Retail Sales Report for August (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $526.1 billion during the month, which was up 0.4 percent (±0.5%)* from July's revised sales of $524.2 billion and 4.1 percent (±0.7 percent) above the adjusted sales in August of last year...July's seasonally adjusted sales were revised from the $523.5 billion reported last month to $524.2 billion, while June sales were also revised higher, from $519.9 billion to $520.055  billion, with this release....estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated sales actually rose 2.4%, from $533,058 million in July to $545,940 million in August, while they were up 4.2% from the $523,933 million of sales in August a year ago...the revision to June’s sales means that 2nd quarter sales were a bit more than $0.6 billion higher at an annual rate than previously reported, which should be enough to add 0.01 percentage point to 2nd quarter GDP when the 3rd estimate is published at the end of the month…

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

August 2019 retail sales table

To compute August's real personal consumption of goods data for national accounts from this August retail sales report, the BEA will use the corresponding price changes from the August consumer price index, which we reviewed earlier….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 August retail sales excluding the 0.9% drop in sales at gas stations were up by 0.5%....then, subtracting the figures representing the 0.2% decrease in grocery & beverage sales and the 1.2% decrease in food services sales from that total, we find that core retail sales were up by a bit more than 0.9% for the month...since the August CPI report showed that the the composite price index of all goods less food and energy goods was 0.2% higher in August, we can thus figure that real retail sales excluding food and energy, or real core PCE, will show an increase of about 0.7% for the month...however, the actual adjustment in national accounts for each of the types of sales shown above will vary by the change in the related price index…for instance, while nominal sales at motor vehicle & parts dealers were up 1.8%, the August price index for transportation commodities other than fuel was 0.2% higher, which would suggest that real sales at auto & parts dealers were 1.6% higher once price increases are taken into account... similarly, since sales at drug stores were up 0.7% while prices for medical care commodities were 0.3% higher, that suggests that real sales at drug stores rose 0.4%…on the other hand, while nominal sales at furniture stores were 0.5% lower in August, the home furniture price index was 0.2% lower, which means that real sales of clothing probably fell by about 0.3%...and while nominal sales at clothing stores were 0.9% lower in August, the apparel price index was 0.2% higher, which means that real sales of clothing probably fell by about 1.1%…

In addition to figuring those core retail sales, to make a complete estimate of real July PCE, we'll need to adjust food and energy retail sales for their price changes separately, just as the BEA will do…the August CPI report showed that the food price index was unchanged, as the price index for food purchased for use at home fell 0.2% while the index for food bought away from home was 0.2% higher...thus, while nominal sales at food and beverage stores were 0.2% lower in August, prices were also 0.2%, which means the sales decline was price related and real sales of food at groceries would be unchanged.…on the other hand the 1.2% nominal decrease in sales at bars and restaurants, once adjusted for 0.2% higher prices, suggests real sales at bars and restaurants fell by 1.4% for the month...meanwhile, while sales at gas stations were down 0.9%, there was a 3.5% decrease in the retail price of gasoline, which would suggest real sales of gasoline were up on the order of 2.6% higher, with the caveat that gasoline stations do sell more than gasoline, and we haven’t accounted for those other sales…by averaging those estimated real sales figures with a sales appropriate weighting, and excluding food services, we’d estimate that the income and outlays report for August will show that real personal consumption of goods rose by about 0.7% in August, after rising by a revised 0.9% in July and by a revised 0.5% in June, after rising by 0.6% in May and by 0.6% in April, after rising 1.9% in March, falling by 0.9% in February and rising by 1.7% in January...at the same time, the 1.4% decrease in real sales at bars and restaurants will have a substantial negative impact on August's real personal consumption of services...

Producer Price Index Rose 0.1% August On Greater Demand for Services

The seasonally adjusted Producer Price Index (PPI) for final demand rose 0.1% in August, even as prices for finished wholesale goods fell by 0.5%, because the more heavily weighted margins of final services providers increased by 0.3%...that followed a July report that indicated the PPI rose 0.2%, as prices for finished wholesale goods increased 0.4%, while margins of final services providers decreased by 0.1%, a June report that indicated the PPI rose 0.1%, as prices for finished wholesale goods decreased 0.4%, while margins of final services providers increased by 0.4%, a revised May report that now shows the PPI was 0.1% lower, as prices for finished wholesale goods averaged 0.3% lower while average margins of final services providers were unchanged, and a revised April report that now has the PPI 0.5% higher, with prices for finished wholesale goods up 0.4% and margins of final services providers now up 0.6%....on an unadjusted basis, producer prices are 1.8% higher than a year ago, up from the 1.7% year over year change indicated by last month's report...meanwhile, the core producer price index, which excludes food, energy and trade services, was up 0.4% for the month, and is now 1.9% higher than in August a year ago, up from the 1.7% YoY increase shown in July...

