Major monthly reports released this past week included the March Consumer Price Index, the March Producer Price Index, and the March Import-Export Price Index, all from the Bureau of Labor Statistics, the Retail Sales report for March, the Business Sales and Inventories report for February, both from the Census Bureau, the March report on Industrial Production and Capacity Utilization from the Fed, and the February report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau, results of which were incorporated into the business inventory report released later in the week...
Consumer Prices Rose 0.1% in February on Higher Prices for Shelter
The consumer price index rose 0.1% in March, as higher prices for rent, new cars, car insurance, hotels, restaurants and airfares were mostly offset by lower prices for groceries, gasoline, used vehicles, utilities, health insurance, and smartphones...theConsumer Price Index Summary from the Bureau of Labor Statistics indicated that the average of seasonally adjusted prices were 0.1% higher in March, after rising by 0.4% in February, by 0.5% in January, by 0.1% in December, by 0.2% in November, by 0.5% in October, by 0.4% in September, and by 0.2% in August, after being unchanged in July, but after rising by 1.3% in June, by 1.0% in May, by 0.3% in April, and by 1.2% in March of last year....the unadjusted CPI-U index, which was originally set to have prices of the 1982 to 1984 period equal to 100, rose from 300.840 in February to 301.836 in March, which left it statistically 4.9850% higher than the index reading of 287.504 in March of last year, which is reported as a 5.0% year over year increase, down from the 6.0% year over year increase reported for February, and down from the forty year high year over year increase of 9.1% reported for June 2022....with lower food and energy prices reducing this month's overall price index, seasonally adjusted core prices, which exclude food and energy, were up by 0.4% for the month, as the unadjusted core price index rose from 304.011 to 305.476, which left the core index 5.5896% ahead of its year ago reading of 289.305, which is reported as a 5.6% year over year increase, up from the 5.5% year over year core price increase that was reported in February, but still well down from the 6.6% annual increase reported for September 2022, which had also been the largest annual increase in core prices in forty years...
The volatile seasonally adjusted energy price index fell 3.5% in March, after falling by 0.6% in February, rising by 2.0% in January, falling by 3.1% in December, falling by 1.4% in November, and rising by 1.7% in October, after falling by 1.7% in September, by 3.9% in August and by 4.7% in July, and is now 6.4% lower than in March of a year ago....the price index for energy commodities was 4.6% lower in March, while the price index for energy services was 2.3% lower, after it had fallen by 1.7% in February....the energy commodity index was down 4.6% on a 4.6% decrease in the price of gasoline, and a 4.0% decrease in the price of fuel oil, while the price index for other energy commodities, including propane, kerosene, and firewood, averaged 0.5% lower....within energy services, the price index for utility gas service fell 7.1% after falling 8.0% in February, but is still 5.5% higher than it was a year ago, while the electricity price index fell 0.7% in March after rising 0.5% in February... energy commodities are now averaging 17.0% lower than their year ago levels, with gasoline prices averaging 17.4% lower than they were a year ago, while the energy services price index is still up 9.2% from last March, as electricity prices are still averaging 10.2% higher than a year ago…
Meanwhile, the seasonally adjusted food price index was unchanged in March, after rising by 0.4% in February, by 0.5% in January, by 0.4% in December, by 0.6% in November, by 0.7% in October, by 0.8% in September, by 0.8% in August, and by 1.1% in July, as the price index for food purchased for use at home was 0.3% lower in March, after rising by 0.3% in February, by 0.4% in January, by 0.5% in December, by 0.6% in November, by 0.5% in October, by 0.8% in September, by 0.6% in August, and by 1.3% in July, while the index for food bought to eat away from home was 0.6% higher, as average prices at fast food outlets rose 0.5%, prices at full service restaurants rose 0.7%, and food prices at employee sites and schools averaged 0.2% higher...
