Sunday, May 22, 2022

April's retail sales, industrial production, new housing construction, and existing home sales; March business inventories

Regular monthly reports that were released this week included the Retail Sales report for April and the Manufacturing and Trade, Inventories and Sales report for March (pdf), both from the Census Bureau, the April report on Industrial Production and Capacity Utilization from the Fed, the April report on New Residential Construction from the Census Bureau and the Existing Home Sales Report for April from the National Association of Realtors…in addition, the Bureau of Labor Statistics released the Regional and State Employment and Unemployment Summary for April this week, which breaks down the two employment surveys from the monthly national jobs report by state and region....while the text of that report provides a useful summary of this data, the serious statistical aggregation can be found in the tables linked at the end of the report, where one can find the civilian labor force data and the change in payrolls by industry for each of the 50 states, the District of Columbia, Puerto Rico, and the Virgin Islands...

This week also saw first two regional Fed manufacturing surveys for May: the Empire State Manufacturing Survey from the New York Fed, which covers all of New York state, a NYC suburban county in Connecticut, northern New Jersey, and Puerto Rico, reported their headline general business conditions index tumbled to -11.6, down from +24.6 in April, suggesting a moderate slowdown of First District manufacturing... Meanwhile, the Philadelphia Fed Manufacturing Survey, covering most of Pennsylvania, southern New Jersey, and Delaware, reported their broadest diffusion index of manufacturing conditions fell to a two year low at +2.6 in May, down from +17.6 in April, indicating just a slim plurality of the region's manufacturing firms reported an increase in their activity this month than in April...

Retail Sales Rose 0.9% in April after March Sales Revised 0.9% Higher

Seasonally adjusted retail sales rose 0.9% in April, after retail sales March were revised 0.9% higher, while sales for February were revised a bit lower ...the Advance Retail Sales Report for April (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled a record high $677.7 billion during the month, which was up by 0.9 percent (±0.5 percent) from revised March sales of $671.6 billion, and 8.2 percent (± 0.7 percent) above the adjusted sales of April of last year...March sales were originally reported at $665.7 billion, up 0.5% from February; they are now indicated to have risen 1.4% to $671.6 billion, while February adjusted sales were concurrently revised from $662.4 billion to $662.3 billion...the net of those revisions to February and March sales would increase first quarter sales at about a $23.4 billion annual rate and add about 0.38 percentage points, give or take, to 1st quarter GDP when the 2nd estimate is released at the end of this month...estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated nominal dollar sales rose 0.4%, from $681,430 million in March to $684,195 million in April, while they were up 8.7% from the $629,451 million of sales in April a year ago....

We are again including below the table of monthly and yearly percentage changes in sales by business type, taken from the Census marts pdf....the first double column below gives us the seasonally adjusted percentage change in sales for each type of retail business type from March to April in the first column, and then the year over year percentage change for those businesses since last April in the 2nd column; the second pair of columns gives us the revision of last month’s March advance monthly estimates (now called "preliminary") as revised in this report, likewise for each business type, with the February to March change under "Feb 2022 r (revised)" and the revised March 2021 to March 2022 percentage change in the last column shown...for your reference, our copy of the table of last month’s advance March estimates, before this report's revision, is here....

To compute April's real personal consumption of goods data for national accounts from this April retail sales report, the BEA will use the corresponding price changes from the April consumer price index, which we reviewed last week...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 March retail sales excluding the 2.7% price-related decrease in sales at gas stations were up by 1.3%....then, by subtracting the amounts representing the 0.2% decrease in grocery & beverage sales and the 2.0% increase in food services sales out from that total, we find that core retail sales were up by roughly 1.4% for the month....since the April CPI report showed that the the composite price index of all goods less food and energy goods was 0.2% higher in April, we can thus figure that real retail sales excluding food and energy will show an increase of roughly 1.2%...however, the actual adjustment in national accounts for each of the types of sales shown above will vary by the change in the related price index…for instance, while nominal sales at motor vehicle & parts dealers were up 2.2%, the April price index for transportation commodities other than fuel was 0.4% higher, which would suggest that real unit sales at auto & parts dealers were likey on the order of 1.8% higher, once price increases are taken into account... on the other hand, while nominal sales at clothing stores were 0.8% higher in April, the apparel price index was 0.8% lower, which means that real sales of clothing likely rose around 1.6%...

