tables and graphs for January 25th

rig count summary:

January 24 2020 rig count summary

heating demand through January 17th:

January 20 2020 population weighted heating degree days thru Jan 17

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natural gas prices at new lows; record oil production; 2019 oil shortage was 297,900,000 barrels, or ~3 days of output

oil prices finished lower for a second week as geopolitical fears unwound and oil traders shifted their focus to an imaginary oil glut and sluggish demand….after falling 6.4% to $59.04 a barrel last week because the exchange of missile attacks between the US and Iran failed to interrupt oil supplies, the benchmark price of US light sweet crude for February delivery fell for a fifth consecutive day on Monday as tensions in the Mideast continued to ease over the weekend and oil traders turned their focus to high US fuel supplies, with oil prices finishing down 96 cents at $58.08 a barrel…however, oil prices snapped their losing streak on Tuesday, rising 15 cents to $58.23 a barrel, buoyed by upbeat anticipation of the expected Wednesday signing of a so-called ‘phase one’ U.S.-China trade deal…but oil prices were down again early Wednesday after the late Tuesday API report had showed a surprise increase of US crude supplies, and continued lower to close down 42 cents at $57.81 a barrel after the EIA reported huge increases in domestic supplies of gasoline and distillates….oil prices then opened higher on Thursday on Chinese commitments to much higher purchases of U.S. energy products, but slumped back to $57.56 at midday before rallying to finish 71 cents higher at $58.52 a barrel on news of the Senate approval of the U.S.-Mexico-Canada trade agreement…oil prices then tacked on another 2 cent gain on Friday to finish at $58.54 a barrel, a loss of less than 1% for the week as the positive news on trade was outweighed by signs of oversupply and weak global demand..

meanwhile, natural gas prices finished much lower on continued moderate weather and on reports from the EIA forecasting lower natural gas prices for 2020 and slower growth in natural gas-fired electricity generationafter finishing last week 3.4% higher at $2.202 per mmBTU as traders eyed a return to winter temperatures, the price of natural gas for February delivery opened higher but then moved down on Monday and ended 2 cents lower at $2.182 mmBTU as the shift to colder temperatures failed to impress natural gas traders…prices recovered a half a cent on Tuesday but were down 6.7 cents on Wednesday on forecasts for less cold in the two week forecasts…prices rallied on a bullish storage report on Thursday, but again faded to close 4.3 cents lower at a five month low of $2.077 mmBTU, as the bullish storage report was no match for bearish weather forecasts… February natural gas lost then 7.4 cents, or 3.6%, on Friday to settle at $2.003 per mmBTU, and was thus down about 9% for the week, the lowest close for natural gas prices since May 2016 and the lowest price ever for February 2020 natural gas

the natural gas storage report for the week ending January 10th from the EIA indicated that the quantity of natural gas held in storage in the US fell by 109 billion cubic feet to 3,039 billion cubic feet by the end of the week, which left our gas supplies 494 billion cubic feet, or 19.4% higher than the 2,545 billion cubic feet that were in storage on January 10th of last year, and 149 billion cubic feet, or 5.2% above the five-year average of 2,890 billion cubic feet of natural gas that has been in storage as of the 10th of January in recent years….the 109 billion cubic feet that were withdrawn from US natural gas storage this week was somewhat more than the average forecast for a 92 billion cubic feet withdrawal by analysts surveyed by S&P Global Platts, but still far less than the average 194 billion cubic feet of natural gas that have been pulled from natural gas storage during the first full week of January over the past 5 years….

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending January 10th showed that because of a modest drop in our oil imports and a sizable increase in our oil exports, we needed to pull oil out of our stored commercial supplies for the seventh time in the past eighteen weeks….our imports of crude oil fell by an average of 179,000 barrels per day to an average of 6,730,000 barrels per day, after rising by an average of 379,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 417,000 barrels per day to 3,481,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 3,071,000 barrels of per day during the week ending January 10th, 596,000 fewer barrels per day than the net of our imports minus our exports during the prior week…over the same period, the production of crude oil from US wells rose by 100,000 barrels per day to a record 13,000,000 barrels per day, and hence our daily supply of oil from the net of our trade in oil and from well production totaled an average of 16,071,000 barrels per day during this reporting week..

meanwhile, US oil refineries were reportedly processing 16,973,000 barrels of crude per day during the week ending January 10th, 76,000 more barrels per day than the amount of oil they used during the prior week, while over the same period the EIA’s surveys indicated that an average of 364,000 barrels of oil per day were being pulled out of the supplies of oil stored in the US….hence, we can see that this week’s crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports, from oilfield production, and from storage was 538,000 barrels per day less than what our oil refineries reported they used during the week…to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a (+538,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting an error or errors of that magnitude in the oil supply & demand figures we have just transcribed…however, since the media treats these figures as gospel and since they drive oil pricing and hence decisions to drill for oil, we’ll continue to report them, just as they’re watched & believed as accurate by most everyone else (for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….   

further details from the weekly Petroleum Status Report (pdf) indicated that the 4 week average of our oil imports slipped to an average of 6,611,000 barrels per day last week, now 13.1% less than the 7,605,000 barrel per day average that we were importing over the same four-week period last year….the 364,000 barrel per day net withdrawal from our total crude inventories was all from our commercially available stocks of crude oil, while the quantity of oil stored in our Strategic Petroleum Reserve was unchanged….this week’s crude oil production was reported to be 100,000 barrels per day higher at a record 13,000,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day higher at a record 12,500,000 barrels per day, and while even though oil production from Alaska was 3,000 barrels per day lower at 480,000 barrels per day, it still added the same rounded 500,000 barrels per day to the rounded national total….last year’s US crude oil production for the week ending January 11th was rounded to 11,900,000 barrels per day, so this reporting week’s rounded oil production figure was 9.2% above that of a year ago, and 54.2% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016…   

meanwhile, US oil refineries were operating at 92.2% of their capacity in using 16,973,000 barrels of crude per day during the week ending January 10th, down from 93.0% of capacity the prior week, and a bit below the recent average capacity utilization for the first full week of January…as a result, the 16,973,000 barrels per day of oil that were refined this week were 1.5% below the 17,223,000 barrels of crude that were being processed daily during the week ending January 11th, 2019, when US refineries were operating at 94.6% of capacity….