In the food at home categories, the price index for cereals and bakery products was 0.6% higher, as average bread prices rose 0.4%, the price index for breakfast cereals rose 2.4%, the price index for fresh sweetrolls, coffeecakes, and doughnuts rose 1.3%, and the price index for frozen and refrigerated bakery products, pies, tarts, and turnovers rose 2.8%... on the other hand, the price index for the meats, poultry, fish, and eggs food group was 1.4% lower, as the price index for ham fell 4.8%, the price index for shelf stable fish and seafood fell 1.8%, and egg prices were 10.9% lower....at the same time, the seasonally adjusted price index for dairy products was 0.1% lower, as milk prices fell 1.0% and the price index for dairy products other than cheese and ice cream was 0.8% lower....meanwhile, the fruits and vegetables price index was 1.3% lower, as the price index for fresh fruits fell 1.7% the price index for fresh vegetables also fell 1.7%, and the price index for processed fruits and vegetables other than those canned or frozen was 1.4% lower...meanwhile, the beverages price index was 0.2% higher, as the price index for carbonated drinks rose 0.4%, and the price index for beverage materials including tea but not coffee was 0.7% higher....lastly, the price index for the ‘other foods at home’ category was 0.4% higher, as the price index for frozen and freeze dried prepared foods rose 1,6%, the price index for snacks also rose 1.6%, the price index for olives, pickles, and relishes rose 1.1%, the price index for salt and other seasonings and spices rose 1.7%, and the price index for prepared salads was 1.4% higher....
Among the seasonally adjusted core components of the CPI, which rose by 0.4% in March, after rising by 0.5% in February, by 0.4% in January, by 0.4% in December, by 0.3% in November, by 0.3% in October, by 0.6% in September, by 0.6% in August, and by 0.3% in July, the composite price index of all goods less food and energy goods was 0.2% higher in March, while the more heavily weighted composite for all services less energy services was 0.4% higher....
Among the goods components of the core index, which will be used by the Bureau of Economic Analysis to adjust February’s retail sales for inflation in national accounts data, the price index for household furnishings and supplies was 0.4% higher, as the price index for furniture other than bedroom, living room, kitchen, and dining room furniture rose 1.6%, the price index for laundry equipment rose 2.6%, the price index for indoor plants and flowers rose 1.8%, the price index for floor coverings rose 0.8%, the price index for household cleaning products rose 1.0%, and the price index for household paper products rose 1.6%...at the same time, the apparel price index was 0.3% higher on a 5.6% increase in the price index for men's pants and shorts, a 4.3% increase in the price index for women's outerwear, a 6.5% increase in the price index for women's dresses, and a 2.9% increase in the price index for boys' and girls' footwear…meanwhile, the price index for transportation commodities other than fuel was unchanged, as prices for new cars rose 0.6% and the price index for vehicle parts and equipment other than tires was 1.2% higher, but the price index for used cars and trucks fell 0.9% and the price index for tires was 0.1% lower….on the other hand, the price index for medical care commodities was 0.6% higher, as nonprescription drug prices rose 1.5% and the price index for medical equipment and supplies was 1.2% higher…at the same time, the recreational commodities index was 0.2% higher despite a 1.0% drop in TV prices, as the price index for other video equipment rose 3.4%. the price index for pet food rose 1.6%, the price index for photographic equipment and supplies rose 1.0%, the price index for newspapers and magazines rose 1.5%, the price index for music instruments and accessories rose 1.8%, and the price index for sewing machines, fabric and supplies rose 2.8%….on the other hand, the education and communication commodities index was 0.5% lower on a 2.6% decrease in the price index for smartphones, a 2.8% decrease in the price index for telephone hardware, calculators, and other consumer information items, and a 1.4% decrease in the price index for educational books and supplies…lastly, a separate price index for alcoholic beverages was 0.1% higher, while the price index for ‘other goods’ was 0.5% higher on a 1.0% increase in the price index for cigarettes and a 1.3% increase in the price index for hair, dental, shaving, and miscellaneous personal care products...
