tables and graphs for April 21

retail sales:

March 2018 retail sales table

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oil prices jump to 41 month high on war news; global oil output at another record high despite deeper OPEC cuts

oil prices were higher each and every day this week, mostly on wars and rumors of wars, ending at their highest level since November 2014, even as US & global oil supply figures remained bearish…after falling 4.4% to $62.06 a barrel on fears of a trade war with China last week, prices for US crude to be delivered in May rose $1.36 to $63.42 a barrel on Monday, as those trade war fears subsided and oil traders turned their attention to rising tensions in the Middle East, where Israeli missiles hit a Syrian air base and an alleged chemical attack over the weekend allegedly killed dozens of civilians in a rebel-held town near Damascusoil prices then jumped $2.09 to $65.51 a barrel on Tuesday, the highest close since 2014, after Trump threatened Syria and Russia with a missile strike in response to the alleged gas attack and UN Ambassador Nikki Haley said that the US would retaliate against the alleged attack in Syria regardless of what the UN Security Council finds, even as the US had no evidence of who was behind the alleged attack or if it actually happened at all…then on Wednesday, despite a surprisingly large increase in US crude supplies, oil prices still rose $1.31 to $66.82 a barrel, because the Saudis intercepted Houthi missile attacks on their capital Riyadh and on their oil facilities and Russia said they’d shoot down any and all of the missiles that Trump threatened to fire at Syria….while oil prices were down 49 cents on Thursday morning, they rebounded to eke out a 25 cent gain for the day, closing at $67.07 a barrel, after the Saudis intercepted another missile attack, this time over Jazan, and a report of a large drop in OPEC production dominated the news…oil prices then rose for a fifth straight session Friday, with the U.S. benchmark crude gaining 31 cents to close the week $67.38 a barrel, an increase of nearly 9% on the week in the largest weekly price jump in over 8 months

natural gas prices, on the other hand, remained unaffected by the geopolitical news, although they also eked out a small gain for the week, as the contract price for May gas delivery ended the week 3.4 cents higher at $2.735 per mmBTU, even after falling 4.5 cents over Monday and Tuesday, as the weekly storage report on Thursday showed a larger than expected withdrawal of natural gas from storage, which boosted prices heading into the weekend…the week’s natural gas storage report indicated that natural gas in storage in the US fell by 19 billion cubic feet to 1,335 billion cubic feet over the week ending April 6th, which left our gas supplies 725 billion cubic feet, or 35.2% lower than the 2,060 billion cubic feet that were in storage on April 7th of last year, and 375 billion cubic feet, or 21.9% below the five-year average of 1710 billion cubic feet typically in storage after the first week of April…the average first week of April over the past five years has shown a surplus of 9 billion cubic feet, so this week’s shortfall & subsequent withdrawal came at a time of year when natural gas normally starts being injected into storage, although you might recall that last week was colder than normal…

The Latest US Oil Data from the EIA

this week’s US oil data from the US Energy Information Administration, covering the week ending April 6th, showed that due to a big jump in our oil imports and a big drop in our oil exports, we were able to add to our crude oil supplies for the seventh time in the past eleven weeks…our imports of crude oil rose by an average of 752,000 barrels per day to an average of 8,650,000 barrels per day during the week, after falling by 250,000 barrels per day the prior week, while our exports of crude oil fell from last week’s record by an average of 970,000 barrels per day to an average of 1,205,000 barrels per day, which meant that our effective trade in oil over the week worked out to a net import average of 7,445,000 barrels of per day during the week, 1,722,000 barrels per day more than our net imports during the prior week…at the same time, field production of crude oil from US wells rose by 65,000 barrels per day to a record high of 10,525,000 barrels per day, which means that our daily supply of oil from our net imports and from wells totaled an average of 17,970,000 barrels per day during the reporting week..

during the same week, US oil refineries were using 17,019,000 barrels of crude per day, 83,000 barrels per day more than they used during the prior week, while at the same time 472,000 barrels of oil per day were being added to oil storage facilities in the US….consequently, this week’s crude oil figures from the EIA seem to indicate that our total working supply of oil from net imports and from oilfield production was 479,000 barrels per day more than what refineries reported they used plus what was added to storage during the week…to account for that disparity, the EIA needed to insert a (-479,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the data for the supply of oil and the consumption of it balance out, essentially a fudge factor that is labeled in their footnotes as “unaccounted for crude oil”… (the details on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, are explained here)…

further details from the weekly Petroleum Status Report (pdf) show that the 4 week average of our oil imports rose to an average of 7,943,000 barrels per day, which was 1.5% less than the 8,065,000 barrel per day average we imported over the same four-week period last year….the 472,000 barrel per day increase in our total crude inventories was all added to our commercially available stocks of crude oil, as oil stocks in our Strategic Petroleum Reserve were unchanged…this week’s 65,000 barrel per day increase in our crude oil production included a 85,000 barrel per day increase in output from wells in the lower 48 states, which was partially offset by a 20,000 barrel per day decrease in output from Alaska…the 10,525,000 barrels of crude per day that were produced by US wells during the week ending April 6th were the highest on record, 14.0% more than the 9,235,000 barrels per day that US wells were producing during the week ending April 7th of last year, and 24.9% above the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June, 2016…

US oil refineries were operating at 93.5% of their capacity in using those 17,019,000 barrels of crude per day, up from 93.0% of capacity the prior week, and the highest utilization rate since the first week of this year….the 17,019,000 barrels of oil that were refined this week was a seasonal record, the most oil that US refineries have ever processed this early in any April, beating the record during the week ending April 7th last year…and while this week’s level of refining was still 3.3% less than the off-season record 17,608,000 barrels per day that were being refined during the last week of December 2017, it was 1.9% more than the 16,697,000 barrels of crude per day that were being processed during that week a year ago, when refineries were operating at 91.0% of capacity….

with the increase in the amount of oil being refined, gasoline output from our refineries was higher than the prior week, increasing by 35,000 barrels per day to 10,150,000 barrels per day during the week ending April 6th, after our gasoline output had decreased by 190,000 barrels per day during the week ending March 30th....with that increase, our gasoline production was 2.2% greater during the week than the 9,927,000 barrels of gasoline that were being produced daily during the week ending April 7th of last year….at the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) rose by 240,000 barrels per day to 5,256,000 barrels per day, after rising by 513,000 barrels per day during the prior two weeks….hence, that increase meant the week’s distillates production was 3.9% higher than the 5,060,000 barrels of distillates per day than were being produced during the week ending April 7th, 2017….   

with the modest increase in our gasoline production, our supply of gasoline in storage at the end of the week rose by 458,000 barrels to 238,935,000 barrels by April 6th, the first increase in 6 weeks, but the 16th increase in 22 weeks….our gasoline supplies rose even as our domestic consumption of gasoline rose by 70,000 barrels per day to 9,273,000 barrels per day because our exports of gasoline fell by 177,000 barrels per day to 789,000 barrels per day, while our imports of gasoline fell by 106,000 barrels per day to 655,000 barrels per day…with this week’s increase, our gasoline inventories are now 1.2% higher than last April 7th’s level of 236,130,000 barrels, and roughly 13.3% above the 10 year average of gasoline supplies for this time of the year…        

even with the increase in distillate’s production, our supplies of distillate fuels fell by 1,044,000 barrels to 128,447,000 barrels over the week ending  April 6th, the 4th decrease in five weeks…our distillate inventories fell because the amount of distillates supplied to US markets, a proxy for our domestic consumption, rose by 283,000 barrels per day to 4,170,000 barrels per day, and because our exports of distillates rose by 209,000 barrels per day to 1,360,000 barrels per day, while our imports of distillates rose by 26,000 barrels per day to 125,000 barrels per day…after this week’s inventory decrease, our distillate supplies ended the week 14.5% lower than the 150,221,000 barrels that we had stored on April 7th, 2017, and roughly 5.9% lower than the 10 year average of distillates stocks at this time of the year…   

however, because of the drop in our oil exports and the jump in our oil imports, we were able to add oil to our commercial supplies of crude oil for the 8th time in 2018 and for the 16th time in the past year, as our commercial crude supplies increased by 3,306,000 barrels, from 425,332,000 barrels on March 30th to 428,638,000 barrels on April 6th….however, after falling most of the past year, our oil inventories as of April 6th were still 19.6% below the 533,377,000 barrels of oil we had stored on April 7th of 2017, 15.2% lower than the 505,232,000 barrels of oil that we had in storage on April 8th of 2016, and 4.9% below the 450,956,000 barrels of oil we had in storage on April 10th of 2015, at a time when the US glut of oil had already begun to surge from the stable levels of prior years…