even with just a modest increase in the amount of oil being refined, gasoline output from our refineries was quite a bit higher, increasing by 394,000 barrels per day to 9,281,000 barrels per day during the week ending January 3rd, after our refineries’ gasoline output had decreased by 1,286,000 barrels per day over the prior week…but even after this week’s increase in gasoline output, our gasoline production was still 3.2% lower than the 9,584,000 barrels of gasoline that were being produced daily over the same week of last year….on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) fell by 105,000 barrels per day to 5,205,000 barrels per day, after our distillates output had increased by 1,000 barrels per day over the prior week…after this week’s decrease in distillates output, our distillates’ production for the week was 3.8% below the 5,412,000 barrels of distillates per day that were being produced during the week ending January 11th, 2018….

even with the increase in our gasoline production, our supply of gasoline in storage at the end of the week increased for the tenth week in a row and for the 16th time in 30 weeks, rising by 6,678,000 barrels to 258,287,000 barrels during the week to January 10th, after our gasoline supplies had increased by a 4 year high of 9,137,000 barrels over the prior week….our gasoline supplies increased by less this week because the amount of gasoline supplied to US markets increased by 428,000 barrels per day to 8,558,000 barrels per day, while our exports of gasoline fell by 198,000 barrels per day to 608,000 barrels per day, and while our imports of gasoline rose by 42,000 barrels per day to 443,000 barrels per day….after this week’s increase, our gasoline supplies were 1.1% higher than last January 11th’s gasoline inventory level of 255,565,000 barrels, and remained roughly 5% above the five year average of our gasoline supplies for this time of the year…

even with the decrease in our distillates production, our supplies of distillate fuels increased for the 6th time in 16 weeks and for 16th time in the past 41 weeks, rising by 8,171,000 barrels to 147,221,000 barrels during the week ending January 10th, after our distillates supplies had increased by 5,330,000 barrels over the prior week….our distillates supplies increased by more this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 188,000 barrels per day to 3,185,000 barrels per day, and because our exports of distillates fell by 373,000 barrels per day to 1,055,000 barrels per day, while our imports of distillates fell by 50,000 barrels per day to 202,000 barrels per day….but even after three weeks of near record inventory increases, our distillate supplies were still 0.7% less than the 140,042,000 barrels of distillates that we had stored on January 11th, 2018, and roughly 3% below the five year average of distillates stocks for this time of the year…

finally, with this week’s increase in oil exports and the decrease in oil imports, our commercial supplies of crude oil in storage fell for the sixteenth time in thirty weeks and for the twenty-first time in 50 weeks, decreasing by 2,549,000 barrels, from 431,060,000 barrels on January 3rd to 428,511,000 barrels on January 10th….after that decrease, our crude oil inventories remained near the five-year average of crude oil supplies for this time of year, but were still almost 35% higher than the prior 5 year (2009 – 2013) average of crude oil stocks after the first full week of January, with the disparity between those comparisons arising because it wasn’t until early 2015 that our oil inventories first rose above 400 million barrels….even though our crude oil inventories had generally been rising over the past year, except for during the past summer, after generally falling until then through most of the prior year and a half, our oil supplies as of January 10th were 2.0% below the 437,055,000 barrels of oil we had stored on January 11th of 2018, while rising to 3.8% above the 419,515,000 barrels of oil that we had in storage on January 5th of 2017, but at the same time fell to 11.2% below the 485,456,000 barrels of oil we had in commercial storage on January 13th of 2016…        

OPEC’s Monthly Oil Market Report

Wednesday of this past week saw the release of OPEC’s January Oil Market Report, which covers OPEC & global oil data for December, and hence it gives us a snapshot of the global oil supply & demand situation before ​OPEC’s ​increased ​production cuts of up to 2.1 million barrels per day, or more than 2% of global supply, are to go into effect…but as we’ll see, this report shows there was already a shortfall of nearly ​0.8% of the amount of oil produced globally in December, even as it was less than the larger shortfalls seen earlier this year…

the first table from this monthly report that we’ll look at is from the page numbered 58 of that report (pdf page 68), 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 a means of impartially adjudicating whether their output quotas and production cuts are being met, to thus avert any potential disputes that could arise if each member reported their own figures…

December 2019 OPEC crude output via secondary sources

as we can see from the above table of oil production data, OPEC’s oil output fell by 161,000 barrels per day to 29,444,000 barrels per day in December, from their revised November production total of 29,606,000 barrels per day…however that November output figure was originally reported as 29,551,000 barrels per day, which means that OPEC’s November production was revised 55,000 barrels per day higher, and hence December’s production was, in effect, a 106,000 barrel per day decrease from the previously reported OPEC production figures (for your reference, here is the table of the official November OPEC output figures as reported a month ago, before this month’s revisions)…

from that table, we can also see that a 111,000 barrel per day decrease in production by the Saudis, a 76,000 barrel per day decrease in production by Iraq, a 46,000 barrel per day decrease in production by the Emirates, and a 44,000 barrel per day decrease in production by Libya were the major reasons for the December drop in OPEC’s output, more than offsetting the increase of 125,000 barrels per day in the output from Angola, while the oil output changes by most other OPEC members had little impact on the total….with th​is month’s increase in Angola’s output, and despite the decrease in Iraq’s output, they are now the only two OPEC countries whose production was above the output allocation as originally determined for each OPEC member after their December 7th, 2018 meeting, when OPEC agreed to cut 800,000 barrels per day as part of a 1.2 million barrel per day cut agreed to with Russia and other oil producers, and which were extended at their July 1st meeting earlier last year…these output allocations for December can be seen in the table of OPEC production quotas for 2019 we’ve included on the left below:

OPEC supply cut targets as of October 2019

OPEC additional supply cuts as of December 2019

in addition to those cuts, at their meeting with other oil producers on December 6th of this past year, OPEC announced additional production cuts of 500,000 barrels per day through to March 2020 on top of those 2019 allocations, a breakdown of which we have in a table from OPEC on the right above…that table was posted on OPEC’s website after their December 6th meeting, and it shows the additional production cuts each of the OPEC members and their allies among other producers are expected to make over the 3 month period beginning January…as you see, the heaviest cuts fall on the core OPEC members of Saudi Arabia. the United Arab Emirates, Kuwait and Iraq, while embargoed Iran and Venezuela remain exempt…obviously, th​at table would be more meaningful if their current production, or even their expected end production, were included, but i’ve been unable to find a table with those complete details, so we’ll just have to make do switching back and forth between the two tables we have to see how each member is impacted….in addition to those cuts that came out of the OPEC meeting, the Saudis voluntarily pledged to cut an additional 400,000 barrels a day more than was mandated by the December 6th agreement, bringing the total cut for the group to 2.1 million barrels a day, or more than 2% of global output….

the next graphic from the report that we’ll include shows us both OPEC and world oil production monthly on the same graph, over the period from January 2018 to December 2019, and it comes from page 59 (pdf page 69) of the January 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…  

December 2019 OPEC report global oil supply

including the 161,000 barrel per day decrease in OPEC’s production from what they produced a month ago, OPEC’s preliminary estimate indicates that total global oil production decreased by a rounded 0.06 million barrels per day to average 100.28 million barrels per day in December, but that reported decrease came after November’s total global output figure was revised higher by 560,000 barrels per day from the 97.78 million barrels per day of global oil output that was reported a month ago, as non-OPEC oil production rose by a rounded 110,000 barrels per day in December after that revision, with higher oil production from the UK, Norway, Canada, Mexico and the US the major reasons for the non-OPEC output increase in December…after the decrease in December’s output from that upward revision to November, the 100.28 million barrels of oil per day produced globally in December were 0.07 million barrels per day, or just fractionally lower than the 100.35 million barrels of oil per day that were being produced globally in December a year ago, before their first round of cuts officially kicked in (see the January 2019 OPEC report (online pdf) for the originally reported December 2018 details)…with this month’s decrease in OPEC’s output, their December oil production of 29,444,000 barrels per day fell to 29.4% of what was produced globally during the month, down from the 29.5% share OPEC contributed in December, and the 29.9% share they had in November….OPEC’s December 2018 production was reported at 31,578,000 barrels per day, which means that the 14 OPEC members who were part of OPEC last year produced 2,134,000 fewer barrels per day of oil​ in December​ than what they produced a year ago, when they accounted for 31.6% of global output, with a 791,000 barrel per day decrease in output from Saudi Arabia, a 677,000 barrel per day drop in the output from Iran, and a 434,000 barrel per day decrease in the output from Venezuela from that time accounting for most of the year over year decrease… 

even with the big upward revision to global oil output that we’ve seen in this report, there was a still substantial shortfall in the amount of oil being produced globally during the month, as this next table from the OPEC report will show us…     

December 2019 OPEC report global oil demand

the above table came from page 31 of the December OPEC Monthly Oil Market Report (pdf page 41), and it shows regional and total oil demand in millions of barrels per day for 2018 in the first column, and OPEC’s estimate of oil demand by region and globally quarterly over 2019 over the rest of the table…on the “Total world” line in the fifth column, we’ve circled in blue the figure that’s relevant for December, which is their estimate of global oil demand during the fourth quarter of 2019…

OPEC has estimated that during the 4th quarter of this year, all oil consuming regions of the globe have used 101.07 million barrels of oil per day, which is an upward revision from the 100.95 million barrels of oil per day they reported for the 4th quarter a month ago….meanwhile, as OPEC showed us in the oil supply section of this report and the summary supply graph above, OPEC and the rest of the world’s oil producers were only producing 100.28 million barrels per day during December, which means that there was a shortage of around 790,000 barrels per day in global oil production when compared to the demand estimated for the month… 

the revisions to November output and to 2019 demand (circled in green above) means that the previous surplus of shortfall figures we had computed for prior months should be revised as well…a month ago we estimated a global shortage of around 1,170,000 barrels per day in global oil production during November, based on the figures published at that time…however, as we saw earlier, November’s global output figure was was revised higher by 560,000 barrels per day from those figures, while global demand was simultaneously revised 120,000 barrels per day higher, so with these revised figures, we now find that global oil production in November was running roughly 730,000 barrels per day short of demand…also a month ago, we estimated a shortage of 1,580,000 barrels per day for October; hence, with the upward revision to 4th quarter demand, that October oil production shortage would now be 1,700,000 barrels per day…

note in our green ellipse that demand for oil in the 3rd quarter was revised 90,000 barrels per day lower…we had previously computed a global shortage of 3,030,000 barrels per day in September (after the ​missile ​attack on Saudi production​)​, a deficit of 1,670,000 barrels per day in August, and a deficit of 2,290,000 barrels per day in July’s oil production…with the downward revision to 3​rd​ quarter demand, those shortfalls will now be 2,940,000 barrels per day in September, 1,580,000 barrels per day in August, and 2,200,000 barrels per day in July…

