Sunday, February 23, 2020

January’s producer prices, new home construction, and existing home sales

Major reports that were released this past week included the January Producer Price Index from the Bureau of Labor Statistics, the January report on New Residential Construction from the Census Bureau, and the Existing Home Sales Report for January from the National Association of Realtors (NAR)…The week also saw the release of the first two regional Fed manufacturing surveys for February: the Empire State Manufacturing Survey from the New York Fed, which covers all of New York state, one county in Connecticut, Puerto Rico and northern New Jersey, reported their headline general business conditions index rose from +3.5 in December and from +4.8 in January to +12.9 in February, suggesting a pickup in the pace of First District manufacturing growth.. meanwhile, the Philadelphia Fed Manufacturing Survey, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest diffusion index of manufacturing conditions rose from +2.4 in December and +17.0 in January to +36.7 in February, its highest reading since February 2017, indicating widespread growth among that region's manufacturing firms this month...

Producer Prices Up 0.5% in January on Higher Margins for Apparel, Sporting Goods, and Fuel Retailers

The seasonally adjusted Producer Price Index (PPI) for final demand rose 0.5% in January, as prices for finished wholesale goods were on average 0.1% higher, while margins of final services providers increased by 0.7%...that followed a revised December report that now shows the PPI was up 0.2%, with prices for finished wholesale goods up 0.3% while margins of final services providers were unchanged, a revised November report that shows the PPI was 0.1% lower, with prices for finished wholesale goods rising 0.3% while margins of final services providers decreased 0.3%, a revised October report that indicates the PPI was 0.3% higher, with prices for finished wholesale goods rising 0.5% and margins of final services providers rising 0.3%, and a revised September report that indicates the PPI was 0.3% lower, with prices for finished wholesale goods 0.2% lower and margins of final services providers 0.1% lower....revisions to prior reports reflect the routine annual recalculation of seasonal adjustment factors and affect previously published seasonally adjusted indexes and percent changes for January 2015 through December 2019....on an unadjusted basis, producer prices are now 2.1% higher than a year ago, up from the 1.3% year over year increase indicated by last month's report, while, the core producer price index, which excludes food, energy and trade services, rose by 0.4% for the month, and is now 1.5% higher than in January a year ago, the same year over year increase as was shown in December...

As noted, the price index for final demand for goods, aka 'finished goods', was 0.1% higher in January, after being 0.3% higher in December, 0.3% higher in November, 0.5% higher in October, 0.2% lower in September, 0.3% lower in August, 0.3% higher in July, 0.5% lower in June, 0.2% lower in May, 0.3% higher in April, 0.9% higher in March, 0.3% higher in February, and 0.6% lower in January of last year....the finished goods index rose 0.1% in January because the index for final demand for core wholesale goods (excluding food and energy) was 0.3% higher after rising 0.2% in December, and because the price index for wholesale foods rose 0.2% in January after falling 0.3% in December but after rising 1.2% in November and 1.4% in October, while the wholesale price index for energy goods was 0.7% lower, after rising by 1.5% in December. 0.3% in November and 2.0% in October...wholesale energy prices were lower due to a 1.5% decrease in wholesale prices for gasoline, a 8.1% decrease in wholesale prices for liquefied petroleum gas, and a 5.5% decrease in wholesale prices for diesel fuel, while the wholesale food price index rose on a 22.4% increase in the wholesale price index for fresh and dry vegetables, and a 6.1% increase in the wholesale price index for oilseeds, which were partially offset by a 35.2% decrease in the wholesale price of eggs for fresh use....among wholesale core goods, wholesale prices for iron and steel scrap rose 13.9%, wholesale prices for textile home-furnishings rose 1.8%, and the wholesale price index for industrial chemicals rose 1.7%..

At the same time, the index for final demand for services rose 0.7% in January, after being unchanged in December, falling by 0.3% in November, rising by 0.3% in October, and falling by a 0.3% in September, as the index for final demand for trade services rose 1.2%, the index for final demand for transportation and warehousing services fell 1.6%, and the core index for final demand for services less trade, transportation, and warehousing services was 0.6% higher....among trade services, seasonally adjusted margins for apparel, jewelry, footwear, and accessories retailers rose 10.3%, margins for sporting goods and boat retailers rose 4.4%, and margins for fuel & lubricants retailers also rose 4.4%, while margins for professional and commercial equipment wholesalers fell 3.8% ... among transportation and warehousing services, margins for airline passenger services fell 5.8%...among the components of the core final demand for services index, margins for portfolio management rose 2.3%, margins for bundled wired telecommunications access services rose 3.5%, and margins for passenger car rental rose 5.7%, while margins for arrangement of vehicle rentals and lodging fell 9.7%...

This report also showed the price index for intermediate processed goods fell 0.3% in January, after rising 0.1% in December, 0.1% in November, and 0.4% in October, but after falling by a revised 0.1% in September and by 0.5% in August....the price index for intermediate energy goods fell 2.1%, as refinery prices for gasoline fell 1.5% and refinery prices for No. 2 diesel fuel fell 5.5%, while prices of natural gas sold to utilities fell 3.5%...at the same time, prices for intermediate processed foods and feeds fell 0.1%, as the producer price index for meats fell 1.4% and the index for processed poultry fell 0.6%... meanwhile, the core price index for intermediate processed goods less food and energy rose 0.3% as the producer price index for iron and steel rose 2.8% and producer prices for secondary nonferrous metals increased 3.1%... prices for intermediate processed goods are still 1.0% lower than in January a year ago, the ninth 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 0.6% in January, after rising a revised 1.6% in December and 4.0% in November, but after falling by a revised 0.8% in October and being unchanged in September....that was as the January price index for crude energy goods fell 5.7% as crude oil prices fell 2.0% and as unprocessed natural gas prices fell 14.3%, while the price index for unprocessed foodstuffs and feedstuffs rose 0.9% on a 10.2% increase in producer prices for slaughter turkeys and a 10.5% increase in producer prices for wheat...at the same time, the index for core raw materials other than food and energy materials rose 5.6%, as prices for unprocessed iron and steel scrap rose 13.9%, prices for wastepaper rose 7.1%, and prices for nonferrous metal ores rose 5.5%...this raw materials index is still 3.2% lower than a year ago, as the year over year change on this index remained negative all last year...

Lastly, the price index for services for intermediate demand was unchanged in January after rising 0.4 percent in December, falling 0.1 percent in November, falling a revised 0.4 percent in October, and rising a revised 0.2 percent in September...the price index for intermediate trade services was 0.3% higher, as margins for intermediate building materials, paint, and hardware wholesalers rose 2.5%, margins for metals, minerals, and ores wholesalers rose 1.6%, and margins for intermediate hardware, building material, and supplies retailers rose 2.9%, while margins for machinery and equipment parts and supplies wholesalers fell 2.5%…on the other hand, the index for transportation and warehousing services for intermediate demand was 0.9% lower, as the price index for intermediate transportation of passengers (partial) fell 5.7% and the index for arrangement of freight and cargo fell 7.9%...at the same time, the core price index for intermediate services less trade, transportation, and warehousing rose 0.1%, as the intermediate price index for bundled wired telecommunication access services rose 3.5%, the price index for radio advertising time sales rose 5.1%, and the price index for television advertising time sales rose 5.1%, while the price index for business loans (partial) fell 6.7% and the index for "internet advertising space sales, excluding Internet ads sold by print publishers" fell 3.7%...over the 12 months ended in January, the year over year price index for services for intermediate demand, which has never turned negative on an annual basis, is now 1.7% higher than it was a year ago, down from 1.8% in December but up from 14% in November...

January Housing Starts Reported Lower after Prior Months Revised Higher; Permits at 13 Year High

The January report on New Residential Construction (pdf) from the Census Bureau estimated that their widely watched count of new housing units started in January was at a seasonally adjusted annual rate of 1,567,000, which was 3.6 percent (±13.3 percent)* below the revised December estimated annual rate of 1,626,000, but was 21.4 percent (±12.2 percent) above last January's rate of 1,291,000 housing starts annually....the asterisk indicates that the Census does not have sufficient data to determine whether housing starts actually rose or fell during the month, with the figures in parenthesis the most likely range of the change indicated; in other words, January housing starts could have been up by 9.7% or down by as much as 16.9% from those of December, with revisions of a greater magnitude in either direction possible...in this report, the annual rate for December housing starts was revised from the 1,608,000 reported last week to a 13 year high of 1,626,000, while November starts, which were first reported at a 1,365,000 annual rate, were revised from last week's initial revised figure of 1,375,000 to a rate of 1,381,000 annually....

The 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 109,100 housing units were started in January, down from the revised 109,700 units that were started in December, but up from the 103,400 units that were started in November...of those housing units started in January, an estimated 68,600 were single family homes and 39,800 were units in structures with more than 5 units, down from the revised 69,400 single family starts in December but up from the 38,600 units started in structures with more than 5 units in December...