Within core services, the price index for shelter was 0.6% higher as rents rose 0.6%, homeowner's equivalent rent was 0.5% higher, and prices for lodging away from home at hotels and motels rose 3.1%, while at the same time the shelter sub-index for water, sewers and trash collection services rose 0.3% and the price index for moving, storage, freight expense was 1.5% higher…on the other hand, the price index for medical care services was 0.5% lower, as the price index for inpatient hospital services was 0.7% lower and the price index for health insurance fell 4.2%… however, the transportation services price index was 1.4% higher, as the price index for airline fares rose 4.0%, the price index for motor vehicle maintenance and servicing rose 0.4%, and the price index for motor vehicle insurance rose 1.2%…meanwhile, the recreation services price index was unchanged, as the price index for cable, satellite, and live streaming television service rose 1.2%, the price index for veterinary services rose 0.8%, and the price index for admission to movies, theaters, and concerts rose 1.1%, while the price index for video discs and other media fell 4.0%, the price index for photographers and photo processing fell 1.0%, and the price index for admission to sporting events fell 3.9%…at the same time, the price index for education and communication services was 0.3% higher, as the price index for day care and preschool rose 1.4% and the price index for internet services and electronic information providers rose 0.9%…lastly, the index for other personal services rose 0.5%, as the price index for funeral expenses rose 0.5% and the price index for tax return preparation and other accounting fees was 2.4% higher..
Retail Sales Fell 1.0% in March, but PCE Goods Still Add 167 Basis Points to Q1 GDP
Seasonally adjusted retail sales decreased by 1.0% in March, after retail sales for February were revised higher...the Advance Retail Sales Report for March (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $691.7 billion during the month, which was down by 1.0 percent (±0.5%) from February's revised sales of $698.6 billion, but still 2.9 percent (±0.7 percent) above the adjusted sales in March of last year... February's seasonally adjusted sales were revised from $697.9 billion to $698.6 billion, while January's sales were revised from $700.7 billion to $700.1 billion; as a result, the percent change from January to February was revised from down 0.4 percent (±0.5 percent)* to down 0.2 percent (±0.1 percent).....estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated sales actually rose 14.5%, from $614,327 million in February to $703,200 million in March, while they were up 3.1% from the $681,854 million of sales in March of a year ago...
Included below is the table of the monthly and yearly percentage changes in retail sales by business type taken from the March Census Marts pdf....the first double column of this table shows us the seasonally adjusted percentage change in sales for each kind of business from the February revised figure to this month's March "advance" report in the first sub-column, and then the year over year percentage sales change since last March in the 2nd column; the second double column pair below gives us the revision of the February advance estimates (now called "preliminary") as of this report, with the new January to February percentage change under "Jan 2023 r" (revised) and the February 2022 to February 2023 percentage change as revised in the 2nd column of that pair...(for your reference, our copy of this same table from the advance February estimate, before this month's revisions, is here).... lastly, the third pair of columns shows the percentage change of the first 3 months of this year's sales (January, February and March) from the preceding three months of the 4th quarter (October thru December) and from the same three months of the 1st quarter of a year ago....as you can see from that fifth column, overall retail sales for the 1st quarter of 2023 were roughly 1.7% higher than the 4th quarter of 2021, which implies that nominal personal consumption of goods for the 1st quarter will be up by roughly the same amount, before any inflation adjustments…
To compute March's real personal consumption of goods data for national accounts from this March retail sales report, the BEA will use the corresponding price changes from the March consumer price index, which we just reviewed... 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 5.5% price-related decrease in sales at gas stations were down by 0.6%....then, by subtracting the dollar values representing the 0.1% decrease in grocery & beverage sales and the 0.1% increase in food services sales out from that total, we find that core retail sales were down by roughly 0.8% for the month...since the March CPI report showed that the the composite price index of all goods less food and energy goods was 0.2% higher in March, we can thus figure that real retail sales excluding food and energy decreased around 1.0%...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 clothing stores were 1.7% lower in March, the apparel price index was 0.3% higher, which means that real sales of clothing likely fell around 2.0%... similarly, while sales at health and personal care stores were 0.3% higher, the price index for medical care commodities was 0.6% higher, which suggests real sales of drugs and health products were down by around 0.3%....