meanwhile, demand for oil in the 2nd quarter was revised 200,000 barrels per day lower…..that would mean that we’d have to revise our most recently computed global oil deficit for June from 310,000 barrels per day to 110,000 barrels per day, that we’d have to revise our May oil shortage from 680,000 barrels per day to 480,000 barrels per day, and that we’d have to revise our global oil deficit for April from 710,000 barrels per day to 510,000 barrels per day…hence, for the 2nd quarter as a whole, even after that big downward revision to demand, the world’s oil producers were still producing 257,000 barrels per day less than what was needed…

also encircled in green is an upward revision of 40,000 barrels per day to first quarter demand, a period when oil supplies exceeded demand….that revision means that the global oil surplus of 190,000 barrels per day we had last figured for March would have to be revised to a global oil surplus of 150,000 barrels per day, that the 640,000 barrel per day global oil output surplus we had for February would now be a 600,000 barrel per day global oil output surplus, and the 550,000 barrel per day global oil output surplus we had for January would be revised to a 510,000 barrel per day oil output surplus…

so as you can see, we have gone from a global oil surplus averaging over 400,000 barrels per day in the first quarter of 2018 to an oil shortage of ​​2, 240,​000 barrels per day by the third quarter, and thence to an oil shortage of around 790,000 barrels per day by December….by totaling up those 12 monthly estimates of surplus or shortfall, we find that for the twelve months of 2019, global oil demand exceeded production by roughly 297,900,000 barrels, a net oil shortfall that is the equivalent of ​almost​ three days of global oil production at the December production rate….however, most of the media, including industry websites, are still reporting on oil supplies as if we still have a global glut of oil, because that has become the established narrative and because no one makes the effort to look at the actual data…

This Week’s Rig Count

the US rig count increased for the 3rd time in the past 22 weeks during the week ending January 17th, but is still more than 26.5% lower than the last ​rig ​count of 2018…Baker Hughes reported that the total count of rotary rigs running in the US increased by 15 rigs to 796 rigs this past week, which was still down by 254 rigs from the 1050 rigs that were in use as of the January 18th report of 2019, and 1,133 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC began to flood the global oil market in an attempt to put US shale out of business

the number of rigs drilling for oil increased by 14 rigs to 673 oil rigs this week, which was 179 fewer oil rigs than were running a year ago, and much less than the recent high of 1609 rigs that were drilling for oil on October 10th, 2014….at the same time, the number of drilling rigs targeting natural gas bearing formations rose by one to 120 natural gas rigs, which was still down by 78 gas rigs from the 198 natural gas rigs that were drilling a year ago, and way down from the modern era high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008…in addition to the rigs drilling for oil & gas, three rigs classified as ‘miscellaneous’ continued to drill this week; one on the big island of Hawaii, one in Washoe County, Nevada, and one in Lake County, California, compared to a year ago, when there were no such “miscellaneous” rigs deployed..

offshore drilling activity in the Gulf of Mexico decreased by one rig to 20 rigs this week, as another rig that had been drilling offshore from Louisiana was shut down this week, the 4th Louisiana offshore decrease in a row…however, the 19 rigs that continued drilling in Louisiana waters plus the one that was drilling offshore from Texas was one more than the Gulf of Mexico rig count of 19 rigs during the same week of a year ago, when 18 rigs were drilling offshore from Louisiana and one rig was drilling in Texas waters…since there are no rigs deployed off US shores elsewhere at this time, nor were there a year ago, the Gulf of Mexico count for this year and last is the same as the national total in both cases..

the count of active horizontal drilling rigs was up by 11 rigs to 709 horizontal rigs this week, the highest horizontal rig count since November 8th, but still 220 fewer horizontal rigs than the 929 horizontal rigs that were in use in the US on January 18th of last year, and also well 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 up by 5 rigs to 43 vertical rigs this week, but those were still down by 23 from the 66 vertical rigs that were operating during the same week of last year….on the other hand, the directional rig count was down by 1 to 44 directional rigs this week, and those were down by 11 from the 55 directional rigs that were in use on January 11th of 2019…

the details on this week’s changes in drilling activity by state and by major shale basin are shown in our screenshot below of that part of the rig count summary pdf from Baker Hughes that gives us those changes…the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the table below that 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 January 17th, the second column shows the change in the number of working rigs between last week’s count (January 10th) and this week’s (January 17th) count, the third column shows last week’s January 10th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running before the same weekend 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 the 18th of January, 2019…   

January 17 2020 rig count summary

three rigs were added in Texas Oil District 8, or the core Permian Delaware this week, while the rig count in the other Texas oil districts encompassing the Permian basin in Texas were unchanged…since the Permian basin rig count was up by a total of six, that means that the three rigs that were added in New Mexico were also Permian rigs, drilling in the far western reaches of the Permian Delaware…the other Texas rig ​changes, meanwhile, were ​the two rigs added ​in Texas Oil District 2 of the Eagle Ford, while the rig that was pulled out of the Granite Wash was apparently operating in Oklahoma, since activity in the panhandle Texas Oil District 8 was unchanged…Oklahoma, meanwhile, saw a rig addition in the Ardmore Woodford and at least one elsewhere not shown above…the Williston basin only shows a two rig increase while the North Dakota activity increased by 3 rigs because a Williston rig in Montana was shut down at the same time; one Williston rig remains in Montana as of this week, down from two a year ago….meanwhile, the single natural gas rig addition this week doesn’t even show up in this weeks tables, as it was in a basin not tracked separately by Baker Hughes… 

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December’s consumer & producer prices, retail sales, industrial production, & housing starts; November’s business inventories & JOLTS

Major reports that were released this past week included the December Consumer Price Index, the December Producer Price Index, the December Import-Export Price Index, and the Job Openings and Labor Turnover Survey (JOLTS) for November, all from the Bureau of Labor Statistics; the December report on Industrial Production and Capacity Utilization from the Fed, and the Advance Retail Sales Report for December, the New Residential Construction report for December (pdf), and the Full Report on Manufacturers’ Shipments, Inventories and Orders for November, all from the Census Bureau..

