Sunday, October 17, 2021

September's consumer price and producer price indexes, and retail sales; August's business inventories and JOLTS

Major reports released this past week included the September Consumer Price Index, the September Producer Price Index, and the September Import-Export Price Index from the Bureau of Labor Statistics, the Retail Sales report for September and the corresponding Business Sales and Inventories report for August from the Census Bureau, and the August Job Openings and Labor Turnover Survey (JOLTS) from the BLS....this week also saw the release of the first regional Fed manufacturing survey for October: the Empire State Manufacturing Survey for October from the New York Fed, which covers New York, northern New Jersey, and an adjacent county in Connecticut, reported their headline general business conditions index fell from +34.3 in September to +19.8 in October, meaning that a smaller majority of First District manufactures reported growth in various facets of their business in the current month than last...

CPI Rose 0.4% in September on Higher Prices for Food, Shelter, Energy, New Vehicles, Furniture and Appliances

The consumer price index rose 0.4% in September, as higher prices for food, energy, new vehicles, furniture and appliances were only partly offset by lower prices for clothing, used cars and trucks, car and truck rentals, airline fares, and health insurance....the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that seasonally adjusted prices averaged 0.4% higher in September, after rising by 0.3% in August, 0.5% in July, 0.9% in June, by 0.6% in May, by 0.8% in April. by 0.6% in March, 0.4% in February, 0.3% in January, 0.2% in December, 0.2% in November, 0.1% in October, and by 0.2% last September...the unadjusted CPI-U index, which was originally set with prices of the 1982 to 1984 period equal to 100, rose from 273.567 in August to 274.310 in September, which left it statistically 5.3903% higher than the 260.280 index reading of September of last year, which is reported as a 5.4% year over year increase, up from the 5.3% year over year increase reported a month ago, and the greatest one year price increase since July 2008...with higher food and energy prices leading the rise the overall index increase, seasonally adjusted core prices, which exclude food and energy, were up by just 0.2% for the month, as the unadjusted core price index rose from 279.507 to 279.884, which left the core index 4.0252% ahead of its year ago reading of 269.054, which is reported as a 4.0% year over year increase, the same year over year core price increase that was reported for August...

The volatile seasonally adjusted energy price index rose 1.3% in September, after rising by 2.0% in August, 1.6% in July, by 1.5% in June, being unchanged in May, falling by 0.1% in April, rising by 5.0% in March, by 3.9% in February, by 3.5% in January, by 2.6% in December, 0.7% in November, 0.6% in October, and by 1.4% last September, and is now 24.8% higher than in September a year ago....the price index for energy commodities was 1.3% higher in September, while the price index for energy services was 1.2% higher, after rising 1.1% in August....the energy commodity index was up 1.3% on a 1.2% increase in the price of gasoline, and a 3.9% increase in the price of fuel oil, while prices for other energy commodities, including propane, kerosene, and firewood, were on average 3.8% higher...within energy services, the price index for utility gas service rose 2.7% after rising 1.6% in August and is now 20.6% higher than it was a year ago, while the electricity price index rose 0.8% in September after rising 1.0% in August.....energy commodities are now averaging 41.7% higher than their year ago levels, with gasoline prices averaging 42.1% higher than they were a year ago, while the energy services price index is now up 8.5% from last September, as electricity prices are also 5.2% higher than a year ago…

The seasonally adjusted food price index rose 0.9% in September, after rising by 0.4% in August, 0.7% in July, by 0.8% in June, by 0.4% in May, by 0.4% in April, by 0.1% in March, by 0.2% in February, by 0.1% in January and by 0.3% in December, after being unchanged in November, rising 0.2% in October, and rising by 0.1% last September, as the price index for food purchased for use at home was 1.2% higher in September, after rising 0.4% in August, while the index for food bought to eat away from home was 0.5% higher, as average prices at fast food outlets rose 0.6% and prices at full service restaurants also rose 0.6%, while food prices at employee sites and schools averaged 6.4% lower...

