Sunday, September 12, 2021

August’s producer prices; July’s wholesale trade and job openings survey

Major reports released this past week included the August Producer Price Index and the Job Openings and Labor Turnover Survey (JOLTS) report for July from the Bureau of Labor Statistics, and the Wholesale Trade, Sales and Inventories report for July from the Census Bureau...this week also saw the Consumer Credit Report for July from the Fed, which indicated that overall consumer credit, a measure of non-real estate debt, expanded by a seasonally adjusted $17.0 billion in July, or at a 4.7% annual rate, as non-revolving credit expanded at a 4.1% rate to $3,332.7 billion while revolving credit outstanding grew at a 6.7% rate to $998.4 billion...

July Job Openings at Record High after June Record Revised Higher; Hiring Down, Job Quitting and Layoffs Higher

The Job Openings and Labor Turnover Survey (JOLTS) report for July from the Bureau of Labor Statistics estimated that seasonally adjusted job openings rose by 749,000, from 10,185,000 in June to a record high of 10,934,000 in July, after June's record job openings were revised 112,000 higher, from the 10,073,000 reported a month ago to 10,185,000 with this report...July's jobs openings were also 62.8% higher than the 6,717,000 job openings reported for July a year ago, as the job opening ratio expressed as a percentage of the employed rose from 6.5% in June to 6.9% in July, and was up from 4.6% in July a year ago....a 202,000 job opening increase to 548,000 job openings in the financial sector appears to be the largest percentage increase for this month, while a decrease from 1.195,000 to 1,100,000 retail job openings looks to be the largest percentage decrease... (see table 1 for more details)...like most BLS releases, the press release for report is easy to understand and also refers us to the associated table for the data cited, which are linked at the end of the release...

The JOLTS release also reports on labor turnover, which consists of hires and job separations, which in turn is further divided into layoffs and discharges, those who quit, and 'other separations', which includes retirements and deaths....in July, seasonally adjusted new hires totaled 6,667,000, down by 160,000 from the revised 6,827,000 who were hired or rehired in June, as the hiring rate as a percentage of all employed fell from 4.7% in June to 4.5% in July, which was the same hiring rate as in July a year earlier (details of hiring by sector since March are in table 2)....meanwhile, total separations rose by 174,000, from 5,612,000 in June to 5,786,000 in July, while the separations rate as a percentage of the employed rose from 3.8% to 3.9%, which was the same as the separations rate in July a year ago (see table 3)...subtracting the 5,786,000 total separations from the total hires of 6,667,000 would imply an increase of 881,000 jobs in July, somewhat less than the revised payroll job increase of 1,053,000 for July reported by the August 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 report...

Breaking down the seasonally adjusted job separations, the BLS finds that 3,977,000 of us voluntarily quit our jobs in July, up by 107,000 from the revised 3,870,000 who quit their jobs in June, while the quits rate, widely watched as an indicator of worker confidence, remained at 2.7% of total employment, while still up from 2.3% in July a year earlier (see details in table 4)....in addition to those who quit, another 1,459,000 were either laid off, fired or otherwise discharged in July, up by 105,000 from the revised 1,354,000 who were discharged in June, as the discharges rate rose from a record low of 0.9% in June to 1.0% of all those who were employed during the month, which still left it down from the 1.3% discharges rate of a year earlier....meanwhile, other separations, which includes retirements and deaths, were at 350,000 in July, down from the revised record 389,000 in June, for an 'other separations’ rate of 0.2%, which was down from the 0.3% rate in June and in July of last year....both seasonally adjusted and unadjusted details by industry and by region on hires and job separations, and on job quits and discharges can be accessed using the links to tables at the bottom of the press release...

August Producer Price Index Sets New YoY Record Increases for Final Demand Goods, Final Demand Services, and a 46 year High for Prices of Intermediate Goods

The seasonally adjusted Producer Price Index (PPI) for final demand rose 0.7% in August, as prices for finished wholesale goods rose 1.0% while margins of final services providers rose 0.7%...that increase followed a July report that indicated the PPI was 1.0% higher, as prices for finished wholesale goods rose 0.6% while margins of final services providers rose 1.1%, a June report that also had the PPI 1.0% higher, but with prices for finished wholesale goods 1.2% higher while margins of final services providers rose 0.8%, a now revised May report that the PPI had risen 0.5%, as prices for finished wholesale goods rose 1.3% while margins of final services providers rose 0.1%, and a rerevised April report that the PPI was 1.0% higher, as prices for finished wholesale goods rose 0.7% while margins of final services providers rose by 1.2%....on an unadjusted basis, producer prices are now a record 8.3% higher than a year ago, up from the 7.8% year over year increase reported for July's producer prices, while the core producer price index, which excludes food, energy and trade services, rose by 0.3% for the month, and is now 6.3% higher than in August a year ago, up from the 6.1% year over year increase that was shown in July...