The week also saw the release of the first two regional Fed manufacturing surveys for January: the Empire State Manufacturing Survey from the New York Fed, which covers all of New York state, one county in Connecticut, Puerto Rico and northern New Jersey, reported their headline general business conditions index rose from +2.9 in November and from +3.5 in December to +4.8 in January, suggesting ongoing slow growth of First District manufacturing…. meanwhile, the Philadelphia Fed Manufacturing Survey, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest diffusion index of manufacturing conditions rose from a revised reading of +2.4 in December to + 17.0 in January, indicating a return to faster growth for that region’s manufacturing firms this month…

Consumer Prices Rose 0.2% in December on Higher Prices for Gasoline, Clothing, & Insurance

The consumer price index rose 0.2% in December, as higher prices for gasoline, fast food, clothing and health insurance were only partly offset by lower prices for electricity, used cars and airline fares…the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that seasonally adjusted prices rose by 0.2% in December after rising 0.3% in November, 0.4% in October, being unchanged in September, rising 0.1% in August, rising 0.3% in July, rising 0.1% in June, rising 0.1% in May, rising 0.3% in April, rising 0.4% in March, rising 0.2% in February, and after they had been unchanged in January, in December and last November…the unadjusted CPI-U index, which was set with prices of the 1982 to 1984 period equal to 100, actually fell from 257.208 in November to 256.974 in December, which left it statistically 2.285% higher than the 251.233 index reading of November of last year, which is reported as a 2.3% year over year increase, up from 2.1% a month ago….with prices for energy a major contributor to the overall index increase, seasonally adjusted core prices, which exclude food and energy, rose by 0.1% for the month, as the unadjusted core price index also fell from 265.108 to 264.935, which left the core index 2.2587% ahead of its year ago reading of 259.083, which is also reported as a 2.3% year over year increase, same as was reported for October…

The volatile seasonally adjusted energy price index rose 1.4% in December, after rising 0.8% in November and by 2.7% in October, but after falling 1.4% in September. falling 1.9% in August. rising 1.3% in July, falling 2.3% in June, falling 0.6% in May, rising 2.9% in April, rising 3.5% in March, rising 0.4% in February, falling 3.1% in January, and falling by 2.6% last December, and hence is now 3.4 higher than in December a year ago…the price index for energy commodities was 2.8% higher in December, while the index for energy services was 0.3% lower, after rising 0.4% in November….the energy commodity index was up 2.8% due to a 2.8% increase in the price of gasoline, the largest component, and a 1.6% increase in the index for fuel oil, while prices for other energy commodities, including propane, kerosene, and firewood, were on average 2.9% higher…within energy services, the price index for utility gas service rose 0.3% after rising 1.1% in November but is still 3.5% lower than it was a year ago, while the electricity price index fell 0.5% after rising 0.3% in November….energy commodities are now averaging 7.4% higher than their year ago levels, with gasoline prices averaging 7.9% higher than they were a year ago, while the energy services price index is now 1.2% lower than last December, as electricity prices are now 0.4% lower than a year ago…

The seasonally adjusted food price index rose 0.2% December, after rising 0.1% in November, 0.2% October, 0.1% September, being unchanged in June, July & August, rising 0.3% in May, falling 0.1% in April, but after rising 0.3% in March, 0.4% in February, 0.2% in January, and by 0.3% last December, as the price index for food purchased for use at home was 0.1% higher in December, while the index for food bought to eat away from home was 0.3% higher, as prices at fast food outlets rose 0.4% and prices at full service restaurants rose 0.2% while food prices at employee sites and schools were on average 0.5% lower…

In the food at home categories, the price index for cereals and bakery products was 0.4% lower as average bread prices fell 0.6%, prices for fresh cakes and cupcakes fell 3.3%, rice prices fell 2.1% and cookie prices fell 1.6%…on the other hand, the price index for the meats, poultry, fish, and eggs group was 1.3% higher, as egg prices rose 2.9%, chicken prices rose 3.3%, and the fresh fish and seafood price index rose 1.4%…meanwhile, the seasonally adjusted index for dairy products was unchanged, as average prices for fresh whole milk rose 0.3% while the index for ice cream & related products fell 1.6%…at the same time, the fruits and vegetables index was 0.3% lower on a 1.2% decrease in the price index for fresh vegetables and a 1.7% decrease in the price index frozen vegetables…in addition, the beverages index was 0.4% lower, as prices for roast coffee fell 2.1% and carbonated drink prices were 1.1% lower….lastly, the index for the ‘other foods at home’ category was down 0.3%, as the price index for candy and chewing gum fell 1.7%, the index for fats and oils including peanut butter but not including butter and margarine fell 1.6%, the index for frozen and freeze dried prepared foods 1.2% and the snack food price index fell 1.2%, while prices for prepared salads averaged 3.8% higher….the itemized list for price changes of over 100 separate food items is included at the beginning of Table 2 for this release, which also gives us a line item breakdown for prices of more than 200 CPI items overall…since last December, none of the food line items have seen a price change greater than 10% over the past year…