In addition to figuring those core retail sales, we should also adjust food and energy retail sales for their price changes separately, just as the BEA will do…the March CPI report showed that the food price index was unchanged, as the price index for food purchased for use at home fell 0.3% while the index for food bought away from home was 0.6% higher, as prices at fast food outlets rose 0.5% while prices at full service restaurants rose 0.7%...hence, while nominal sales at food and beverage stores were 0.1% lower, real sales of food and beverages would be around 0.2% higher in light of the 0.3% lower prices…on the other hand, the 0.1% increase in nominal sales at bars and restaurants, once adjusted for 0.6% higher prices, suggests that real sales at bars and restaurants fell around 0.5% during the month...and while sales at gas stations were down 5.5%, there was a 4.6% decrease in price of gasoline during the month, which would suggest that real sales of gasoline were down on the order of 0.9%, with a caveat that gasoline stations do sell more than gasoline, products which should not be adjusted with gasoline prices, so the actual decrease 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 March will show that real personal consumption of goods fell by around 0.8% in March, after rising by a revised 0.1% in February and by a revised 2.9% in January...at the same time, the 0.5% decrease in real sales at bars and restaurants would reduce March real personal consumption of services by a small fraction of a percent...
Now that we have estimates of the percentage change in PCE goods for all three months of the first quarter, we can also estimate the contribution that PCE goods will make to 1st quarter GDP.... the February income and outlays report gives the change in real PCE goods for the 4th quarter months as up 0.8% in October, down 1.3% in November, and down 0.7% in December…based on the revisions to retail sales in the March retail report, we now estimate real PCE goods for January at +2.9%, PCE goods for February at +0.1%, and PCE goods for March at -0.8%…to simplify our calculations, we’ll now convert those perfcentage changes in PCE goods into an index, and set October with an index value of 100.00…thus Nov = 98.70, Dec = 98.01, Jan = 100.85, Feb = 100.95, and March = 100.14…hence, to estimate the growth rate of 1st quarter PCE goods, we have this calculation (((100.85 + 100.95 + 100.14) / 3) / ((100.00+ 98.70+ 98.01)/ 3)) ^ 4 = 1.07239…that means that PCE goods rose at about a 7.24% annual rate in the 1st quarter…since PCE goods has usually been around 23% of GDP, that means that the contribution of PCE goods to first quarter GDP should be around 1.67 percentage points…
Industrial Production Rose 0.4% in March on Colder Weather
The Fed's G17 release on Industrial production and Capacity Utilization for March indicated that industrial production rose 0.4% in March after rising by a revised 0,2% in February and a revised 0.9% in January, which left production 0.5% higher than a year ago... the industrial production index, with the benchmark set for average 2017 production to be equal to 100.0, rose to 103.0 in March, after the February index was revised up from 102.0 to 102,6, the January index was revised up from 102.0 to 102,4, the December index was revised down from 101.6 to 101.5 and the November index was revised up from 103.0 to 103.1...after those revisions and the March increase, US industrial production was up at a 0.2% annual rate for the first quarter as a whole...
The manufacturing index, which accounts for around 77% of the total IP index, fell to 99.5 in March from 100.0 in February, which had previously been reported at 99.6...at the same time, the January manufacturing index was revised from 99.5 to 99.4, the December manufacturing index was revised from 98.2 to 98.1, the November manufacturing index was revised from 100.0 to 100.1, and the October manufacturing index was revised from 100.7 to 100.8....after revisions, the manufacturing index now sits 0.1% above its year ago level, while first quarter manufacturing rose at a 0.3% annual rate from that of the 4th quarter of 2022....meanwhile, the mining index, which includes oil and gas well drilling, also fell 0.5%, from 117.1 in February to 116.6 in March, after the February mining index was revised up from last month's reported 116.3, which left the mining index 0.2% above where it was a year earlier...finally, the utility index, which typically fluctuates due to deviations from normal temperatures, rose by 8.4% in our cold March, from 100.6 to 109.0, after the February utility index was revised from 99.3 to 100.6, now down 0.7% from January...including this month's revisions, the utility index is now 4.2% above that of a year ago, since last March temperatures averaged closer normal...