The monthly data on new building permits, with a smaller margin of error, are probably a better monthly indicator of new housing construction trends than the volatile and often revised housing starts data...in January, Census estimated new building permits for housing units were being issued at a seasonally adjusted annual rate of 1,551,000, which was a 13 year high for permits, 9.2 percent (±2.1 percent) above the revised December rate of 1,420,000 permits, and 17.9 percent (±1.3 percent) above the 1,316,000 a year rate of building permit issuance in January a year earlier...the annual rate for housing permits issued in December was revised from the 1,416,000 reported last month to 1,420,000....again, these annual estimates for new permits reported here were extrapolated from the unadjusted estimates collected monthly by canvassing census agents, which showed permits for roughly 113,000 housing units were issued in January, up from the revised estimate of 107,300 new permits issued in December....of those, 70,400 were permits for single family homes and 39,600 were permits for units in structures of more than 5 units, up from the 63,000 single family permits in December, but down from the 41,200 permits for units in structures of more than 5 units....for graphs and commentary on this report, see the following two posts by Bill McBride at Calculated Risk: Housing Starts decreased to 1.567 Million Annual Rate in January and Comments on January Housing Starts...

Existing Home Sales Fell 1.3% in January

The National Association of Realtors (NAR) reported that existing home sales fell by 1.3% from December to January on a seasonally adjusted basis, projecting that 5.46 million existing homes would sell over an entire year if the January home sales pace were extrapolated over that year, a pace that was still 9.6% above the annual sales rate projected in January of a year ago...December home sales are now shown to have been running at a 5.53 million annual rate, revised down from the 5.54 million annual rate indicated by last month's report...the NAR also reported that the median sales price for all existing-home types was $266,300 in January, 6.8% higher than in January a year earlier, which they report "marks 95 straight months of year-over-year gains".....the NAR press release, which is titled "Existing-Home Sales Drop 1.3 Percent in January", 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 read about 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 usually take look at the raw data overview (pdf) to see what actually happened during the month...this unadjusted data indicates that roughly 318,000 homes sold in January, down by 26.7% from the 434,000 homes that sold in December, but up 11.6% from the 285,000 homes that sold in January of last year, so we can see the effect of that large mid-winter seasonal adjustment...that same pdf indicates that the median home selling price for all housing types fell 3.0%, from a revised $274,500 in December to $266,300 in January, while the average home sales price was $302,700 in January, down 2.7% from the $311,000 average sales price in December, but up 5.0% from the $288,200 average home sales price of January a year ago...for both seasonally adjusted and unadjusted graphs and additional commentary on this report, see the following two posts from Bill McBride at Calculated Risk: NAR: Existing-Home Sales Decreased to 5.46 million in January and Comments on January Existing Home Sales...  

 

(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…)      

Sunday, February 16, 2020

January’s consumer prices, retail sales & industrial production: December's business inventories and JOLTS

Major reports released this week included the January Consumer Price Index and the January Import-Export Price Index from the Bureau of Labor Statistics, the Retail Sales Report for January and the Business Sales and Inventories Report for December from the Census Bureau, the January report on Industrial Production and Capacity Utilization from the Fed, and the Job Openings and Labor Turnover Survey (JOLTS) report for December, also from the BLS...

Consumer Prices Rose 0.1% in January on Higher Prices for Rent, Clothing, & Health Insurance

The consumer price index rose 0.1% in January, as higher prices for food services, shelter, clothing and utilities were only partly offset by lower prices for gasoline, used cars and drugs...the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that seasonally adjusted prices rose by 0.1% in January, after rising by 0.2% in December, 0.2% in November, 0.2% in October, 0.1% in September, 0.1% in August and rising 0.3% in July...the unadjusted CPI-U index, which was set with prices of the 1982 to 1984 period equal to 100, rose from 256.974 in December to 257.971 in January, which left it statistically 2.4866% higher than the 251.712 index reading of January of last year, which is reported as a 2.5% year over year increase, up from 2.3% a month ago....with lower prices for energy a major drag on the overall index increase, seasonally adjusted core prices, which exclude food and energy, rose by 0.2% for the month, as the unadjusted core price index rose from 264.935 to 266.004, which left the core index 2.2612% ahead of its year ago reading of 260.122, which is reported as a 2.3% year over year increase, same as was reported for December...the seasonal adjusted component of this month’s release incorporates revisions to indices from 2015 through 2019 based on newly revised seasonal factors..

The volatile seasonally adjusted energy price index fell 0.7% in January, after rising 1.6% in December, 0.8% in November and by 1.7% in October, but after falling 0.8% in September, falling 1.4% in August and rising 0.9% in July, and is now 6.2% higher than in January a year ago...the price index for energy commodities was 1.6% lower in January, while the index for energy services was 0.6% higher, after falling 0.3% in December....the energy commodity index was down 1.6% due to a 1.6% decrease in the price of gasoline, the largest component, and a 0.4% decrease in the index for fuel oil, while prices for other energy commodities, including propane, kerosene, and firewood, were on average 3.0% lower...within energy services, the price index for utility gas service rose 1.0% after falling 0.5% in December but is still 3.2% lower than it was a year ago, while the electricity price index rose 0.6% after falling 0.5% in December....energy commodities are still averaging 12.1% higher than their year ago levels, with gasoline prices averaging 12.8% higher than they were a year ago, while the energy services price index is still 0.4% lower than last January, even as electricity prices are now 0.5% higher than a year ago…

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

In the food at home categories, the price index for cereals and bakery products was 0.4% lower as average bread prices fell 0.8%, prices for breakfast cereals fell 1.0%, the index for fresh biscuits, rolls, muffins fell 1.1%, and the index for crackers and cracker products prices fell 3.1%...at the same time, the price index for the meats, poultry, fish, and eggs group was unchanged, as ham prices rose 1.9%, hot dog prices rose 4.8% and the fish and seafood price index rose 0.7%, while egg prices fell 1.4% and chicken prices fell 1.7%...meanwhile, the seasonally adjusted index for dairy products was 0.2% higher, as average prices for fresh whole milk rose 1.8% while the index for cheese & related products fell 0.2%...in addition, the fruits and vegetables index was 0.1% higher as a 2.0% increase in the price index for fresh vegetables was only partly offset by a 1.4% decrease in the price index fresh fruits...at the same time, the beverages index was 0.4% higher as the price index for juices and nonalcoholic drinks rose 0.6%....lastly, the index for the ‘other foods at home’ category was up 0.2%, as the price index for candy and chewing gum rose 2.4%, the index for fats and oils rose 1.2%, the index for frozen and freeze dried prepared foods rose 0.7%, while prices for baby food averaged 1.2% lower....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 January, none of the food line items have seen a price change greater than 10% over the past year...

Among the seasonally adjusted core components of the CPI, which rose by 0.2% in January after rising by 0.1% December, 0.2% November, 0.1% October, 0.2% in September, 0.2% in August, and by 0.3% in July, the composite price index of all goods less food and energy goods was unchanged in January, while the more heavily weighted composite for all services less energy services was 0.3% higher....among the goods components, which will be used by the Bureau of Economic Analysis to adjust January’s retail sales for inflation in national accounts data, the price index for household furnishings and supplies was 0.1% lower, as the price index for laundry appliances fell 1.6% while the index for window and floor coverings rose 4.4%....on the other hand, the apparel price index was 0.7% higher on a 2.3% increase in the price index for men's apparel, a 1.8% increase in the price index for girl's apparel, and a 1.3% increase in the price index for footwear... however, the price index for transportation commodities other than fuel was 0.4% lower even as prices for new cars and trucks were unchanged because prices for used cars and trucks fell 1.2% and tire prices fell 0.2%, while the price index for motor oil, coolant, and fluids fell 3.0%...at the same time, prices for medical care commodities averaged 0.6% lower because prescription drugs prices fell 0.4%, non-prescription drugs prices fell 1.3% and the medical equipment price index fell 0.8%...however, the recreational commodities index was 0.1% higher despite a 1.7% decrease in TV prices due to a 0.6% increase in the price index for sporting goods, a 2.4% increase in the price index for photographic equipment and supplies, and a 2.4% increase in price index for newspapers and magazines...on the other hand, the education and communication commodities index was 1.2% lower on a 1.2% decrease in the price index for computer software and accessories, a 1.4% decrease in the price index for telephone hardware, calculators, and other consumer information items, and a 2.7% decrease in the price index for college textbooks...lastly, a separate price index for alcoholic beverages was 0.3% higher, while the price index for ‘other goods’ was 0.5% higher on a 16.1% increase in the index for infants equipment...

Within core services, the price index for shelter rose 0.4% as rents rose 0.4%, homeowner's equivalent rent rose 0.4%, and prices for lodging away from home at hotels and motels rose 0.2%, while at the same time the shelter sub-index for water, sewers and trash collection rose 0.2%, and household operation costs were on average 0.1% higher....in addition, the price index for medical care services was 0.3% higher, as the price index for hospital services rose 0.8% and health insurance rose 1.7%...at the same time, the transportation services price index was was 0.3% higher as the price index for car and truck rental rose 1.2%, airline fares rose 0.7% and motor vehicle registration and license fees rose 0.4%.....meanwhile, the recreation services price index also rose 0.3% as prices for cable and satellite television services rose 0.7%, veterinarian services rose 0.3% and the index for admission to sporting events rose 0.4%....in addition, the index for education and communication services was 0.4% higher as college tuition and fees rose 0.5%, postage rose 0.8%, and prices for internet services and electronic information provision rose 0.7%....lastly, the index for other personal services was up 0.6% as the price index for haircuts and other personal care services rose 0.7%, legal fees rose 0.7%, and the index for tax return preparation and other accounting fees was 2.0% higher...