Among the seasonally adjusted core components of the CPI, which rose by 0.1% December after rising by 0.2% November, 0.2% October, 0.1% in September, 0.3% in August, 0.3% in July, 0.3% in June, 0.1% in May, 0.1% in April, 0.1% in March, 0.1% in February, and by 0.2% for each of the five months prior to that, the composite price index of all goods less food and energy goods was unchanged in December, while the more heavily weighted composite for all services less energy services was 0.2% higher….among the goods components, which will be used by the Bureau of Economic Analysis to adjust December’s retail sales for inflation in national accounts data, the price index for household furnishings and supplies was 0.3% lower, as the price index for living room, kitchen, and dining room furniture fell 1.0% and the index for laundry appliances fell 3.1% while the index for window coverings rose 5.6%….on the other hand, the apparel price index was 0.4% higher as a 3.2% increase in the price index for girl’s apparel and a 2.1% increase in the price index for women’s dresses more than offset a 6.5% decrease in the price index for men’s suits, sport coats, and outerwear… meanwhile, the price index for transportation commodities other than fuel was 0.2% lower even as prices for new cars and trucks rose 0.1% because prices for used cars and trucks fell 0.8% and tire prices fell 0.2%, while the price index for motor oil, coolant, and fluids rose 5.4%…at the same time, prices for medical care commodities averaged 1.5% higher because prescription drugs prices rose 2.1%…however, the recreational commodities index was 0.6% lower on a 2.0% decrease in TV prices, an 0.8% decrease in the price index for sporting goods, a 3.3% decrease in the price index for photographic equipment, and a 1.3% decrease in price index for newspapers and magazines….in addition, the education and communication commodities index was 1.2% lower on a 1.6% decrease in the price index for computers, peripherals, and smart home assistant devices and a 2.4% decrease in the price index for telephone hardware, calculators, and other consumer information items…lastly, a separate price index for alcoholic beverages was 0.1% higher, while the price index for ‘other goods’ was 0.5% lower on a 0.6% decrease in the index for hair, dental, shaving, and miscellaneous personal care products and a 1.9% decrease in the price index for cosmetics, perfume, bath, nail preparations and implements…

Within core services, the price index for shelter rose 0.2% as rents rose 0.2%, homeowner’s equivalent rent rose 0.2%, while prices for lodging away from home at hotels and motels fell 2.0%, while at the same time the shelter sub-index for water, sewers and trash collection rose 0.2%, and household operation costs were on average 0.1% higher….in addition, the price index for medical care services was 0.4% higher, as the index for hospital services rose 0.3% and health insurance rose 1.4%….on the other hand, the transportation services price index was was 0.3% lower as the price index for car and truck rental fell 1.3%, airline fares fell 1.4% and the index for other intercity transportation fell 2.5%….meanwhile, the recreation services price index rose 0.5% as prices for cable and satellite television services rose 1.1%, veterinarian services rose 0.6% and the index for admission to sporting events rose 1.5%…at the same time, the index for education and communication services was 0.2% higher as the index for child care and nursery school rose 0.3%, the index for delivery services rose 1.1%, and prices for internet services and electronic information provision rose 0.4%….lastly, the index for other personal services was up 0.4% as the price index for funeral expense rose 0.6% and the index for tax return preparation and other accounting fees was 1.9% higher…

Among core line items, prices for televisions, which now average 20.5% cheaper than a year ago, the price index for telephone hardware, calculators, and other consumer information items, which is down by 14.6% since last December, and the price index for computer software and accessories, which is down 11.2% year over year, have all seen prices drop by more than 10% over the past year, while the cost of health insurance, which is now up by 20.4% over the past year, the price index for infants’ furniture, which has increased 22.0% year over year, and intercity bus-fare, which has increased by 19.7% since last December, are the only line items to have increased by a double digit magnitude over that span….

Retail Sales Rose 0.3% in December after Prior Months Were Revised Lower

Seasonally adjusted retail sales increased in December after retail sales for October and November were revised lower…the Advance Retail Sales Report for December (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $529.6 billion during the month, which was 0.3 percent (±0.4%)* higher than November’s revised sales of $527.8 billion, and was 5.8 percent (±0.7 percent) above the adjusted sales in December of last year…November’s seasonally adjusted sales were revised a bit lower, from $528.0 billion to $527.8 billion, while October’s sales were revised 0.1% lower, from $527.0 billion to $526.4 billion; as a result, the October to November change was revised up from an increase of 0.2 percent (±0.4%) to an increase of 0.3 percent (±0.2%), and the year over year increase for the 4th quarter came in at 4.1%…..estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated actual sales rose 11.1%, from $597,347 million in November to $537,635 million in December, while they were up 6.0% from the $563,497 million of sales in December a year ago, so we can see how the large seasonal adjustment to holiday sales brought the headline sales increase down from the big holiday sales increase that one would normally expect in December…

Since it’s the end of the quarter and the end of the year for retail sales, we’ll include the entire table from this report showing retail sales by business type, including the quarter over quarter data…again, to explain what this table shows, the first double column below shows us the seasonally adjusted percentage change in sales for each kind of business from the November revised figure to this month’s December “advance” figure in the first sub-column, and then the year over year percentage sales change since last December in the 2nd column; the second double column pair below gives us the revision of the November advance estimates (now called “preliminary”) as of this report, with the new October to November percentage change under “Oct 2019 r” (revised) and the November 2018 to November 2019 percentage change as revised in the 2nd column of that pair (for your reference, the table of from advance estimate of November sales, before this month’s revisions, is here)…. then, the third pair of columns shows the percentage change of the most recent 3 months of this year’s sales (October, November and December) from the preceding three months of the 3rd quarter (July, August and September) and then from the same three months (October, November and December) of a year earlier….that first column of the last pair thus gives us a snapshot comparison of 3rd quarter sales to fourth quarter sales, which is useful in estimating the impact of retail sales on 4th quarter GDP, once those sales are adjusted for inflation….