This report also includes capacity utilization data, which is expressed as the percentage of our plant and equipment that was in use during the month…seasonally adjusted capacity utilization for total industry rose to 79.8% in March from 79.6% in February, which was revised up from the 78.0% utilization reported a month ago...capacity utilization of NAICS durable goods production facilities fell from a revised 76.0% in February to 75.2% in March, while capacity utilization for non-durables producers was down from 81.5% to 81.3%...capacity utilization for the mining sector fell to 91.1% in March from 91.6% in February, which had been reported as 87.3% last month, while utilities were operating at 75.3% of capacity during March, up from 69.7% in February, after February's utility utilization was revised up from the previously reported 68.9%....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..
Producer Prices Fell 0.5% in March on Lower Energy, Trade and Transportation Services
The seasonally adjusted Producer Price Index (PPI) for final demand fell 0.5% in March, as average prices for wholesale goods fell 1.0%, while the price index for final demand for services was 0.3% lower....that decrease followed an upwardly revised change in February, when average prices for finished wholesale goods fell 0.3% while final demand for services was 0.1% higher, an upwardly revised 0.4% increase in January, when average prices for finished wholesale goods rose 1.3% and final demand for services was unchanged, a 0.2% decrease in December, when average prices for finished wholesale goods fell 1.4%, but final demand for services was 0.5% higher, an upwardly revised 0.4% increase in November, when average prices for finished wholesale goods rose 0.3% and final demand for services was 0.4% higher, and a 0.3% increase in October, when prices for finished wholesale goods rose 0.4%, while final demand for services was 0.2% higher, a 0.3% increase in September, when average prices for finished wholesale goods rose 0.5% and final demand for services rose 0.2%, and an August PPI that was unchanged, as average prices for finished wholesale goods were 0.8% lower while the more heavily weighted final demand for services was 0.5% higher....on an unadjusted basis, producer prices are still 2.7% higher than a year ago, albeit down from the revised 4.9% year over year increase now indicated for February's producer price index, while the core producer price index, which excludes food, energy and trade services, rose by 0.1% for the month, and is 3.6% higher than it was a year ago, down from the 4.5% year over year core PPI increase that is now indicated for February...note that the BLS is now revising the PPI going back five months with every release, so the figures we'll cite for those months were revised, whether we note it or not..
As we noted, the producer price index for final demand for goods, which was previously aggregated as 'finished goods', was 1.0% lower in March, after being 0.3% lower in February, 1.3% higher in January, 1.4% lower in December, 0.3% higher in November, 0.4% higher in October, 0.5% higher in September, 0.8% lower in August, 1.6% lower in July, 2.1% higher in June, 1.4% higher in May, 1.4% higher in April, and 2.2% higher in March of last year, and hence is still up by 2.0% from a year ago....the final demand goods price index fell 1.0% in March as the price index for wholesale energy goods was 6.4% lower, after it had fallen by 0.3% in February, risen by 5.5% in January, fallen by 6.3% in December and by 2.3% in November, but after it rose by 1.5% in October and by 1.0% in September, while the price index for wholesale foods was 0.6% higher, after falling by 2.2% in February, by 1.2% in January, and by 0.9% in December but after rising by 3.3% in November, by 0.7% in October and 1.5% in September, while the index for final demand for core wholesale goods (excluding food and energy) was 0.3% higher, after after it had risen by 0.3% in February, by 0.6% in January, by 0.1% in December and by 0.3% in November…
Wholesale energy prices averaged 6.4% lower in March due to an 11.7% decrease in wholesale prices for gasoline, a 9.3% decrease in wholesale prices for liquefied petroleum gas, a 6.5% decrease in wholesale prices for diesel fuel, and a 7.1% decrease in wholesale prices for residential natural gas, while the final demand food price index was 0.6% higher on a 33.9% increase in the wholesale price index for eggs for fresh use, a 6.3% increase in the wholesale price index for processed young chickens, a 3.4% increase in the wholesale price index for pork, a 1.5% increase in the wholesale price index for beef and veal, and a 1.1% increase in the wholesale price index for finfish and shellfish....among core wholesale goods, the wholesale price index for iron and steel scrap increased 4.1%, the final demand price index for pet food rose 5.6%, and the wholesale price index for transformers and power regulators rose 1.7%...