Among core line items, prices for televisions, which are now averaging 20.8% cheaper than a year ago, the price index for telephone hardware, calculators, and other consumer information items, which is down by 14.0% since last January, the rental of video discs and other media, which has fallen 12.6% from a year ago, the price index for women's outerwear, which has fallen by 12.1% in the past year, and the price index for computer software and accessories, which is down 10.7% 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 20.5% over the past year, and the price index for infants' furniture, which has increased 10.2% year over year, are the only line items to have increased by a double digit magnitude over that span....

Retail Sales Rose 0.3% in January after November and December were Revised Lower

Seasonally adjusted retail sales increased 0.3% in January after retail sales for November and December were revised lower...the Advance Retail Sales Report for January (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $529.8 billion during the month, which was up 0.3 percent (±0.4%)* from December's revised sales of $528.4 billion and 4.4 percent (±0.7 percent) above the adjusted sales in January of last year....December's seasonally adjusted sales were revised down 0.2%, from $529.6 billion to $528.4 billion, while November's sales were also revised lower, from $527.8 billion to $527.5 billion; as a result, the November to December change was revised from up 0.3 percent (±0.4 percent)* to up 0.2 percent (±0.2 percent)*.....the revisions to November and December sales would indicate that 4th quarter personal consumption expenditures were lower at a rate of around $6 billion annually, which would thereby reduce 4th quarter GDP by around 0.11 percentage points....estimated unadjusted retail sales, extrapolated from surveys of a small sampling of retailers, indicated sales actually fell 19.4%, from $595,536 million in December to $480,162 million in January, while they were 4.6% higher than the $459,143 million of sales in January a year ago, so we can see how a large seasonal adjustment to holiday and post holiday sales brought the headline sales into line, compared to the big sales decrease that would normally be expected in January...

Included below is the table of the monthly and yearly percentage changes in retail sales by business type taken from the January Census Marts pdf....the first pair of columns below gives us the seasonally adjusted percentage change in sales for each kind of business from the revised December figure to this month's January "advance" report in the first sub-column, and then the year over year percentage sales change since last January in the 2nd column...the second double column pair below gives us the revision of the December advance estimates (now called "preliminary") as of this report, with the new November to December percentage change under "Nov 2019 r" (revised) and the December 2018 to December 2019 percentage change as revised in the last column shown...for your reference, the table of last month’s advance estimate of December sales, before this month's revisions, is here...

January 2020 retail sales table

To compute January's real personal consumption of goods data for national accounts from this January retail sales report, the BEA will use the corresponding price changes from the January consumer price index, which we reviewed earlier...to estimate what they will find, we'll first separate out the volatile sales of gasoline from the other totals...from the third line on the above table, we can see that January retail sales excluding the 0.5% price-related decrease in sales at gas station were up by 0.4%.....then, subtracting the figures representing the 0.2% increase in grocery & beverage store sales and the 1.2% increase in food services sales from that total, we find that core retail sales were up a bit more than 0.2% for the month...since the CPI report showed that the composite price index for all goods less food and energy goods was unchanged in January, we can thus approximate that real retail sales excluding food and energy will on average be close to our nominal core retail sales, or show an increase of 0.2%.....however, the actual adjustment in national accounts data 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 furniture stores were up 0.6%, the price index for household furnishings and supplies decreased by 0.1%, which would suggest that real sales at furniture stores rose by roughly 0.7%…similarly, while nominal sales at sporting goods, hobby, music and book stores rose 0.1%, the price index for recreational commodities fell 0.1%, so we can figure real sales of recreational goods were up by roughly 0.2%....on the other hand, while nominal sales at clothing stores were 3.1% lower in January, the apparel price index was 0.7% higher, which means that real sales of clothing probably fell around 3.8%...

In addition to figuring those core retail sales, we should adjust food and energy retail sales for their price changes separately…the January CPI report showed that the food price index was 0.2% higher, with the index for food purchased for use at home 0.1% higher, while prices for food bought to eat away from home were 0.4% higher... thus, while nominal sales at food and beverage stores were 0.2% higher, real sales of food and beverages would be roughly 0.1% higher in light of the 0.1% higher prices…meanwhile, the 1.2% increase in nominal sales at bars and restaurants, once adjusted for 0.4% higher prices, suggests that real sales at bars and restaurants rose about 0.8% during the month....in addition, while sales at gas stations were down 0.5%, there was a 1.6% decrease in the retail price of gasoline during the month, which would suggest that real sales of gasoline were up on the order of 1.1%, with the caveat that gasoline stations do sell more than gasoline, and we haven’t accounted for those other sales....averaging real sales that we have thus estimated together, we can then estimate that the income and outlays report for January will show that real personal consumption of goods rose by about 0.2% in January, after falling by a revised 0.1% in December, but rising by a revised 0.3% in November...at the same time, the 0.8% increase in real sales at bars and restaurants would boost January’s real personal consumption of services by more than 0.1%...

Industrial Production Fell 0.3% in January on Warm Weather

The Fed's G17 release on Industrial production and Capacity Utilization indicated that industrial production fell by 0.3% in January after falling by a revised 0.4% in December, which left it 0.8% lower than a year ago...the industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, fell to 109.2 in January from 109.5 in December, after the December index was revised from 109.4 to 109.5, the November index was revised from the 109.8 reported last month to 110.0, the October index was revised from 108.9 to 109.0, the September index was revised from 109.4 to 109.5, and the August index was revised from 110.0 to 109.9....as a result of this month's revisions, industrial production grew 0.7% in August, rather than 0.8% as previously reported, shrunk 0.3% in September, rather than the 0.5% downturn previously reported, shrunk 0.4% in October, revised from down 0.5%, and grew 0.9% in November, revised from the 0.8% growth previously reported, while industrial production fell 0.4% in December rather than the 0.3% drop that was previously reported...

The manufacturing index, which accounts for around 77% of the total IP index, fell 0.1% in January, from 105.0 to 104.9, after the November index was revised from 104.8 to 104.9, and the October index was revised from 103.8 to 103.9, while the December manufacturing index remained at 105.0 and the September index remained at 104.5...the January decrease in manufacturing included a 0.5% drop in durable goods output, mostly due falling aerospace and machinery output; factory output excluding aircraft and parts was up 0.3%...meanwhile, the mining index, which includes oil and gas well drilling, rose from 134.6 in December to 136.2 in January after the December index was revised up from 134.4, which lifted the mining index to 3.1% above where it was a year earlier...finally, the utility index, which often fluctuates due to above or below normal temperatures, fell 4.0% in January, from 102.0 to 98.0, after the December utility index was revised from 101.6 to 102.0 and the November utility index was revised from 107.6 to 108.7...even though last year's heating requirements for December and January were below normal and drove the utility index lower at that time, this year's temperatures were further above normal and hence the utility index is now 6.2% lower than it was a year ago...

This report also includes capacity utilization data, which is expressed as the percentage of our plant and equipment that was in use during the month, and which indicated that seasonally adjusted capacity utilization for total industry fell to 76.8% in January from 77.1% in December, which was revised from the 77.0% that was reported last month ...capacity utilization of NAICS durable goods production facilities fell from an unrevised 75.2% in December to 74.7% in January, while capacity utilization for non-durables producers rose from an upwardly revised 76.2% to 76.4%...capacity utilization for the mining sector rose to 90.7% in January from 89.8% in December, which was originally reported as 89.6%, while utilities were operating at 70.6% of capacity during January, down from their 73.8% of capacity during December, which was previously reported at 73.5%...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....

December Business Sales Down 0.1%, Business Inventories Up 0.1%

After the release of the January retail sales report, the Census Bureau released the composite Manufacturing and Trade, Inventories and Sales report for December (pdf), which incorporates the revised December retail data from that January report and the earlier published December wholesale and factory data to give us a complete picture of the business contribution to the economy for that month....according to the Census Bureau, total manufacturer's and trade sales were estimated to be valued at a seasonally adjusted $1,461.0 billion in December, down 0.1 percent (±0.2 percent)* from November's revised sales, but up 1.7 percent (±0.4 percent) from December sales of a year earlier...note that total November sales were concurrently revised down from the originally reported $1,465.7 billion to $1,462,043 million, now up just 0.5% from October, rather than +0.7%....manufacturer's sales rose 0.5% to $504,082 million in December; retail trade sales, which exclude restaurant & bar sales from the revised December retail sales reported earlier, were statistically unchanged at $462,598 million, while wholesale sales fell 0.7% to $501,682 million...

