Sunday, April 11, 2021

March producer prices; February’s trade deficit, job openings survey, factory inventories, & wholesale trade

Major monthly reports released over the past week included the Commerce Department's report on our International Trade for February, the Producer Price Index for March and the Job Openings and Labor Turnover Survey (JOLTS) for February, both from the Bureau of Labor Statistics, and the Full Report on Manufacturers' Shipments, Inventories and Orders for February, and the February report on Wholesale Trade, Sales and Inventories, both from the Census Bureau....in addition, the Fed released the Consumer Credit Report for February, which indicated that overall consumer credit, a measure of non-real estate debt, expanded by a seasonally adjusted $27.6 billion, or at a 7.9% annual rate, the most since late 2017, as non-revolving credit expanded at a 7.3% annual rate to $3,231.4 billion and revolving credit outstanding grew at a 10.1% rate to $974.4 billion...

Privately issued reports released this week included the March 2021 Services Report On Business® from the Institute for Supply Management, which saw the ISM Services index rise to an all-time high of 63.7% in March, up from 55.3% in February, indicating a much larger plurality of service industry purchasing managers reported expansion in various facets of their business in March, and the Mortgage Monitor for February (pdf) from Black Knight Financial Services, which indicated that 6.00% of all mortgages were delinquent in February, up from 5.85% in January, and up from 3.28% in February of 2020, and that a record low of 0.32% of all mortgages were in the foreclosure process, unchanged from the 0.32% that were in foreclosure in January but down from the 0.45% of mortgages that were in foreclosure a year earlier...

US Trade Deficit Rises 4.8% in February to Record High

Our trade deficit rose 4.8% February, as both our exports and imports decreased, but the value of our exports fell by almost three times as much as the value of our imports did....the Commerce Department report on our international trade in goods and services for February indicated that our seasonally adjusted goods and services trade deficit rose by $3.3 billion to $71.1 billion in February, from a January deficit that was revised down to $67.8 billion from the $68.2 billion deficit reported a month ago...in rounded figures, the value of our February exports fell by $5.0 billion to $187.3 billion on $4.8 billion decrease to $131.1 billion in our exports of goods and a $0.2 billion decrease to $56.1 billion in our exports of services, while our imports fell $1.7 billion to $258.3 billion as a $2.0 billion decrease to $219.1 billion in our imports of goods was partially offset by a $0.3 billion increase to $39.2 billion in our imports of services....export prices averaged 1.6% higher in February, which means our real exports month over month fell more than the nominal decrease by that percentage, while import prices rose 1.3%, meaning that the contraction in real imports was greater than the nominal decrease reported here by that percentage...

The decrease in our February exports of goods resulted from lower exports of capital goods, consumer goods, soybeans, and of automotive vehicles, parts and engines...referencing the Full Release and Tables for February (pdf), in Exhibit 7 we find that our exports of capital goods fell by $2,451 million to $39,094 million on a $738 million decrease in our exports of industrial machines other than those itemized separately, a $459 million decrease in our exports of civilian aircraft, and a $409 million decrease in our exports of semiconductors, and that our exports of consumer goods fell by $937 million to $15,049 million on a $470 million decrease in our exports of gem diamonds; in addition, our exports of foods, feeds and beverages fell by $727 million to $13,166 million on a $889 million decrease in our exports of soybeans, and our exports of automotive vehicles, parts, and engines fell by $703 million to $11,899 million on a $319 million decrease in our exports of parts and accessories of vehicles other than tires, engines and chassis and a $280 million decrease in our exports of new and used passenger cars, while our exports in other goods not categorized by end use fell by $372 million to $4,968 million....partially offsetting the decreases in those end use categories, our exports of industrial supplies and materials rose by $352 million to $46,448 million as a $2,399 million increase in our exports of natural gas and a $503 million increase in our exports of non-monetary gold were partly offset by a $824 million decrease in our exports of crude oil, a $326 million decrease in our exports of plastic materials, and a $357 million decrease in our exports of natural gas liquids...

Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our imports of goods and shows that lower imports of automotive vehicles, parts, and engines and of consumer goods were responsible for the $2.0 billion decrease in our February imports, while their impact was partly offset by greater imports of industrial supplies and materials...our imports of automotive vehicles, parts and engines fell by $3,393 million to $28,184 million on a $1,768 million decrease in our imports of passenger cars, a $633 million decrease in our imports of trucks, buses, and special purpose vehicles, and a $589 million decrease in our imports of parts and accessories of vehicles other than tires, engines and chassis, and our imports of consumer goods fell by $2,674 million to $60,665 million as a $3,876 million decrease in our imports of pharmaceuticals and a $438 million decrease in our imports of household appliances were partially offset by a $737 million increase in our imports of artwork, antiques, and other collectibles...in addition, our imports of foods, feeds, and beverages fell by $669 million to $13,116 million on decreases in most food & feed categories and a $285 million decrease in imports of foods other than those itemized separately...partially offsetting the decreases in those end use categories, our imports of industrial supplies and materials rose by $3,531 million to $46,586 million on a $1,056 million increase in our imports of finished metal shapes, a $963 million increase in our imports of crude oil, an $874 million increase in our imports of natural gas, a $535 million increase in our imports of precious metals other than those itemized, and a $395 million increase in our imports of petroleum products other than those itemized, and our imports of capital goods rose by $159 million to $57,707 million as a $951 million increase in our imports of civilian aircraft was partly offset by a $420 million increase in our imports of computers, and lastly our imports of other goods not categorized by end use rose by $924 million to $9,483 million...

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

The February figures show surpluses, in billions of dollars, with South and Central America ($3.7), Brazil ($1.4), Hong Kong ($1.2), Singapore ($0.6), United Kingdom ($0.2), and Saudi Arabia ($0.1). Deficits were recorded, in billions of dollars, with China ($30.3), European Union ($19.0), Mexico ($6.8), Germany ($5.3), Japan ($4.5), Canada ($4.0), Italy ($3.2), France ($2.7), Taiwan ($2.4), South Korea ($2.3), and India ($1.7).

  • The deficit with China increased $3.1 billion to $30.3 billion in February. Exports decreased $4.5 billion to $10.4 billion and imports decreased $1.5 billion to $40.6 billion.
  • The deficit with Canada increased $2.2 billion to $4.0 billion in February. Exports decreased $0.5 billion to $23.7 billion and imports increased $1.7 billion to $27.7 billion.
  • The deficit with Mexico decreased $5.1 billion to $6.8 billion in February. Exports increased $2.1 billion to $22.8 billion and imports decreased $3.0 billion to $29.6 billion.

To gauge the impact of January and February trade on 1st quarter GDP growth figures, we use exhibit 10 in the full pdf for this report, which gives us monthly goods trade figures by end use category and in total, already adjusted for inflation in chained 2012 dollars, the same inflation adjustment that’s used by the BEA to compute trade figures for GDP, with the only difference being that the amounts are not annualized here....from that table, we can figure that the 4th quarter’s real exports of goods averaged 145,373.7 million monthly in chained 2012 dollars, while inflation adjusted 1st quarter goods exports were at 147,294 million and 139,441 million for January and February respectively in that same 2012 dollar quantity index representation...averaging January’s and February’s goods exports and then computing the annualized change between that average and the average of the fourth quarter, we find that the 1st quarter's real exports of goods are running at a 5.4068% annual rate below those of the 4th quarter, or at a pace that would subtract about 0.33 percentage points from 1st quarter GDP..... in a similar manner, we find that our 4th quarter real imports of goods averaged 239,602.7 million monthly in chained 2012 dollars, while inflation adjusted January and February imports were at 243,409 million and 238,534 million respectively, after that same 2012 chained dollars inflation adjustment...that would indicate that so far in the 1st quarter, our real imports of goods have increased at a 2.305% annual rate from those of the 4th quarter...since increases in imports subtract from GDP because they represent the portion of consumption or investment that occurred during the quarter that was not produced domestically, their increase at a 2.3% rate would subtract about 0.26 percentage points from 1st quarter GDP....hence, if the average trade deficit in goods of the two months reported here is continued in March, the net effect of our international trade in goods will be to subtract around 0.59 percentage points from 1st quarter GDP...

Note that we have not computed the impact of the usually less volatile change in services here because the Census does not provide inflation adjusted data on those, but that the $0.2 billion decrease in exports of services and the $0.3 billion increase in imports of services both suggest that February’s trade in services would also be a subtraction from 1st quarter GDP, after the change January's exports and imports in services were statistically equal...