December 2020 retail sales table

To compute December’s real personal consumption of goods data for national accounts from this December retail sales report, the BEA will use the corresponding price changes from the December consumer price index, which we reviewed above…to estimate what they will find, we’ll first separate out the volatile sales of gasoline from the other totals…from the third line on this table, we can see that December retail sales excluding the 2.8% price-related increase in sales at gas stations were up by 0.1%….then, subtracting the figures representing the 0.4% increase in grocery & beverage sales and the 0.2% increase in food services sales from that total, we find that core retail sales were up by less than half of 0.1% for the month…since the CPI report showed that the composite price index for all goods less food and energy goods was unchanged in December, we can thus approximate that real retail sales excluding food and energy will on average be close to our nominal core retail sales, or show an increase of less than half of 0.1%, which would be rounded to 0%…however, the actual adjustment for each of the types of sales shown above will vary by the change in the related price index…for instance, while nominal sales at clothing stores were 1.6% higher in December, the apparel price index was 0.4% higher, which would mean that real sales of clothing only rose around 1.2%.…on the other hand, while sales at furniture stores were up 0.1%, the price index for household furnishings and supplies decreased by 0.3%, which would suggest that real sales at furniture stores rose by roughly 0.4%…similarly, while nominal sales at sporting goods, hobby, music and book stores rose 0.9%, the price index for recreational commodities fell 0.6%, so we can figure real sales of recreational goods were up roughly 1.5%…

In addition to figuring those core retail sales, to make a complete estimate of real December PCE, we’ll need to adjust food and energy retail sales for their price changes separately, just as the BEA will do.…the CPI report showed that the food price index was 0.2% higher in December, with the index for food purchased for use at home 0.1% higher, while prices for food bought to eat away from home were 0.3% higher… hence, with nominal sales at food and beverage stores 0.4% higher, real sales of food and beverages would only be around 0.3% higher in light of the 0.1% higher prices…likewise, the 0.2% increase in nominal sales at bars and restaurants, once adjusted for 0.3% higher prices, suggests that real sales at bars and restaurants fell about 0.1%…meanwhile, while sales at gas stations were up 2.8%, there was also a 2.8% increase in the retail price of gasoline, which would suggest real sales of gasoline were close to unchanged, with the caveat that gasoline stations do sell more than gasoline, and we haven’t accounted for those other sales…..by averaging those estimated real sales figures with a sales appropriate weighting, and excluding food services, we can estimate that the income and outlays report for December will show that real personal consumption of goods rose by almost 0.1% for the month, after rising by 0.5% in November, but after falling by a revised 0.3% in October…at the same time, the 0.1% decrease in real sales at bars and restaurants will have a slightly negative December’s real personal consumption of services…

Industrial Production Fell 0.3% in December Due to Warm Weather, After October’s & November’s Output Were Revised Higher

The Fed’s G17 release on Industrial production and Capacity Utilization indicated that industrial production fell by a seasonally adjusted 0.3% in December after rising by a revised 0.8% in November, but after falling by a revised 0.5% in October, which together meant that industrial production fell at a 0.5% annual rate in the 4th quarter, after rising by a revised 1.2% rate in the 3rd quarter….the industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, fell to 109.4 in December from 109.8 in November, which was revised from the 109.7 reported last month, while at the same time the index for October was revised from 108.5 to 108.9, now a 0.5% increase from September, rather than the 0.9% decrease previously reported…the IP index for September was revised lower from 109.5 to 109.4, while the index for August was revised higher, from 109.9 to 110.0…year over year industrial production is now down 1.0%, down from the 0.8% year over year decrease reported a month ago….

The manufacturing index, which accounts for more than 75% of the total IP index, rose 0.2% to 105.0 in December, after the November index was revised from 104.9 to 104.8, but is still 1.3% lower than it was a year ago….meanwhile, the mining index, which includes oil and gas well drilling, rose from 132.6 in November to 134.4 in December, after the November mining index was revised up from 132.3, which lifted the mining index to a level 1.4% higher than it was a year earlier…finally, the seasonally adjusted utility index, which often fluctuates due to above or below normal temperatures, fell by 5.6% in our warm December, from 107.6 to 101.6, after the November utility index was revised from 106.6 to 107.6, now 1.0% higher than October…since December 2018 was also depressed in a warmer than normal month, the utility index is still only 1.9% lower than it was a year ago…

This report also includes capacity utilization data, which is expressed as the percentage of our plant and equipment that was in use during the month, and which indicated that seasonally adjusted capacity utilization for total industry fell to 77.0% in December from 77.4% in November, which was revised from the 77.3% reported last month…capacity utilization of NAICS durable goods production facilities fell from a downwardly revised 75.5% in November to 75.2% in December, while capacity utilization for non-durables producers rose from a downwardly revised 75.7% to 76.1%…capacity utilization for the mining sector rose to 89.6% in December from 88.8% in November, which was originally reported as 88.6%, while utilities were operating at 73.5% of capacity during December, down from 78.0% of capacity during November, which was previously reported at 77.3%…for more details on capacity utilization by type of manufacturer, see Table 7: Capacity Utilization: Manufacturing, Mining, and Utilities, which shows the historical capacity utilization figures for a dozen types of durable goods manufacturers, 8 classifications of non-durable manufacturers, mining, utilities, and capacity utilization for a handful of other special categories….

Producer Price Index Up 0.1% in November On Higher Energy Prices

The seasonally adjusted Producer Price Index (PPI) for final demand rose 0.1 in December, as average prices for finished wholesale goods rose 0.3% while margins of final services providers were on average unchanged…that followed a November report that the PPI was unchanged, as prices for finished wholesale goods had risen 0.3% while margins of final services providers fell 0.3%, an October report that had the PPI 0.4% higher, with prices for finished wholesale goods 0.7% higher and margins of final services providers up by 0.3%, a revised September report that showed producer prices fell 0.3%, with prices for finished wholesale goods 0.4% lower while margins of final services providers decreased by 0.3%, and a revised August report that showed the PPI rose 0.2%, even prices for finished wholesale goods fell by 0.3%, because the more heavily weighted margins of final services providers increased by 0.3%….on an unadjusted basis, producer prices are now 1.3% higher than a year ago, up from the 1.1% year over year increase indicated by last month’s report, which had been the lowest annual price increase since the year ended October 2016…meanwhile, the core producer price index, which excludes food, energy and trade services, also rose by 0.1% for the month, and is now 1.5% higher than in December a year ago, up from the 1.3% YoY increase shown in November…