In the food at home categories, the price index for cereals and bakery products was 1.1% higher, as average bread prices rose 1.8%, the price index for rice, pasta, and cornmeal rose 1.6%, the price index for crackers, and bread and cracker products rose 3.1%, and the price index for fresh biscuits, rolls, muffins rose 3.7%....at the same time, the price index for the meats, poultry, fish, and eggs food group was 2.2% higher, as the price index for beef and veal rose 4.8%, the price index for pork rose 1.7%, and the price index of fresh fish and seafood rose 2.4%....in addition, the seasonally adjusted price index for dairy products was 0.7% higher, as milk prices rose 0.4% and the price index for cheese and related products was 0.8% higher...meanwhile, the fruits and vegetables price index was 0.6% higher, as the price index for fresh vegetables rose 1.0% and the price index for processed fruits and vegetables other than those canned or frozen but including those dried rose 2.0%...moreover, the beverages price index was 1.2% higher, as the price index for carbonated drinks rose 1.7% and the price index for coffee rose 1.9%....lastly, the price index for the ‘other foods at home’ category rose 1.1%, as the price index for fats and oils other than butter, margarine and salad dressing but including peanut butter rose 3.7%, the price index for soups rose 1.8%, the price index for baby food rose 2.2%, the price index for prepared salads rose 4.2%, and the price index for snacks was 1.3% higher...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 September, the price index for uncooked beef steaks is up 22.1%, the price index for uncooked beef roasts is up 20.8%, the price index for other beef and veal is up 20.6%, the price index for bacon and related products is up 19.3%, the price index for "other pork including roasts, steaks, and ribs" is up 19.2%, and the price index for fresh fish and seafood is up 10.7%, while the price of food at employee sites and schools has fallen 46.3% over the past year on a 56.1% drop in food prices at elementary and secondary schools...

Among the seasonally adjusted core components of the CPI, which rose by 0.2% in September after rising by 0.1% in August, 0.3% in July, by 0.9% in June, by 0.7% in May, 0.9% in April, 0.3% in March, 0.1% in February, being unchanged in January and December, after rising by 0.2% in November, by 0.1% in October, and by 0.2% in September of last year, the composite price index of all goods less food and energy goods was 0.2% higher in September, while the more heavily weighted composite for all services less energy services also rose 0.2%....

Among the goods components, which will be used by the Bureau of Economic Analysis to adjust August retail sales for inflation in national accounts data, the price index for household furnishings and supplies was 1.3 higher, as the price index for window and floor coverings rose 3,9%, the price index for living room, kitchen, and dining room furniture rose 3.5%, the price index for bedroom furniture rose 1.5%. the price index for appliances rose 1.2%, the price index for household paper products rose 1.3%, and the price index for dishes and flatware rose 2.9%....on the other hand, the apparel price index was 1.1% lower on a 2.4% decrease in the price index for men's suits, sport coats, and outerwear, a 3.7% decrease in the price index for women's suits and separates, a 1.7% decrease in the price index for men's pants and shorts and a 3.0% decrease in the price index for girls' apparel%....meanwhile, the price index for transportation commodities other than fuel was 0.3% higher, as prices for new cars were 1.2% higher, prices for new trucks rose 1.3%, tire prices were 0.9% higher, and the price index for parts and equipment other than tires rose 1.0%, while the price index for used cars and trucks fell 0.7% ... at the same time, the price index for medical care commodities was also 0.3% higher. as prescription drug prices rose 0.8% and the price index for medical equipment and supplies rose 1.0%...however, the recreational commodities index 0.2% lower on a 0.6% decrease in TV prices, a 1.7% decrease in the price index for audio equipment, a 0.4% decrease in the price index for sporting goods, and a 1.3% decrease in the price index for toys...on the other hand, the education and communication commodities index was 0.6% higher on a 1.1% increase in the price index for telephone hardware, calculators, and other consumer information items and a 1.2% increase in the price index for computers, peripherals, and smart home assistants….lastly, a separate price index for alcoholic beverages was 0.2% higher, while the price index for ‘other goods’ was 0.1% higher on a 0.7% increase in the price index for cigarettes and a 0.1% increase in the price index for cosmetics, perfume, bath, nail preparations and implements...