Producer Prices rose 1.0% in March on Higher Wholesale Energy Prices, Wider Margins for Trade and Transport Services

The seasonally adjusted Producer Price Index (PPI) for final demand rose 1.0% in March, as prices for finished wholesale goods rose 1.7% while margins of final services providers rose 0.7%...that increase followed a February report that the PPI was 0.5% higher, with prices for finished wholesale goods on average 1.4% higher, while margins of final services providers increased by 0.1%, a January report that had the PPI 1.3% higher, with average prices for finished wholesale goods rising 1.4%, while margins of final services providers increased by 1.3%, a now revised December report that indicated the PPI was up 0.3%, with prices for finished wholesale goods up 1.0% while margins of final services providers were 0.2% lower, and a re-revised November report that shows the PPI was unchanged, with prices for finished wholesale goods rising 0.4% while margins of final services providers decreased 0.2%....on an unadjusted basis, producer prices are now 4.2% higher than a year ago, up from the 2.8% 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 0.6% for the month, and is now 3.1% higher than in March a year ago, up from the 2.2% year over year increase as was shown in February...

As noted, the price index for final demand for goods, aka 'finished goods', was 1.7% higher in March, after being 1.4% higher in February, 1.4% higher in January, 1.0% higher in December, 0.4% higher in November, 0.5% higher in October, 0.4% higher in September, 0.4% higher in August, 0.5% higher in July, 0.4% higher in June, and 1.4% higher in May, but 2.8% lower in April and 1.7% lower in March of last year....the finished goods price index rose 1.7% in February because the price index for wholesale energy goods was 5.9% higher, after it had risen by 6.0% in February, 5.1% in January, 4.7% in December, 1.7% in November, and by 0.5% in October, while the price index for wholesale foods rose 0.5%, after rising by 1.3% in February, rising 0.2% in January, after being unchanged in December and rising by a revised 0.2% in November, and while the index for final demand for core wholesale goods (excluding food and energy) was 0.9% higher, after it had risen by 0.3% in February and 0.8% in January....wholesale energy prices averaged 5.9% higher due to a 8.8% increase in wholesale prices for gasoline and a 16.5% increase in wholesale prices for No.2 diesel fuel, while, the wholesale food price index rose 0.5% on a 10.3% increase in the wholesale price index for eggs for fresh use, a 6.0% increase in the wholesale price index for pork, and a 7.7% increase in wholesale price index for fin-fish and shellfish....among core wholesale goods, the wholesale price index for industrial chemicals rose 9.1%, the wholesale price index for mobile homes rose 2.5%, and the wholesale price index for iron and steel scrap rose 10.8% ..

At the same time, the index for final demand for services rose 0.7% in March, after rising 0.1% in February and 1.3% in January, after falling by 0.2% in December and in November, as the index for final demand for trade services rose 1.0%, the index for final demand for transportation and warehousing services rose 1.5%, and the core index for final demand for services less trade, transportation, and warehousing services was 0.4% higher...among trade services, seasonally adjusted margins for machinery and vehicle wholesalers rose 6.7%, margins for apparel, jewelry, footwear, and accessories retailers rose 5.8%, margins for TV, video, and photographic equipment and supplies retailers rose 6.8%, and margins for food retailers rose 1.1%, while margins for automobile retailers fell 4.7%.. among transportation and warehousing services, average margins for truck transportation of freight rose 1.7%, average margins for air transportation of freight rose 1.2%, and average margins for rail transportation of freight and mail rose 1.1%...among the components of the core final demand for services index, the index for portfolio management rose 1.6%, the index for passenger car rental rose 9.6%, and margins for residential property sales and leases, brokerage fees and commissions rose 1.7%, while margins for arrangement of cruises and tours fell 3.0%…

