August 2 graphics

2nd quarter GDP:

2nd quarter 2014 advance GDP

May Case Shiller A-L:

May 2014 Case Shiller A-L

May Case Shiller M-Z:

May 2014 Case Shiller M-Z

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June reports on consumer prices, durable goods, new and existing home sales

the key release of this past week was that of the June consumer price index from the BLS; we also saw the two reports on home sales for June; the Census report on new home sales and the Realtor’s report on sales of existing homes…this week also saw the release of the Chicago Fed National Activity Index for June (pdf), a composite index of 85 different economic metrics grouped into four broad categories of data, wherein a positive index reading corresponds to growth above trend and a negative index reading corresponds to growth below trend…their national index slipped to +0.12 in June from +0.16 in May as 44 of the 85 indicators were positive, with employment-related indicators adding 0.22 to the June reading, the sales, orders, and inventories category adding 0.04, production-related indicators adding up to zero, while the consumption and housing metrics subtracted 0.12 from the overall reading for June…for manufacturing, we saw the release of two regional Fed manufacturing surveys; the Richmond Fed, reporting for a District that includes Virginia, Maryland, the Carolinas, the District of Columbia and West Virginia, reported slightly faster growth in July as the Fifth District manufacturing composite index rose to 7, up from a reading of 4 in June, in a diffusion index where numbers above zero indicate expanding manufacturing activity…similarly, the Kansas City Fed, surveying an region that includes western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico, also reported that Growth in Tenth District Manufacturing Activity Edged Higher (pdf) as their June composite index rose to 9 in July from 6 in June…

Unfilled Orders for Durable Goods Rose 0.8% in June

also on manufacturing, the Census released the Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders for June (pdf), which estimated that the widely watched new orders for manufactured durable goods rose by a seasonally adjusted $1.8 billion or 0.7% to $239.9 billion, after falling by 1.0% in May; new orders rose across most industries; new orders for transportation equipment rose 0.6% to $75,065 million, while new orders excluding transportation rose 0.8%..important new orders for capital goods rose 1.9% to $91,968 million, led by a $0.9 billion or 2.4% increase in new orders for machinery….meanwhile, seasonally adjusted June shipments of durable goods, which will be reflected in 2nd quarter GDP, rose $0.3 billion or 0.1% to $238.2 billion., after falling 0.1% in May and rising 0.1% in April, suggesting a weak contribution to GDP….a 0.7% rise to $70,184 million in shipments of transportation equipment, led by a 13.6% jump in shipments of commercial aircraft, made all the difference; excluding transport equipment, June shipments fell 0.1%…in addition, seasonally adjusted inventories of durable goods, which have been up 14 out of the last 15 months, rose $1.6 billion or 0.4% to a record $399.7 billion, led by a 0.7% increase to $128,803 in inventories of transportation equipment, which are now 10.7% higher than they were a year ago….and finally, unfilled orders for manufactured durable goods, which we consider a better measure of industry conditions than the widely watched but volatile new orders, increased by $8.7 billion or 0.8% to a record $1,096.8 billion…except for the 0.8% decrease in unfilled orders for communications equipment:, increases in the unfilled order book were seen by all other categories of durable manufacturers in June, led by a 2.8% increase in unfilled orders for defense aircraft and parts…

June Consumer Price Index Rises 0.3% on Higher Gasoline Prices

consumer inflation generally moderated in June after May’s widespread price increases, as increasing prices for gasoline alone accounted for two-thirds of the overall June increase in the CPI…the Consumer Price Index for All Urban Consumers (CPI-U) for May from the Bureau of Labor Statistics showed that seasonally adjusted prices rose by 0.3%, down from a 0.4% increase in May, with prices for every category except energy moderating…the unadjusted CPI-U, which was set with prices of the 1982  to 1984 period equal to 100, rose from 237.900 in May to 238.343 in June and was 2.1% above the 233.504 reading of a year earlier….with energy prices responsible for most of the increase, core prices, which exclude the more volatile food and energy prices changes, were up just 0.1%…the unadjusted core index rose from 238.029 in May to 238.157 in June and was 1.9% ahead of its year ago level of  233.640…

the seasonally adjusted energy index increased by 1.6% in June as prices for energy commodities rose 3.0% while the index for energy services fell 0.4%…driving the increase in energy commodities was a 3.3% increase in the overall price of gasoline, while prices for other motor fuels also rose 2.1%….fuel oil prices, on the other hand, fell 1.7%, while prices for other fuels, including propane, kerosene and firewood averaged just a 0.1% increase….within energy services, the index for utility gas service fell for the 2nd consecutive month, as it was down 2.6% in June after falling 1.7% in May, while the electricity index was up 0.2% in June after rising 2.3% in May and falling 2.6% in April…