Meanwhile, the price index for final demand for services was was 0.3% lower in March, after being 0.1% higher in February, unchanged in January, but after rising by a revised 0.5% in December, by 0.2% in November, by 0.2% in October, by 0.2% in September, by 0.5% in August, by 0.3% in July, 0.3% in June, and by 0.4% in May, and is still 2.8% higher than a year ago, albeit down from the 3.8% year over year increase shown in February, and down from the record 9.2% year over year increase that was reported for March of 2022....the price index for final demand for trade services fell 0.9%, and the price index for final demand for transportation and warehousing services fell 1.3%, while 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 major household appliance retailers fell 9.4%, margins for fuels and lubricants retailers fell 12.1%, margins for automobile retailers fell 1.6%, and margins for machinery and vehicle wholesalers fell 7.3%, but margins for lawn, garden, and farm equipment and supplies retailers rose 12.9%....among transportation and warehousing services, average margins for truck transportation of freight fell 2.9% and margins for air transportation of freight fell 0.9%....among the components of the core final demand for services index, the price index for deposit services rose 3.0%, the price index for traveler accommodation services rose 4.1%, and margins for cable and satellite subscriber services rose 1, but the price index for the price index for portfolio management fell 4.5%...
This report also showed the price index for intermediate processed goods fell 1.9% in March, after falling 0.4% in February, but after rising by 1.1% in January, after falling by 2.5% in December, by 0.5% in November, by 0.2% in October and by 0.1% in September, after falling by 1.2% in August and by 2.1% in July, but after rising by 1.9% in June, by 2.2% May, by 2.0% in April, and by 2.1% last March....the price index for intermediate energy goods fell 5.1% in February, as refinery prices for gasoline fell 11.7%, refinery prices for diesel fuel fell 6.5%, refinery prices for jet fuel fell 7.7%, producer prices for liquefied petroleum gas fell 9.3%, producer prices for commercial natural gas fell 9.7%, and producer prices for industrial natural gas fell 6.1%... at the same time, the price index for intermediate processed foods and feeds fell 0.1%, as the producer price index for fats and oils fell 4.0% and the producer price index for dairy products fell 2.0%...however, the core price index for intermediate processed goods less food and energy goods rose 0.1%, as the producer price index for lighting fixtures rose 1.5%, the producer price index for ball and roller bearings rose 2.0%, the producer price index for paving mixtures and blocks rose 1.2%, and the producer price index for steel mill products rose 1.2%, while the producer price index for nitrogenates fell 5.8%....average prices for intermediate processed goods are now 1.0% lower than in March 2022, the first decrease since 20020, and are way down from their 26.6% year over year increase of November 2021, which had been a 46 year high...
At the same time, the price index for intermediate unprocessed goods fell 5.0% in March, after falling 4.8% in February and by 4.7% in January. after rising 1.5% in December, after falling by 3.1% in November, by 9.7% in October, and by 3.1% in September...that was as the March price index for crude energy goods fell 11.9%, as unprocessed natural gas prices fell 21.4%, crude oil prices fell 10.2%, but coal prices were 1.3% higher...at the same time, the price index for unprocessed foodstuffs and feedstuffs was 1.3% lower, led by a 9.6% decrease in producer prices for raw milk, a 9.4% decrease in producer prices for wheat, a 7.5% decrease in producer prices for corn, and a 3.3% decrease in producer prices for slaughter hogs....meanwhile, the index for core raw materials other than food and energy materials was 0.3% lower on a 10.9% increase in the price index for recyclable paper and a 10.6% increase in the price index for iron and steel scrap....this raw materials price index is now 17.0% lower than a year ago, just the second negative print after twenty-seven consecutive year over year increases, which came after the annual change on this index had been negative from the beginning of 2019 through October of 2020...