This report also showed the price index for intermediate processed goods rose 4.0% in March, after rising 2.7% in February, 1.7% in January, a revised 1.2% in December, a revised 0.9% in November, 0.9% in October, 0.6% in September, 0.9% in August, 1.4% in July, and 1.2% in June, but after being unchanged in May and falling the prior 5 months....the price index for intermediate energy goods rose 8.8%, as refinery prices for gasoline rose 8.8%, refinery prices for No. 2 diesel fuel rose 16.5%, refinery prices for jet fuel rose 12.6%, producer prices for industrial electric power rose 9.5%, and producer prices for industrial natural gas rose 8.5%... meanwhile, the price index for intermediate processed foods and feeds rose 0.9%, as the producer price index for fats and oil rose 3.1%, the producer price index for processed poultry rose 3.9%, and the producer price index for prepared animal feeds rose 1.0%...at the same time, the core price index for intermediate processed goods less food and energy rose 3.2% as the producer price index for plastic resins and materials rose 9.1%, the producer price index for phosphates rose 20.4%, the producer price index for steel mill products rose 17.6%, the producer price index for plywood rose 10.5%, and the producer price index for hardwood lumber rose 9.0%...prices for intermediate processed goods are now 12.5% higher than in March a year ago, the fourth increase after 19 consecutive year over year decreases, which followed 29 months of year over year increases, which had been preceded by 16 months of negative year over year comparisons, as prices for intermediate goods fell every month from July 2015 through March 2016....

Meanwhile, the price index for intermediate unprocessed goods rose 9.3% in March, after rising 4.3% in February, 3.8% in January, a revised 2.3% in December, a revised 6.3% in November, and after rising by 1.3% in October, 5.2% in September, 4.0% in August, 0.6% in July, 5.4% in June and 8.4% in May, but after falling 13.7% in April, and by 8.1% last March ....that was as the March price index for crude energy goods rose 22.3% as crude oil prices rose 11.0%, unprocessed natural gas prices rose 46.6%, and coal prices were unchanged, while the price index for unprocessed foodstuffs and feedstuffs rose 1.4% on a 17.0% increase in the price of slaughter hogs, and a 5.3% increase in producer prices for alfalfa hay....at the same time, the index for core raw materials other than food and energy materials rose 3.2%, as the price index for copper base scrap rose 11.1% and the price index for iron and steel scrap rose 10.8%... this raw materials index is now 41.6% higher than a year ago, just the fifth annual increase in more than 2 years, as the year over year change on this index had been negative from the beginning of 2019 through October of last year...

Lastly, the price index for services for intermediate demand rose 0.4% in March, after rising 0.7% in February, 1.3% in January, and a revised 0.2% in December, after being unchanged  in November, rising 0.7% in October, rising 1.1% in September, 0.8% in August, 0.5% in July, and 0.3% last June….the price index for intermediate trade services was 0.4% higher, as margins for intermediate building materials, paint, and hardware wholesalers rose 3.6%, margins for intermediate paper and plastics products wholesalers rose 3.9%, and margins for intermediate hardware, building material, and supplies retailers rose 2.1%...meanwhile, the index for transportation and warehousing services for intermediate demand was 0.9% higher, as the intermediate price index for water transportation of freight rose 3.3%, the intermediate price index for truck transportation of freight rose 1.7%, and the intermediate price index for arrangement of freight and cargo rose 2.9%....at the same time, the core price index for intermediate services other than trade, transportation, and warehousing services rose 0.3%, as the intermediate price index for business loan services (partial) rose 6.2%, the intermediate price index for passenger car rental rose 9.6%, the intermediate price index for investment banking rose 4.4%, and the intermediate price index for advertising space sales in periodicals and newspapers rose 1.8%, while the intermediate price index for truck, utility trailer, and RV rental and leasing fell 2.6%..over the 12 months ended in March, the year over year price index for services for intermediate demand is 4.0% higher than it was a year ago, the seventh consecutive positive annual change since it briefly turned negative year over year from April to August for the first time in the history of this index...

Job Openings, Hiring, Layoffs & Job Quitting were all Higher in February

The Job Openings and Labor Turnover Survey (JOLTS) report for February from the Bureau of Labor Statistics estimated that seasonally adjusted job openings increased by 268,000, from 7,099,000 in January to 7,367,000 in February, after January’s job openings were revised up from the originally reported 6,917,000...February's jobs openings were also 5.1% higher than the 7,012,000 job openings reported in February a year ago, as the job opening ratio expressed as a percentage of the employed rose from 4.7% in January to 4.9% in February, which was also up from the 4.4% rate of February a year ago...the healthcare and social assistance sector, with a 233,000 job opening increase to 1,453,000 openings, saw the largest increase, while job openings in state and local education decreased by 117,000 to 177,000  (details on job openings by industry and region can be viewed in Table 1)...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 at the end of the release...