OPEC’s Monthly Oil Market Report

Thursday of this past week saw the release of the OPEC’s April Oil Market Report (covering March OPEC & global oil data), which is available as a free download, and hence it’s the report we check for global oil supply data….the first table from this monthly report that we usually look at is from the page numbered 51 of that report (pdf page 59), and it shows oil production in thousands of barrels per day for each of the current OPEC members over the recent years, quarters and months, as the column headings indicate…for all their official production measurements, OPEC uses an average of estimates from six “secondary sources”, namely the International Energy Agency (IEA), the oil-pricing agencies Platts and Argus, ‎the U.S. Energy Information Administration (EIA), the oil consultancy Cambridge Energy Research Associates (CERA) and the industry newsletter Petroleum Intelligence Weekly, as an impartial adjudicator as to whether their output quotas and production cuts are being met, to resolve any potential disputes that could arise if each member reported their own figures… 

March 2018 OPEC crude output via secondary sources

as we can see on this table of official oil production data, OPEC’s oil output fell by 201,400 barrels per day in March to 31,958,000 barrels per day, from an February production total of 32,159,000 barrels per day, but that was a figure that was originally reported as 32,186,000 barrels per day, so their production for March was actually 228,400 barrels per day lower than the previously reported figures (for your reference, here is the table of the official February OPEC output figures as reported a month ago, before this month’s revisions)…as you can tell from the far right column above, oil production cutbacks by several of the OPEC members led to the March drop, with an 81,700 barrel per day decrease in Angolan oil output, a 55,300 barrel per day decrease in Venezuela’s oil output, a 46,900 barrel per day decrease in Saudi output, and a 37,200 barrel per day decrease in Libya’s output as the major factors…at 31,958,000 barrels per day, OPEC oil output is now 828,000 barrels per day below the 32,730,000 barrels per day revised quota they agreed to at their November 2017 meeting, with only Iraq’s 4,426,000 barrel per day output above their 4,350,000 barrel per day allocation…

the next graphic we’ll include shows us both OPEC and world oil production monthly on the same graph, over the period from April 2016 to March 2018, and it comes from the page numbered 52 (pdf page 60) of the April OPEC Monthly Oil Market Report…on this graph, the cerulean blue bars represent OPEC oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the metrics for global output shown on the right scale…  

March 2018 OPEC report global oil supply

OPEC’s preliminary data indicates that total global oil production rose by 180,000 barrels per day to a record 98.15 million barrels per day in March, after February’s global output total was revised down by .23 million barrels per day from the record 98.20 million barrels per day global oil output that was reported a month ago, as a 380,000 barrel per day increase in non-OPEC oil production more than made up for this month’s OPEC output cuts….global oil output for March was also 2.33 million barrels per day higher than the 95.82 million barrels of oil per day that were being produced globally in March a year ago (see last April’s OPEC report online (pdf) for the year ago data)… OPEC’s March oil production of 31,958,000 barrels per day thus represented just 32.6% of what was produced globally, down from a revised 32.9% in February, as oil output increases by US, Norway, UK, Bahrain, Brazil, Russia and China were only partially offset by decreases in oil output from Colombia, Oman and Kazakhstan…OPEC’s March 2017 production was at 31,928,000 barrels per day, which means that the 13 OPEC members who were part of OPEC last year, excluding their new member Equatorial Guinea, are now producing 165,000 more barrels per day of oil than they were producing a year ago, during the third month that their production quotas were in effect, with the increase from last year largely due to recoveries of oil production in Libya and Nigeria… 

the increase in global oil output that we can see in the above purple graph meant there was a surplus in the amount of oil being produced globally, as this next table from the OPEC report will show us..     

March 2018 OPEC report 2018 global oil demand

the table above comes from page 31 of the March OPEC Monthly Oil Market Report (pdf page 39), and it shows regional and total oil demand in millions of barrels per day for 2017 in the first column, and OPEC’s estimate of oil demand by region and globally quarterly over 2018 over the rest of the table…on the “Total world” line of the second column, we’ve circled in blue the figure that’s relevant for March, which is their revised estimate of global oil demand during the first quarter of 2018…  

so, OPEC’s estimate is that during the 1st quarter of this year, all oil consuming areas of the globe have been using 97.40 million barrels of oil per day, which is an upward revision from their prior estimate of 97.27 million barrels of oil per day (which we’ve circled in green)…..meanwhile, as OPEC showed us in the oil supply section of this report and the summary supply graph above, even after the OPEC and non-OPEC production cuts, the world’s oil producers were producing 98.15 million barrels per day during March, which means that there was a surplus of around 750,000 barrels per day in global oil production vis-a vis demand during the month…

meanwhile, the 0.23 million barrels per day upward revision to February’s global output plus the 0.13 million barrel of oil per day upward revision to 1st quarter demand means that our previously computed surplus for February should be revised .36 million barrels per day lower, and thus now stands at 570,000 barrels per day…likewise, the 0.13 million barrel of oil per day upward revision to 1st quarter demand means that January’s surplus was that much lower, now at 410,000 barrels per day…hence, for the first three months of the year, oil production has exceeded supply by roughly 51.9 million barrels

on the other hand, cumulative global oil demand figures for 2017 were revised higher by 0.03 million barrels per day to 97.07 barrels per day (also circled in green) with this report, because of a 0.13  million barrels per day upward revision to 4th quarter demand figures…with 92 days in the 4th quarter, that means our previous estimate of a 201 million barrel oil shortfall for 2017 was about 12 million barrels too low, so we can now re-estimate that the global oil deficit over all of 2017 was approximately 213 million barrels…

This Week’s Rig Count

US drilling activity increased for the seventh time in the past eight weeks and for 16th time in the past 23 weeks during the week ending April 13th, a period of higher oil prices that has consequentially seen the rig increases far exceed the few decreases…Baker Hughes reported that the total count of active rotary rigs running in the US rose by 5 rigs to 1008 rigs in the week ending on Friday, which was the most rigs running in the US since April 2nd, 2015…that was also 161 more rigs than the 847 rigs that were in use as of the April 13th report of 2017, while it was still down from the recent high of 1929 drilling rigs that were deployed on November 21st of 2014…

the number of rigs drilling for oil increased by 7 rigs to 815 rigs this week, which was also 132 more oil rigs than were running a year ago, while it was still well below the recent high of 1609 rigs that were drilling for oil on October 10, 2014…at the same time, the number of drilling rigs targeting natural gas formations fell by 2 rigs to 192 rigs this week, which was still 30 more gas rigs than the 162 natural gas rigs that were drilling a year ago, but way down from the recent high of 1,606 natural gas rigs that were deployed on August 29th, 2008…in addition, there is also a rig drilling currently that was listed as “miscellaneous”, unchanged from last week, but down from the 2 “miscellaneous” rigs that were operating a year ago.

new drilling began from 4 additional platforms in the Gulf of Mexico this week, increasing current drilling activity in the Gulf to 16 rigs, which was still 5 rigs less than were working in the Gulf, or anywhere offshore, a year ago…meanwhile, the count of active horizontal drilling rigs decreased by one rig to 883 horizontal rigs this week, which was still 177 more horizontal rigs than the 706 horizontal rigs that were in use in the US on April 13th of last year, but down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014…at the same time, the vertical rig count was also down by 1 rig to 55 vertical rigs this week, which was also down from the 77 vertical rigs that were in use during the same week of last year…on the other hand, the directional rig count increased by 7 rigs to 70 directional rigs this week, which was up from the 64 directional rigs that were deployed on April 13th of 2017…

the details on this week’s changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes…the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows the weekly and year over year rig count changes for the major US geological oil and gas basins…in both tables, the first column shows the active rig count as of April 13th, the second column shows the change in the number of working rigs between last week’s count (April 6th) and this week’s (April 13th) count, the third column shows last week’s April 6th active rig count, the 4th column shows the change between the number of rigs running on Friday and as of the equivalent weekend report of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was on Thursday the 13th of April, 2017…    