the seasonally adjusted food index rose just 0.1% in June, after rising 0.5% in May and 0.4% in April, while it was 2.3% higher than last June….prices for food away from home rose 0.2% as both meals at full service restaurants and prices at fast food restaurants were 0.2% higher, while prices for food at work and at school rose 1.2% and prices for other food away from home rose 0.3%….meanwhile, the price index for food at home was statistically unchanged in June as meat price increases moderated and produce prices fell back…prices in the meats, poultry, fish, and eggs group rose 0.2% after rising 1.4% in May as beef, pork, and fish price increases averaged just 0.1%, while hot dog prices rose 1.1% and fresh chicken prices fell 2.7%; however, overall beef prices still remained 10.4% higher than last June, pork averaged 12.0% higher, while lamb and mutton prices were 13.2% lower than a year earlier….meanwhile, dairy products prices were 0.4% lower than in May as milk prices fell 0.8%, ice cream was 0.9% lower, while cheese prices rose 0.7%….in addition, the fruit and vegetable price index was 0.3% lower in June as prices for citrus fruits, including oranges, were 7.7% lower than in May, canned vegetable prices fell 1.8%, while lettuce prices rose 7.9% and tomatoes were 1.9% higher…on a year over year basis, however, citrus fruits still remained 12.2% higher than a year earlier…cereal and bakery products were also priced lower in June, 0.2% below May, as a 1.2% drop in prices for rice, pasta and cornmeal and a 0.6% drop in the price of white bread was only partially offset by a 0.6% increase in prices for flour and prepared mixes and breakfast cereals which were 0.8% higher….meanwhile, prices for the beverage group were statistically unchanged as a 2.6% increase in the price of freeze dried coffee was offset by a 1.1% drop in prices for non-carbonated juices and an 0.8% drop in prices for other beverages including tea…lastly, prices for other foods at home rose 0.1% as butter prices were 4.2% higher, spices and seasonings rose 0.6%, while peanut butter prices fell 0.5%, and prices for other condiments were 5.8% lower… as a result of the June increase, butter prices are now 11.2% higher than a year ago…

within the seasonally adjusted prices of the core components of the CPI, both overall commodities and overall services saw increases of 0.1%….the index for shelter, which is almost 32% of the CPI, rose 0.2%, with rent of shelter rising 0.2%, homeowner’s equivalent rent rising 0.3%, while prices for lodging away from home fell 1.9% on 2.5% lower prices at hotels and motels….meanwhile, household furnishings and supplies, the commodity component of housing, rose 0.1% on a 0.5% increase in prices for window and floor coverings and 3.4% rebound in prices for dishes and flatware, while major appliance prices fell 1.1%…the price index for apparel, which had been down earlier this year, rose 0.5% in June as women’s apparel rose 1.2% and men’s apparel rose 0.9% while prices for women’s footwear fell 1.6%…the aggregate index for medical care increased by 0.1% as medical care commodities rose 0.7% on a 1.0% increase in prescription drug prices, while medical care services were unchanged overall as a 0.5% increase in outpatient hospital services was offset by a 0.3% drop in prices for physicians’ services and 0.2% lower costs for health insurance…and while the transportation composite index showed a 1.0% increase, that index includes gasoline; transportation commodities less fuel were actually 0.4% lower, as prices for new cars and trucks fell 0.3%, the price of used cars & trucks fell 0.4%, and the price of tires fell 0.8%…meanwhile, the transportation services index fell 0.2% on a 2.1% drop in prices for car and track rentals while airfares were 0.4% higher than in May…in addition, the recreation index was up 0.1% as recreation commodities fell 0.2% on another 2.1% decrease in TV prices and a 0.7% decrease in prices for film and photographic supplies, which were partially offset by a 0.3% increase in prices for pets and pet products, while recreation services rose 0.2% on a 0.4% increase in prices for pet services including veterinary and a 0.3% increase in cable and satellite television and radio service charges which was partially offset by a 0.5% decrease in prices for film processing…finally, the aggregate education and communication index rose 0.2% as education and communication commodities fell 0.3%, mostly on a 2.7% decline in prices for telephone hardware and other consumer information gear, while education and communication services rose 0.2% on a 0.5% increase in college tuition and a 0.4% increase in postage and delivery services…. on a year over year basis, just two line items among CPI components other than food and energy showed price changes greater than 10%; prices for women’s outerwear has risen 16.4%, and televisions are 15.0% cheaper than they were a year earlier… 

our FRED graph below shows the overall change in each of the major component indexes of the CPI since January 2000, with all indexes reset to 100 as of that month for an apples to apples comparison of the price changes in each…in blue, we show  the relative track of the price index for food and beverages; in bright green, we show the reset price index for all housing components, which includes rent, homeowners equivalent rent, utilities, insurance & household maintenance; in red, we have the price changes for apparel, the only index to show a net price decline over the previous decade; while the relative change in the price index for medical care shown in violet has obviously seen the greatest price increase over the period…next, the transportation price index is in orange, and shows the impact of volatile fuel prices on the cost of transportation, while the price change for education and communication over the period is tracked in brown, and in dark green, is the relative strength of the index for recreation prices…finally, we’ve added the track of the overall CPI-U in black, which tends to track close to the large housing component, which makes up 41.5% of the total index…this graph can also be viewed as an interactive, wherein you can track the monthly changes in all of these relative price indexes by dragging your cursor across the graph…