In addition to figuring those core real retail sales, to make an estimate of the change in real sales, we'll need to adjust food and energy retail sales for their price changes separately, just as the BEA will do…the April CPI report showed that the food price index was 0.9% higher, as the price index for food purchased for use at home rose 1.0% while the index for food bought away from home was 0.6% higher...thus, while nominal sales at food and beverage stores were 0.2% lower, real sales of food and beverages would have 1.2% lower in light of the 1.0% higher prices…similarly, the 2.0% increase in nominal sales at bars and restaurants, once adjusted for 0.6% higher prices, suggests that real sales at bars and restaurants rose by around 1.4% during the month...and while sales at gas stations were down 2.7%, there was a 6.1% decrease in price of gasoline during the month, which would suggest that real sales of gasoline were actually up on the order of 3.6%, with a caveat that gasoline stations do sell more than gasoline, products which should not be adjusted with gasoline prices, so the actual increase in real sales at gas stations was likely smaller…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 April will show that real personal consumption of goods rose by around 1.2% in April, after rising by a revised 0.4% in March, but after falling by a revised 0.9% in February and rising by 3.1% in January...at the same time, the 1.4% increase in real sales at bars and restaurants should add about 0.1% to April's real personal consumption of services...

Industrial Production Rose 1.1% to a Record High in April

Industrial production increased in April after production for March was revised lower...the Fed's G17 release on Industrial production and Capacity Utilization for April reported that industrial production rose 1.1% in April after rising by 0.9% in March and by a revised 1.0% in February, which lifted our total output to a level 6.4% higher than the level of April a year ago...the industrial production index, with the benchmark now set for average 2017 production to equal to 100.0, rose to a record high 105.6 in April, after the March index value was revised to 104.5 from the 104.6 reported last month, while the February index value was unrevised at 103.6, and the January index was revised down from 102.7 to 102.6, and the December index was revised up from 101.6 to 101.7....the effect of those revisions was to revise the January change from +1.0% to +0.8%..

The manufacturing index, which accounts for more than 77% of the total IP index, rose 0.8% to 103.2 in April, led by a 3.9% increase in the production of motor vehicles and parts, after the March manufacturing index was revised from 102.6 to 102.5, the February manufacturing index was revised from 101.7 down to 101.6, and the January manufacturing index was revised from 100.5 to 100.3....the manufacturing index is now 5.8% above its Covid impacted level of a year ago....meanwhile, the mining index, which includes oil and gas well drilling, rose 1.6%, from 112.2 in March to 114.0 in April, after the March mining index was revised down from the originally reported 112.8, which left the mining index 8.6% higher than it was a year earlier...finally, the seasonally adjusted utility index, which typically fluctuates due to deviations from normal temperatures, rose by 2.4% in our cooler than normal April, from 106.7 to 109.3, after the March utility index was revised from 106.4 to 106.7, now down by 0.3% from our cold February, after the February index was revised from 106.0 to 107.0, now the same as January...with the April increase and this month's revisions, the utility index is now 7.5% above that of a year ago, partly due to a milder April last year than this year..

This report also includes April capacity utilization stats, which is expressed as a percentage of our plant and equipment that was in use during the month…seasonally adjusted capacity utilization for total industry rose to 79.0% in April from 78,2% in March, with capacity utilization for March concurrently revised down from 78.3% and capacity utilization for February revised from 77.7% to 77.6%...capacity utilization of NAICS durable goods production facilities rose from 78.3% in March to 79.1% in April, while capacity utilization for non-durables producers rose from 79.6% to 79.9%...capacity utilization for the mining sector rose to 80.1% in April from 79.0% in March, which was previously reported as 79.5%, while utilities were operating at 77.0% of capacity during April, up from their 75.4% of capacity during March, which was previously reported at 75.3%...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..

Business Sales Rose 1.8% in March, Business Inventories Were Up 2.0%

After the release of the April retail sales report, the Census Bureau also released the composite Manufacturing and Trade, Inventories and Sales report for March (pdf), which incorporates the revised March retail data from that April retail report and the earlier published March wholesale and factory data to give us a complete picture of the business impact on the economy for that month....note that retail sales and inventories were revised on April 25th, which thus revised the figures that were reported a month ago, even before the usual revisions to the prior month’s data that accompany this report...

According to the Census Bureau, total manufacturers' and trade sales were estimated to be valued at a seasonally adjusted $1,832.1 billion in March, up 1.8 percent (±0.2 percent) from February's revised sales, and up 14.1 percent (±0.4 percent) from March sales of last year...at the same time, total February sales were revised down from the originally reported $1,804.6 billion to $1,800.4 million, but are now a 1.2% increase from January....manufacturer's sales rose 2.3% to $556,354 million in March; retail trade sales, which exclude restaurant & bar sales from the revised March retail sales reported earlier, rose 1.3% to $589,550 million, while wholesale sales rose 1.7% to $686,150 million..

Meanwhile, total manufacturer's and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $2,324.2 billion at the end of March, up 2.0% (±0.1%) from the end of February, and up 14.7 percent (±0.5 percent) from inventories of March a year earlier...the value of end of February inventories was revised from the $2,270.3 billion reported last month to $2,279.547 billion, which is now 1.8% more than January's inventory valuation....seasonally adjusted inventories of manufacturers were estimated to be valued at $797,563 million, up 1.3% from February, while inventories of retailers were valued at $686,364 million, 2.3% more than those of February, and while inventories of wholesalers were estimated to be valued at $840,321 million at the end of March, also 2.3% more than in February...