April 13 2018 rig count summary

one thing that isn’t shown on this week’s tables is the 4 rigs that were added in the Gulf of Mexico; they were all offshore from Louisiana and are hence included in the Louisiana count, which was only up by 1 rig because three land based rigs – one in the northern part of the state, and two in the south, were shut down in Louisiana at the same time…meanwhile, the rig that was added in Ohio’s Utica was targeting a natural gas bearing formation, and there was also a new natural gas added in the Arkoma Woodford of Oklahoma; however, natural gas rigs ended down two because of the shutdown of one rig in the Marcellus of West Virginia, one in the Eagle Ford of south Texas (where three oil rigs were added), and two in other basins not shown above…also note that there’s a 6 rig increase in the major shale basins shown above; assuming those additions were all horizontal rigs, there then had to be at least 7 horizontal rigs shut down in those “other” basins that Baker Hughes does not track separately…

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March consumer and producer prices, February’s wholesale sales and JOLTS

regular monthly reports released this week included all three major indexes used by the BEA to adjust goods and services for inflation: March Consumer Price Index, the March Producer Price Index, and the March Import-Export Price Index, all of which were released by the Bureau of Labor Statistics…in addition, the BLS also released the Job Openings and Labor Turnover Survey (JOLTS) for February, while the Census Bureau released the February report on Wholesale Trade, Sales and Inventories…that report estimated that the seasonally adjusted value of wholesale sales was at $495.9 billion, up 1.0 percent (+/-0.5%) from January, after January sales were revised from $492.6 billion down to $490.9 billion, and that the adjusted value of wholesale inventories at the end of February was at $625.6 billion, also up 1.0% from January, after the value of wholesale inventories at the end of January was revised up from $619.05 billion to $619.6 billion…

Consumer Prices Slide 0.1% in March on Lower Prices for Energy and Clothing

the consumer price index decreased by 0.1% in March, as lower prices for energy and clothing more than offset higher prices for shelter and medical services….the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that the seasonally adjusted price index for urban consumers fell by 0.1% in March after it had risen by 0.2% in February, 0.5% in January, 0.1% in December, 0.4% in November, 0.1% in October, 0.5% in September, 0.4% in August, and 0.1% in July….the unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, actually rose from 248.991 in February to 249.554 in March, which left it statistically 2.236% higher than the 243.603 index reading of last March, which is reported as a 2.4% year over year increase…with lower priced energy being the major reason for the drop in the overall index, seasonally adjusted core prices, which exclude food and energy, rose by 0.2% for the month, with the unadjusted core index rising from 255.783 to 256.610, which put it 2.117% ahead of its year ago reading of 251.143, which is reported as a 2.1% increase…

the volatile seasonally adjusted energy price index fell by 2.8% in March, after it had risen by 0.1% in February, 3.0% in January, fallen by 0.2% in December, risen by 3.2% in November and by 2.0% in October, and is still 7.0% higher than in March a year ago….prices for energy commodities were 4.7% lower for the month, while the index for energy services decreased by 0.2%, after increasing by 1.4% in February….the decrease in the energy commodity index was due to a 4.9% decrease in the retail price of gasoline, the largest component, while the price of fuel oil fell 0.7%, whereas prices for other fuels, including propane, kerosene and firewood, rose by an average of 0.5%…however, the energy commodities index is still 11.3% above its year ago levels, with gasoline prices averaging 11.1% higher than they were a year ago…within energy services, the index for utility gas service fell 1.2% after rising by 4.7% in February, leaving utility gas priced 3.4% higher than it was a year ago, while the electricity price index was unchanged, after rising by 0.4% in February…the energy services price index is now 2.5% higher than last March, as electricity prices have also increased by 2.2% over that period…

the seasonally adjusted food price index rose 0.1% in March, after being unchanged in February, rising 0.2% in January, 0.2% in December, being unchanged in October and November, rising 0.1% in September, 0.1% in August, 0.2% in July, being unchanged in June, rising 0.2% in May, 0.2% in April, and 0.3% last March, as the index for food purchased for use at home was 0.1% higher in March while prices for food bought to eat away from home were also 0.1% higher, as prices at both fast food outlets and at full service restaurants rose 0.1%, while food prices at elementary and secondary schools were unchanged…

in the food at home categories, the price index for cereals and bakery products increased by 0.4%, as prices for bread rose 2.0% and prices for breakfast cereal rose 0.4%…the price index for the meats, poultry, fish, and eggs group was up 0.8% as egg prices rose 3.8% and processed fish and seafood prices rose 2.0%, while at the same time the index for dairy products was 0.3% higher despite a 1.3% decrease in the index for milk, as prices for ice cream rose 2.0% and cheese price rose 0.8%…on the other hand, the fruits and vegetables index was 0.7% lower on a 1.2% decrease in the price index for fresh fruits, a 1.1% decrease in the index for fresh vegetables and 2.6% drop in canned fruit prices….meanwhile, the beverages index was up 0.4% as coffee prices rose 1.0% and noncarbonated juices and drink prices rose 0.4%….lastly, prices in the ‘other foods at home’ category was 0.1% lower, as prices for fats and oils other than butter and margarine fell 1.2% and soup prices fell 3.0%….among food at home line items, only prices for eggs, which have risen 16.3% since last March, have seen a change greater than 10% over the past year…the itemized list for price changes in over 100 separate food items is included at the beginning of Table 2, which gives us a line item breakdown for prices of more than 200 CPI items overall

among the seasonally adjusted core components of the CPI, which rose by 0.2% in March after rising by 0.2% in February, 0.3% in January, 0.3% in December, 0.1% in November, 0.2% in October, 0.1% in September, 0.2% in August and by 0.1% in each of the prior 4 months, the composite of all goods less food and energy goods fell by 0.1%, while the more heavily weighted composite for all services less energy services was 0.3% higher….among the goods components, which will be used by the Bureau of Economic Analysis to adjust March retail sales for inflation in national accounts data, the index for household furnishings and supplies fell 0.1% as a 3.2% decrease in prices for window coverings and a 4.2% decrease in prices for infants furniture was mostly offset by a 3.0% increase in prices for cookware and tableware and a 1.7% increase for non-major appliances…the apparel price index was 0.6% lower after rising 1.5% in February and 1.7% in January on a 4.0% decrease in prices for women’s suits and separates and a 2.7% decrease in the index for men’s shirts and sweaters….at the same time, prices for transportation commodities other than fuel were 0.1% lower, as prices for new cars were unchanged while prices for used cars were down 0.3%…on the other hand, prices for medical care commodities were 0.1% higher on a 0.9% increase in non-prescription drug prices, while the recreational commodities index was 0.3% higher on a 2.1% jump the index for photographic equipment and supplies and a 1.3% increase in the index for sporting goods….meanwhile, the education and communication commodities index was 0.4% lower, on a 2.1% decrease in the index for telephone hardware, calculators, and other consumer information items and a 1.4% decrease in prices for computer software and accessories…lastly, a separate price index for alcoholic beverages was up 0.1%, while the price index for ‘other goods’ was down 0.2% on a 0.8% decrease in the index for miscellaneous personal goods..

within core services, which rose by 0.3%, the price index for shelter rose 0.4% on a 0.4% increase in rents and a 0.3% increase in homeowner’s equivalent rent, while costs for lodging away from home at hotels and motels jumped 2.3%, the sub-index for water, sewers and trash collection rose 0.2%, and other household operation costs were on average 0.2% higher….meanwhile, the index for medical care services was up 0.5%, as dentists services rose 1.2% and hospital services were priced 0.6% higher…at the same time, the transportation services index was 0.2% higher on a 3.0% increase in car and truck rentals and 1.0% higher automobile service club fees….on the other hand, the recreation services index fell 0.1% as admissions to sporting events fell 3.4%, while the index for education and communication services was 0.2% lower, as landline telephone services fell 0.8% internet and electronic information services fell 1.0%…lastly, the index for other personal services was up 0.7% as the index for checking and other bank services rose 4.7%…among core line items, the index for clocks, lamps, and decorator items, which has fallen 10.2% over the past year, prices for televisions, which are now 14.3% cheaper than a year ago, and the index for audio equipment, which is now 17.6% lower than last March, have seen prices drop by more than 10% over the past year, while nothing has seen prices rise by a double digit magnitude over that span…