June 2014 CPI components

Existing Home Sales Rise Modestly; New Home Sales Down Sharply

according to the National Association of Realtors, seasonally adjusted existing home sales rose by 2.8% in June to an annual rate of 5.04 million completed transactions, from an revised annual rate of 4.91 million in May, while home sales still remained 2.3% below the annual sales rate of 5.16 million-units in June of last year….before the seasonal adjustment and  conversion to an annualized figure, an estimated 506,000 homes sold in June, up 10.6% from the 473,000 homes that sold in May, but still down 1.2% from the estimated 500,000 homes that sold in June a year ago…both seasonally adjusted and unadjusted data (pdf) indicate that homes sales increased in every region of the country, ranging from a seasonally adjusted 0.5% increase in the South to a 6.2% increase in the Midwest…the median home selling price for all housing types was $223,300 in June, up from $212,000 in May and 4.3% higher than the $214,000 median sales price in June of last year, in home price data that is not seasonally adjusted…the average home sales price was $269,100, up from $259,400 in May and $261,000 in June a year ago, with regional average home prices ranging from $340,800 in the West to the average of $213,700 for homes sold in the Midwest….foreclosed homes, which sold for an average of 20% below the price of similar homes in their market, accounted for 8% of June sales, while short sales, at 3% of the total, were discounted by an average of 11%…the median time on the market for all homes was 44 days in June, down from 47 days in May, but up from a median of 37 days on the market in June a year ago…those who bought houses with cash accounted for 32% of transactions in June, unchanged from May and up from 31% all cash buyers in June of 2013;  those identified as investors accounted for 16% of all transactions, unchanged from May but down from the 17% investor sales a year earlier….Chinese buyers now make up 24% of all home sales to foreigners by dollar volume…domestic 30 year mortgage rates averaged 4.16% in June, down from 4.19% in May; and the share of first time home buyers rose to 28%, down from 27% in May but still well below the historical average of 40%….2.30 million existing homes remained available for sale at the end of June, which would be a 5.5-month supply of unsold homes at the June sales pace, unchanged from May but up from a 5.0 month supply a year earlier…

while existing homes sales were up slightly, June sales of new homes were down around 8% from May sales, which themselves were revised down by more than 12%… the Census bureau report on New Residential Sales for June estimated that new single family homes were sold at a seasonally adjusted annual rate of 406,000 in June, which was 8.1 percent (±12.3%)* below the revised May rate of 442,000 annually and 11.5 percent (±14.4%)* below the annualized new homes sales pace in June of last year….the May annualized sales rate was revised down from the 504,000 annually reported a month ago to 442,000, and April’s sales rate was revised down from 425,000 annually to 408,000…recall that the asterisks indicate that based on their small sampling, Census could not be certain whether June’s new home sales rose or fell from those of May or even from those of a year ago, but they’re 90% confident that June home sales rose less than 4.2% or fell less than 20.4% from those of May…the unadjusted data from Census field reps estimated that 38,000 homes sold in June, down from 42,000 in June, which was originally estimated at 49,000, while April’s unadjusted sales were revised from 40,000 down to 38,000…of the 38,000 homes sold in June, 12,000 were completed, 13,000 were under construction, and 13,000 had not yet been started…the median new home sales price was $273,500 in June, down from $282,600 in May, while the average sales price was $331,400, up from May’s $320,100 average… the Census estimated that a seasonally adjusted 197,000 new homes remained unsold at the end of June, which was a 5.8 month supply at the June sales pace, up from from a 5.2 month supply of unsold new homes in May…

the FRED graph below shows the seasonally adjusted annual rate of new single family home sales from this Census report in thousands since January 2000 in red, and the seasonally adjusted annual rate of existing home sales from the Realtors monthly over the same time period in blue…although both have recovered from their recession lows, neither appears to be in a clear uptrend, and with the large downward revision of May’s figures, new home sales now seem stuck under 450,000 annually….this graph can also be viewed as an interactive at the FRED site, where the monthly annualized sales for both existing and new homes will appear as you scroll across the face of the graph…

June 2014 new and existing homes sold

(the above are the comments that accompanied my regular sunday morning links emailing, synopses which in turn were 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 that accompanies these commentaries, most from the aforementioned GGO posts,contact me…)

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July 26 graphics

June CPI components:

June 2014 CPI components

June home sales:

June 2014 new and existing homes sold

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June’s retail sales, industrial production, producer prices, new housing, and states jobs reports

  the major economic releases this past week were all on June data, including the advance report on retail sales from the Census Bureau, the G17 on industrial production from the Fed, and the Census report on residential construction, which were all weaker than expected, and the June producer price index release from the BLS, which showed wholesale prices rose more than thought…we also saw the first two regional surveys on manufacturing from Fed District banks; on Tuesday, the July Empire State Manufacturing Survey from the New York Fed, covering manufacturers in New York and northern New Jersey, reported that their broadest diffusion index for general business conditions rose to a four year high at 25.6, up from from 19.3 last month, in an index where any positive number indicates improving business for area manufacturers….then on Thursday, the Philadelphia Fed released their July Business Outlook Survey (pdf), covering manufactures in most of Pennsylvania, southern New Jersey, and Delaware, reporting that their broadest diffusion index of manufacturing activity rose to 23.9 from last month’s 17.8, their highest reading since March 2011

Retail Sales Increase 0.2% in June, Grow at a 9.5% Annual Rate in 2nd Quarter

the Advance Retail Sales Report for June (pdf) from the Census Bureau estimated that our total seasonally adjusted retail and food services sales were at $439.9 billion in June, which was an increase of 0.2 percent (±0.5%)*  from revised May sales of $438.8 billion, and 4.5% (±0.7%) above sales in June of last year….May’s seasonally adjusted sales were originally reported at $437.6 billion, and with the upward revision the April to May increase was revised from the previously reported 0.3 percent (±0.5%)* to an increase of 0.5% (±0.2%), while April sales were revised up by over 1%, from $436.2 billion to $436.73 billion…recall that an asterisk after Census percentage ranges indicates they do not yet have enough data to determine whether sales actually rose or fell during the period cited….estimated unadjusted sales in May, extrapolated from surveys of a small sampling of retailers, indicated sales fell to $438,468 million in June from $464,425 million in May, and up from $420,523 million in June a year ago, so we can see there was a fairly large seasonal adjustment to May’s sales data, complicating month over month comparisons….

to break down the details and explain what they mean, we’ll again start by including a picture of the table of monthly and yearly percentage changes in sales by business type from the Census pdf…notice there are three double columns in the table; the first double column shows us the percentage change in sales for each kind of business from the May revised figure to this June “advance” report in the first sub-column, and then the year over year percentage sales change since last June in the 2nd column; the second double column set below gives us the revision of the May advance estimates (now called “preliminary”) as of this report, with the new April to May percentage change under “Apr 2014 r” (revised) and the May 2013 to May 2014 percentage change as revised in the 2nd column of the pair….then, the third double column shows the percentage change of the last 3 months of this year’s sales (April, May and June) from the preceding three months (January thru March) and from the same three months of a year ago….with estimates for those 3 months now in place, we’ll be able to speculate about the contribution of this report to 2nd quarter GDP…

June 2014 retail sales table

looking at the details for June in the first two column above it’s fairly clear that the seasonally adjusted 0.3% decline in motor vehicle and parts sales to $87,952 million was the major reason for the weaker than expected headline increase in June; excluding motor vehicles and parts, retail sales rose 0.4% to $351,939…you may recall that reports two weeks ago indicated June light vehicle sales were at an eight year high; it’s possible the discrepancy between that report and this one may have arisen from differences in the seasonal adjustment method (there 24 selling days in June, down from the 27 selling days in May), or that this report, with its small sampling, might be revised higher when more complete data is available to the Census survey next month…excluding vehicles, June retail sales were stronger in general merchandise stores, where sales rose 1.1% to $56,037 million, non-store retailers, who saw sales rise 0.9% to $39,965 million, drug stores, where sales rose 0.9% to $24,962 million, specialty stores such as sporting goods, book and music stores, where sales rose 0.6% to $7,184 million, and food and beverage stores, where sales rose 0.4% to $55,386 million; the only areas seeing significant declines in June sales were building material and garden supply outlets, where sales fell 1.0% to $26,967 million, and retaurants and bars, where sales fell 0.3% to $46,830 million..

looking at the revisions to May in the table above and comparing them to the table from the advance report for May released last month, we find that sales at auto and other vehicle dealers, which were originally reported increasing by 1.4%, have now been revised to an increase of just 0.8%; hence, the overall revision from 0.3% growth in May sales to 0.5% growth was driven by major revisions in sales at other business types, as May sales excluding automotive were revised from a increase of 0.1% to an increase of 0.4%; driving that change were revisions to sales for two business types; sales at restaurants and bars, originally reported as down 0.2%, have been revised to show an increase of 0.9%, while sales at drug stores, which were reported 0.1% lower last month, are now seen to have increased by 1.1%…other major revisions were to May sales by general merchandize sores, first reported down 0.6%, are now revised to down just 0.1%, and May sales at food stores, last reported as down 0.1%, are now seen to have increased by 0.3%…meanwhile, sales at building material and garden supply stores, previously reported as increasing 1.1%, are now shown to have only increased 0.6%…