Meanwhile, total manufacturer's and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $2040.0 billion at the end of December, up 0.1 percent (±0.1 percent)* from November, and 2.2 percent (±0.4 percent) higher than in December a year earlier...at the same time, the value of end of November inventories was revised from the $2,037.4 billion reported last month to $2,038.1 billion, still down 0.2% from October....seasonally adjusted inventories of manufacturers were estimated to be valued at $704,869 million in December, 0.5% more than in November,statistically unchanged from November, while inventories of retailers were valued at $660,663 million, statistically unchanged from November,  and inventories of wholesalers were estimated to be valued at $674,477 million at the end of December, 0.2% lower than in November...

Last week we estimated that 4th quarter GDP was overestimated by around 0.08 percentage points based on what the wholesale inventory report showed, but that 4th quarter GDP was underestimated by around by about 0.05 or 0.06 percentage points based on what the factory inventories report showed....in the advance report on 4th quarter GDP of two 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 $661,219 billion at the end of December, up but statistically unchanged from a revised $661,154 billion in November....that's $0.556 billion more than the $660,663 billion for the end of the quarter that this report shows, which would mean that the quarterly change in 4th quarter retail inventories were overestimated at roughly a $2.2 billion annual rate, or by an amount that would add around 0.04 percentage points too much to GDP...combined with our previous figures on factory and wholesale inventories, then, this report would suggest that the growth rate of 4th quarter GDP should be revised downwards by around 0.06 or 0.07 percentage points when the 2nd estimate is released at the end of February...

Job Openings and Quitting Down In December; Hiring and Layoffs Up

The Job Openings and Labor Turnover Survey (JOLTS) report for December from the Bureau of Labor Statistics estimated that seasonally adjusted job openings decreased by 364,000, from 6,787,000 in November to 6,423 ,000 in December, after November job openings were revised 13,000 lower, from 6,800,000 to 6,787,000....December's jobs openings were also 14.1% lower than the 7,479,000 job openings reported in December a year ago, and the fewest since December 2017, as the job opening ratio expressed as a percentage of the employed at 4.0% was down from the 4.3% logged in November, and down from 4.7% in December a year ago...the trade, transportation, and utilities sector, with an 88,000 job opening decrease to 233,000, saw the largest percentage decrease, while the construction sector saw job openings increase by 22,000 to 239,000 (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 linked to at the end of the release...

Since job openings have now fallen substantially over the past two months, we'll include a graph so you can see what that looks like...as you can see, job openings are now down 15.8% from their November 2018 peak, and appear to have made a major turn....in the 20 year history of this metric, there were only two prior periods that saw jobs opening fall by that magnitude, and both were co-incident with recessions…

December 2020 job openings

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 December, seasonally adjusted new hires totaled 5,907,000, up by 80,000 from the revised 5,827,000 who were hired or rehired in November, as the hiring rate as a percentage of all employed rose from 3.8% in November to 3.9% in December, and was also up from 3.8% in December a year earlier (details of hiring by sector since March are in table 2)....meanwhile, total separations rose by 21,000, from 5,709,000 in November to 5,730,000 in December, as the separations rate as a percentage of the employed rose was unchanged at 3.7%, while it was up from 3.6% in December a year ago (see table 3)...subtracting the 5,730,000 total separations from the total hires of 5,907,000 would imply an increase of 177,000 jobs in December, more than the revised payroll job increase of 147,000 for December reported in the January establishment survey of last week, but well within the expected +/-115,000 margin of error in these incomplete labor market samplings...

Breaking down the seasonally adjusted job separations, the BLS finds that 3,488,000 of us voluntarily quit our jobs in December, down by 80,000 from the revised 3,568,000 who quit their jobs in November, while the quits rate, widely watched as an indicator of worker confidence, remained at 2.3% of total employment, the same at it was a year earlier (see details in table 4)....in addition to those who quit, another 1,895,000 were either laid off, fired or otherwise discharged in December, up by 127,000 from the revised 1,768,000 who were discharged in November, as the discharges rate also remained unchanged at 1.2% of all those who were employed during the month, which was the same as the discharges rate of 1.2% a year earlier....meanwhile, other separations, which includes retirements and deaths, were at 347,000 in December, down from 373,000 in November, for an 'other separations rate’ of 0.2%, the same rate as in November and the same as in December 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…)      

Sunday, February 9, 2020

January’s jobs report; December’s trade deficit, construction spending, factory inventories and wholesale sales

The major economic releases from the past week included the Employment Situation Summary for January from the Bureau of Labor Statistics and four December reports that included metrics which were either estimated or included in last week's release of 4th quarter GDP: the Commerce Dept’s report on our International Trade for December, the December report on Construction Spending, the Full Report on Manufacturers' Shipments, Inventories and Orders for June, and the December report on Wholesale Trade, Sales and Inventories with all of those from the Census Bureau...in addition, the Fed released the Consumer Credit Report for January, which showed that overall consumer credit, a measure of non-real estate debt, expanded by a seasonally adjusted $22.0 billion, or at a 6.3% annual rate, as non-revolving credit expanded at a 3.7% annual rate to $3,099.1 billion and revolving credit outstanding expanded at a 14.0% rate to $1,098.0 billion, the largest one month increase in credit card debt in over 21 years..

The week’s privately issued reports included the ADP Employment Report for January, the light vehicle sales report for January from Wards Automotive, which estimated that vehicles sold at a 16.84 million annual rate in January, up from the 16.70 million annual rate reported in December, and up from the 16.60 million annual rate in January a year ago, and both of the widely followed purchasing manager's survey from the Institute for Supply Management (ISM): the January Manufacturing Report On Business indicated that the manufacturing PMI (Purchasing Managers Index) rose to 50.9% in January, up from 47.2% in December, which suggests a return to very weak expansion among manufacturing firms nationally, while the January Non-Manufacturing Report On Business reported their NMI (non-manufacturing index) rose to 55.5% from 54.9% in December, indicating a slightly larger plurality of service industry purchasing managers reported expansion in various facets of their business in January...

Employers Add 225,000 Jobs in January, Unemployment Rate Rises to 3.6%

The Employment Situation Summary for January from the Bureau of Labor Statistics indicated slightly above average job creation over the month, while the month over month household survey resuls were skewed by the effects of an annual revision…estimates extrapolated from the seasonally adjusted establishment survey data projected that employers added 225,000 jobs in January, after the previously estimated payroll job increase for December was revised up from 145,000 to 147,000, while the payroll jobs increase for November was revised up from 256,000 to 261,000,…that means that this report represents a total of 232,000 more seasonally adjusted payroll jobs than the report of a month ago, somewhat better than the past year's average monthly gain of 176,000 jobs per month...the unadjusted data, however, shows that there were actually 2,832,000 fewer payroll jobs remaining in January than in December, as the normal post holiday seasonal layoffs in areas such as retail, wholesale, goods transportation, leisure and hospitality were normalized by the seasonal adjustments..

As is usual for the January jobs report, this report included the results of the annual benchmark revision, which revised prior reports and set March 2019 (the benchmark) at 150,282,000 payroll jobs, 514,000 fewer jobs than was previously reported for that month, while job totals for every month in 2019 were concurrently revised downward by magnitudes of between 422,000 and 520,000 per month as well (as is shown in Table A of the press release)...as a result of this revision, 2019 job growth totaled 2,096,000 payroll jobs, down a bit from the previously published total of 2,108,000, while job growth in earlier years was revised lower as well...since all the newly revised figures are now incorporated into this month's report as if previously reported totals had never been reported, that's the way we'll cover it...

Seasonally adjusted job increases in January were spread through construction, the private service sectors and government, while employment in manufacturing was down by 12,000 on a loss of 10,600 jobs in the automotive sector and retail sales saw a seasonally adjusted decrease of 8,300 jobs...meanwhile, 47,200 jobs were added in health care and social assistance, as 9,700 more employees were added by hospitals and 11,300 more were employed by individual and family services...after seasonal adjustments, 44,000 jobs were added in construction, with 35,000 of those working for specialty trade contractors, with those job increases split between both nonresidential and residential specialty trade contractors...also after seasonal adjustments, employment in the leisure and hospitality sector increased by 36,000 jobs over the month, with the addition of 24,400 more jobs in bars and restaurants and 10,000 more working in amusements, gambling, and recreation...employment in transportation and warehousing increased by 28,300, with the addition of 14,300 couriers and messengers and 5,700 working in warehousing and storage...in addition, private educational services added 24,900 jobs, with no itemized breakdown for those jobs....the broad professional and business services sector added 21,000 jobs, led by a 7,000 job increase in computer systems design and related services....19,000 jobs were also added in the government sector, with 14,500 of those added by local governments not including education....meanwhile, employment in the other major sectors, including mining, wholesale trade, utilities, financial activities and information, all saw smaller job gains over the month..