Producer Prices Up 0.3% in March on Higher Wholesale Foods, Core Services

the seasonally adjusted Producer Price Index (PPI) for final demand rose 0.3% in March, as prices for both finished wholesale goods and margins of final services providers increased by 0.3%…this followed a February that indicated the PPI was 0.2% higher, with prices for finished wholesale goods down 0.1%, while margins of final services providers increased by 0.3%, and a January report that indicated the PPI was 0.4% higher, with prices for finished goods up 0.7% while final demand for services rose 0.3%….on an unadjusted basis, producer prices are now 3.0% higher than a year earlier, with the core producer price index, which excludes food, energy and trade services, 2.9% higher for the year, up from the year over year figures of 2.8% for the PPI and 2.7% for core that were indicated last month….

as noted, the price index for final demand for goods, aka ‘finished goods’, was up 0.3% in March, after being down 0.1% in February, up 0.4% in January, and rising a revised 0.1% in December, and 0.8% in November…the price index for wholesale energy was down 2.1% in January after falling 0.5% in February but rising 3.4% in January, while the price index for wholesale foods rose 2.2%, and the index for final demand for core wholesale goods (ex food and energy) was 0.3% higher…driving the wholesale energy price index lower was a 3.7% decrease in the wholesale price of gasoline and 10.1% lower wholesale prices for home heating oil, while wholesale residential natural gas prices were unchanged…wholesale foods prices, meanwhile, rose on 31.5% higher prices for fresh and dry vegetables, a 39.9% jump in wholesale prices for fresh eggs, and 13.4% higher wholesale dairy prices….among wholesale core goods, prices for household appliances rose 0.9% while the wholesale price index for mining machinery and equipment rose 2.4%…

at the same time, the index for final demand for services rose 0.3% for the third month in a row, after being unchanged in December, rising a revised 0.1% in November, 0.5% in October, and by 0.2% in both August and September, as the March index for final demand for trade services rose 0.2%, the index for final demand for transportation and warehousing services rose 0.6%, and the index for final demand for services less trade, transportation, and warehousing services was 0.3% higher….among trade services, seasonally adjusted margins for computer hardware, software, and supplies retailers rose 5.2% and margins for machinery, equipment, parts, and supplies wholesalers rose 2.9%… among transportation and warehousing services, margins for rail transportation of freight and mail were 1.3% higher and margins for air transportation of passengers rose 1.6%…in the core final demand for services index, the index for cable and satellite subscriber services rose 3.5% while the index for arrangement of cruises and tours rose 3.0%..

this report also showed the price index for intermediate processed goods was 0.3% lower in March, after rising 0.7% in both January and February, and by a revised 0.3% in December, and a revised 0.8% in November….the price index for intermediate energy goods fell 1.3%, as prices for industrial natural gas fell 5.6% and prices for natural gas sold to electric utilities fell 18.0%, while prices for intermediate processed foods and feeds rose 1.4% as the processed meat index rose 2.3%…meanwhile, the core price index for processed goods for intermediate demand less food and energy was 0.3% higher on a 4.4% increase in the index for building paper and board and a 2.6% increase in prices for secondary nonferrous metals….prices for intermediate processed goods are now 4.6% higher than in March a year ago, now the 16th consecutive year over year increase, after 16 months of negative year over year comparisons, as intermediate goods prices fell every month from July 2015 through March 2016….

meanwhile, the price index for intermediate unprocessed goods fell 4.8% in March, after rising 2.8% in February, 0.9% in January, and a revised 1.5% in December and 2.6% in November…that was as the price index for crude energy goods fell 11.6% as raw natural gas prices dropped 32.1% even as crude oil prices rose 5.0%, while at the same time the index for unprocessed foodstuffs and feedstuffs fell 1.0%, as prices for slaughter hogs fell 14.7% and prices for slaughter steers and heifers fell 5.0%…on the other hand,  the index for core raw materials other than food and energy materials rose 1.5%, as prices for iron and steel scrap rose 4.3%…this raw materials index is still up by 4.2% from a year ago, in contrast to the year over year increase of 13.4% that we saw last March…

lastly, the price index for services for intermediate demand rose 0.3% in March after rising 0.5% in February, 0.1% in January, and rising a revised 0.1 in December and 0.2% in November….the index for trade services for intermediate demand was up 1.7%, as margins for machinery and equipment parts and supplies wholesalers rose 3.6% while margins for intermediate wholesalers of building materials, paint, and hardware rose 2.6%…the index for transportation and warehousing services for intermediate demand rose 0.5%, as the intermediate index for rail transportation of freight and mail rose 1.3%…meanwhile, the core price index for services less trade, transportation, and warehousing for intermediate demand was 0.1% higher, as the index for legal services rose 0.8% while the index for radio advertising sales rose 5.8%….over the 12 months ended in March, the year over year price index for services for intermediate demand, which has never turned negative on an annual basis, is now 3.2% higher than it was a year ago…

Job Openings, Hiring, and Layoffs Fall in February; Hiring, Job Quitting Inches Up

the Job Openings and Labor Turnover Survey (JOLTS) report for February from the Bureau of Labor Statistics estimated that seasonally adjusted job openings decreased by 176,000, from 6,228,000 in January to 6,052,000 in February, after January job openings were revised down from the originally reported 6,312,000 …however, February’s jobs openings were still 7.7% higher than the 5,618,000 job openings reported in February a year ago, as the job opening ratio expressed as a percentage of the employed fell from 4.0% in January to 3.9% in February, which was still up from the 3.7% rate of February a year ago…(details on job openings by industry and region can be viewed in Table 1)…like most BLS releases, the press release for this report is easy to understand and also refers us to the associated table for the data cited, which are linked at the end of the release…

the JOLTS release also reports on labor turnover, which consists of hires and job separations, which in turn is further divided into layoffs and discharges, those who quit, and ‘other separations’, which includes retirements and deaths….in February, seasonally adjusted new hires totaled 5,507,000, down by 67,000 from the revised 5,574,000 who were hired or rehired in January, as the hiring rate as a percentage of all employed fell from 3.8% in January to 3.7% in February, which was still up from the 3.6% hiring rate in February a year earlier (details of hiring by sector since October are in table 2)….meanwhile, total separations fell by 127,000, from 5,319,000 in January to 5,192,000 in February, as the separations rate as a percentage of the employed fell from 3.6% to 3.5%, which was also up from 3.4% in February a year ago (see details in table 3)…subtracting the 5,192,000 total separations from the total hires of 5,507,000 would imply an increase of 315,000 jobs in February, a bit less than the revised payroll job increase of 326,000 for February reported in the March establishment survey last week and well within the expected +/-115,000 margin of error in these incomplete samplings

breaking down the seasonally adjusted job separations, the BLS founds that 3,210,000 of us voluntarily quit our jobs in February, up from the revised 3,191,000 who quit their jobs in January, while the quits rate, widely watched as an indicator of worker confidence, remained at 2.2% of total employment, which was up from 2.1% year earlier (see details in table 4)….in addition to those who quit, another 1,647,000 were either laid off, fired or otherwise discharged in February, down by 137,000 from the revised 1,784,000 who were discharged in January, as the discharges rate fell from 1.2% to 1.1% of all those who were employed during the month, while it was unchanged from the discharges rate of a year earlier….meanwhile, other separations, which includes retirements and deaths, were at 334,000 in February, down from 344,000 in January, for an ‘other separations rate’ of 0.2%, the same as in January and as in February of last year….both seasonally adjusted and unadjusted details by industry and by region on hires and job separations, and on job quits and discharges can be accessed using the links to tables at the bottom of the press release…    

 

(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most from the aforementioned GGO posts, contact me…)   

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graphs and tables for April 14th

rig count summary:

April 13 2018 rig count summary

OPEC oil output:

March 2018 OPEC crude output via secondary sources

global oil supply:

March 2018 OPEC report global oil supply

global oil demand:

March 2018 OPEC report 2018 global oil demand

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US oil supplies drop on record crude exports, new drilling at a 3 year high as active rigs top a thousand.