despite exceptionally weak retail sales as reported in each of the monthly advance reports during the 2nd quarter, the subsequent strong revisions to the upside have resulted in what is so far a respectable increase to sales for this past quarter, which you can see in the last pair of columns above; overall, retail sales in the 2nd quarter (April to June) were 2.3% higher than sales in the first quarter of this year, and 4.5% greater than retail sales in the second quarter of last year…on its face, that 2.3% increase, which implies quarterly growth at a 9.5% annual rate, would suggest a decent contribution from goods sales to the personal consumption expenditures component of GDP…however, before goods sold at retail are applied to the change in real GDP, they must first be adjusted for inflation, and as of this writing, our quarterly inflation data is incomplete (June CPI data will be released this coming week)…with what we’ve seen so far, prices for durable goods have been on a long term downtrend, so there wont likely be much of an inflation adjustment for durable catagories above, such as automotive, appliance and furniture sales….however, with increasing prices for non-durable goods, and especially food and energy, we’d rather suspect that sales increases we see above for business types such as gas stations, groceries, restaurants and drug stores will be somewhat lower once adjusted for inflation by the BEA when they report on second quarter GDP two weeks hence..

Industrial Production Increases 0.2% in June; 2nd Quarter Growth at 5.5% Annual Rate

the Fed’s June G17 release on Industrial production and Capacity Utilization indicated that industrial production rose by 0.2% over a May reading which was revised down from a 0.6% increase in output to growth of 0.5%…the industrial production index, which is benchmarked to 2007 production equal to 100.0, rose to a record high 103.9 from a revised 103.7 in May, 4.3% higher than a year ago, while April was revised from 103.0 to 103.2, March was revised from 103.3 to 103.2, and February’s index was revised from 102.5 to 102.2…the manufacturing index, which accounts for roughly 70% of the industrial composite, rose 0.1% in June to 99.7, while the May manufacturing reading was revised from an increase of 0.6% at 99.5 to an increase of 0.4% at 99.6 and the April manufacturing index was revised from a 0.1% drop to 98.9 to a 0.3% gain to 99.1; net of all the revisions, the manufacturing index is now up 3.5% from a year earlier…the utility index, reflecting another milder than normal month, fell another 0.3% in June to 100.3, after falling 0.4% in May and 5.1% in April and is now just 1.8% higher than last May…. meanwhile, the mining index, which includes oil & gas production, increased by 0.8% to 130.3 in June, after increasing a revised 1.1% to 129.2 in May, 2.0% in April and 2.0% in March…the mining index is now up 7.2% year to date, and 9.7% higher than a year ago…

in addition to the breakdown of industrial production into the three major industry groups, this release also reports on industrial production by market group…among final products and nonindustrial supplies, which rose by 0.1% in June, seasonally adjusted production of consumer goods was statistically unchanged after falling a revised 0.3% in May…production of durable goods rose by 0.7% carried by a 4.0% in production of consumer electronics and a 0.7% increase in the heavily weighted automotive products sector…meanwhile, production of non-durable goods fell 0.2% as output of consumer energy products fell 1.2% while output of non-energy non-durables rose 0.2% as a 1.5% decline in clothing production and a 0.4% decrease in food and tobacco output was offset by a 1.1% increase in the output of chemical products and a 0.8% increase in paper products production…for the second quarter, production of durable goods increased at a 10.3% annual rate, led by annualized growth rates of 22.7% in home electronics, 17.5% in appliances, furniture, carpeting, and 13.8% in automotive production, while 2nd quarter production of non-durable goods fell at a 1.3% annual rate on a decrease in output of consumer energy products at a 16.5% annual rate, while non energy non durable goods production showed a 4.7% annualized increase…

seasonally adjusted production of business equipment rose 0.1% in June after rising by a revised 0.6% in May as production of transit equipment rose 1.6% while production of information processing equipment and production of industrial equipment both fell 0.3%…for the second quarter, output of business equipment rose at a 9.2% annual rate, as production of transit equipment rose at a 17.3% rate, output of industrial production equipment rose at a 10.1% rate, while production of information processing equipment fell at a 1.6% rate….meanwhile, production of defense and space equipment rose by 0.4% in June and grew at a 4.1% annual rate over the 2nd quarter…in addition, production of supplies for use in construction were up by 0.5% for the month and at a 4.2% rate for the quarter, while production of business supplies fell by 0.1% in June, reducing their annual growth rate in the second quarter to 0.6%…meanwhile, production of raw and intermediate materials that would input into other production processes rose by 0.4% in June and at an 8.2% rate for the quarter, boosted by June’s 0.5% growth in durable goods parts and 0.6% growth in the output of energy materials…

in reporting on capacity utilization for June, which is the percentage of our plant and equipment that was in use during the month, the Fed found that the utilization rate for total industry was unchanged in June at 79.1%, which suggests that plant capacity increased by 0.2% during the month…..77.1% of our total manufacturing capacity was in use during June, down from 77.2% in May but up 1.0% from the factory operating rate of 76.1% in June of last year…the operating rate for NAICS classified durable goods manufacturers was at 77.3%, up from 77.1% in May with capacity utilization ranging from 84.0% for manufactures of electrical equipment, appliances, and components to 63.3% for manufactures of non-metallic mineral products, while the June operating rate for NAICS classified manufacturers of non-durables was at 78.4%, down from 78.7% in May, with the oil and coal products industry operating at 84.5% of capacity while textile mills were operating at a 70.0% rate…. meanwhile, capacity utilization by the ‘mining’ industry rose from a revised 89.9% to 90.0%, reflecting the likelihood that the oil and gas industry is continuing to add capacity, while the operating rate for utilities fell from 79.0% to 78.7%….our FRED graph for this report below, which can also be viewed as an interactive graph at FRED, shows the percentage of capacity in use for all industries monthly since 2007 in pink, while it shows the the seasonally adjusted industrial production index values for all industry in black, the manufacturing production index in blue, the utility production index in green, and the mining production index in red from the beginning of the index year of 2007, at which time they were all benchmarked to equal 100.0…

