Monday, August 8, 2022

July’s jobs report; June’s trade deficit, construction spending, factory inventories, and JOLTS

The major economic releases of the past week included the Employment Situation Summary for July and the Job Openings and Labor Turnover Survey (JOLTS) for June, both of which came from the Bureau of Labor Statistics, and three June reports that included metrics which were either estimated or included in last week's release of 2nd quarter GDP: the Commerce Dept report on our International Trade for June,the June report on Construction Spending (pdf), and the Full Report on Manufacturers' Shipments, Inventories and Orders for June, both of which were from the Census Bureau...in addition, this week also saw the Consumer Credit Report for June from the Fed, which indicated that overall consumer borrowing outstanding grew by a seasonally adjusted $40.1 billion, or at a 10.5% annual rate, as non-revolving credit expanded at an 8.8% rate to $3,501.7 billion while revolving credit outstanding grew at a 16.0% rate to $1,125.8 billion..

Privately issued reports included the ADP Employment Report for July, the light vehicle sales report for July from Wards Automotive, which is the source data for the BEA report, and which reported that vehicles sold at a 13.35 million annual rate in July, up 2.9% from the 13.00 million annual rate in June, but down 9.0% from the 14.75 annual sales rate of July 2021, and the Mortgage Monitor for June from Black Knight Financial Services, which reported that 2.84% of mortgages were delinquent in June, up from the 2.75% that were delinquent in May, but down from the 4.37% delinquency rate of June of 2021, and that 0.36% of mortgages remained in the foreclosure process in June, up from 0.33% of all mortgages in foreclosure in May, and up from the 0.27% in foreclosure a year ago....

This week also saw both of the widely followed purchasing manager's surveys from the Institute for Supply Management (ISM): the July Manufacturing Report On Business indicated that the manufacturing PMI (Purchasing Managers Index) fell to 52.8% in July, down from 53.0% in June, suggesting a bit slower growth among manufacturing firms nationally, and the July 2020 Services Report On Business, which saw their Services PMI rise to 56.7%, up from 55.3% in June, indicating a larger plurality of service industry purchasing managers reported growth in various facets of their business in July...

Seasonally Adjusted Jobs Rose by 528,000 in July, Unemployment Rate Fell to 3.5%

The Employment Situation Summary for July from the Bureau of Labor Statistics showed there was a jump in payroll jobs that exceeded all forecasts, as well as an unexpected decrease in the unemployment rate, but that the labor force participation rate fell because the drop in the unemployed who were looking for work exceeded the increase in those newly employed.…seasonally adjusted estimates extrapolated from the establishment survey data projected that employers added 528,000 jobs in July, after the payroll job increase for May was revised up from 384,000 jobs to 386,000, and the June jobs increase was revised up from 372,000 to 398,000 jobs, and hence the combined number of jobs created over those two months was 28,000 more than was previously reported...with those revisions, that means that this report indicates an increase of 556,000 more jobs than were reported last month, and also means that seasonally adjusted non-farm payrolls are now 32,000 jobs above the 152,504,000 jobs reported for February of 2020, before the first pandemic related layoffs kicked in....the unadjusted data shows that there were actually 385,000 fewer payroll jobs extant in July than in June, as the large seasonal job cutbacks associated with the end of the school year were eliminated by the seasonal adjustments…

Seasonally adjusted job increases were spread throughout the private goods producing and service sectors and government, and no major sector showed a net job loss...since the BLS summary of the job gains by sector is clear and more detailed than our usual synopsis, we'll just quote from that summary here:

  • Job growth was widespread in July, led by gains in leisure and hospitality, professional and business services, and health care. (See table B-1.)
  • Total nonfarm employment has increased by 22.0 million since reaching a low in April 2020 and has returned to its pre-pandemic level. Private-sector employment is 629,000 higher than in February 2020, although several sectors have yet to recover. Government employment is 597,000 lower than its pre-pandemic level.
  • In July, leisure and hospitality added 96,000 jobs, as growth continued in food services and drinking places (+74,000). However, employment in leisure and hospitality is below its February 2020 level by 1.2 million, or 7.1 percent.
  • Employment in professional and business services continued to grow, with an increase of 89,000 in July. Job growth was widespread within the industry, including gains in management of companies and enterprises (+13,000), architectural and engineering services (+13,000), management and technical consulting services (+12,000), and scientific research and development services (+10,000). Employment in professional and business services is 986,000 higher than in February 2020.
  • Employment in health care rose by 70,000 in July. Job gains occurred in ambulatory health care services (+47,000), hospitals (+13,000), and nursing and residential care facilities (+9,000). Employment in health care overall is below its February 2020 level by 78,000, or 0.5 percent. Employment in government rose by 57,000 in July but is below its February 2020 level by 597,000, or 2.6 percent.
  • Over the month, employment increased by 37,000 in local government, mostly in education (+27,000). Employment in local government is below its February 2020 level by 555,000, or 3.8 percent, with the losses split between the education and non-education components.
  • Employment in construction increased by 32,000 in July, as specialty trade contractors added 22,000 jobs. Construction employment is 82,000 higher than in February 2020.
  • Manufacturing employment increased by 30,000 in July. Employment in durable goods industries rose by 21,000, with job gains in semiconductors and electronic components (+4,000) and miscellaneous durable goods manufacturing (+4,000). Employment in manufacturing is 41,000 above its February 2020 level.
  • In July, social assistance added 27,000 jobs, including a gain of 19,000 in individual and family services. Since February 2020, employment in social assistance is down by 53,000, or 1.2 percent.
  • Employment in retail trade increased by 22,000 in July, although it has shown no net change since March. In July, job gains occurred in food and beverage stores (+9,000) and general merchandise stores (+8,000). Retail trade employment is 208,000 above its level in February 2020.
  • In July, transportation and warehousing added 21,000 jobs. Employment rose in air transportation (+7,000) and support activities for transportation (+6,000). Employment in transportation and warehousing is 745,000 above its February 2020 level.
  • Information employment continued its upward trend in July (+13,000) and is 117,000 higher than in February 2020.
  • Employment in financial activities continued to trend up in July (+13,000). Employment in the industry is 95,000 above its level in February 2020.
  • Employment in mining rose by 7,000 in July, with gains in support activities for mining (+4,000) and oil and gas extraction (+2,000). Mining employment is 96,000 above a recent low in February 2021.
  • Employment showed little change over the month in wholesale trade and in other services.

The establishment survey also showed that average hourly pay for all employees rose by 15 cents an hour to $32.27 an hour, after it had increased by a revised 14 cents an hour in June; at the same time, the average hourly earnings of production and non-supervisory employees increased by 11 cents to $27.57 an hour...employers also reported that the average workweek for all private payroll employees was unchanged at 34.6 hours for the fifth consecutive month, while hours for production and non-supervisory personnel remained at 34.0 hours for the third consecutive month....meanwhile, the average manufacturing workweek remained 40.4 hours, while average factory overtime increased by a tenth of an hour to 3.3 hours..

Meanwhile, the seasonally adjusted extrapolation from the July household survey estimated that the number of those employed rose by 179,000 to 158,290,000, while the similarly estimated number of those counted as unemployed fell by 242,000 to 5,670,000, which therefore meant that July saw a net decrease of 63,000 in the total labor force...since the working age population had grown by 177,000 over the same period, that meant the number of employment aged individuals who were not in the labor force rose by 239,000 to 100,051,000....at the same time, the 63,000 decrease of those in the labor force was enough to lower the labor force participation rate by 0.1% to 62.1%....meanwhile, the increase in number employed vis-a-vis the increase in the population was great enough to increase the employment to population ratio, which we could think of as an employment rate, by 0.1% to 60.0%...in addition, the increase in the total labor force combined with the drop in those unemployed was enough to lower the unemployment rate from 3.6% to 3.5%, the lowest since the pandemic hit....on the other hand, the number who reported they were involuntarily working part time rose by 303,000 to 3,924,000 in July, which still wasn't enough to raise the alternative measure of unemployment, U-6, which includes those "employed part time for economic reasons", as it remained at 6.7%, the lowest on record....

Like most reports from the Bureau of Labor Statistics, the employment situation press release itself is easy to read and understand, so you can get more details on these two reports from there...note that almost every paragraph in that release points to one or more of the tables that are linked to on the bottom of the release, and those tables are also on a separate html page here that you can open it along side the press release to avoid the need to scroll up and down the page..