oil prices tumbled with equity markets over the past week, as the Trump administration doubled down on their tariff threats against China, and the specter of a full-scale trade war spooked the markets…after sliding 1.3% to close last week at $64.94 a barrel, US oil prices for May delivery fell $1.93, or nearly 3%, to a two-week low of $63.01 a barrel on Monday, following stocks lower after China retaliated against US tariffs on Chinese steel and aluminum, heightening concerns over a broadening trade war between the U.S. and China…however, oil prices then rebounded 50 cents to $63.51 a barrel on Tuesday as traders shifted their attention back to the oil supply situation and the week’s expected draw from US crude inventories….oil prices then fell 14 cents to $63.37 a barrel on Wednesday, as a surprisingly large draw in U.S. crude supplies offset an early drop to lower prices after China proposed a further broad range of tariffs on U.S. exports…with US stock markets rebounding on Thursday, oil prices rose 17 cents to $63.54 a barrel, as Saudi Arabia unexpected hiked their crude prices, even as oil’s gain was curbed by strength in the dollar….on Friday, however, Trump threatened an additional $100 billion in tariffs on Chinese goods, sending stocks plummeting 767 points, with oil prices following stocks lower, ending the day down $1.48 at $62.06 a barrel, for a net loss of $2.88 a barrel, or 4.4% for the week…

meanwhile, natural gas prices were also lower for the week, even as they appeared to remain immune to geopolitical influences…after rising to $2.733 per mmBTU on the forecast of colder weather last week, natural gas contract prices for May delivery fell 5 cents $2.683 per mmBTU on Monday, after a report that US natural gas output averaged 78.3 billion cubic feet per day over the prior three calendar days, up by 400 million cubic feet per day from the 77.9 billion cubic feet per day output averaged over March…natural gas prices then rose 1.4 cents on Tuesday and 2.1 cents on Wednesday on the persistence of colder than normal temperature forecasts for the northern half of the country, but then gave all those gains up in falling 4.3 cents to $2.675 per mmBTU on Thursday, on what was seen to be a bearish natural gas storage report, wherein the actual withdrawal of 20 billion cubic feet was less than the median forecast of a 26 billion cubic feet draw…so even though natural gas prices recovered 2.6 cents to $2.701 mmBTU on Friday on that cold April forecast, they still ended the week 3.2 cents lower than the prior week’s close…

the week’s natural gas storage report indicated that natural gas in storage in the US fell by 29 billion cubic feet to 1,354 billion cubic feet over the week ending March 30th, which left our gas supplies 697 billion cubic feet, or 34.0% lower than the 2,051 billion cubic feet that were in storage on March 31st of last year, and 347 billion cubic feet, or 20.4% below the five-year average of 1701 billion cubic feet typically in storage at the end of March…however, 9 billion cubic feet of this week’s decrease was a non-flow-related adjustment to working gas stocks in the South Central Nonsalt region, and hence the actual withdrawal of gas from storage for consumption was 20 billion cubic feet….the average withdrawal of natural gas during the last week of March over the past 5 years has been 28 billion cubic feet, so this week’s actual usage fell 8 billion cubic feet short of the norm, even though reported gas in storage fell more than the average amount… 

The Latest US Oil Data from the EIA

this week’s US oil data from the US Energy Information Administration, covering the week ending March 30th, showed that due to a big jump in our oil exports and a modest drop in our oil imports, we saw the largest drop in our crude oil supplies in twelve weeks…our imports of crude oil fell by an average of 250,000 barrels per day to an average of 7,898,000 barrels per day during the week, after rising by 1,071,000 barrels per day the prior week, while our exports of crude oil rose by an average of 597,000 barrels per day to a record average of 2,175,000 barrels per day, which meant that our effective trade in oil over the week worked out to a net import average of 5,723,000 barrels of per day during the week, 847,000 barrels per day less than our net imports during the prior week…at the same time, field production of crude oil from US wells rose by 27,000 barrels per day to a record high of 10,460,000 barrels per day, which means that our daily supply of oil from our net imports and from wells totaled an average of 16,183,000 barrels per day during the reporting week..

during the same week, US oil refineries were using 16,936,000 barrels of crude per day, 141,000 barrels per day more than they used during the prior week, while at the same time 660,000 barrels of oil per day were being pulled out of oil storage facilities in the US….hence, this week’s crude oil figures from the EIA seem to indicate that our total working supply of oil from net imports, from oilfield production, and from storage was 93,000 barrels per day less than what refineries reported they used during the week…to account for that disparity, the EIA needed to insert a (+93,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the data for the supply of oil and the consumption of it balance out, essentially a fudge factor that is labeled in their footnotes as “unaccounted for crude oil”… (the details on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, is explained here)…

further details from the weekly Petroleum Status Report (pdf) show that the 4 week average of our oil imports fell to an average of 7,677,000 barrels per day, which was 3.4% less than the 7,947,000 barrel per day average we imported over the same four-week period last year….the 660,000 barrel per day withdrawal from our total crude inventories was all taken from our commercially available stocks of crude oil, as oil stocks in our Strategic Petroleum Reserve were unchanged…this week’s 27,000 barrel per day increase in our crude oil production included a 25,000 barrel per day increase in output from wells in the lower 48 states, and a 2,000 barrel per day increase in output from Alaska…the 10,460,000 barrels of crude per day that were produced by US wells during the week ending March 30th were the highest on record, 13.7% more than the 9,199,000 barrels per day that US wells were producing during the week ending March 31st of last year, and 24.1% above the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June, 2016…

US oil refineries were operating at 93.0% of their capacity in using those 16,936,000 barrels of crude per day, up from 92.3% of capacity the prior week, but still down from the wintertime record 96.7% of capacity set during the last week of 2017, as US refineries are still ramping up after their pre-spring blend changeover and scheduled maintenance season….nonetheless, the 16,936,000 barrels of oil that were refined this week was a seasonal record, the most oil that US refineries have ever processed during February or March…while that elevated level of refining was still 3.8% less than the off-season record 17,608,000 barrels per day that were being refined during the last week of December 2017, it was 3.1% more than the 16,429,000 barrels of crude per day that were being processed during the week ending March 31st, 2017, when refineries were operating at 90.8% of capacity….

even with the increase in the amount of oil being refined, gasoline output from our refineries was lower than the prior week, decreasing by 190,000 barrels per day to 10,115,000 barrels per day during the week ending March 30th, after our gasoline output had increased by 373,000 barrels per day during the week ending March 23rd....nonetheless, our gasoline production was still 6.2% greater during the week than the 9,515,000 barrels of gasoline that were being produced daily during the week ending March 31st of last year….however, our refineries’ production of distillate fuels (diesel fuel and heat oil) rose by 172,000 barrels per day to 5,016,000 barrels per day, after rising by 341,000 barrels per day during the prior week….hence, that increase meant the week’s distillates production was fractionally higher than the 4,967,000 barrels of distillates per day than were being produced during the equivalent week of 2017….    

with the decrease in our gasoline production, our supply of gasoline in storage at the end of the week fell by 1,116,000 barrels to 238,477,000 barrels by March 30th, the fifth draw from supplies in a row, but just the sixth decrease in 21 weeks….our gasoline supplies fell as our domestic consumption of gasoline fell by 5,000 barrels per day to 9,203,000 barrels per day, after falling by 116,000 barrels per day the prior week, and even though our exports of gasoline fell by 133,000 barrels per day to 966,000 barrels per day, while our imports of gasoline rose by 76,000 barrels per day to 761,000 barrels per day…with our gasoline supplies now down 5 weeks in a row, our gasoline inventories are fractionally lower than last March 31st’s level of 239,103,000 barrels, even as they are roughly 7.2% above the 10 year average of gasoline supplies for this time of the year…         

with the increase in distillate’s production, our supplies of distillate fuels rose by 537,000 barrels to 129,491,000 barrels over the week ending March 30th, after falling by 8,472,000 barrels over the prior three weeks…our distillate inventories rose because the amount of distillates supplied to US markets, a proxy for our domestic consumption, fell by 488,000 barrels per day to 3,887,000 barrels per day, even as our exports of distillates rose by 233,000 barrels per day to 1,151,000 barrels per day, while our imports of distillates fell by 51,000 barrels per day to 99,000 barrels per day…but even after this week’s inventory increase, our distillate supplies still ended the week 15.0% lower than the 152,374,000 barrels that we had stored on March 31st, 2017, and roughly 7.2% lower than the 10 year average of distillates stocks at this time of the year…    

finally, to cover the big increase in our oil exports, we had to take oil out of our commercial supplies of crude oil for the 12th time in 20 weeks and for the 37th time in the past year, as our commercial crude supplies decreased by 4,617,000 barrels, from 429,949,000 barrels on March 23rd to 425,332,000 barrels on March 30th….hence, after falling most of the past year, our oil inventories as of March 30th were 20.6% below the 535,543,000 barrels of oil we had stored on March 31st of 2017, 14.7% lower than the 498,598,000 barrels of oil that we had in storage on April 1st of 2016, and 5.4% below the 449,662,000 barrels of oil we had in storage on March 27th of 2015, at a time when the US glut of oil had already begun to surge from the stable levels of prior years… 

since our crude oil exports are the major reason for our falling supplies, and since this week saw a record high for those exports, we’ll include here a graph of those exports over the past year and a half…