Within core services, the price index for shelter was 0.4% higher as rents rose 0.5% and homeowner's equivalent rent was 0.4% higher, while prices for lodging away from home at hotels and motels fell 0.6%, while at the same time the shelter sub-index for water, sewers and trash collection rose 0.5%, and other household operation costs were on average 0.2% higher, on a 1.9% increase in the price index for gardening and lawncare services....on the other hand, the price index for medical care services was 0.1% lower, as the price index for physician's services fell 0.3% and the price index for health insurance fell 1.0%....at the same time, the transportation services price index was 0.5% lower, as the price index for car and truck rentals fell 2.9%, the price index for vehicle repair fell 1.3%, airline fares fell 6.4%, ship fares fell 2.4%, and the price index for intracity transportation services fell 1.9%...meanwhile, the recreation services price index rose 0.4% as the price index for cable and satellite television service rose 0.5% and the price index for admissions to entertainment venues rose 1.0%.... at the same time, the index for education and communication services was also 0.4% higher as the price index for internet services and electronic information providers rose 0.6%, the price index for day care and preschool rose 0.7%, and the price index for wireless telephone services rose 0.4%...lastly, the index for other personal services was 0.1% higher as the price index for legal services was 1.8% higher and the price index for apparel services other than laundry and dry cleaning services was 0.8% higher...

Among core line items, the price index for car and truck rental, which is still 42.9% higher than a year ago, the price index for used car and trucks, which is still up 24.4% from a year ago, the price index for ship fares, which is up 10.8% since last September, the price index for intracity transportation, which is up 10.9% over the same span, the price index for lodging away from home including at hotels and motels, which has still risen 19.8% from a year ago, the price index for domestic services, which has risen 11.5% year over year, the price index for living room, kitchen, and dining room furniture, which is now up 13.7% over the last 12 months, the price index for televisions, which has risen 12.7% since last September, the price index for boys' and girls' footwear, which has risen by 11.9% over the past year, and the price index for laundry equipment, which is up 19.1% from last September, have all seen prices rise by more than 10% over the past year, while the price index for telephone hardware, calculators, and other consumer information items, which is now down by 14.5% since last September, the price index for video discs and other media services, which is 10.1% lower than last year, and the price index for sewing machines, fabric and supplies, which has fallen 10.3% from a year ago, are the only core line items to have decreased in price by a double digit magnitude over that one year span...

Retail Sales Increased by 0.7% in September after July and August Sales were Revised Higher

Seasonally adjusted retail sales rose 0.7% in September after retail sales for July and August were revised higher....the Advance Retail Sales Report for September (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $625.4 billion during the month, which was 0.7 percent (± 0.5 percent) above August's revised sales of $620.9 billion, and 13.9 percent (± 0.7 percent) above the adjusted sales in September of last year....August's seasonally adjusted sales were revised from $618.7 billion to $620.9 billion, while July sales were also revised higher, from $614.3 billion to $615.25 billion, with this release....unadjusted sales estimates,extrapolated from surveys of a small sampling of retailers, indicated sales actually fell 3.8%, from $631,060 million in August to $606,786 million in September, while they were up 14.3% from the $530,987 million of sales in September a year ago...

Since it's the end of the quarter for retail sales, we'll include the entire table from this report showing the change in retail sales by business type, including the quarter over quarter data...again, to explain what this table shows, the first double column below shows us the seasonally adjusted percentage change in sales for each kind of business from the August revised figure to this month's September "advance" report figure in the first sub-column, and then the year over year percentage sales change since last September in the 2nd column; the second double column pair below gives us the revision of the August advance estimates (now called "preliminary") as of this report, with the new July to August percentage change under "Jul 2021 (r)" (revised) and the August 2020 to August 2021 percentage change as revised in the 2nd column of the pair.. (for your reference, the table of last month’s advance estimate of August sales, before this month's revisions, is here).... then, the third pair of columns shows the percentage change of the most recent 3 months of this year's sales (July, August and September) from the preceding three months of the 2nd quarter (April, May and June) and then from the same three months (July, August and September) of a year ago....that first column of that pair gives us a snapshot comparison of 2nd quarter sales to third quarter sales which, after adjustment for price changes, could be useful in estimating the impact of this report on 3rd quarter GDP..