The JOLTS release also reports on labor turnover, which consists of hires and job separations, which in turn is further divided into layoffs and discharges, those who quit, and 'other separations', which includes retirements and deaths....in February, seasonally adjusted new hires totaled 5,738,000, up by 273,000 from the revised 5,465,000 who were hired or rehired in January, as the hiring rate as a percentage of all employed rose from 3.8% in January to 4.0% in February, which was also up from the 3.9% hiring rate in February a year earlier (details of hiring by sector since October and for a year ago are in table 2)....meanwhile, total separations rose by 133,000, from 5,323,000 in January to 5,456,000 in February, as the separations rate as a percentage of the employed rose from 3.7% in January to 3.8% in February, and was also up from 3.7% in February a year ago (see details in table 3)...subtracting the 5,456,000 total separations from the total hires of 5,738,000 would imply an increase of 288,000 jobs in February, somewhat less than the revised payroll job increase of 468,000 for February reported in the March establishment survey last week, with at least some of that difference likely due to the difference in the date of the surveys, which is at month end for this report but is during the week of the 12th for the employment situation....

Breaking down the seasonally adjusted job separations, the BLS founds that 3,357,000 of us voluntarily quit our jobs in February, up by 51,000 from the revised 3,306,000 who quit their jobs in January, while the quits rate, widely watched as an indicator of worker confidence, remained at 2.3% of total employment, which was still up from the quits rate of 2.2% year earlier (see details in table 4)....in addition to those who quit, another 1,775,000 were either laid off, fired or otherwise discharged in February, also up by 51,000 from the revised 1,724,000 who were discharged in January, as the discharges rate remained at 1.2% of all those who were employed during the month, while it was down from the 1.3% discharges rate of a year earlier....meanwhile, other separations, which includes retirements and deaths, were at 323,000 in February, up from 294,000 in January, for an 'other separations rate’ of 0.2%, same as in January and the same as in February 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...  

February Factory Shipments Down 2.0%, Factory Inventories 0.8% Higher

The Full Report on Manufacturers' Shipments, Inventories, & Orders (pdf) for February from the Census Bureau reported that the seasonally adjusted value of new orders for manufactured goods decreased by $4.1 billion or 0.8 percent to $505.7 billion in February, the first decrease in 10 months, following a revised 2.7% increase to $509.7 billion in January, which was originally reported as a 2.6 percent increase to $509.4 billion a month ago....however, since the Census Bureau does not even collect data on new orders for non durable goods for this widely watched "factory orders report", both the "new orders" and "unfilled orders" sections of this report are really only accurate as revised updates to the February advance report on durable goods which was released two weeks ago...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 February, down following nine consecutive monthly increases, decreased $4.1 billion or 0.8 percent to $505.7 billion, the U.S. Census Bureau reported today. This followed a 2.7 percent January increase. Shipments, also down following nine consecutive monthly increases, decreased $10.3 billion or 2.0 percent to $502.4 billion. This followed a 1.8 percent January increase. Unfilled orders, up two consecutive months, increased $8.5 billion or 0.8 percent to $1,082.3 billion. This followed a 0.2 percent January increase. The unfilled orders-to-shipments ratio was 6.29, up from 6.11 in January. Inventories, up six of the last seven months, increased $5.5 billion or 0.8 percent to $702.4 billion. This followed a 0.2 percent January increase. The inventories-to-shipments ratio was 1.40, up from 1.36 in January. 
  • New orders for manufactured durable goods in February, down following nine consecutive monthly increases, decreased $3.2 billion or 1.2 percent to $254.1 billion, down from the previously published 1.1 percent decrease. This followed a 3.6 percent January increase. Transportation equipment, down following five consecutive monthly increases, led the decrease, $1.5 billion or 1.8 percent to $83.4 billion. New orders for manufactured nondurable goods decreased $0.9 billion or 0.4 percent to $251.6 billion.
  • Shipments of manufactured durable goods in February, down following five consecutive monthly increases, decreased $9.4 billion or 3.6 percent to $250.8 billion, down from the previously published 3.5 percent decrease. This followed a 1.8 percent January increase. Transportation equipment, also down following five consecutive monthly increases, led the decrease, $7.1 billion or 8.3 percent to $78.5 billion. Shipments of manufactured nondurable goods, down following nine consecutive monthly increases, decreased $0.9 billion or 0.4 percent to $251.6 billion. This followed a 1.8 percent January increase. Chemical products, also down following nine consecutive monthly increases, led the decrease, $0.8 billion or 1.1 percent to $71.1 billion.
  • Unfilled orders for manufactured durable goods in February, up two consecutive months, increased $8.5 billion or 0.8 percent to $1,082.3 billion, unchanged from the previously published increase. This followed a 0.2 percent January increase. Transportation equipment, up following eleven consecutive monthly decreases, led the increase, $5.0 billion or 0.7 percent to $711.1 billion.
  • Inventories of manufactured durable goods in February, up following two consecutive monthly decreases, increased $2.8 billion or 0.7 percent to $427.3 billion, unchanged from the previously published increase. This followed a 0.3 percent January decrease. Transportation equipment, also up following two consecutive monthly decreases, led the increase, $0.9 billion or 0.6 percent to $146.6 billion. Inventories of manufactured nondurable goods, up six of the last seven months, increased $2.7 billion or 1.0 percent to $275.1 billion. This followed a 0.9 percent January increase. Petroleum and coal products, up four consecutive months, led the increase, $1.9 billion or 5.3 percent to $37.4 billion..