April 4 2018 crude exports as of March 30

the above graph of recent US crude oil exports came from the weekly package of oil graphs that John Kemp of Reuters emailed out on Wednesday, after the release of the weekly EIA report…it shows weekly US crude oil exports in thousands of barrels per day over the past 18 months, and also highlights the exact amount of our crude exports in thousands of barrels per day over a few select weeks going back to September 1st, when our exports were choked off as Gulf Coast ports were shut down by Hurricane Harvey…as you can see, our oil exports had only topped a million barrels per day a few times prior to that date…however, after the price of US crude fell to a 10% discount to the comparable international grade in the wake of the hurricanes, US crude suppliers began to sell as much oil overseas as they could, and as a result our oil exports have stayed above a million barrels per day since…oil exports from the US are being sold from supplies benchmarked to the price of WTI, the light sweet grade of oil that’s quoted daily…for the week ending March 30th, when these record exports were recorded, US light crude prices were quoted between $63.72 and $66.55 a barrel, with an average of around $65.25…at the same time, Brent crude, the similar North Sea grade of oil that serves as the international benchmark, was being quoted between $68.78 and $71.05 a barrel, with an average price of just under $70 a barrel…so it’s clear that even after accounting for shipping costs of as much as $2 a barrel, US oil producers are incentivized to sell as much of our oil into international markets as our pipeline and port infrastructure will allow for…

This Week’s Rig Count

US drilling activity increased for the sixth time in seven weeks and for 15th time in the past 22 weeks during the week ending April 6th, a period of higher oil prices that has seen the rig increases far exceed the few decreases…Baker Hughes reported that the total count of active rotary rigs running in the US rose by 10 rigs to 1003 rigs in the week ending on Friday, topping 1000 rigs for the first time since April 2nd, 2015…that was also 164 more rigs than the 839 rigs that were in use as of the April 7th report of 2017, while it was still down from the recent high of 1929 drilling rigs that were deployed on November 21st of 2014… 

the number of rigs drilling for oil increased by 11 rigs to 808 rigs this week, which was also 136 more oil rigs than were running a year ago, while it was still well below the recent high of 1609 rigs that were drilling for oil on October 10, 2014…at the same time, the number of drilling rigs targeting natural gas formations was unchanged at 194 rigs this week, which was 29 more gas rigs than the 165 natural gas rigs that were drilling a year ago, but way down from the recent high of 1,606 natural gas rigs that were deployed on August 29th, 2008…however, one of the rigs that was listed as “miscellaneous” was shut down this week, so now there is just one such “miscellaneous” rigs active, down from the 2 “miscellaneous” rigs that were operating a year ago.

the count of drilling rigs working in the Gulf of Mexico was unchanged at 12 rigs, still the lowest number of rigs working in the Gulf or offshore nationally in Baker Hughes records dating back to 1968, & down by 10 rigs from the 22 rigs that were deployed in the Gulf of Mexico a year ago….the count of active horizontal drilling rigs increased by 14 rigs to 884 horizontal rigs this week, which was also up by 189 rigs from the 695 horizontal rigs that were in use in the US on April 7th of last year, but down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014…in addition, the directional rig count increased by 3 rigs to 63 directional rigs this week, which was still down from the 71 directional rigs that were in use during the same week of last year…on the other hand, the vertical rig count was down by 7 rigs to 56 vertical rigs this week, which was also down from the 73 vertical rigs that were deployed on April 7th of 2017…

the details on this week’s changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes…the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows the weekly and year over year rig count changes for the major US geological oil and gas basins…in both tables, the first column shows the active rig count as of April 6th, the second column shows the change in the number of working rigs between last week’s count (March 30th) and this week’s (April 6th) count, the third column shows last week’s March 30th active rig count, the 4th column shows the change between the number of rigs running on Friday and the equivalent Friday of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was for the 7th of April, 2017…   

April 6th 2018 rig count summary

you’ve probably noticed the two rig increase in the Utica shale; that increase holds no surprises this week, as both of those new rigs are targeting natural gas, with one of those in Ohio and the other in Pennsylvania, where there are now two rigs targeting the Utica for natural gas in Beaver county, PA…however, Pennsylvania was down a rig this week because two of their Marcellus rigs were shut down, while drilling the Marcellus was down by only one rig with the addition of another Marcellus natural gas directed rig in West Virginia…the natural gas rig count was unchanged, however, because two rigs targeting gas in the Cana Woodford of Oklahoma were switched out for two rigs targeting oil, while another rig targeting natural gas started up in an unnamed basin…also missing from the above tables were 5 new rigs targeting oil that were started up in “other basins”, at least one of which was the Unitah of Utah, were there were at least 3 horizontal and two directional rigs working as of April 6th….meanwhile, other than the changes for the major oil & gas producing states shown above, Alabama’s only working rig was shut down this week, down from 2 rigs a year ago and marking the first time there was no activity in the state since January 13, 2017, while Mississippi had a rig added and now has 5 deployed, the same as they had working a year ago…

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March jobs report; February’s trade deficit, construction spending, & factory inventories

in addition to the Employment Situation Summary for March from the Bureau of Labor Statistics, this week’s economic releases included three reports that will input into 1st quarter GDP:  the BEA report on our International Trade for February, the February report on Construction Spending, and the Full Report on Manufacturers’ Shipments, Inventories and Orders for February, all from the Census Bureau….in addition, the Fed released the Consumer Credit Report for February, which indicated that overall consumer credit, a measure of non-real estate debt, expanded by a seasonally adjusted $10.6 billion, or at a 3.3% annual rate, as non-revolving credit expanded at a 4.4% annual rate to $2,836.6 billion and revolving credit outstanding grew at a 0.2% rate to $1,030.9 billion…

privately issued reports released this week included  the ADP Employment Report for March, the light vehicle sales report for March from Wards Automotive, which estimated that vehicles sold at a 17.40 annual rate in March, up from the 16.96 annual sales rate in February, and up from the 16.53 million rate a year earlier, and the Mortgage Monitor for February from Black Knight Financial Services….that report indicated that 4.30% of US mortgages were delinquent in February, down from 4.31% in January but up from 3.62% in February a year ago, and that 0.65% of all mortgages were in the foreclosure process at the end of the month, down from 0.66% of mortgages in January and down from the 0.93% of mortgages that were in foreclosure in February a year ago…in addition, the week saw both of the widely followed purchasing manager’s surveys from the Institute for Supply Management (ISM): the March Manufacturing Report On Business indicated that the manufacturing PMI (Purchasing Managers Index) fell to 59.3% in March, from 60.8% in February, which still suggests an ongoing expansion in manufacturing firms nationally, and the March Non-Manufacturing Report On Business; which saw the NMI (non-manufacturing index) fall to 58.8% in March, down from 59.5% in February, indicating a slightly smaller plurality of service industry purchasing managers reported expansion in various facets of their business in March…both of those ISM reports are easy to read and include anecdotal comments from purchasing managers from the 34 business types who participate in those surveys nationally…  