September 2021 retail sales table

To compute September's real personal consumption of goods data for national accounts from this September retail sales report, the BEA will use the corresponding price changes from the September consumer price index, which we reviewed earlier...to estimate what they will find, we’ll start by pulling out the usually volatile sales of gasoline from the other totals...from the third line on the above table, we can see that September retail sales excluding the 1.8% price related increase in sales at gas stations were up by 0.6%....then, subtracting the figures representing the 0.7% increase in grocery & beverage sales and the 0.3% increase in food services sales from that total, we find that core retail sales were up by 0.7% for the month....since the CPI report showed that the composite price index for all goods less food and energy goods was up 0.2% in September, we can thus figure that real retail sales excluding food and energy were up by roughly 0.5% month over month...however, the adjustment for each of the types of sales shown above will vary by the change in the related price index…for instance, while nominal sales at motor vehicle & parts dealers were up by 0.5%, the price index for transportation commodities other than fuel was 0.3% higher, which would mean that real unit sales at auto & parts dealers would only be around 0.2% higher...on the other hand, while sales at clothing stores were 1.1% higher in September, the apparel price index was 1.1% lower at the same time, which would suggest that real sales of clothing actually rose more than 2.2%...similarly, while nominal sales at sporting goods, hobby, music and book stores rose 3.7%, the price index for recreational commodities fell 0.2%, so real sales of recreational goods were up roughly 3.9%...

In addition to figuring those core retail sales, to make a complete estimate of real September PCE, we would need to adjust food and energy retail sales for their price changes separately, just as the BEA will do….the September CPI report showed that the food price index was 0.9% higher in September, with the price index for food purchased for use at home 1.2% higher, while prices for food bought at restaurants were 0.6% higher... hence, even as nominal sales at food and beverage stores were up 0.7%, real sales of food and beverages would be roughly 0.5% lower in light of those higher prices.…similarly, the 0.3% increase in nominal sales at bars and restaurants, once adjusted for 0.6% higher prices, suggests that real sales at bars and restaurants actually fell by 0.3%...similarly, while sales at gas stations were up 1.8%, there was a 1.2% increase in the retail price of gasoline, which would suggest real sales of gasoline were only up on the order of 0.6%, with the caveat that gasoline stations do sell more than gasoline, and we haven’t accounted for those other sales....by reweighing and averaging the real sales changes that we have thus estimated back together, and excluding food services, we can then estimate that the income and outlays report for September will show that real personal consumption of goods rose 0.4% in September, after rising by a revised 0.7% in August, but after falling by a revised 2.4% in July, and rising by 0.4% in June, but after falling by 2.6% in May, and after falling by 0.4% in April, but after rising by 10.0% in March, falling by 3.3% in February and rising by 7.2% in January.....at the same time, the 0.3% increase in real sales at bars and restaurants will have a modest negative impact on September's real personal consumption of services..

With those estimates for the relative change in real PCE goods between the months of the 2nd and 3rd quarter, we should be able to also estimate the change in PCE goods between those two quarters....setting September's real PCE goods as an index equal to 100, we can then say that August's PCE goods equals 99.6 (100-0.4%), after that, we find July's PCE goods equals 98.9, and from that, we get a index value of 101.3 for June, 100.9 for May, and 103.5 for April...we then compute the quarter over quarter change in those index values at a quarterly rate to determine the probable change that would be applied to 3rd quarter GDP... (((100 + 99.6 + 98.9) /3 ) / ((101.3 + 100.9 + 103.5)/3)) ^4 = 0.9090, which means that real PCE goods are falling at a 9.1% annual rate over the the third quarter...since PCE goods is roughly 23% of GDP, that suggests that PCE goods over those two months will subtract roughly 1.99 percentage points from 3rd quarter GDP...

Record 8.6% Annual Increase in Producer Price Index in September, also Record Increase for Final Demand Goods, and a 46 year Record for Prices of Intermediate Goods

The seasonally adjusted Producer Price Index (PPI) for final demand rose 0.5% in September, as prices for finished wholesale goods rose 1.3% while margins of final services providers were 0.2% higher...that increase followed a 0.7% increase in August, when prices for finished wholesale goods rose 1.0% and margins of final services providers rose 0.7%, 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 now revised June report that has the PPI 0.6% higher, with prices for finished wholesale goods 1.0% higher while margins of final services providers rose 0.2%, and a rerevised May report that the PPI had risen 0.9%, as prices for finished wholesale goods rose 1.5% while margins of final services providers rose 0.6%....on an unadjusted basis, producer prices are now a record 8.6% higher than a year ago, up from the 8.3% year over year increase reported for August's producer prices, while the core producer price index, which excludes food, energy and trade services, rose by 0.1% for the month, and is now 5.9% higher than in September a year ago, down from the 6.3% year over year increase that was shown in August...