To gauge the effect of February's dollar valued factory inventories on 1st quarter GDP, they must first be adjusted for changes in price with appropriate components of the producer price index....by stage of fabrication, the value of finished goods inventories increased 0.5% to $251,683 million; the value of work in process inventories also increased by 0.5% to $206,550 million, and the value of materials and supplies inventories increased by 1.3% to $244,208 million...at the same time, the producer price index for February indicated that prices for finished goods increased 1.4%, that prices for intermediate processed goods were 2.7% higher, and that prices for unprocessed goods were on average 4.3% higher, even as core raw materials were priced 1.3% lower than January's....assuming similar valuations for like inventories, that would suggest that February's real finished goods inventories were around 0.9% lower than January’s, that real inventories of intermediate processed goods were about 2.2% smaller, and that real raw material inventory inventories were on average lower, even as core raw material inventories were higher…since there was a small increase in 4th quarter real factory inventories, the large February decrease, following an equally large decrease in January's real factory inventories, will thus have a significant negative impact on 1st quarter GDP...

February Wholesale Sales Down 0.8%, Wholesale Inventories Up 0.6% Due to Higher Prices

The February report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at $538.3 billion, down 0.8 percent (±0.7 percent) from the revised January level, but 6.4 percent (±0.9 percent) higher than wholesale sales of February 2020... the December 2020 to January 2021 percent change in sales was revised from the preliminary estimate of up 4.9 percent (±0.7 percent) to $531.7 billion to an increase of 4.4 percent (±0.9 percent) to $542,867 million in conjunction with an annual revision of previously published data based on the results of the 2019 Annual Wholesale Trade Survey and the results of the 2017 Economic Census, which makes any such comparisons to previous published amounts nonsense....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 sold....

On the other hand, the monthly change in private inventories is a major factor in GDP, as additional goods on the shelf represent goods that were produced but not sold, and this February report estimated that wholesale inventories were valued at $682.5 billion at month end, an increase of 0.6 percent (+/-0.4%) from the revised January level and also 2.0 percent (±1.1 percent) higher than February a year ago, with the January preliminary inventory estimate revised upward from the advance estimate of up 1.3 percent (±0.4 percent) to $661.7 billion to an increase of 1.4 percent (±0.2 percent) to $678.2 billion....

For national accounts, the wholesale inventories reported here will be adjusted the February producer price index, ie the index a month prior to the one we just reported on...with notable exceptions such as inventories of farm products, chemicals and petroleum, we've previously estimated that wholesale inventories appear to be roughly 70% finished goods....with the February producer price index for finished goods up by 1.4% while the producer price indexes for intermediate goods & raw goods were 2.7% higher and 4.3% higher respectively, we can thus figure that February’s real wholesale inventories would have decreased by at least 0.8%, and probably by much more...since the real wholesale inventories inched up a bit over the 4th quarter, any real decrease in the 1st quarter will not only reverse that bit, but also subtract from the growth of GDP by the size of the real inventory decrease...

 

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

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