Employers Add 103,000 Jobs in March, Labor Force Participation Rate Falls to 62.9%

the Employment Situation Summary for March showed the weakest payroll job growth in 7 months, while the labor force participation rate fell because a number of the unemployed stopped looking for work…seasonally adjusted estimates extrapolated from the establishment survey data projected that employers added 103,000 jobs in March, after the previously estimated payroll job increase for January was revised down from 239,000 to 176,000 and the payroll jobs increase for February was revised up from 313,000 up to 326,000…including those revisions, this report thus represents a total of just 53,000 more seasonally adjusted payroll jobs than were reported last month, well below the past year’s average of 188,000 jobs per month…the unadjusted data shows that there were actually 665,000 more payroll jobs extant in March than in February, as normal seasonal job increases in sectors such as construction, administrative and waste services, and leisure and hospitality were smoothed over by the seasonal adjustments…

seasonally adjusted job increases in March were weak but still spread through through both the goods producing and the service sectors, with only construction and the retail sector showing job losses a seasonally adjusted basis, while both of those sectors actually added jobs on an unadjusted basis…adjusted construction employment was down 15,000 after increasing 65,000 in February, as it appears that those workers who would have been added in March were brought on early due to the mild February weather, meaning the March job additions were short of normal…meanwhile, the retail sector showed a seasonally adjusted 4,400 job decrease, as general merchandise stores cut 12,600 employees, probably due to store closings…meanwhile, the broad professional and business services sector added 33,000 jobs, as 9,600 more were employed by accounting and bookkeeping services….employment in health care rose by 22,400, with the addition of 9,900 jobs in hospitals…in addition, the manufacturing sectors saw the addition of 22,000 jobs, with metal fabrication factories adding 8,800….and there was also a 11,400 payroll job increase in social assistance sector, with the addition of 11,800 jobs in individual and family services….however, all the other major sectors, including resource extraction, wholesale trade, transportation and warehousing, utilities, information, financial services, education, leisure and hospitality, and government, all saw smaller increases in payroll employment over the month…

the establishment survey also showed that average hourly pay for all employees rose by 8 cents an hour to $26.82 an hour in March, after it had increased by a revised 3 cents an hour in February; at the same time, the average hourly earnings of production and non-supervisory employees increased by 4 cents to $22.42 an hour…employers also reported that the average workweek for all private payroll employees was unchanged at 34.5 hours in March, while hours for production and non-supervisory personnel slipped by 0.1 hour to 33.7 hours…in addition, the manufacturing workweek was down 0.1 hours at 40.9 hours, and average factory overtime decreased by 0.1 hours to 3.6 hours…

meanwhile, the March household survey indicated that the seasonally adjusted extrapolation of those who reported being employed fell by an estimated 37,000 to 155,178,000, while the similarly estimated number of those qualified as unemployed fell by 121,000 to 6,585,000; which thus meant a decrease of 158,000 in the total labor force…since the working age population had grown by 163,000 over the same period, that meant the number of employment aged individuals who were not in the labor force rose by 323,000 to 95,335,000….with the number of those in the labor force decreasing while the civilian noninstitutional population was increasing, the labor force participation rate fell by 0.1% to 62.9%….at the same time, the small decrease in number employed as a percentage of the increase in the population was not enough to change the employment to population ratio, as it remained at 60.4%…likewise, the decrease in the number unemployed was also not large enough to impact the unemployment rate, which remained at 4.1%….meanwhile, the number who reported they were involuntarily working part time fell by 141,000 to 5,019,000 in March, which was enough to lower the alternative measure of unemployment, U-6, which includes those “employed part time for economic reasons”, from 8.2% in February to 8.0% in March, the lowest since November…

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.. 

February Trade Deficit Rose 1.6% on Cost of Rights to Broadcast the Winter Olympics

our trade deficit grew by 1.6% February, as the value of our imports increased more than the value of our exports did….the Commerce Department report on our international trade in goods and services for February indicated that our seasonally adjusted goods and services trade deficit rose by $926 million to $57.59 billion in February, from a January deficit that was revised from the originally reported $56.601 billion to $56.665 billion…in rounded figures, the value of our February exports rose by $3.5 billion to $204.4 billion on a $3.0 billion increase to $137.2 billion in our exports of goods and an increase of $0.5 billion to $67.3 billion in our exports of services, while our imports rose $4.4 billion to $262.0 billion on a $3.3 billion increase to $214.2 billion in our imports of goods and a $1.1 billion increase to $47.8 billion in our imports of services…the latter reflected a one-time $1.0 billion increase in charges for the use of intellectual property for the rights to broadcast the 2018 Winter Olympic Games…export prices averaged 0.2% higher in February, so the real growth in exports was less than the nominal dollar growth by that percentage, while import prices were 0.4% higher, meaning real imports were smaller than the nominal dollar values reported here by that percentage…

the increase in our February exports of goods came about as a result of higher exports of industrial supplies, capital goods, and of automotive products, which was partially offset by a decrease in our exports of consumer goods…referencing the Full Release and Tables for February (pdf), in Exhibit 7 we find that our exports of industrial supplies and materials rose by $2,022 million to $43,468 million on a $602 million increase in our exports of nonmonetary gold, a $293 million increase in our exports of crude oil, a $280 million increase in our exports of natural gas, and a $279 million increase in our exports of coal and other fuels, while our exports of automotive vehicles, parts, and engines rose by $925 million to $14,825 million on a $680 million increase in our exports of passenger cars…in addition, our exports of capital goods rose by $658 million to $45,549 million, led by a $227 million increase in our exports of civilian aircraft, while our exports of foods, feeds and beverages rose by $9 million to $10,746 million, and our exports of other goods not categorized by end use rose by $341 million to $5,009 million….partially offsetting those increases, our exports of consumer goods fell by $480 million to $17,077 million on a $562 million decrease in our exports of pharmaceuticals and a $453 decrease in our exports of jewelry….

Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our imports of goods and shows that higher imports of capital goods, industrial supplies and materials, and foods, feeds and beverages were largely responsible for the increase in our February imports…our imports of capital goods rose by $1,823 million to $57,782 million on a $450 million increase in our imports of civilian aircraft, a $282 million increase in our imports of materials handling equipment, a $252 million increase in our imports of computers, a $240 million increase in our imports of telecommunications equipment, and a $230 million increase in our imports of industrial machines other than those listed separately…in addition, our imports of industrial supplies and materials rose by $783 million to $48,091 million, as our imports of crude oil rose by $740 million and our imports of organic chemicals rose by $290 million, and our imports of foods, feeds, and beverages rose by $767 million to $12,643 million on a $306 million increase in foods other than those itemized separately…also, our imports of consumer goods rose by $555 million to $55,122 million on a $999 million increase in our imports of pharmaceuticals, a $423 million increase in our imports of furniture, and a $212 million increase in our imports of nonwool or cotton clothing and textiles, which were partially offset by a $1,007 million decrease in our imports of cellphones, and our imports of automotive vehicles, parts and engines rose by $146 million to $31,088 million…partially offsetting those increases, our imports of other goods not categorized by end use fell by $528 million to $7,822 million…

to gauge the impact of January and February trade on 1st quarter GDP growth figures, we use exhibit 10 in the pdf for this report, which gives us monthly goods trade figures by end use category and in total, already adjusted for inflation in chained 2009 dollars, the same inflation adjustment that’s used by the BEA to compute trade figures for GDP, with the only difference being that they are not annualized here….from that table, we can figure that 4th quarter real exports of goods averaged 128,106 million monthly in chained 2009 dollars, while inflation adjusted 1st quarter goods exports were at 126,884 million and 129,401 million for January and February respectively in that same 2009 dollar quantity index representation…averaging January and February goods exports and then computing the annualized change between that average and the average of the fourth quarter, we find that the 1st quarter’s real exports of goods are running at a 0.12% annual rate above those of the 4th quarter, or at a pace that would add a bit less than 0.01 percentage point to 1st quarter GDP…..in a similar manner, we find that our 4th quarter real imports of goods averaged 194.913.3 million monthly in chained 2009 dollars, while inflation adjusted January and February imports were at 196,842 million and 198,507 million respectively, after that same 2009 chained dollars inflation adjustment…that would indicate that so far in the 1st quarter, our real imports of goods have increased at a 5.79% annual rate from those of the 4th quarter…since imports subtract from GDP because they represent the portion of consumption or investment that occurred during the quarter that was not produced domestically, their increase at a 5.79% rate would thus subtract 0.66 percentage points from 1st quarter GDP….hence, if the average trade deficit in goods of the two months reported here is continued in March, the net effect of our international trade in goods will be to subtract 0.65 percentage points from 1st quarter GDP…

note that we have not computed the impact of the usually less volatile change in services here because the Census does not provide inflation adjusted data on those, but that we can still approximate that the $1.0 billion increase in our imports of services relating to the broadcast rights for Winter Olympic Games would subtract another 0.10 percentage points from 1st quarter GDP at the same time…