June 2014 industrial production

June Producer Prices Increase 0.4% as Wholesale Gasoline Prices Rise 6.4%

the Producer Price Index for June released by the BLS reported that the seasonally adjusted producer price index for final demand rose 0.4% after falling 0.2% in May and rising by 0.6% in April, and is now 1.9% above year ago levels…the index for final demand for services rose by 0.3%, as the index for final demand for trade services rose 0.2%, the index for final demand of transportation and warehousing services rose 0.3%; and producer prices for services other than trade, transportation, and warehousing also rose 0.3%; within the later, producer prices for deposit services rose 3.2% while prices for arrangement of vehicle rentals and lodging fell 4.6%…the price index for final demand for goods, aka ‘finished goods’, rose 0.5% after falling by 0.2% in May, as the price index for final demand energy rose 2.1% as a 6.4% increase in wholesale prices for gasoline accounted for most of the increase; meanwhile, the price index for final demand food fell 0.2%, the same drop as in May, as finished consumer foods rose 0.4% and wholesale prices of food for export fell 3.6%, with wholesale grain prices 12.5% lower and oilseeds priced 6.5% less than May…excluding food and energy, the core producer price index for final demand goods rose 0.1% as wholesale pharmaceuticals rose 1.4% and paper products rose 1.1%, while producer prices for travel trailers and campers fell 1.1%…

this report also showed the price index for processed goods for intermediate demand rose 0.4% on a 1.3% increase in prices for intermediate processed energy goods, while prices for intermediate processed foods and feeds fell 0.1% and intermediate core producer prices rose 0.1%…meanwhile, the price index for unprocessed goods fell 0.9% on a 3.0% drop in producer prices for for unprocessed foods and feeds and a 1.1% decline in the index for unprocessed nonfood materials less energy, while raw energy materials rose 1.2%…finally, the price index for services for intermediate demand rose 0.6% in June, the largest increase since a 0.7% increase in October 2012, mostly on a 1.3% jump in the index for trade services for intermediate demand, while prices for intermediate services less trade, transportation, and warehousing moved up 0.5% and prices for transportation and warehousing services for intermediate demand saw a 0.3% rise…over the 12 months ended in June, the index for services for intermediate demand rose 1.5%…

New Housing Starts and Permits Continue to Trend Below 1 Million Annually

the June Report on New Residential Construction (pdf) from the Census Bureau includes broad estimates of new housing permits, new housing starts, and housing completions based on a survey of a small percentage of permit offices visited by Census field agents, is widely watched and reported on for new housing starts without a mention of the wide margin of error inherent in the small Census sampling…in June, starts on new housing units were estimated to be at a seasonally adjusted annual rate of 963,000, which was 9.3 percent (±10.3%)* below the revised May estimate of 985,000 annually, but 7.5 percent (±14.4%)* above the annual rate of 915,000 housing starts estimated a year ago….in the footnote, the Census tells us the asterisk means they don’t have sufficient statistical evidence to determine whether there was an increase or decrease in new housing starts for the month or even for the year, but that there’s a 90% likelihood that seasonally adjusted new starts in June were in a range between 1.0% more than or 19.6% less than May’s, and a similar likelihood that June’s new housing starts were in a range between 6.9% less than a year earlier and 21.9% more than a year earlier…the unadjusted estimates from which those annual rates were extrapolated indicated an estimated 58,500 single family homes were started in May, while construction on an estimated 25,700 apartment units was started in buildings with 5 or more units, with the margin of error on single family starts at ±10.3%, while the margin of error on apartment units started was ±19.7%…with this release, previously reported single family starts in May were revised up from 59,700 to 60,900 while units starting in buildings with more than 5 units were revised down from 33,600 to 31,400…

the monthly data on new building permits have a much smaller margin of error; but since not all permits to build actually result in construction, this again is just an estimate of intention rather than activity; in June, Census estimated new permits were issued at a seasonally adjusted annual rate of 963,000, which was 4.2 percent (±1.5%) below the revised May annual rate of 1,005,000 and 2.7 percent (±1.8%) below the 938,000 annual rate estimated for new permits in May of last year…those estimates were extrapolated from the unadjusted estimate of 91,400 new permits issued in June, which was down from the estimated 92,200 permits issued in May…of those permitted in June, 60,800 (±1.2%) were for single family homes, and 27,700 (±1.0%) represented permits for housing units in building with 5 or more units…our FRED graph on this report below, which can also be viewed as an interactive at the FRED site, shows the seasonally adjusted annual rate of housing units started in thousands monthly in blue, and the annual rate of housing units authorized by building permits monthly in red since 2000…ie, the number shown monthly for either metric is an estimate of how many units would be permitted or started in a year if that month’s pace were continued over 12 months…