Lastly, the price index for services for intermediate demand was 0.5% lower in March, after being 0.3% higher in February, 0.9% higher in January, after being unchanged in December, 0.8% higher in November, 0.4% higher in October, 0.5% higher in September, 0.6% higher in August, and 0.3% higher last July….the price index for intermediate trade services fell 0.5%, as margins for paper and plastics products wholesalers fell 1.5%, margins for intermediate building materials, paint, and hardware wholesalers fell 2.9%, margins for metals, minerals, and ores wholesalers fell 1.0% and margins for intermediate automotive parts and tires retailers fell 1.3%....at the same time, the index for transportation and warehousing services for intermediate demand was 0.9% lower, as the intermediate price index for arrangement of freight and cargo fell 4.4%, and the intermediate price index for truck transportation of freight fell 2.9%.... at the same time, the core price index for intermediate services other than trade, transportation, and warehousing services was 0.5% lower, as the intermediate price index for television advertising time sales fell 3.6%, the intermediate price index for business loan services fell 5.9%, and the intermediate price index for portfolio management fell 4.5%, while the intermediate price index for investment banking rose 3.0%...over the 12 months ended in March, the year over year price index for services for intermediate demand is 4.2% higher than it was a year ago, the twenty-ninth consecutive annual increase in this index change after it briefly turned negative year over year at the onset of the pandemic, from April to August of 2020, even as it is still lower than the record 9.5% year over year increase indicated for July 2021...
February Business Sales Flat, Business Inventories Up 0.2%
After the release of the March retail sales report, the Census Bureau also released the composite Manufacturing and Trade, Inventories and Sales report for February (pdf), which incorporates the revised February retail data from that March retail report and the earlier published February wholesale and factory data to give us a complete picture of the business contribution to the economy for that month....note that wholesale sales and inventories were revised on March 24th, which thus significantly 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 manufacturer's and trade sales were estimated to be valued at a seasonally adjusted $1,817.9 billion, virtually unchanged (±0.1 percent)* from January, but up 3.3 percent (±0.4 percent) from sales of February last year...January's sales were revised from the originally reported $1,847.5 billion to $1,818.0 billion, now a 1.2% increase from December, vs the 1.5% increase previously reported....the seasonally adjusted value of manufacturer's sales fell 0.5% to $542,788 million in February; retail trade sales, which exclude restaurant & bar sales from the revised February retail sales reported earlier, were virtually unchanged at $605,625 million, while wholesale sales rose 0.4% to $594,041 million...
Meanwhile, total manufacturer's and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $2,471.6 billion at the end of February, up 0.2 percent (±0.1%) from the end of January, and 9.1 percent (±0.4 percent) higher than in February a year earlier...at the same time, the value of end of January inventories was revised from the $2,479.6 billion reported last month to $2,466.4 billion, now 0.2% lower than December....seasonally adjusted inventories of manufacturers were estimated to be valued at $806,287 million, down 0.1% from January, while inventories of retailers were valued at $746,065 million, 0.7% higher than January, and inventories of wholesalers were estimated to be valued at $919,232 million at the end of February, 0.1% higher than in January...
For GDP purposes, all those inventories, including retail, are adjusted for inflation with appropriate component price indices of the producer price index for February, which was down by 0.3% for finished goods...last week, we looked at real factory inventories with price adjustments for goods at various stages of production, and judged that our approximation of real factory inventories would have a negative impact on 1st quarter GDP.... meanwhile, the February wholesale and retail inventories released this week would be adjusted for a modest 0.3% decrease in prices and likey show a real inventory increases on the order of 1.0% for retail and 0.4% for wholesale; for real retail inventories, that would be close to the increase of the 4th quarter, indicating little impact on 1st quarter GDP....for wholesale inventories, that would be considerably smaller than the real increase in the 4th quarter, and therefore subtract from the difference between the two quarters from 1st quarter GDP..
(the above is the synopsis that accompanied my regular sunday morning news 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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