Job Openings, Layoffs, Hiring, and Quitting were All Lower in June

The Job Openings and Labor Turnover Survey (JOLTS) report for June from the Bureau of Labor Statistics estimated that seasonally adjusted job openings fell by 605,000, from 11,303,000 in May to 10,698,000 in June, after May's job openings were revised 49,000 higher, from 11,254,000 to 11,303,000...June jobs openings were still 8.6% higher than the 9,852,000 job openings reported for June of a year ago, as the job opening ratio expressed as a percentage of the employed fell from 6.9% in May to 6.6% in June, but was up from the 6.3% rate of June a year ago...the greatest drop in June job openings was in retail, where openings fell by 343,000 to 842,000, while job openings in finance and insurance rose by 31,000 to 401,000 (see table 1 for details on other categories of job openings)...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 June, seasonally adjusted new hires totaled 6,374,000, down by 133,000 from the revised 6,507,000 who were hired or rehired in May, as the hiring rate as a percentage of all employed fell to 4.2% from 4.3% in May, and it was also lower than the 4.4% hiring rate in June a year earlier (details of hiring by industry since January are in table 2)....meanwhile, total separations decreased by 86,000, from 6,017,000 in May to 5,931,000 in June, as the separations rate as a percentage of the employed rose from 3.7% to 3.8%, which was the same as the separations rate of June a year ago (see table 3)...subtracting the 5,931,000 total separations from the total hires of 6,374,000 would imply an increase of 443,000 jobs in June, more than the revised payroll job increase of 398,000 for June reported by the July establishment survey later in the week, but still with the expected +/-110,000 margin of error in these incomplete employment extrapolations...

Breaking down the seasonally adjusted job separations, the BLS finds that 3,869,000 of us voluntarily quit their jobs in June, down by 37,000 from the revised 4,274,000 who quit their jobs in May, while the 'quits rate', widely watched as an indicator of worker confidence, was unchanged at 2.8% of total employment, which was also unchanged from the 2.8% quits rate of a year earlier (see details in table 4)....in addition to those who quit, 1,327,000 were either laid off, fired or otherwise discharged in June, down by 89,000 from the revised 1,416,000 who were discharged in May, as the discharges rate remained at a record low 0.9% of all those who were employed during the month, which was also the same as the discharges rate of 0.9% a year earlier (see table 5)...meanwhile, other separations, which includes retirements and deaths, were at 367,000 in June, up from 334,000 in May, for an 'other separations rate’ of 0.2%, the same as in May, but down from 0.3% in June 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 easily accessed using the links to tables at the bottom of the press release...

Trade Deficit Fell 6.2% in June on Lower Imports of Automotive Goods, Higher Exports of Industrial Supplies and Materials

Our trade deficit decreased 6.2% in June, after falling by a revised 2.1% in May, as the value our exports increased while the value of our imports was lower...the Commerce Department report on our international trade in goods and services for June indicated that our seasonally adjusted goods and services trade deficit fell by a rounded $5.3 billion to $79.6 billion in June from a revised May deficit of $84.9 billion, which had previously been reported at $85.5 billion...the value of our June exports rose by $4.3 billion to $260.8 billion on a $3.5 billion increase to $183.0 billion in our exports of goods and a $0.7 billion increase to $77.8 billion in our exports of services, while the value of our imports fell by $1.0 billion to $340.4 billion as a $1.4 billion decrease to $282.5 billion in our imports of goods was partly offset by a $0.4 billion increase to $57.9 billion in our imports of services...export prices were on average 0.7% higher in June, so the increase in the month's real exports would be relatively less than their nominal change by that percentage, while import prices were 0.2% higher, meaning that the decrease in our real imports was relatively greater than the nominal decrease by that percentage..

The $3.5 billion increase in June's export of goods was largely due to greater exports of industrial supplies and materials and of foods, feeds and beverages, which were partly offset by lower exports of capital goods....referencing the Full Release and Tables for June (pdf), in Exhibit 7 we find that our exports of industrial supplies and materials rose by $4,749 million to $78,234 million on an $1,841 million increase in our exports of non monetary gold, a $1,554 million increase in our exports of natural gas, a $433 million increase in our exports of fuel oil, a $415 million increase in our exports of fertilizers, pesticides, and insecticides, a $363 million increase in our exports of crude oil, and a $345 million increase in our exports of other petroleum products, and that our exports of foods, feeds and beverages rose by $926 million to $16,857 million on higher exports of soybeans, wheat, fish and shellfish, and of meat and poultry....partly offsetting the increases in those export categories, our exports of capital goods fell by $1,125 million to $46,087 million on a $833 million decrease in our exports of civilian aircraft, a $360 million decrease in our exports of industrial machines other than those itemized separately, and a $303 million decrease in our exports of telecommunications equipment, while in addition, our exports of automotive vehicles, parts, and engines fell by $486 million to $12,886 million, our exports of consumer goods fell by $305 million to $21,027 million, and our exports of other goods not categorized by end use fell by $14 million to $6,256 million....

Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our goods imports and shows that lower imports of automotive vehicles, parts, and engines were responsible for the decrease in June imports, and that their decrease was partly offset by greater imports of capital goods and industrial supplies and materials ...our imports of automotive vehicles, parts, and engines fell by $2,725 million to $31,373 million on a $1,257 million decrease in our imports of new and used passenger cars, a $682 million decrease in our imports of vehicle parts and accessories other than engines, chassis, and tires, and a $497 million decrease in our imports of trucks, buses, and special purpose vehicles...in addition, our imports of foods, feeds, and beverages fell by $197 million to $17,940 million due to a $440 million decrease in our imports of fish and shellfish, and our imports of other goods not categorized by end use fell by $206 million to $9,882 million....partly offsetting the decreases in those categories, our imports of capital goods rose by $853 million to $72,276 million on a $1,409 million increase in our imports of computers and a $319 million increase in our imports of semiconductors, our imports of industrial supplies and materials rose by $643 million to $73,117 million on a $1,030 million increase in our imports of petroleum products other than fuel oil and a $537 million increase in our imports of steelmaking materials, and our imports of consumer goods rose by $457 million to $75,351 million on a $1,347 million increase in our imports of gem diamonds and a 302 million increase in our imports of toys, games, and sporting goods, which were offset by a $469 million decrease in our imports of cotton apparel and household goods and a $373 million decrease in our imports of furniture and related household goods...

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

The June figures show surpluses, in billions of dollars, with South and Central America ($7.9), Netherlands ($3.0), Singapore ($1.8), Hong Kong ($1.7), Brazil ($1.7), Australia ($1.5), Belgium ($1.0), and Switzerland ($0.9). Deficits were recorded, in billions of dollars, with China ($36.9), European Union ($17.6), Vietnam ($11.1), Mexico ($9.7), Canada ($7.3), Ireland ($6.1), Germany ($5.4), India ($5.2), Japan ($4.7), South Korea ($3.7), Taiwan ($3.6), Italy ($3.5), Malaysia ($3.0), Saudi Arabia ($1.9), France ($0.9), Israel ($0.8), and United Kingdom ($0.4).

  • The balance with Switzerland shifted from a deficit of $1.9 billion in May to a surplus of $0.9 billion in June. Exports increased $2.1 billion to $4.7 billion and imports decreased $0.7 billion to $3.8 billion.
  • The deficit with Canada decreased $2.5 billion to $7.3 billion in June. Exports increased $1.0 billion to $30.5 billion and imports decreased $1.5 billion to $37.7 billion.
  • The deficit with China increased $4.7 billion to $36.9 billion in June. Exports decreased $0.6 billion to $11.9 billion and imports increased $4.1 billion to $48.8 billion.

In the advance report on 2nd quarter GDP released last week, our June goods trade deficit was estimated based on the Advance Report on our International Trade in Goods from the Census Bureau, which was also released last week, coincident with the GDP release...that report estimated that our June goods trade deficit was at $98,183 million on a Census basis, down from the $104,041 million goods deficit reported in May...this report revises those figures and shows that our actual goods trade deficit in June was at $99,482 million on a balance of payments basis, and $98,591 million on a Census basis, and that the May goods deficit was revised to $103,513 million on a Census basis...together, those revisions from the previously published data mean that the 2nd quarter goods trade deficit in goods was roughly $120 million less than the estimates that were used in last week's GDP report, or less than $0.4 billion more at an annual rate, before adjusting for price changes...that small change could indicate a upward revision of roughly 0.01 percentage points to 2nd quarter GDP when the 2nd estimate is released at the end of August.....