As noted, the price index for final demand for goods, previously called 'finished goods', was 1.3% higher in September, after being 1.0% higher in August, 0.6% higher in July. 1.0% higher in June, 1.5% 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, and 0.4% higher in September of last year, and hence is now up by a record 13.3% from a year ago....the finished goods price index rose 1.2% in September as the price index for wholesale foods rose 2.0%, after rising by 2.9% in August, falling 2.1% in July, rising by 0.8% in June, rising 2.8% in May, and rising by 1.8% in April, and as the price index for wholesale energy goods was 2.8% higher, after it had risen by 0.8% in August, by 2.6% in July, by 2.1% in June, and by 1.4% in May...meanwhile, the index for final demand for core wholesale goods (excluding food and energy) was 0.6% higher in September, after it had risen by 0.6% in August and by 1.0% in July....wholesale energy prices averaged 2.8% higher on a 3.9% increase in wholesale prices for gasoline, an 11.8% increase in wholesale prices for liquefied petroleum gas and a 3.5% increase in wholesale prices for home heating oil, while the wholesale food price index rose 2.0% on a 8.6% increase in the wholesale price index for beef and veal, a 21.2% increase in the wholesale price index for eggs for fresh use, and a 19.4% increase in wholesale price index for fresh and dry vegetables...among core wholesale goods, the wholesale price index for industrial chemicals rose 4.4%, the wholesale price index for travel trailers and campers rose 2.7%, the wholesale price index for transformers and power regulators rose 3.3%, the wholesale price index for commercial furniture rose 2.3%, and the wholesale price index for household appliances rose 2.2%, while the wholesale price index for consumer, institutional, and commercial products not elsewhere classified rose 3.3%....

At the same time, the index for final demand for services rose 0.2% in September, after rising 0.7% in August, 1.1% in July, a revised 0.2% in June, a revised 0.6% in May, and 1.2% in April, and is still up by 6.4% from a year ago, fractionally lower but statistically matching the record increase of August...the index for final demand for trade services rose 0.9%, but the index for final demand for transportation and warehousing services fell 4.0%, while the core index for final demand for services less trade, transportation, and warehousing services was 0.2% higher... among trade services, seasonally adjusted margins for fuels and lubricants retailers rose 11.6%, margins for RVs, trailers, and campers retailers rose 10.4%, margins for major household appliances retailers rose 5.9%, and margins for automobile retailers rose 3.4%, while margins for hardware, building materials, and supplies retailers fell 5.5%...among transportation and warehousing services, average margins for airline passenger services fell 16.9% even as margins for transportation of freight rose 2.3% and margins for courier, messenger, and U.S. postal services rose 2.6%...among the components of the core final demand for services index, the price index for price index for hospital inpatient care rose 0.9%, the price index for tax preparation and planning rose 1.2%, the price index for residential property sales and leases, brokerage fees and commissions rose 1.3%, and the price index for arrangement of flights (partial) rose 3.6%, while index for passenger car rental services fell 5.1%…