Construction Spending Rose 0.1% in February after January & December Revised Much Higher

the Census Bureau’s report on February construction spending (pdf) reports that “Construction spending during February 2018 was estimated at a seasonally adjusted annual rate of $1,273.1 billion, 0.1 percent (±1.2 percent)* above the revised January estimate of $1,272.2 billion. The February figure is 3.0 percent (±1.5 percent) above the February 2017 estimate of $1,235.7 billion. During the first two months of this year, construction spending amounted to $176.3 billion, 4.4 percent (±1.3 percent) above the $168.9 billion for the same period in 2017.”…the January annualized spending estimate was revised 0.7% higher, from $1,262.8 billion to $1,272.2 billion, while December’s construction spending was revised from $1,262.7 billion to $1,272.65 billion annually, which would suggest a major upward revision to 4th quarter GDP when the annual revisions are released later this summer…

details on different subsets of construction spending are provided by the Census release summary: Spending on private construction was at a seasonally adjusted annual rate of $982.0 billion, 0.7 percent (±1.6 percent)* above the revised January estimate of $974.8 billion. Residential construction was at a seasonally adjusted annual rate of $533.4 billion in February, 0.1 percent (±1.3 percent)* above the revised January estimate of $532.9 billion. Nonresidential construction was at a seasonally adjusted annual rate of $448.6 billion in February, 1.5 percent (±1.6 percent)* above the revised January estimate of $441.9 billion. In February, the estimated seasonally adjusted annual rate of public construction spending was $291.1 billion, 2.1 percent (±1.6 percent) below the revised January estimate of $297.4 billion. Educational construction was at a seasonally adjusted annual rate of $74.6 billion, 0.5 percent (±2.6 percent)* below the revised January estimate of $75.0 billion. Highway construction was at a seasonally adjusted annual rate of $88.5 billion, 0.2 percent (±5.4 percent)* below the revised January estimate of $88.7 billion.

as you can see from that excerpt, construction spending would input into 3 subcomponents of GDP; investment in private non-residential structures, investment in residential structures, and into government investment outlays, for both state and local and Federal governments… however, gauging the impact of the February spending that’s reported here on GDP is difficult because all figures given here are in nominal dollars and as you know, data used to compute the change in GDP must be adjusted for changes in price…adding to the problem, the National Income and Product Accounts Handbook, Chapter 6 (pdf), lists a multitude of privately published deflators for the various components of non-residential investment, making an accurate estimate a real chore to undertake manually…so in lieu of trying to adjust for all of those different indices, we’ve opted to just use the producer price index for final demand construction as an inexact shortcut to make the needed price adjustment…

that price index showed that aggregate construction costs were up 0.1% in February, after they had increased by 0.8% in January, decreased by 0.1% in December and were unchanged in November…on that basis, we can estimate that February construction costs were roughly 0.9% more than those of December, 0.8% more than those of November, and 0.8% more than those of October…we then use those relative percentages to inflate the lower cost spending figures for each of the 4th quarter months vis a vis February, which is arithmetically the same as adjusting higher priced January and February construction spending downward, for purposes of comparison….this report gives annualized construction spending in millions of dollars for the 4th quarter months as $1,272,648 in December, $1,252,144 in November, and $1,237,649 in October, while annualized construction costs were at $1,273,085 in February and $1,272,178 in January….thus to compare January’s nominal construction spending of $1,183,840 and February’s figure of $1,192,822  to inflation adjusted figures of the fourth quarter, our formula becomes: ((1,273,085 +1,272,178 * 1.001) / 2 ) / ((1,272,648 * 1.009 + 1,252,144 * 1.008 + 1,237,649 * 1.008)/ 3) = 1.00685, which tells us that real construction spending over January and February was up by 0.685% from that of the 4th quarter period, or up at a 2.77% annual rate…then, to figure the potential effect of that change on GDP,  we take the difference between the 4th quarter inflation adjusted average and that of January’s & February’s adjusted spending as a fraction of 4th quarter GDP, and find that 1st quarter construction spending is rising at a rate that would add about 0.20 percentage points to 1st quarter GDP, assuming there is little change in real construction in March..

February Factory Shipments Up 0.2%, Factory Inventories 0.3% Higher

the Census Bureau’s summary of the Full Report on Manufacturers’ Shipments, Inventories, & Orders (pdf) for February, which precedes the detailed spreadsheet of those metrics and which includes revisions to the February advance durable goods report which we reviewed two weeks ago, is quite complete, so we’ll just quote directly from that here:

  • New orders for manufactured goods in February, up six of the last seven months, increased $6.0 billion or 1.2 percent to $498.0 billion, the U.S. Census Bureau reported today. This followed a 1.3 percent January decrease. Shipments, up fourteen of the last fifteen months, increased $1.0 billion or 0.2 percent to $500.5 billion. This followed a 0.7 percent January increase. Unfilled orders, up five of the last six months, increased $1.9 billion or 0.2 percent to $1,142.8 billion. This followed a 0.3 percent January decrease. The unfilled orders-to-shipments ratio was 6.49, down from 6.52 in January. Inventories, up fifteen of the last sixteen months, increased $2.3 billion or 0.3 percent to $675.2 billion. This followed a 0.4 percent January increase. The inventories-to-shipments ratio was 1.35, unchanged from January.
  • New orders for manufactured durable goods in February, up three of the last four months, increased $7.2 billion or 3.0 percent to $247.3 billion, down from the previously published 3.1 percent increase. This followed a 3.6 percent January decrease. Transportation equipment, also up three of the last four months, led the increase, $5.5 billion or 7.0 percent to $83.5 billion. New orders for manufactured nondurable goods decreased $1.2 billion or 0.5 percent to $250.7 billion.
  • Shipments of manufactured durable goods in February, up nine of the last ten months, increased $2.2 billion or 0.9 percent to $249.8 billion, unchanged from the previously published increase. This followed a 0.5 percent January increase. Machinery, up six of the last seven months, led the increase, $0.6 billion or 1.7 percent to $33.3 billion. Shipments of manufactured nondurable goods, down following eight consecutive monthly increases, decreased $1.2 billion or 0.5 percent to $250.7 billion. This followed a 1.0 percent January increase. Petroleum and coal products, down following seven consecutive monthly increases, drove the decrease, $2.0 billion or 3.7 percent to $50.5 billion.
  • Unfilled orders for manufactured durable goods in February, up five of the last six months, increased $1.9 billion or 0.2 percent to $1,142.8 billion, unchanged from the previously published increase. This followed a 0.3 percent January decrease. Transportation equipment, up two of the last three months, led the increase, $1.4 billion or 0.2 percent to $773.3 billion. 
  • Inventories of manufactured durable goods in February, up nineteen of the last twenty months, increased $1.8 billion or 0.4 percent to $410.8 billion, unchanged from the previously published increase. This followed a 0.4 percent January increase. Transportation equipment, up three consecutive months, led the increase, $0.7 billion or 0.5 percent to $132.7 billion. Inventories of manufactured nondurable goods, up nine consecutive months, increased $0.4 billion or 0.2 percent to $264.4 billion. This followed a 0.4 percent January increase. Petroleum and coal products, up eight consecutive months, led the increase, $0.2 billion or 0.5 percent to $42.8 billion.

to gauge the effect of February factory inventories on 1st quarter GDP, they must first be adjusted for changes in price with appropriate components of the producer price index…by stage of fabrication, the value of finished goods inventories increased 0.1% to $211,892 million; the value of work in process inventories was up 0.4% at $211,337 million, and materials and supplies inventories were valued 0.6% higher at $229,586 million…meanwhile, the producer price index for February indicated that prices for finished goods decreased 0.1%, that prices for intermediate processed goods were 0.7% higher, and that prices for unprocessed goods were on average 2.8% higher….assuming similar valuations for like inventories, that would suggest that February’s real finished goods inventories were 0.4% greater than January’s, that real inventories of intermediate processed goods were 0.3% smaller, and that real raw material inventory inventories were 2.2% smaller…since real factory inventories in the 4th quarter were a bit higher, any real inventory decreases over the 1st quarter will subtract from growth of 1st quarter GDP…

 

(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 from the aforementioned GGO posts, contact me…)   

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table and graph for April 7th

rig count summary:

April 6th 2018 rig count summary

crude exports:

April 4 2018 crude exports as of March 30

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