For our trade in services, the BEA's Key source data and assumptions (xls) for the advance estimate of second quarter GDP provides aggregate exports and imports of services at annual rates on an international-transactions-accounts basis, indicating that the BEA assumed a $5.7 billion increase in exports of services and a $4.2 billion increase in imports of services on an annual basis in June....while there is no comparable annualized metric or adjusted data in this trade report that we could match that to, this release does show that exports of our services rose $0.7 billion in June after May's exports of services were revised $0.2 billion higher, and that imports of services rose $0.4 billion in June after May imports of services were statistically unchanged from last month...that suggests that the annual rate for June increase in exports of services used in the GDP report was on the order of $2.5 billion too low, while the annual rate for the June increase in imports of services used in the GDP report was about $0.2 billion too low...(note: revisions to monthly annualized figures are divided by 3 to get a quarterly annualized figure)...using those revised annualized figures computed in that blunt manner, we're thus estimating the 2nd quarter services surplus indicated by the advance GDP was $2.3 billion too low, suggesting another upward revision of roughly 0.04 percentage points to 2nd quarter GDP when the 2nd estimate is released on August 25th..

Construction Spending Fell 1.1% in June, Will Revise GDP Lower

The Census Bureau report on construction spending for June (pdf) estimated that the month's seasonally adjusted construction spending would work out to $1,762.3 billion annually if extrapolated over an entire year, which was 1.1 percent (±1.0 percent) below the revised annualized estimate of $1,781.9 billion of construction spending for May, but 8.3 percent (±1.5 percent) above the estimated annualized level of construction spending in June of last year...the May annualized construction spending estimate was revised 0.1% higher, from $1,779.8 billion to $1,781.9 billion, while the annual rate of construction spending for April was revised nearly 0.1% lower, from $1,782.5 billion to $1,780.9 billion...for the first half of 2020, actual construction spending amounted to $848.2 billion, 10.7 percent (±1.0 percent) above the $766.0 billion spent for construction in the first half of 2021..

A further breakdown of the different subsets of construction spending is provided in a Census summary, which precedes the detailed spreadsheets:

  • Private Construction Spending on private construction was at a seasonally adjusted annual rate of $1,416.4 billion, 1.3 percent (±0.5 percent) below the revised May estimate of $1,434.4 billion. Residential construction was at a seasonally adjusted annual rate of $923.7 billion in June, 1.6 percent (±1.3 percent) below the revised May estimate of $939.2 billion. Nonresidential construction was at a seasonally adjusted annual rate of $492.7 billion in June, 0.5 percent (±0.5 percent)* below the revised May estimate of $495.3 billion.
  • Public Construction In June, the estimated seasonally adjusted annual rate of public construction spending was $345.9 billion, 0.5 percent (±1.8 percent)* below the revised May estimate of $347.5 billion. Educational construction was at a seasonally adjusted annual rate of $77.5 billion, 0.7 percent (±3.0 percent)* below the revised May estimate of $78.1 billion. Highway construction was at a seasonally adjusted annual rate of $97.4 billion, 2.7 percent (±5.1 percent)* below the revised May estimate of $100.1 billion.

Construction spending for May was higher than what was reported by the BEA in the advance report for 2nd quarter GDP last week, but construction spending for April and June was lower than the BEA had estimated...as we saw above, the annual rate of construction spending for April was revised almost $1.6 billion lower, and annualized construction spending for May was revised $2.1 billion higher...in reporting 2nd quarter GDP, the Excel file with key source data and assumptions accompanying the report indicated on line 86 that they had estimated that the value of June’s nonresidential construction would be $1.3 billion smaller than that of the previously reported May figure, that June’s residential construction on lines 110 and 111 would be $10.1 billion less than that of the previously reported May figure, and that the value of June’s public construction shown on line 200 would be $1.2 billion greater than the previously published May figure...hence, the total of the figures used by the BEA for total June construction in the 2nd quarter GDP report were $10.2 billion less than the previously published May figure...with June construction now reported down $19.6 billion from a May figure that was revised $2.1 billion higher, that means that the BEA had overestimated annualized June construction spending by $7.3 billion when reporting 2nd quarter GDP...thus, after averaging the revisions to construction spending for the three months of the 2nd quarter, we find the total revised annualized figure for 2nd quarter construction spending would thus be $2.67 billion less in current dollars than the figures used by the BEA when computing 2nd quarter GDP, implying we'll see a downward revision of about 0.05 percentage points to to the construction components of 2nd quarter GDP when the 2nd estimate is released on the 25th of August...