As noted, the price index for final demand for goods, aka 'finished goods', was 1.0% higher in August, after being 0.6% higher in July. 1.2% higher in June, 1.3% higher in May, 0.7% higher in April, 1.5% higher in March, 1.6% higher in February, 1.6% higher in January, 0.9% higher in December, 0.4% higher in November, 0.5% higher in October, 0.4% higher in September, and 0.4% higher in August of last year, and hence is now up by a record 12.6% from a year ago....the finished goods price index rose 1.0% in August as the price index for wholesale foods rose 2.9%, after falling 2.1% in July, rising by 0.8% in June, rising 2.8% in May, by 1.8% in April, by 0.6% in March, by 1.4% in February, and by 1.6% in January, and as the price index for wholesale energy goods was 0.4% higher, after it had risen by 2.6% in July, by 2.1% in June, and by 1.4% in May, after falling 1.2% in April and rising 5.0% in March, by 6.2% in February, and by 5.1% in January....meanwhile, the index for final demand for core wholesale goods (excluding food and energy) was 0.6% higher in August, after it had risen by 1.0% in each of the prior four months....wholesale energy prices averaged 0.4% higher despite a 0.3% decrease in wholesale prices for gasoline, due to a 5.6% increase in wholesale prices for residential natural gas and a 4.4% increase in wholesale prices for LP gas, while the wholesale food price index rose 2.6% on a 14.7% increase in the wholesale price index for beef and veal, a 6.0% increase in the wholesale price index for processed chickens, and a 16.0% increase in wholesale price index for fresh and dry vegetables...among core wholesale goods, the wholesale price index for industrial chemicals rose 4.9%, the wholesale price index for truck trailers rose 2.6%, the wholesale price index for printing machinery and equipment rose 2.5%, the wholesale price index for home electronic equipment rose 3.1%, and the wholesale price index for toys, games, and children's vehicles rose 2.0%...

At the same time, the index for final demand for services rose 0.7% in August, after rising 1.1% in July, 0.6% in June, a revised 0.1% in May, a revised 1.2% in April, and 0.3% in March, 0.3% in February and 1.0% in January, and is now up by a record 6.4% from a year ago, as the index for final demand for trade services rose 1.5%, the index for final demand for transportation and warehousing services rose 2.8%, and the core index for final demand for services less trade, transportation, and warehousing services was 0.1% higher... among trade services, seasonally adjusted margins for health, beauty, and optical goods retailers rose 7.8%, margins for TV, video, and photographic equipment and supplies retailers rose 3.9%, margins for furnishings wholesalers rose 5.2%, and margins for sporting goods and boat retailers rose 9.0%, while margins for hardware, building materials, and supplies retailers fell 11.6%...among transportation and warehousing services, average margins for air transportation of freight rose 1.1% and margins for airline passenger services rose 8.9%...among the components of the core final demand for services index, the price index for bundled wired telecommunications access services rose 4.7%, the price index for tax preparation and planning rose 2.1%, the price index for food and beverages for immediate consumption rose 1.6%, and the price index for traveler accommodation services rose 2.6%, while index for securities brokerage, dealing, investment advice, and related services fell 3.1% and the price index for hospital outpatient care fell 1.5 % …