As noted, the price index for final demand for goods, aka 'finished goods', was 0.5% lower in August, after being 0.4% higher in July, 0.4% lower in June, 0.3% lower in May, 0.4% higher in April, 1.0% higher in March, 0.3% higher in February, 0.6% lower in January, 0.6% lower in December, 0.5% lower in November, 0.8% higher in October, and 0.1% lower in September of 2018....the finished goods index fell in July because the wholesale price index for energy was 2.5% lower, after rising by 2.3% in July, but after falling by 3.1% in June and by a revised 1.1% in May, and because the price index for wholesale foods fell 0.6% in August after rising 0.2% in July and 0.6% in June, and while the index for final demand for core wholesale goods (excluding food and energy) was unchanged after rising 0.1% in July....wholesale energy prices were lower on a 6.6% decrease in wholesale prices for gasoline, a 7.7% drop in wholesale prices for liquefied petroleum gas, and 12.1% lower wholesale prices for home heating oil, while the wholesale food price index fell on a 12.0% decrease in the wholesale price index for grains and a 11.8% increase in the wholesale price index for fresh and dry vegetables, even as wholesale egg prices rose 21.6%....among wholesale core goods, wholesale prices for iron and steel scrap rose 8.3% and wholesale prices for mobile homes rose 8.4%, while wholesale prices for industrial chemicals fell 2.9%..

At the same time, the index for final demand for services rose 0.3% in August, after falling 0.1% in July, rising 0.4% in June, being unchanged in May, rising a revised 0.6% in April, as the index for final demand for trade services rose 0.2% in August and the index for final demand for transportation and warehousing services rose 0.3%, and the core index for final demand for services less trade, transportation, and warehousing services was 0.5% higher.... among trade services, seasonally adjusted margins for fuels and lubricants retailers rose 16.8%, margins for auto parts and tire retailers rose 6.2%, margins for apparel, footwear, and accessories retailers rose 3.5%, and margins for chemicals and allied products wholesalers rose 2.8%, while margins for machinery and vehicle wholesalers fell 4.2%... among transportation and warehousing services, margins for air transportation of freight fell 1.3% while margins for airline passenger services rose 1.4%...among the components of the core final demand for services index, margins for guestroom rentals rose 6.4%, margins for arrangement of vehicle rentals and lodging rose 5.0%, and margins for wireless telecommunication services rose 2.3%..

This report also showed the price index for intermediate processed goods fell 0.7% in August, after rising 0.2% in July, falling 1.1% in June and a revised 0.3% in May, after rising a revised 0.1% in April....the price index for intermediate energy goods fell 2.2%, as refinery prices for gasoline fell 6.6%, refinery prices for diesel fuel fell 5.7%, and prices for natural gas sold to electric utilities fell 2.2%...however, prices for intermediate processed foods and feeds rose 0.3%, as the producer price index for prepared animal feeds rose 1.2% and producer prices for meats rose 3.0%... meanwhile, the core price index for intermediate processed goods less food and energy fell 0.4% as producer prices for primary nonferrous metals decreased 1.9% and producer prices for plywood fell 2.7%... prices for intermediate processed goods are now 2.8% lower than in August a year ago, the fourth consecutive year over year decrease following 29 months of year over year increases, which had been preceded by 16 months of negative year over year comparisons, as intermediate goods prices fell every month from July 2015 through March 2016....

Meanwhile, the price index for intermediate unprocessed goods fell 1.0% in August, after rising 1.6% in July, falling 3.3% in June, falling a revised 3.8% in May, but after rising a revised 1.7% in April...that was as the August price index for crude energy goods fell 2.2% as crude oil prices fell 10.9% and unprocessed natural gas prices fell 4.5%, while the price index for unprocessed foodstuffs and feedstuffs fell 0.5% on a 9.7% decrease in producer prices for wheat and a 13.2% decrease in producer prices for corn....at the same time, the index for core raw materials other than food and energy materials rose 0.1%, as wastepaper prices rose 4.7% and prices for unprocessed iron and steel scrap rose 8.3%...this raw materials index is still 7.8% lower than a year ago, as the year over year change on this index has been negative all year...

Lastly, the price index for services for intermediate demand rose 0.5% in August, after falling 0.2% in July, rising 0.2% in June, falling a revised 0.2% in May, rising a revised 0.4% in April, and 0.5% in March...the price index for intermediate trade services was 0.6% higher, as margins for intermediate paper and plastic product wholesalers rose 2.2% and margins for intermediate chemicals wholesalers rose 2.8%…at the same time the index for transportation and warehousing services for intermediate demand rose 0.5%, as the price index for intermediate arrangement of freight and cargo transportation rose 4.8% and the price index for services related to water transportation rose 1.5%...in addition, the core price index for intermediate services less trade, transportation, and warehousing also rose 0.5%, as the price index for nonresidential real estate services rose 3.3% and the index for traveler accommodation services rose 5.8% while the price index for television advertising time sales fell 2.0%....over the 12 months ended in June, the year over year price index for services for intermediate demand, which has never turned negative on an annual basis, is now 2.5% higher than it was a year ago...