The establishment survey also showed that average hourly pay for all employees rose by 7 cents an hour to $28.44 an hour in January, after it had increased by 3 cents an hour in December; at the same time, the average hourly earnings of production and non-supervisory employees increased by 3 cents to $23.87 an hour...employers also reported that the average workweek for all private payroll employees was unchanged at 34.3 hours in January, while hours for production and non-supervisory personnel increased by 0.1 hour 33.6 hours...however, the manufacturing workweek was unchanged at 40.8 hours, while average factory overtime was down by 0.1 hour to 3.1  hours...

Meanwhile, the January household survey indicated that the seasonally adjusted extrapolation of those who reported being employed fell by an estimated 89,000 to 158,714,000, while the estimated number of those unemployed rose by 139,000 to 5,892,000; which led to a 50,000 increase in the total labor force...however, those numbers were skewed as the benchmark revision to the civilian noninstitutional population showed that December's population had been overstated by 811,000, which meant that the population dependent metrics all had to be adjusted for that revision....with a January population increase of 132,000 on top of that, that revision meant the number of employment aged individuals who were not in the labor force increased to 94,896,000, the labor force participation rate rose from 63.2.to 63.4%, and the employment to population ratio, which we could think of as an employment rate, rose from 61.0 in December to 61.2% in January.....at the same time, the increase in the number unemployed was large enough to increase the unemployment rate, as rose from 3.5 to 3.6%...in addition, the number of those who reported they were forced to accept just part time work rose by 32,000, from 4,148,000 in December to 4,182,000 in January, which was enough to increase the alternative measure of unemployment, U-6, which includes those "employed part time for economic reasons", from 6.7% of the labor force in December to 6.9% in January...

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 of the press release to avoid the need to scroll up and down the page to view the tables you want to see..    

December Trade Deficit Up 11.9% After Deficits for Prior Months are Revised Higher

Our trade deficit jumped 11.9% in December as the value of both our exports and our imports increased, but our imports increased by much more....the Census report on our international trade in goods and services for December indicated that our seasonally adjusted goods and services trade deficit rose by $5.2 billion to $48.9 billion in December from a revised November deficit of $43.7 billion ....the value of our December exports rose by a rounded $1.6 billion to $209.6 billion on a $1.3 billion increase to $137.7 billion in our exports of goods and an increase of $0.3 billion to $71.9 billion in our exports of services, while the value of our imports rose by a rounded $6.8 billion to $258.5 billion on a $6.4 billion increase to $207.5  billion in our imports of goods, and a $0.4 billion increase to $51.1 billion in our imports of services...the November trade deficit was revised from the originally reported $43.3 billion to $43.7 billion, while the seasonally adjusted goods data for every prior month of 2019 were revised as well, which obviously means that previously published quarter over quarter figures for GDP should be revised as well...the revised figures now show that this year's trade deficit decreased $10.9 billion, or 1.7 percent, from 2018, on a $1.5 billion decrease in exports and a 12.5 billion decrease in imports, December’s jump notwithstanding....export prices were on average 0.2% lower in December, which means the relative real increase in exports for the month was greater than the nominal increase by that percentage, while import prices averaged 0.3% higher, meaning the increase in real imports was smaller than the nominal dollar decrease reported here by that percentage...

The $1.3 billion increase in our December exports of goods largely resulted from greater exports of industrial supplies and materials and of "other" goods, which was partially offset by lower exports of automotive vehicles, parts, and engines...referencing the Full Release and Tables for December (pdf), in Exhibit 7 we find that our exports of industrial supplies and materials rose by $1,705 million to $46,035 million on a $1,543 million increase in our exports of crude oil, a $534 million increase in our exports of fuel oil, and a $236 million increase in our exports of natural gas, and that our exports of those goods not categorized by end use rose by $996 million to $6,425 million...in addition, our exports of capital goods rose by $153 million to $45,396 million as a $1060 million increase in our exports of civilian aircraft and a $240 million increase in our exports of  semiconductors was mostly offset by a $562 million decrease in our exports of drilling & oilfield equipment, a $252 million decrease in our exports of medical equipment, and a $211 million decrease in our exports of parts for civilian aircraft, while our exports of foods, feeds and beverages rose by $79 million to $10,465 million...partly offsetting the increases in those export categories, our exports of automotive vehicles, parts, and engines fell by $1040 million to $12,370 million on a $614 million decrease in our exports of new and used passenger automobiles and a $614 million decrease in our exports of automotive parts other than engines, chassis, and tires, and our exports of consumer goods fell by $614 million to $16,454 million on a $493 million decrease in our exports of jewelry and a $321 million decrease in our exports of pharmaceutical preparations....

Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our goods imports and shows greater imports of industrial supplies and materials and of "other" goods accounted for a large part of our $6.4 billion increase in imports... our imports of industrial supplies and materials rose by $3973 million to $44,888 million on a $1,747 million increase in our imports of crude oil, a $906 million increase in our imports of non-monetary gold, a $626 million increase in our imports of petroleum products other than fuel oil, a $346 million increase in our imports of precious metals other than gold, a $218 million increase in our imports of iron and steel mill products, and a $201 million increase in our imports of fuel oil, which were slightly offset by a $322 million decrease in our imports of organic chemicals, and a $239 million decrease in our imports of coal and related fuels, while our imports of goods not categorized by end use rose by $996 million to $6,425 million....in addition, our imports of consumer goods rose by $655 million to $51,897 million on a $502 million increase in our imports of cellphones and a $217 million increase in our imports of toys, games, and sporting goods which were partially offset by a $217 million decrease in our imports of art, antiques and other collectibles, and our imports of capital goods rose by $645 million to $56,050 million as a $564 million increase in our imports of semiconductors, a $328 million increase in our imports of computers, and a $200 million increase in our imports of medicinal equipment was partly offset by a $310 million decrease in our imports of industrial machines not itemized separately, a $300 million decrease in our imports of excavating machinery, and a $222 million decrease in our imports of industrial engines, while our imports of foods, feeds, and beverages rose by $55 million to $12,288 million on increases in imports of several food items….only slightly offsetting increases in those import categories, our  imports of automotive vehicles, parts and engines fell by $293 million to $29,777 million as a $372 million decrease in our imports of automotive parts other than engines, chassis, and tires was partially offset by a $269 million increase in our imports of trucks, buses, and special purpose vehicles...

The Full Release and Tables pdf for this month's report also summarizes Exhibit 19, which gives us surplus and deficit details on our goods trade with selected  countries:

The December figures show surpluses, in billions of dollars, with South and Central America ($4.6), Hong Kong ($1.9), Brazil ($0.9), OPEC ($0.7), United Kingdom ($0.6), Singapore ($0.5), and Saudi Arabia ($0.3). Deficits were recorded, in billions of dollars, with China ($25.7), European Union ($14.0), Mexico ($9.4), Germany ($5.5), Japan ($4.4), Canada ($4.4), Italy ($2.9), Taiwan ($2.4), South Korea ($1.9), India ($1.7), and France ($0.3).

  • • The deficit with Canada increased $2.4 billion to $4.4 billion in December. Exports increased $0.1 billion to $23.9 billion and imports increased $2.5 billion to $28.2 billion.
  • • The deficit with Mexico increased $0.9 billion to $9.4 billion in December. Exports decreased $0.6 billion to $20.2 billion and imports increased $0.3 billion to $29.6 billion.
  • • The deficit with Japan decreased $1.3 billion to $4.4 billion in December. Exports increased $0.9 billion to $6.7 billion and imports decreased $0.4 billion to $11.1 billion.

In the advance estimate of 4th quarter GDP published last week, our December trade deficit was estimated based on the sketchy Advance Report on our International Trade in Goods which was released just before the GDP release...that report estimated that our seasonally adjusted December goods trade deficit was at $68,332 million on a Census basis, on goods exports of $136,983 million and goods imports of $205,315 million...this report revises that and shows that our actual Census basis goods trade deficit in December was at $68,671 million, on adjusted goods imports of $205,816 million and adjusted goods exports of $137,144 million...at the same time, the November goods trade deficit was revised up from the $62,988 million indicated in that advance report by nearly $1 billion to $63,728 million, and the October goods trade deficit was revised up from $66,693 million to $67,122 million…those revisions from the previously published figures would suggest that the 4th quarter trade deficit in goods was roughly $1.508 billion more than was accounted for in last week's GDP report, or more than $6.0 billion greater on an annualized basis, which would subtract about 0.10 percentage points from 4th quarter GDP when the 2nd estimate is released at the end of this month....

Note that trade in goods for July, August, September and October, which all go into figuring the change in 4th quarter GDP, were also revised with this report as well, and since our GDP growth is a measure of the change from one quarter to the next, we should also be adjusting for changes in those months as well to get an accurate 4th quarter read...however, the BEA will not revise 3rd quarter GDP figures until the annual revision this coming summer, so the 4th quarter GDP report that will be published at the end of March will not reflect the revised 3rd quarter trade figures included herein...however, since this month’s revisions are due to changes in the seasonal adjustments, the net trade deficit for the entirety of 2019 should not be affected...