June 2014 new homes

Regional and State Employment and Unemployment for June

finally, on Friday the Bureau of Labor Statistics released the Regional and State Employment and Unemployment Summary for June, which basically takes the same data that we saw in the national employment report two weeks ago and breaks it down by state and region…..so while they tell us in opening that 22 states had unemployment rate decreases, 14 states had increases, and 14 states had no change, we know that comes from the household survey with its large margin of error, and they make that point later when they tell us just six states had statistically significant monthly unemployment rate decreases, led by Illinois whose unemployment rate fell from 7.5% to 7.1%, and only Vermont, whose unemployment rate rose from 3.3% to 3.5%, saw a statistically significant monthly unemployment rate increase….as with the national report, the sections of this report that correspond to the establishment survey are more informative, in that they show the number of jobs added or lost in each state, ranging from the 37,400 jobs added in Florida to the loss of 9,100 in West Virginia…for a breakdown of payroll employment by job type for each state over the past 3 months, and the change since last April, see the following two BLS tables accompanying this release: Table 5. Employees on nonfarm payrolls by state and selected industry sector, seasonally adjusted and Table 6. Employees on nonfarm payrolls by state and selected industry sector, not seasonally adjusted …for an even more detailed and graphic look at state employment data, statistician Nathan Yau of the data visualization and statistics blog FlowingData.com has created a new interactive graphic of specific jobs by state and salary with boxes representing the respective size of each job category and their subcategories, with an interactive slider to highlight those jobs that come with a median salary at or above a preset level…

(the above are the comments that accompanied my regular sunday morning links emailing, synopses which in turn were 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 that accompanies these commentaries, most from the aforementioned GGO posts,contact me…)

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July 19 graphics

June retail sales table:

June 2014 retail sales table

June industrial production:

June 2014 industrial production

June home construction:

June 2014 new homes

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May’s wholesale sales and inventories, job openings and turnover, and consumer credit

there were just a handful of relatively minor reports released this week, and all were on May data…we’ll start with the Census report on Wholesale Trade: Sales and Inventories for May (pdf), which estimated that seasonally adjusted sales of merchant wholesalers increased by 0.7% (+/-0.5%) to $453.2billion for the month and by 6.6% (+/-1.4%) over the sales of May 2013, not adjusted for inflation….wholesale sales of durable goods were up 0.2% (+/-0.7%)*, as a 3.2% increase in wholesale sales of metals and minerals was partially offset by a 1.6% decrease in wholesale sales of computers, peripheral equipment and software, while wholesale sales of nondurable goods were up were up 1.1 percent (+/-0.5%) from April on a seasonally adjusted 6.6% increase in wholesale sales of farm products…

meanwhile, May’s seasonally adjusted wholesale inventories, which will impact 2nd quarter GDP, rose 0.5% (+/-0.4%) from the downwardly revised April figure to $532.7 billion at the end of May, a level 7.9% (+/-0.9%) higher than a year earlier, as inventories of durable goods rose 1.0% (+/-0.4%) on a 2.1% increase in metals and minerals stocks and a 1.9% increase in inventories of motor vehicles and vehicle parts and supplies, while inventories of nondurable goods fell 0.3% (+/-0.5%)* on a 3.2% decrease in wholesale inventories of farm products, which was partially offset by a 2.0% increase in wholesale inventories of petroleum and petroleum products…with wholesale inventories and sales both rising, the inventories to sales ratio for wholesalers was unchanged from April at 1.18…

Job Openings at 7 Year High in May as Hiring, Firing Falls

according to the May Job Openings and Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics, seasonally adjusted job openings rose by 171,000 to a new 7 year high of 4,635,000, as job openings in health care and social assistance rose from 658,000 to 736,000 and job openings in restaurants and bars rose from 589,000 to 644,000, while job openings in retail fell from 570,000 in March to 460,000 in April… jobs open at the end of April were revised up by 9,000 from the originally reported 4,455,000 opening to 4,464,000, and job openings as a percentage of the employed labor force rose to 3.2% from 3.1%, up from 2.8% a year earlier and up from 2.7% in January …based on 9,799,000 officially unemployed in May, there would be 2.1 who were actually looking for work during May for every job opening; that, of course, does not count those who might have wanted a job but didn’t look for work during the month…jobs are now staying unfilled longer than ever; the average job opening went unfilled for 25.1 days in May, the longest duration since 2001, when those record were first kept…