Factory Shipments Up 1.1% in June, Factory Inventories Up 0.4%

The Full Report on Manufacturers' Shipments, Inventories, & Orders (pdf) from the Census Bureau reported that the seasonally adjusted value of new orders for manufactured goods rose by $10.8 billion or 2.0 percent to $555.2 billion in June, following an increase of 1.8% to $544.4 billion in May, which was revised from the 1.6 percent increase to $543.4 billion reported for May last month....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 useful as a revised update to the advance report on durable goods we reported on last week...on those revisions, the Census Bureau's summary, which precedes their detailed spreadsheet of the metrics included in this report, is quite complete, so we'll just quote directly from that here:

  • Summary: New orders for manufactured goods in June, up thirteen of the last fourteen months, increased $10.8 billion or 2.0 percent to $555.2 billion, the U.S. Census Bureau reported today. This followed a 1.8 percent May increase. Shipments, up twenty-five of the last twenty-six months, increased $6.3 billion or 1.1 percent to $551.9 billion. This followed a 2.1 percent May increase. Unfilled orders, up twenty-two consecutive months, increased $8.3 billion or 0.7 percent to $1,118.0 billion. This followed a 0.3 percent May increase. The unfilled orders-to-shipments ratio was 6.03, up from 5.98 in May. Inventories, up twenty-two of the last twenty-three months, increased $3.3 billion or 0.4 percent to $801.5 billion. This followed a 1.3 percent May increase. The inventories-to-shipments ratio was 1.45, down from 1.46 in May.
  • New orders for manufactured durable goods in June, up eight of the last nine months, increased $5.4 billion or 2.0 percent to $272.9 billion, up from the previously published 1.9 percent increase. This followed a 0.8 percent May increase. Transportation equipment, up three consecutive months, led the increase, $4.6 billion or 5.2 percent to $92.9 billion. New orders for manufactured nondurable goods increased $5.5 billion or 2.0 percent to $282.4 billion.
  • Shipments of manufactured durable goods in June, up thirteen of the last fourteen months, increased $0.8 billion or 0.3 percent to $269.6 billion, unchanged from the previously published increase. This followed a 1.5 percent May increase. Computers and electronic products, up seven of the last eight months, led the increase, $0.4 billion or 1.4 percent to $29.0 billion. Shipments of manufactured nondurable goods, up twenty-five of the last twenty-six months, increased $5.5 billion or 2.0 percent to $282.4 billion. This followed a 2.7 percent May increase. Petroleum and coal products, up ten of the last eleven months, led the increase, $4.0 billion or 6.0 percent to $71.5 billion.
  • Unfilled orders for manufactured durable goods in June, up twenty-two consecutive months, increased $8.3 billion or 0.7 percent to $1,118.0 billion, unchanged from the previously published increase. This followed a 0.3 percent May increase. Transportation equipment, up sixteen of the last seventeen months, led the increase, $7.8 billion or 1.2 percent to $647.8 billion.
  • Inventories of manufactured durable goods in June, up seventeen consecutive months, increased $2.0 billion or 0.4 percent to $484.9 billion, unchanged from the previously published increase. This followed a 0.6 percent May increase. Machinery, up twenty consecutive months, led the increase, $0.8 billion or 1.0 percent to $83.1 billion. Inventories of manufactured nondurable goods, up twenty of the last twenty-one months, increased $1.3 billion or 0.4 percent to $316.6 billion. This followed a 2.4 percent May increase. Chemical products, up fourteen of the last fifteen months, led the increase, $0.7 billion or 0.7 percent to $103.9 billion. By stage of fabrication, June materials and supplies increased 0.9 percent in durable goods and 0.1 percent in nondurable goods. Work in process increased 0.1 percent in durable goods and 0.3 percent in nondurable goods. Finished goods increased 0.2 percent in durable goods and 0.8 percent in nondurable goods.

The BEA's key source data and assumptions (xls) for the advance estimate of second quarter GDP indicates on line 142 that they had estimated that the value of durable goods inventories would rise $1.8 billion before any inflation adjustment in June, and this report indicates that total durable goods inventories actually increased in value by $2.0 billion; in addition, on line 143 of the BEA's GDP source data, they estimated that nondurable goods inventories rose by $1.2 billion in June, while this report indicates that nondurable goods inventories rose by $1.3 billion...combined, this report thus shows that the BEA had underestimated the change in the 2nd quarter GDP inventory component by around $0.3 billion before an inflation adjustment, or by around $1.2 billion on an annualized basis, which would suggest that 2nd quarter GDP would have to be revised upwards by about 0.02 percentage points to account for what this report shows...

 

 

(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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