This report also showed the price index for intermediate processed goods rose 1.3% in September, after rising 1.0% in August, 1.7% in July, a revised 1.4% in June, a revised 3.0% in May, and rising 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, and 0.6% in September of last year....the price index for intermediate energy goods rose 2.0% in September, as producer prices for LP gas rose 11.8%, refinery prices for gasoline rose 3.9%, refinery prices for fuel oil rose 2.9%, refinery prices for jet fuel rose 2.7%, and producer prices for commercial natural gas rose 3.8%, while refinery prices for residual fuels fell 14.3%... meanwhile, the price index for intermediate processed foods and feeds rose 1.9%, as the producer price index for meats rose 4.5%, the producer price index for processed poultry rose 3.2%, and the producer price index for fats and oils rose 1.8%...at the same time, the core price index for intermediate processed goods less food and energy goods rose 1.1%, as the producer price index for basic organic chemicals rose 5.0%, the producer price index for steel mill products also rose 5.0%, the producer price index for aluminum mill shape rose 3.8%, the producer price index for fabricated structural metal products rose 3.1%, the producer price index for switchgear, switchboard, and industrial controls equipment rose 3.2%, the producer price index for phosphates rose 4.9%, and the producer price index for paperboard rose 2.8%, while the producer price for plywood fell 33.6% and the producer price for building paper and board fell 22.3%...average prices for intermediate processed goods are now 23.9% higher than in August a year ago, the largest year over year price increase since the year ended January 1975, but just the tenth 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 2.4% in September, after rising 1.0% in August, 1.4% in July, a revised 2.7% in June, a revised 7.2% in May, and by 2.0% in April, after falling by 4.2% in March, but after rising by 11.9% in February, and by 5.3% in January, 2.1% in December, by 6.3% in November, 1.3% in October, and by 5.2% last September....that was as the September price index for crude energy goods rose 8.5% as crude oil prices rose 4.8%, unprocessed natural gas prices rose 14.4%, and coal prices rose 0.2%, while the price index for unprocessed foodstuffs and feedstuffs rose 3.8% on an 8.0% increase in producer prices for slaughter chickens, a 7.2% increase in producer prices for slaughter hogs, and a 6.5% increase in producer prices for alfalfa hay, while producer prices for raw milk fell 4.5% and producer prices for corn fell 12.8%...at the same time, the index for core raw materials other than food and energy materials was down by 3.5%, as the price index for carbon steel scrap fell 4.1% and the price index for logs, bolts, timber, pulpwood, and woodchips fell 0.2%....this raw materials index is still 45.9% higher than a year ago, which is actually down from the 57.9% year over year increase recorded in May, but just the eleventh 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 0.5% in September, after rising 0.3% in August, 1.0% in July, a revised 0.6% in June, a revised 0.6% in May, and rising by 1.3% in April, by 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, and rising 1.1% last September….the price index for intermediate trade services was 0.6% higher, as margins for intermediate machinery and equipment parts and supplies wholesalers rose 1.6%, margins for intermediate paper and plastics products wholesalers rose 3.2%, margins for intermediate food wholesalers rose 2.9%, and margins for intermediate building materials, paint, and hardware wholesalers rose 3.6%, while margins for intermediate metals, minerals, and ores wholesalers fell 4.7%...meanwhile, the index for transportation and warehousing services for intermediate demand was 0.8% higher, as the intermediate price index for arrangement of freight and cargo rose 10.9%, the intermediate price index for the US postal service rose 5.7%, the intermediate price index for water transportation of freight rose 2.9%, and the intermediate price index for air transportation of freight rose 2.3%, while the intermediate price index for transportation of passengers fell 16.6%...in addition, the core price index for intermediate services other than trade, transportation, and warehousing services rose 0.2%, as the intermediate price index for business loans (partial) rose 4.9%, the intermediate price index for radio advertising time sales rose 3.8%, and the intermediate price index for portfolio management rose 1.2%, while the intermediate price index for passenger car rental fell 5.1%...over the 12 months ended in September, the year over year price index for services for intermediate demand is still 8.0% higher than it was a year ago, the twelfth 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....

Business Sales Fell 0.1% in August; Business Inventories Rose 0.6%

After the release of the September retail sales report, the Census Bureau released the composite Manufacturing and Trade Inventories and Sales report for August (pdf), which incorporates the revised August retail data from that September report and the earlier published August 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 $1,652.4 billion in August, down 0.1 percent (±0.2%)* from July’s revised sales, but up 15.3 percent (±0.6 percent) from August sales of a year earlier....note that total July sales were concurrently revised up from the originally reported $1,652.2 billion to $1,653.3 billion, still a 0.5% increase from June....manufacturer's sales were 0.1% higher at $508,251 million in August, and retail trade sales, which exclude restaurant & bar sales from the revised August retail sales we reported earlier, were were 1.0% higher at $548,654 million, while wholesale sales were 1.1% lower at $595,543 million…