Two weeks ago we figured that there would be a 0.01 percentage point upward revision to first quarter GDP based on the inventory change the factory report showed, while last week we figured that 1st quarter GDP was underestimated by around 0.11 percentage points based on what the wholesale inventories report showed....the BEA's Key source data and assumptions (xls) that accompanied the release of the advance estimate of 1st quarter GDP indicates that they had estimated that the value of retail inventories March would increase by $14.4 billion before adjustment with the PPI, which is less than the $15.1 billion that this report indicates...that $0.7 billion underestimation would result in another 0.02 percentage point upward revision to first quarter GDP...combining those 3 inventory revisions, this report thus indicates there should be a net upward adjustment of around 0.14 percentage points to 1st quarter GDP when the 2nd estimate is released at the end of May...

April Housing Starts Little Changed After Prior Months Revised Lower

The April report on New Residential Construction (pdf) from the Census Bureau estimated that new housing units were being started at a seasonally adjusted annual rate of 1,724,000 in April, which was s 0.2 percent (±8.7 percent)* below the revised March estimated rate of 1,728,000 annually, but 14.6 percent (±14.2 percent) above last April's rate of 1,505,000 housing starts a year....the figures shown in parenthesis indicate the most likely range of the change indicated; in other words, April housing starts could have been up by 8.5% or down by 8.9% from those of March, with revisions of a greater magnitude in either direction from that range possible...with this report, the annual rate for March housing starts was revised from the 15 year high rate of 1,793,000 reported last month to 1,728,000, and February starts, which were first reported at a 1,769,000 annual rate, were revised from last month's initial revised figure of 1,788,000 annually to a 1,777,000 annual rate, while January starts, which were first reported at a 1,638,000 annual rate, and were revised from an annual rate of 1,657,000 to a 1,679,000 annual rate a month ago, were revised back to a 1,666,000 annual rate with this report....

The annual rates of housing 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 154,600 housing units were started in April, up from the 143,100 housing units that were started in March, and up from the 126,100 housing units that were started in February...of those housing units started in April, an estimated 100,900 were single family homes and 52,600 were housing units in structures with more than 5 units, up from the revised 143,100 single family starts in March, and up from the 42,300 units started in structures with more than 5 units in March...

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 April, Census estimated new building permits for housing units were being issued at a seasonally adjusted annual rate of 1,819,000, which was 3.2 percent (±1.2 percent) above the March rate of 1,879,000, but was 3.1 percent (±1.8 percent) above the rate of building permit issuance in April a year earlier....the annual rate for housing permits issued in March was unrevised....

Again, these annualized estimates for new permits reported here were extrapolated from the unadjusted estimates collected monthly by canvassing census agents, which showed permits for roughly 156,300 housing units were issued in April, down from the revised estimate of 169,000 new permits issued in March.... for graphs and commentary on this report, see the following posts by Bill McBride at Calculated Risk: Housing Starts decreased to 1.724 Million Annual Rate in April and April Housing Starts: All-Time Record Housing Units Under Construction, which in turn links to his detailed Real Estate Newsletter post on the same subject.

Existing Home Sales Decrease 2.4% in April on Record High Prices

The National Association of Realtors (NAR) reported that seasonally adjusted existing home sales fell by 2.4% from March to April, projecting that 5.61 million existing homes would sell over an entire year if the April home sales pace were extrapolated over that year, a pace that was also 5.9% below the annual sales rate projected during April of a year ago....March sales, now shown at a 5.75 million annual rate, were revised from the the 5.77 million annual rate originally reported....the NAR also reported that the median sales price for all existing-home types was at a record high $391,200 in April, 14.8% higher than in April a year earlier, which they report "marks 122 consecutive months of year-over-year increases, the longest-running streak on record."......not noted is that this was the eighth consecutive month with lower sales year-over-year....the NAR press release, which is titled "Existing-Home Sales Retract 2.4% in April", 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 look at the raw data overview (pdf) to see what actually happened during the month...this unadjusted data indicates that roughly 464,000 homes sold in April, up 1.8% from the 456,000 homes that sold in March, but down by 9.6% from the 513,000 homes that sold in April of last year, so we can see the effect of the seasonal adjustment on reported sales, as it’s known that home sales should increase as spring progresses, & hence reported sales are lowered accordingly....that same pdf indicates that the median home selling price for all housing types rose by 4.4%, from a revised $374,800 in March to $391,200 in April, while the average home sales price rose by 2.9% to $397,600, up from the $386,500 average sales price in March, while it was up 9.2% from the $364,100 average April home sales price of a year ago...to view both seasonally adjusted and unadjusted graphs and additional commentary on this report, again see the following posts from Bill McBride at Calculated Risk:NAR: Existing-Home Sales Decreased to 5.61 million SAAR in Apriland More Analysis on April Existing Home Sales, which in turn links to his in-depth newsletter article on this report...

 

 

(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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