Construction Spending Fell 0.2% in December after Prior Months Were Revised Higher

The Census Bureau's report on construction spending for December (pdf) estimated that the month's seasonally adjusted construction spending would work out to $1,327.7 billion annually if extrapolated over an entire year, which was 0.2 percent (± 0.8 percent)* below the revised November estimate of a $1,329.9 billion rate annually, but still 5.0  percent (±1.3 percent) above the estimated annualized level of construction spending in December of last year...the annualized November construction spending estimate was revised 0.4% higher, from $1,324.1 billion to $1,329.9 billion, and the annual rate of construction spending for October was revised 0.3% higher, from $1,316.8 billion to $1,320.8 billion...for all of 2019, construction spending totaled $1,303.5 billion, 0.3 percent (±1.0 percent) above the $1,307.2 billion spent in 2018...

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 $991.2 billion, 0.1 percent (±0.5 percent)* below the revised November estimate of $992.2 billion. Residential construction was at a seasonally adjusted annual rate of $540.7 billion in December, 1.4 percent (±1.3 percent) above the revised November estimate of $533.3 billion. Nonresidential construction was at a seasonally adjusted annual rate of $450.5 billion in December, 1.8 percent (±0.5 percent) below the revised November estimate of $458.9 billion. The value of private construction in 2019 was $974.7 billion, 2.5 percent (±1.0 percent) below the $1,000.2 billion spent in 2018. Residential construction in 2019 was $514.3 billion, 4.7 percent (±2.1 percent) below the 2018 figure of $539.6 billion and nonresidential construction was $460.4 billion, virtually unchanged from (±1.0 percent)* the $460.5 billion in 2018. 
  • Public Construction: In December, the estimated seasonally adjusted annual rate of public construction spending was $336.4 billion, 0.4 percent (±1.3 percent)* below the revised November estimate of $337.7 billion. Educational construction was at a seasonally adjusted annual rate of $80.4 billion, 2.1 percent (±2.1 percent)* below the revised November estimate of $82.1 billion. Highway construction was at a seasonally adjusted annual rate of $99.9 billion, 3.1 percent (±3.1 percent)* above the revised November estimate of $96.9 billion. The value of public construction in 2019 was $328.8 billion, 7.1 percent (±1.8 percent) above the $307.1 billion spent in 2018. Educational construction in 2019 was $79.0 billion, 3.4 percent (±3.6 percent)* above the 2018 figure of $76.4 billion and highway construction was $98.8 billion, 8.8 percent (±4.6 percent) above the $90.8 billion in 2018.

Construction spending for December was higher than was reported by the BEA in their advance estimate of 4th quarter GDP last week, while October's and November's annualized construction spending were revised $4.0 and $5.8 billion higher respectively...The BEA's key source data and assumptions (xls) accompanying last week's 4th quarter GDP report indicates that they had estimated that December's residential construction would increase by an annualized $5.8 billion from previously published figures, that nonresidential construction would decrease by an annualized $2.4 billion from last month's report, and that December's public construction would decrease by an annualized $1.3 billion from last month's report....totaling those changes, the BEA had estimated December construction spending to be $2.1 higher than previously reported November levels, which have now been revised $5.8 billion higher...since this report indicated that total construction spending for December was $2.2 billion lower than the revised November figure, that means the net of the annualized construction figures used for December in the GDP report was $1.5 billion too low...averaging the differences between the annual rates in this report and those used in the GDP report for the three months of the 4th quarter would mean that this report suggests that construction spending in the 4th quarter GDP report was underestimated by $3.7 billion (at an annual rate), implying a downward revision to GDP components at a rate that should result in addition of 0.07 or 0.08 percentage points to 4th quarter GDP when the 2nd estimate is released at the end of the month...

Factory Shipments and Factory Inventories Both Up 0.5% in December 

The Full Report on Manufacturers' Shipments, Inventories, & Orders (pdf) for December from the Census Bureau reported that the seasonally adjusted value of new orders for manufactured goods increased by $8.6 billion or 1.8 percent to $499.3 billion in December, following a decrease of 1.2% to $490.7 billion in November, which was revised from the 0.7% decrease to $493.0 billion that was reported for November a month ago....however, since the Census Bureau does not even collect orders data on 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 December advance report on durable goods which was released 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 December, up two of the last three months, increased $8.6 billion or 1.8 percent to $499.3 billion, the U.S. Census Bureau reported today. This followed a 1.2 percent November decrease. Shipments, up three consecutive months, increased $2.3 billion or 0.5 percent to $504.1 billion. This followed a 0.3 percent November increase. Unfilled orders, down three of the last four months, decreased $0.6 billion or virtually unchanged to $1,156.2 billion. This followed a 0.6 percent November decrease. The unfilled orders-to-shipments ratio was 6.65, down from 6.66 in November. Inventories, up twelve of the last thirteen months, increased $3.5 billion or 0.5 percent to $704.9 billion. This followed a 0.3 percent November increase. The inventories-to-shipments ratio was 1.40, unchanged from November.
  • New orders for manufactured durable goods in December, up two of the last three months, increased $5.9 billion or 2.4 percent to $245.6 billion, unchanged from the previously published increase. This followed a 3.1 percent November decrease. Transportation equipment, up following three consecutive monthly decreases, drove the increase, $6.1 billion or 7.9 percent to $83.2 billion. New orders for manufactured nondurable goods increased $2.8 billion or 1.1 percent to $253.8 billion.
  • Shipments of manufactured durable goods in December, down six consecutive months, decreased $0.5 billion or 0.2 percent to $250.3 billion, unchanged from the previously published decrease. This followed a 0.2 percent November decrease. Transportation equipment, also down six consecutive months, led the decrease, $0.3 billion or 0.4 percent to $83.3 billion. Shipments of manufactured nondurable goods, up three consecutive months, increased $2.8 billion or 1.1 percent to $253.8 billion. This followed a 0.7 percent November increase. Petroleum and coal products, up five of the last six months, led the increase, $2.4 billion or 4.5 percent to $56.3 billion.
  • Unfilled orders for manufactured durable goods in December, down three of the last four months, decreased $0.6 billion or virtually unchanged to $1,156.2 billion, up from the previously published 0.1 percent decrease. This followed a 0.6 percent November decrease. Machinery, down fourteen consecutive months, led the decrease, $0.4 billion or 0.4 percent to $101.6 billion.
  • Inventories of manufactured durable goods in December, up seventeen of the last eighteen months, increased $2.1 billion or 0.5 percent to $435.9 billion, unchanged from the previously published increase. This followed a 0.4 percent November increase. Transportation equipment, also up seventeen of the last eighteen months, led the increase, $1.7 billion or 1.1 percent to $151.2 billion. Inventories of manufactured nondurable goods, up two consecutive months, increased $1.4 billion or 0.5 percent to $269.0 billion. This followed a 0.2 percent November increase. Petroleum and coal products, up three consecutive months, led the increase, $1.0 billion or 2.5 percent to $40.8 billion. By stage of fabrication, December materials and supplies decreased 0.3 percent in durable goods and increased 0.5 percent in nondurable goods. Work in process increased 1.5 percent in durable goods and decreased 0.3 percent in nondurable goods. Finished goods were virtually unchanged in durable goods and increased 0.9 percent in nondurable goods.

The BEA's key source data and assumptions (xls) for 4th quarter GDP indicates that they had estimated that the value of non-durable goods inventories would  increase by $0.6 billion on a Census basis in December before they estimated the 4th quarter’s output, so the actual $1.4 billion increase would indicate that they underestimated the end of 4th quarter GDP inventory component by about $0.8 billion, or by ~$3.2 billion on an annualized basis, which would suggest that 4th quarter GDP would have to be revised upwards by about 0.05 or 0.06 percentage points to account for what this report shows..

December Wholesale Sales Down 0.7% After November Sales Revised 0.6% Lower; Inventories Down 0.2%

The December report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at $494.4 billion, down 0.7 percent (+/-0.4%) from the revised November level, but up 0.5 percent (±1.1 percent)* from wholesale sales of December 2018... the November preliminary estimate was revised down $3.0 billion or 0.6% to $497.7 billion from the $500.7 billion in sales reported last month, which is now 0.9% more than October sales, rather than a 1.5% increase...as an intermediate activity, wholesale sales are not included in GDP except insofar as they are a trade service, since the traded goods themselves do not represent an increase in the output of the goods produced or finally sold....

On the other hand, the monthly change in private inventories is a major factor in GDP, as additional goods on the shelf or in intermediate storage represent goods that were produced but not sold, and this December report estimated that wholesale inventories were valued at a seasonally adjusted $674.5 billion at month end, down 0.2 percent (±0.4 percent)* from the revised November level but 2.1 percent (±1.1 percent) higher than in December a year ago, with the November preliminary estimate revised higher, from $674.9 billion to $675.7 billion at the same time, now a 0.1% increase from October....

In the advance report on 4th quarter GDP of last week, 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 $675.6 billion at the end of December, down from $676.0 billion in November....that's $1.1 billion more than the $674.5 billion that this report shows, which would imply that the quarterly change in 4th quarter wholesale inventories was overestimated at roughly a $4.4 billion annual rate...assuming there's no distortion caused by reweighting the inflation adjustments to those inventories, that would mean that the growth rate of 4th quarter GDP was overestimated by around 0.8 percentage points, just based on what this report shows...