Meanwhile, total manufacturer's and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $1,919.2 billion billion at the end of August, up 0.6 percent (±0.1 percent) from July, and 5.5 percent (±0.3%) higher than in August a year earlier...the value of end of July inventories were revised to $2,070.5 billion from the $2,069.5 billion reported last month, which is now shown as a 0.6% increase from June...seasonally adjusted inventories of manufacturers were estimated to be valued at $749,299 million, up 0.6% from July, while inventories of retailers were valued at $603,488 million, 0.1% more than in July, and inventories of wholesalers were estimated to be valued at $731,124 million at the end of August, 1.2% higher than in July…

For GDP purposes, all inventories, including retail, are adjusted for inflation with appropriate component price indices of the producer price index...while we reviewed the September index above, the producer price index for August indicated that aggregate prices for finished goods were on average 1.0% higher, that prices for intermediate processed goods were 1.0% higher, and prices for unprocessed goods were also 1.0% higher....retail inventories are all finished goods, as are about 70% of wholesale inventories, while factory inventories, which we looked at last week, are roughly evenly split between the three stages of production...hence, although the nominal value of August inventories was 0.6% higher, real inventories would have been down by about 0.4% in August, following a July decrease in real inventories of around 0.1% or 0.2%....however, since the recent GDP report showed that real private inventories saw a substantial decrease in the second quarter, a modest decrease in real inventories over the 3rd quarter would still result in a positive impact on 3rd quarter GDP, by reversing the 2nd quarter drop, even after subtracting from that the amount of the much smaller 3rd quarter decrease...

Job Openings and Hiring Lower in August, Job Quitting at a Record High, Layoffs at a Record Low

The Job Openings and Labor Turnover Survey (JOLTS) report for August from the Bureau of Labor Statistics estimated that seasonally adjusted job openings decreased by 659,000, from 11,098,000 in July to 10,439,000 openings in August, after July job openings were revised 164,000 higher, from 10,934,000 to a record high of 11,098,000 in July....August jobs openings were still 61.8% higher than the 6,451,000 job openings reported in August a year ago, as the job opening ratio expressed as a percentage of the employed fell from a record high of 7.0% in July to 6.6% in August, which was still up from 4.4% a year ago...the largest percentage decrease appears to have been the 124,000 job opening decrease to 288,000 job openings in state and local education, while job openings in transportation, warehousing, and utilities increased by 37,000 to 537,000 (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 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 August, seasonally adjusted new hires totaled 6,322,000, down by 439,000 from the revised 6,761,000 who were hired or rehired in July, as the hiring rate as a percentage of all employed fell from 4.6 in July to 4.3% in August, and was also down from the 4.6% hiring rate in August a year earlier (details of hiring by sector since March are in table 2)....meanwhile, total separations rose by 211,000, from 5,792,000 in July to 6,003,000 in August, while the separations rate as a percentage of the employed rose from 3.9% to 4.1%, which was also up from the separations rate of 3.5% in August a year ago (see table 3)...subtracting the 6,003,000 total separations from the total hires of 6,322,000 would imply an increase of 319,000 jobs in August, somewhat less than the revised payroll job increase of 366,000 for August reported by the September establishment survey last week, but still within the expected +/-110,000 margin of error in these incomplete survey extrapolations......

Breaking down the seasonally adjusted job separations, the BLS finds that a record 4,270,000 of us voluntarily quit our jobs in August, up by 242,000 from the revised 4,028,000 who quit their jobs in July, while the quits rate, widely watched as an indicator of worker confidence, rose from 2.7% to a record 2.9% of total employment, and was also up from the quits rate of 2.1% a year earlier (see details in table 4)....in addition to those who quit, a record low of 1,343,000 were either laid off, fired or otherwise discharged in August, down by 80,000 from the revised 1,423,000 who were discharged in July, while the discharges rate fell to a record low of 0.9% of all those who were employed during the month, down from the 1.0% discharges rate in July and from what was a record low 1.1% discharges rate in August of a year earlier....meanwhile, other separations, which includes retirements and deaths, were at 390,000 in August, up from 311,000 in July, and the highest since January 2016, for an 'other separations rate’ of 0.3%, up from 0.2% in July and from August 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 of which are picked from the aforementioned GGO posts, contact me…)  

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