this 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 include retirements and death…. in May, seasonally adjusted new hires totaled 4,718,000, down 52,000 from the 4,770,000 hired or rehired in April, as the hiring rate as a percentage of all employed fell from 3.5% to 3.4%, but still remained up from 3.3% a year earlier…total hiring in the professional and business services category decreased by 43,000 to 967,000 in May, hiring in health care and social assistance services fell by 36,000 to 463,000, while hires at bars and restaurants rose 10,000 to 702,000….total separations also fell, from 4,550,000 in April to 4,495,000 in May, as the separations rate as a percentage of the employed slipped from 3.3% to 3.2%, the same as it was a year ago…subtracting the 4,495,000 total separations from the total hires of 4,718,000 would imply an increase of 223,000 jobs in May, virtually the same as the revised payroll job increase of 224,000 for April reported by the BLS establishment survey last week, a rare match between these two surveys that both have wide confidence intervals…

further breaking down the seasonally adjusted job separations, we find 2,527,000 quit their jobs in May, 60,000 more than the 2,467,000 who quit their jobs in April, while the quits rate, an indicator of worker confidence which is being watched by the Fed, remained unchanged at 1.8% of total employment…that quitting rate varied considerably between industries, ranging from a high of 3.8% of restaurant and bar workers who quit to a low quit rate of 0.6% for government employees….in addition to those who quit, another 1,575,000 were either laid off, fired or otherwise discharged in April, down 126,00 from 1,701,000 discharges in April, which pushed the discharges rate down to its low for the year at 1.1% of all those who were employed during the month….meanwhile, other separations, which includes retirement and death, were at 392,000 in April, up a bit from 382,000 in April, for an ‘other separations’ rate of 0.3%, which was unchanged….

our FRED graph for this report below shows job openings in blue in thousands monthly since January 2005, and monthly hires in orange and monthly separations in violet over the same span.note that when separations in purple were above  hires in orange we were losing jobs…the two major components of separations are also included, the count of layoffs and firings is tracked in red, while the number of those quitting their jobs monthly is shown in green….

May 2014 JOLTS

May Consumer Credit Up $19.6 Billion on Car Loans as Credit Card Growth Slows

G-19 report on Consumer Credit for May, which showed that seasonally adjusted consumer borrowing outstanding at the end of May was up $19.6 billion over April to $3,194.6 billion, increasing at an annual rate of 7.4% over April’s revised $3,175.0 billion total…revolving credit, which is mostly credit card debt, grew at an annual rate of 2.5%, increasing to $872.2 billion in May from $870.4 billion in April, and slowing from what now appears to be a one time spike at a 12.5% growth rate in April, while non-revolving debt, which includes long term borrowing for items such as cars and yachts and tuition, but not real estate, rose at an annual rate of 9.7% to a seasonally adjusted $2,322.4 billion from $2,304.6 billion in April….

the Zero Hedge bar graph below shows the seasonally adjusted monthly change in non-revolving credit outstanding in red and the change in revolving credit monthly in blue since the beginning of 2011, with negative changes pointing down, while the black line on the graph sums the two to track the headline change in overall credit that this release reports on…we can see the relatively large jump in credit card debt (blue) last month seems to have been a one time phenomena, and note that higher borrowing overall over the last three months is more than likely is related to the post-recession highs in automobile sales that we’d been seeing over those months..

May 2014 change in consumer credit from zero hedge

the unadjusted consumer credit data shows that outstanding revolving credit is still $22.6 billion below the level of credit card debt at year end, as $40.0 billion in credit card debt was paid down in the first quarter; moreover, aggregate credit card balances outstanding are still $81.6 billion below the early recession level of $916.8 billion at the end of 2009…so the panicked reports last month that consumers were “maxing out their credit cards” were greatly exaggerated…moreover, data from the American Bankers Association indicates that delinquency rates on bank issued credit cards fell to 2.44% in the first quarter, 36% below their 15-year average, and just off the 24 year low of 2.41% hit a year earlier…contrast that to the mortgage delinquency rate of 5.62% for May that we reported on last week, and it appears consumers have their credit cards well controlled…..

the truncated section of table below, excerpted from the second table in the report, shows the actual level of credit outstanding in billions of dollars by type and by holder at year end for each year from 2009 to 2013, and then also at the end of the March, April and May of this year…note that revolving credit outstanding in May remains below the year end level for each of the past five years, and that non-revolving credit, which is mostly car and student loans, continues to rise as borrowing for both tuition and vehicles remains strong…in the revolving credit section, we can also see the rapid expansion of student debt held by the Federal government, from $223.1 billion in 2009 to $781.1 billion as of May…although their are other holders of the nearly $1.2 trillion in student debt outstanding, those held by the Federal government are student loans originating from the Department of Education…

May 2014 consumer credit

(the above are the comments that accompanied my regular sunday morning links emailing, synopses which in turn were 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 that accompanies these commentaries, most from the aforementioned GGO posts,contact me…)

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July 12th graphics

May JOLTS:

May 2014 JOLTS

May change in consumer credit:

May 2014 change in consumer credit from zero hedge

May consumer credit table:

May 2014 consumer credit

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