Sunday, February 2, 2020

4th quarter GDP; December’s personal income and outlays, durable goods, and new home sales

This week’s key reports were the advance estimate of 4th quarter GDP and the December report on Personal Income and Spending, both from the Bureau of Economic Analysis...other widely watched reports included the advance report on durable goods for December and the December report on new home sales, both from the Census bureau, and the Case-Shiller Home Price Index for November from S&P Case-Shiller, which reported that prices for homes that sold nationally during September, October and November averaged 3.5% higher than the prices for the same homes that sold during the same 3 month period a year earlier...in addition, this week also saw the last two Fed manufacturing surveys for January: the Richmond Fed Survey of Manufacturing Activity, covering an area that includes Virginia, Maryland, the Carolinas, the District of Columbia and West Virginia, which reported its broadest composite index rose to +20 in January from -5 in December and -1 in November, suggesting a return to robust growth of Fifth District manufacturing, and the Dallas Fed Texas Manufacturing Outlook Survey, covering Texas and adjacent counties in Louisiana and New Mexico, reported its general business activity index rose to 0.0, up from last month's -3.2, a zero reading which the Dallas Fed says “suggests manufacturers were fairly balanced in their assessment of whether activity had improved or worsened from last month”...

4th Quarter GDP Grew at 2.1% Rate; 2019’s Growth was Weakest Since 2016

Our economy grew at a 2.1% rate in the fourth quarter, the same growth rate as in the third quarter, as weaker personal consumption and much slower growth in private inventories were offset by a return to fixed investment growth and a big positive contribution from trade figures...the Advance Estimate of 4th Quarter GDP from the Bureau of Economic Analysis estimated that the real output of goods and services produced in the US grew at a 2.1% annual rate over the output of the 3rd quarter of 2018, when our real output grew at a 2.1% real rate, as improving trade added almost a point and a half to GDP while slowing inventory investment subtracted more than a point...for the entire year, our economy grew at a 2.3% rate, down from the the 2.9% growth of 2018, and the 2.4% growth rate of 2017....in current dollars, our fourth quarter GDP grew at a 3.6% annual rate, increasing from what would work out to be a $21,542.5 billion a year output rate in the 3rd quarter to a $21,734.3 billion annual rate in the 4th quarter, with the headline 2.1% annualized rate of increase in real output arrived at after an annualized inflation adjustment averaging 1.4%, aka the GDP deflator, was computed and applied to the current dollar change... as is usual with an advance estimate, the BEA cautions that the source data is incomplete and also subject to revisions, which have averaged +/-0.6% in either direction before the third estimate for the quarter is released, which will be two months from now...also note that December construction and factory inventory data were not yet reported or estimated at the time of this release, and that the BEA assumed a $4.8 billion increase in residential construction, a $2.4 billion decrease in nonresidential construction, and a $7.6 billion increase in nondurable manufacturing inventories for December before they estimated the 4th quarter’s output (see Key source data and assumptions (xls)

While we review the details for the 4th quarter below, remember that the news release for GDP 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 over the 3 month period, and that the prefix "real" is used to indicate that each change has been adjusted for inflation using price indexes chained from 2012 prices, 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 advance estimate of 4th quarter GDP, which we find on the BEA GDP landing page, which also offer links to just the tables on Excel and other technical notes... specifically, we refer to table 1, which shows the real percentage change in each of the GDP components annually and quarterly since the 1st  quarter of 2016, table 2, which shows the contribution of each of the components to the GDP growth figures for those quarters and years, table 3, which shows both the current dollar value and the inflation adjusted value in 2012 dollars of each of those components, and table 4, which shows the change in the price indexes for each of the GDP components....

Personal consumption expenditures (PCE), which accounts for almost 70% of GDP,  grew at a 3.4% rate in current dollars in the 4th quarter, which was deflated to indicate a 1.8% real growth rate of goods and services consumed for GDP purposes, after an annualized PCE price index increase of 1.6% was indicated to adjust that consumer spending for inflation...consumer outlays for durable goods fell at a 0.3% rate in current dollars while prices for those durable goods fell at a 2.4% rate, and thus the BEA found that the real growth in the output of consumer durables indicated by that lower spending rose at a 2.1% rate, as real consumption of recreational goods and vehicles grew at a 3.3% rate and accounted for half the growth in durables...the BEA also found that real output of consumer non-durable goods grew at a 1.6% rate, after growth in consumer spending for non-durables at a 2.4% rate was adjusted for weighted non-durable goods prices that rose at a 1.6% rate, as modest growth in real consumption of clothing, footwear, gasoline and other energy goods was offset by lower consumption of food and other non-durable goods....meanwhile, the 4.2% nominal growth in consumer outlays for services was deflated by a 2.2% average increase in prices for personal services to show real output of consumer services grew at a 2.2% annual rate, as a 2.9% growth rate in real health care services accounted for almost one-third of services growth...as a result of those changes in growth from the 3rd to the 4th quarter, the increase in real outlays for durable goods added 0.15 percentage points to the GDP growth rate, increased non-durable goods added 0.11 percentage points, and increased services added 0.94 percentage points to the growth rate of the economy in the 4th quarter..

The change in other components of the change in GDP is computed by the BEA in the same manner that we have just illustrated for computing real PCE; ie, the annualized increase in current dollar spending for the quarter is adjusted with the annualized inflation factor for that component, yielding the change in real units of goods or services produced during the quarter at an annual rate....thus, real gross private domestic investment, which had shrunk at a real 1.0% annual rate in the 3rd quarter, shrunk at a real 6.1% annual rate from those levels in the 4th quarter...however, the real growth rate of fixed investments increased, growing at a 0.1% annual rate in the 4th quarter, after shrinking at a 0.8% rate in the 3rd quarter...among fixed investments, real non-residential fixed investment shrunk at a 1.5% rate because real investment in non-residential structures shrunk at a 10.1% rate and subtracted 0.30 percentage points from 4th quarter GDP, and because real investment in equipment shrunk at a 2.9% rate and subtracted 0.17 percentage points from 4th quarter GDP, while real investment in intellectual property grew at 5.9% rate and added 0.27 percentage points to GDP....at the same time, real residential investment grew at a 5.8% rate and added 0.21 percentage points to GDP....for an easy to read table as to what's included in each of those GDP investment categories, see the NIPA Handbook, Chapter 6, page 3.....

Meanwhile, real private inventories grew by an inflation adjusted $6.5 billion in the 4th quarter, after growing at an inflation adjusted $69.4 billion in the 3rd quarter, and as a result the rounded $63.0 billion negative change in real inventory growth subtracted 1.09 percentage points from the 4th quarter's growth rate, after real inventory growth that was unchanged in the 3rd quarter had no impact on that quarter's GDP....however, since growth in inventories indicates that more of the goods produced during the quarter were left in storage or "sitting on the shelf”, the $63.0 billion decrease in their growth in turn means real final sales of GDP were actually greater by that amount, and hence real final sales of GDP rose at a 3.2% rate in the 4th quarter, up from the real final sales growth rate of 2.1% in the 3rd quarter, when the lack of inventory growth meant that the quarter’s growth in real final sales was the same as that of the quarter's GDP...

Real exports increased in the quarter, while real imports decreased, thus increasing the portion of our investment and consumption that was domestically sourced....our real exports of goods and services grew at a 1.4% rate in the fourth quarter, after our exports had increased at a 1.0% rate in the 3rd quarter, while our real imports shrunk at a 8.7% rate in the fourth quarter, after growing at a 1.8% rate in the 3rd quarter...as you'll recall, increases in exports are added to GDP because they are part of our production that was not consumed or added to investment in our country (& hence not counted elsewhere in this GDP calculation), and thus the fourth quarter increase in real exports added 0.17 percentage points to 4th quarter GDP, after increasing exports had added 0.11 percentage points to the 3rd quarter...on the other hand, increases in imports subtract 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 in the US, so conversely the decrease in 4th quarter imports added 1.32 percentage points to 4th quarter GDP, after increasing imports had subtracted 0.26 percentage points from the 3rd quarter....as result, our improving trade balance added a rounded total of 1.48 percentage points to 4th quarter GDP, after our worsening trade deficit had subtracted a rounded 0.14 percentage points in the third quarter…

Finally, real consumption and investment by all branches of government increased at a 2.7% annual rate in the 4th quarter, after growing at a 1.7% rate in the 3rd quarter, as federal government consumption and investment grew at a 3.6% rate, while state and local consumption and investment grew at a 2.2% rate....inflation adjusted federal spending for defense grew at a 4.9% rate and added 0.19 percentage points to 4th quarter GDP growth, while real non-defense federal consumption and investment grew at a 1.6% rate and added 0.04 percentage points to GDP....note that federal 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....meanwhile, state and local government investment and consumption expenditures grew at a 2.2% annual rate and added a rounded 0.23 percentage points to the growth of 4th quarter GDP, as real growth in state and local consumption expenditures added 0.11 percentage points while real state and local investment grew at a 6.5% annual rate and added 0.13 percentage points to GDP...