This report also showed the price index for intermediate processed goods rose 1.0% in August, after rising 1.7% in July, 1.9% in June, a revised 2.5% in May, a revised 1.9% in April, 3.5% in March, 2.9% in February, and 1.8% in January, 1.4% in December, 0.9% in November, 0.9% in October, 0.6% in September, and 0.9% in August of last year....the price index for intermediate energy goods rose fell 0.6% in August, as refinery prices for jet fuel fell 2.0%, refinery prices for fuel oil fell 1.6%, refinery prices for gasoline fell 0.3%, and producer prices for natural gas to electric utilities fell 3.1%, while producer prices for industrial natural gas rose 7.2%... meanwhile, the price index for intermediate processed foods and feeds rose 2.1%, as the producer price index for meats rose 8.5%, the producer price index for processed poultry rose 3.7%, and the producer price index for fats and oils rose 2.7%...at the same time, the core price index for intermediate processed goods less food and energy goods rose 1.3%, as the producer price index for synthetic rubber rose 5.9%, the producer price index for steel mill products rose 5.1%, the producer price index for aluminum mill shape rose 3.7%, the producer price index for plastic construction products rose 3.0%, the producer price index for basic organic chemicals rose 5.3%, the producer price index for nitrogenates rose 4.1%, and the producer price index for fabricated structural metal products rose 3.3%, while the producer price for softwood lumber fell 27.7%...average prices for intermediate processed goods are now 23.0% higher than in August a year ago, the largest year over year price increase since the year ended February 1975, but just the ninth increase after 19 consecutive year over year decreases, which had 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 rose 1.0% in August, after rising 1.4% in July, 2.6% in June, a revised 7.3% in May, and a revised 2.0% in April, after falling by 4.2% in March, rising 11.9% in February, and rising by 5.3% in January, 2.1% in December, by 6.3% in November, 1.3% in October, 5.2% in September, and by 4.0% last August....that was as the August price index for crude energy goods fell 0.2% as crude oil prices fell 10.1%, unprocessed natural gas prices rose 13.4%, and coal prices fell 0.3%, while the price index for unprocessed foodstuffs and feedstuffs rose 3.8% on a 14.3% increase in producer prices for wheat, a 12.6% increase in producer prices for alfalfa hay, a 12,9% increase in producer prices for slaughter chickens, and a 4.9% increase in producer prices for corn...at the same time, the index for core raw materials other than food and energy materials was unchanged, as the price index for iron ore rose 1.5% and the price index for recyclable paper rose 3.7%, while the price index for copper base scrap fell 4.8% and the price index for iron and steel scrap fell 3.7%....this raw materials index is still 50.1% higher than a year ago, which is actually down from the 57.9% year over year increase recorded in May, but just the tenth year over year increase after the annual 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 0.3% in August, after rising 1.0% in July, 1.1% in June, a revised 0.2% in May, a revised 1.3% in April, and rising 0.6% in March, 0.3% in February, 1.1% in January, and 0.7% in December 2020, after being unchanged in November, rising 0.7% in October, rising 1.1% in September, and 0.8% last August….the price index for intermediate trade services was 1.1% higher, as margins for intermediate machinery and equipment parts and supplies wholesalers rose 2.8%, margins for intermediate metals, minerals, and ores wholesalers rose 6.8%, as margins for intermediate chemicals and chemical products wholesalers rose 3.4%, and margins for intermediate building materials, paint, and hardware wholesalers rose 5.7%...meanwhile, the index for transportation and warehousing services for intermediate demand was also 1.1% higher, as the intermediate price index for transportation of passengers rose 8.7%, the intermediate price index for water transportation of freight rose 1.3%, the intermediate price index for truck transportation of freight rose 0.9%, and the intermediate price index for air transportation of freight rose 1.1%...on the other hand, the core price index for intermediate services other than trade, transportation, and warehousing services fell 0.2%, as the intermediate price index for television advertising time sales fell 9.0%, the intermediate price index for securities brokerage, dealing, investment advice, and related services fell 3.1%, the intermediate price index for passenger car rental fell 3.1%, and the intermediate price index for cable and satellite subscriber services fell 2.5%, while the intermediate price index for bundled wired telecommunication access services rose 4.8%...over the 12 months ended in June, the year over year price index for services for intermediate demand is still 8.6% higher than it was a year ago, the eleventh consecutive positive annual change since it briefly turned negative year over year from April to August of last year, but down from the record 9.2% year over year increase recorded in July....

July’s Wholesale Sales Were Up 2.0%; Wholesale Inventories Were Up 0.6%

The July report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at $601.3 billion in July, up 2.0 percent (±0.4 percent) from the revised June level, and up 23.7 percent (±1.6 percent) from wholesale sales of July 2020... the June preliminary sales estimate was revised to $589.7 billion from the $588.1 billion in sales reported last month, which is now 2.3% more than May's sales, revised from the 2.0% increase reported last month...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 July report estimated that wholesale inventories were valued at a seasonally adjusted $722.4 billion at month end, up 0.6 percent (+/-0.4%) from the revised June level and 11.5 percent (±1.4%) higher than in June a year ago, with the June preliminary estimate statistically unrevised from the $718.3 billion reported a month ago, which was a 1.2% increase from May....

July's wholesale inventories, after an adjustment for price changes for each category of wholesale goods as indicated by the components of the July producer price index, appears to indicate that real wholesale inventories were close to unchanged in chained 2012 dollars during the first month the 3rd quarter....since the key source data and assumptions (xls) for the second estimate of 2nd quarter GDP indicated a real decrease of $3.3 billion in wholesale inventories on a NIPA basis, July's nearly unchanged real inventories would reverse that 2nd quarter decrease in a small boost to 3rd quarter GDP...

 

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

No comments:

Post a Comment