July Business Sales Up 0.3%, Business Inventories Up 0.4%

After the release of the August retail sales report, the Census Bureau released the composite Manufacturing and Trade Inventories and Sales report for July (pdf), which incorporates the revised July retail data from that August report and the earlier published July wholesale trade report and last week’s July factory data to give us a complete picture of the business contribution to the economy for that month....according to the Census Bureau, total manufacturer's and trade sales were estimated to be valued at a seasonally adjusted $1,462.9 billion in July, up 0.3 percent (±0.1%) from June revised sales, and up 1.3 percent (±0.3 percent) from July sales of a year earlier...note that total June sales were concurrently revised down from the originally reported $1,460.1 billion to $1,458.6 billion....manufacturer's sales were down by 0.2% to $504,021 million in July, while retail trade sales, which exclude restaurant & bar sales from the revised July retail sales reported earlier, rose 0.8% to $459,298 million, and wholesale sales rose 0.3% to $499,596 million...

Meanwhile, total manufacturer's and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $2,042.6 billion at the end of July, up 0.4% (±0.1%) from June, and 4.8 percent (±0.4 percent) higher than in July a year earlier...the value of end of June inventories was revised down from the $2,035.7 billion reported last month to $2,035.2 billion, still statistically unchanged from May...seasonally adjusted inventories of manufacturers were estimated to be valued at $696,484 million, 0.2% higher than in June, inventories of retailers were valued at $667,077 million, 0.8% more than in June, while inventories of wholesalers were estimated to be valued at $679,084 million at the end of July, up 0.2% from June...

In national accounts, all types of business inventories are adjusted for inflation with an item-appropriate component of the producer price index...the July producer price index reported that prices for finished goods were on average 0.4% higher, that prices for intermediate processed goods were on average 0.2% higher, while prices for unprocessed goods were 1.6% higher...those increases suggest that the 0.4% July inventory increase was largely price related, and that real (inflation adjusted) inventories were probably a bit lower....since real private inventories grew at an inflation adjusted $69.0 billion annual rate in the 2nd quarter, any real inventory decrease in the 3rd quarter will reverse that and correspondingly subtract from GDP by whatever percentage of GDP that real change in inventory ends the 3rd quarter at...

Job Openings Down in July, Hiring and Firing Up; Job Quitting at a Record High

The Job Openings and Labor Turnover Survey (JOLTS) report for July from the Bureau of Labor Statistics estimated that seasonally adjusted job openings fell by 31,000, from 7,248,000 in June to 7,217 ,000 in July, after June job openings were revised 100,000 lower, from 7,348,000 to 7,248,000...July's jobs openings were also 3.0% lower than the 7,442,000 job openings reported for July a year ago, as the job opening ratio expressed as a percentage of the employed fell from 4.6% in June to 4.5% in July, and was down from 4.8% in July a year ago....the 55,000 job opening decrease to 158,000 openings in the wholesale trade sector appears to be the largest percentage decrease for the month, while the increase from 129,000 to 171,000 information sector job openings looks to be the largest percentage increase... (see table 1 for more details)...like most BLS releases, the press release for report is easy to understand and also refers us to the associated table for the data cited, which are linked at the end of the release...

The JOLTS release also reports on labor turnover, which consists of hires and job separations, which in turn is further divided into layoffs and discharges, those who quit, and 'other separations', which includes retirements and deaths....in July, seasonally adjusted new hires totaled 5,953,000, up by 237,000 from the revised 5,716,000 who were hired or rehired in June, as the hiring rate as a percentage of all employed rose from 3.8% in June to 3.9% in July, while it was the same as in July a year earlier (details of hiring by sector since March are in table 2)....meanwhile, total separations rose by 246,000, from 5,513,000 in June to 5,759,000 in July, while the separations rate as a percentage of the employed rose from 3.6% to 3.8%, which was unchanged from the separations rate in July a year ago (see table 3)...subtracting the 5,759,000 total separations from the total hires of 5,953,000 would imply an increase of 194,000 jobs in July, somewhat higher than the revised payroll job increase of 159,000 for July reported by the August establishment survey last week, but still within the expected +/-115,000 margin of error in these incomplete samplings.....

Breaking down the seasonally adjusted job separations, the BLS finds that a record 3,592,000 of us voluntarily quit our jobs in July, up by 130,000 from the revised 3,462,000 who quit their jobs in June, while the quits rate, widely watched as an indicator of worker confidence, rose to 2.4% of total employment, up from 2.3% in June and up from 2.3% in July a year earlier (see details in table 4)....in addition to those who quit, another 1,799,000 were either laid off, fired or otherwise discharged in July, up by 88,000 from the revised 1,711,000 who were discharged in June, as the discharges rate rose from 1.1% to 1.2% of all those who were employed during the month, while it was unchanged from the discharges rate of 1.2% a year earlier....meanwhile, other separations, which includes retirements and deaths, were at 368,000 in July, up from 340,000 in June, for an 'other separations’ rate of 0.2%, which was the same rate as in June and as in July of last year....both seasonally adjusted and unadjusted details by industry and by region on hires and job separations, and on job quits and discharges can be accessed using the links to tables at the bottom of the press release...

 

(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most picked from the aforementioned GGO posts, contact me…)      

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