December Personal Income Rose 0.2%, Personal Spending Rose 0.3%, PCE Price Index Up 0.3%

Friday's release of the December Income and Outlays report from the Bureau of Economic Analysis was concurrent with the GDP release on Thursday, and all the PCE data in the 4th quarter GDP report we just covered actually originated with this report...and like that GDP report, all the dollar values reported here are at an annual rate and seasonally adjusted, ie, they tell us what personal income, spending and saving would be for a year if December's adjusted income and spending were extrapolated over an entire year...however, the percentage changes are computed monthly, from one annualized figure to the next, and in this case of this month's report they give us the percentage change in each annualized metric from November to December....thus, when the opening line of the news release for this report tell us "Personal income increased $40.7 billion (0.2 percent) in December...", they mean that the annualized figure for all types of personal income in December, $18,922.3 billion, was $40.7 billion, or more than 0.2% greater than the annualized personal income figure of $18,881.6 billion for November; the actual increase in personal income in December over November is not given....similarly, disposable personal income, which is income after taxes, rose by nearly 0.2%, from an annual rate of $16,675.8 billion in November to an annual rate of $16,706.4 billion in December...the monthly contributors to the change in personal income, which can be seen in the Full Release & Tables (PDF) for this release, are also annualized...in December, the largest contributors to the $40.7 billion annual rate of increase in personal income were a $28.4 billion increase in wages and salaries and a $29.6 billion increase in dividend and interest income, while proprietor's income fell at a $25.0 billion rate on a $36.2 billion decrease in farm income…

Meanwhile, seasonally adjusted personal consumption expenditures (PCE) for December, which were included in the change in real PCE in the 4th quarter GDP report, rose at a $46.6 billion annual rate to a $14,852.6 billion pace of consumer spending annually, more than 0.3% above that of November, after November‘s PCE was revised down from the previously reported annual rate of $14,824.1 billion to $14,806.0 billion...the current dollar increase in December spending included a $33.4 billion annualized increase to an annualized $10,263.9 billion in spending for services, a $26.1 billion increase to $3,043.8 billion in annualized spending for nondurable goods, offset by a $12.9 billion decrease to $1,545.0 billion in annualized spending for durable goods...total personal outlays for December, which includes interest payments and personal transfer payments in addition to PCE, rose by an annualized $51.5 billion to $15,430.6 billion, which left personal savings, which is disposable personal income less total outlays, at a $1,275.9 billion annual rate in December, down from the revised $1,296.7 billion in annualized personal savings in November...as a result, the personal saving rate, which is personal savings as a percentage of disposable personal income, fell to 7.6%, down from 7.8% in November, and the lowest savings rate since July..

While our personal consumption expenditures accounted for 69.8% of our fourth quarter GDP, before they could be included in that measurement of the change in our output, they first needed to be adjusted for inflation, to give us the real change in consumption, and hence the real change in the goods and services that were produced for that consumption.....that adjustment was made using the price index for personal consumption expenditures, also included in this report, which is a chained price index based on 2012 prices = 100....from Table 9 in the pdf for this report, we find that index rose from 110.294 in November to 110.585 in December, giving us a month over month inflation rate of 0.26384%, which the BEA reports as an increase of +0.3%...at the same time, Table 11 gives us a year over year PCE price index increase of 1.6%, and a core price increase, excluding food and energy, also up 1.6% for the year, but both still below the Fed's inflation target....applying the December inflation adjustment to the change in December PCE shows that real PCE was up 0.0508%, which BEA reports as a 0.1% increase in their summary table...note that when those PCE price indexes are applied to a given month's annualized current dollar PCE, it yields that month's annualized real PCE in chained 2012 dollars, which aren't really dollar amounts at all, but merely the means that the BEA uses to compare one month's or one quarter's real goods and services produced to another....those results are shown in tables 7 and 8 of the report PDF, where the quarterly figures given are identical to those shown in table 3 in the GDP report, and which were used to compute the contribution of real personal consumption of goods and services to GDP...

December Durable Goods: New Orders Up 2.4%, Shipments Down 0.2%, Inventories Up 0.5%

The Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders for December (pdf) from the Census Bureau reported that the value of the widely watched new orders for manufactured durable goods rose by $5.7 billion or 2.4 percent to $245.5 billion in December, after November's new orders were revised from the $242.6 billion reported a month ago to $239.8 billion, now 3.1% less than October's new orders...for the year, 2019’s new orders were 1.5% below those of 2018, a reversal of the 8.1% year over year increase this report indicated for 2018....an increase in the volatile monthly new orders for transportation equipment was responsible for the December increase, as new transportation equipment orders rose $5.9 billion or 7.6 percent to $82.9 billion, on a 168.3% increase to $5,887 million in new orders for defense aircraft, even as new orders for commercial aircraft fell 74.7% to $1,454 million....excluding orders for transportation equipment, other new orders fell 0.1%, while excluding new orders for defense equipment, new orders fell 2.5%....moreover, new orders for nondefense capital goods less aircraft, a proxy for equipment investment, fell $639 million or 0.9% to $68,618 million...

Meanwhile, the seasonally adjusted value of December shipments of durable goods, which were included as inputs into various components of 4th quarter GDP after adjusting for changes in prices, fell by $0.5 billion or 0.2 percent to $250.4 billion, the sixth consecutive decrease, after the value of November shipments was revised from from $251.6 billion to $257.6 billion, now down 0.1% from October...shipments of transportation equipment, also down six consecutive months, led the decrease, falling $0.4 billion or 0.4 percent to $83.2 billion, on a 8.7% decrease to $3,766 million in shipments of defense aircraft....meanwhile, shipments of nondefense capital goods less aircraft fell 0.4% to $68,823 million, after November’s capital goods shipments were revised fractionally lower...for the year, shipments of durable goods were valued just 0.9% greater than those of 2018…

At the same time, the value of seasonally adjusted inventories of durable goods, also a major GDP contributor, rose for the 17th time in the past 18 months, increasing by $2.2 billion or 0.5 percent to $436.0 billion, after November inventories were revised from $434.0 billion to $433,828 million, still up 0.4% from October....a $1.7 billion or 1.2 percent increase to $151.2 billion in inventories of transportation equipment was responsible for most of the increase, which in turn was driven by a 2.8 percent increase to $12,915 million in inventories of commercial aircraft...

Finally, unfilled orders for manufactured durable goods, which are probably a better measure of industry conditions than the widely watched but obviously volatile new orders, decreased for the third month out of the last four, falling by $0.8 billion or 0.1 percent to $1,156.0 billion, after unfilled orders for November were revised from $1,159.0 billion to $1,181.274 billion, now a 0.6% decrease from October...oddly enough, a $0.5 billion or 0.5 percent decrease to $101.6 billion in unfilled orders for machinery was responsible for more than half of the decrease, as unfilled orders for transportation equipment orders were statistically unchanged at $788,136 million...compared to the end of 2018, the unfilled order book for durable goods at the end of December was 2.2% below the level of the prior year end, with unfilled orders for nondefense capital goods less aircraft also 2.2% below their year ago level..

New Home Sales Little Changed in December After Sales in Prior Two Months Revised Lower

The Census report on New Residential Sales for December (pdf) estimated that new single family homes were selling at a seasonally adjusted pace of 694,000 homes annually during the month, which was 0.4 percent (±15.1 percent)* below the revised November annual rate of 697,000 new single family home sales, but was 23.0 percent (±20.0 percent) above the estimated annual rate that new homes were selling at in December of last year....the asterisk indicates that based on their small sampling, Census could not be certain whether December new home sales rose or fell from those of November, 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 new single family homes in November were revised from the annual rate of 719,000 reported last month to an annual rate of 697,000, while home sales in October, initially reported at an annual rate of 733,000 and revised to 710,000 last month, were revised to a 705,000 a year rate with this report, and while September's annualized home sale rate, initially reported at an annual rate of 701,000 and revised down from the initially revised 738,000 a year rate to a 710,000 a year rate last month, were further revised up to a 725,000 annual rate with this release...

The annual rates of sales reported here are seasonally adjusted after extrapolation from the estimates of canvassing Census field reps, which indicated that approximately 47,000 new single family homes sold in December, down from the estimated 51,000 new homes that sold in November and the 55,000 that sold in October.....the raw numbers from Census field agents further estimated that the median sales price of new houses sold in December was $331,400, up from the median sale price of $320,900 in November and up from the median new home sales price of $305,400 in December a year ago, while the average December new home sales price was $384,500, up from the $377,600 average sales price in November, and up from the average sales price of $361,100 in December a year ago, but still down from the $402,900 average sales price of two years earlier....a seasonally adjusted estimate of 327,000 new single family houses remained for sale at the end of December, which represents a 5.7 month supply at the December sales rate, up from the revised 5.5 months of new home supply in November...for graphs and additional commentary on this report, see the following two posts by Bill McBride at Calculated Risk: New Home Sales at 694,000 Annual Rate in December and A few Comments on December New Home Sales...

 

(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…)