As noted, the price index for final demand for goods, aka ‘finished goods’, was 0.3% higher in December, after being 0.3% higher in November, 0.7% higher in October, 0.4% lower in September, 0.3% lower in August, 0.4% higher in July, 0.5% lower in June, 0.2% lower in May, 0.4% higher in April, 1.0% higher in March, 0.3% higher in February, 0.6% lower in January, and 0.6% lower in December of 2018….the finished goods index rose 0.3% in November because the wholesale price index for energy goods was 1.5% higher, after rising by 0.6 in November and 2.8% in October, after falling by a revised 2.8% in September and by a revised 1.4% in August, while the price index for wholesale foods fell 0.2% in December after rising 1.1% in November, 1.3% in October and 0.3% in September, and while the index for final demand for core wholesale goods (excluding food and energy) was 0.1% higher after rising 0.2% in November….wholesale energy prices were higher due to a 3.7% increase in wholesale prices for gasoline, a 7.7% increase in wholesale prices for home heating oil, and a 6.4% increase in wholesale prices for diesel fuel, while the wholesale food price index fell on a 7.0% decrease in the wholesale price index for beef and veal, a 7.1% decrease in the wholesale price index for fresh and dry vegetables, and a 10.4% decrease in the wholesale price of eggs for fresh use….among wholesale core goods, wholesale prices for iron and steel scrap rose 11.3% and wholesale prices for agricultural machinery and equipment rose 1.3%..

At the same time, the index for final demand for services was unchanged in December, after falling by 0.3% in November, rising by 0.3% in October, falling by a revised 0.3% in September, and rising by 0.3% in August, as the index for final demand for trade services fell 0.3%, the index for final demand for transportation and warehousing services rose 2.7%, and the core index for final demand for services less trade, transportation, and warehousing services was 0.1% lower….among trade services, seasonally adjusted margins for sporting goods and boat retailers fell 4.3%, margins for apparel, jewelry, footwear, and accessories retailers fell 3.7%, and margins for fuel & lubricants retailers fell 4.3%, while margins for book retailers rose 3.8% … among transportation and warehousing services, margins for airline passenger services rose 8.6%…among the components of the core final demand for services index, margins for portfolio management rose 1.9%, and margins for consumer loans (partial) rose 1.8%, while margins for arrangement of cruises and tours fell 3.9%…

This report also showed the price index for intermediate processed goods rose 0.1% in December, after rising 0.2% in November, 0.4% in October. but after falling by a revised 0.2% in September and a revised 0.5% in August….the price index for intermediate energy goods rose 1.0%, as refinery prices for gasoline rose 3.7% and refinery prices for No. 2 diesel fuel rose 6.4%…at the same time, prices for intermediate processed foods and feeds rose 0.1%, as the producer price index for processed poultry rose 2.0% while the index for meats fell 1.7%… meanwhile, the core price index for intermediate processed goods less food and energy fell 0.2% as the producer price index for steel mill products fell 1.8% and producer prices for synthetic rubber decreased 1.6%, while the index for building paper and board rose 5.4%… prices for intermediate processed goods are still 1.7% lower than in December a year ago, the eighth consecutive year over year decrease, following 29 months of year over year increases, which had been preceded by 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 rose 1.8% in December, after rising 3.9% in November and by 1.0% in October, but after falling by a revised 1.6% in September and by a revised 1.7% in August….that was as the December price index for crude energy goods rose 0.4% as crude oil prices rose 3.4% while unprocessed natural gas prices fell 4.6%, while the price index for unprocessed foodstuffs and feedstuffs rose 2.3% on a 10.0% increase in producer prices for slaughter chickens, a 3.4% increase in producer prices for slaughter hogs and a 8.8% increase in producer prices for alfalfa hay….at the same time, the index for core raw materials other than food and energy materials rose 3.0%, as prices for unprocessed iron and steel scrap rose 11.3% and prices for nonferrous metal ores rose 4.5%…this raw materials index is still 7.3% lower than a year ago, as the year over year change on this index remained negative all year…

Lastly, the price index for services for intermediate demand rose 0.4 percent in November after falling 0.1 percent in November, 0.2 percent in October, and a revised 0.1 percent in September, while rising a revised 0.4% in August…the price index for intermediate trade services was 0.3% higher, as margins for intermediate machinery and equipment parts and supplies wholesalers rose 2.8%, margins for metals, minerals, and ores wholesalers rose 1.9%, and margins for intermediate building materials, paint, and hardware wholesalers rose 1.8%, while margins for chemicals and allied products wholesalers fell 4.2%…at the same time, the index for transportation and warehousing services for intermediate demand was 1.2% higher, as the price index for intermediate transportation of passengers (partial) rose 8.5% and the index for arrangement of freight and cargo rose 4.0%…in addition, the core price index for intermediate services less trade, transportation, and warehousing rose 0.2%, as the intermediate price index for “internet advertising space sales, excluding Internet ads sold by print publishers” rose 6.0% and the price index for television advertising time sales rose 4.0%, while the index for intermediate traveler accommodation services fell 3.0%…over the 12 months ended in October, the year over year price index for services for intermediate demand, which has never turned negative on an annual basis, is now 1.8% higher than it was a year ago, up from 1.4% in November and from 1.6% in October…

November Business Sales Up 0.7% Business Inventories Down 0.2%

After the release of the December retail sales report, the Census Bureau released the composite Manufacturing and Trade, Inventories and Sales report for November (pdf), which incorporates the revised November retail data from that December report and the earlier published November wholesale and factory data to give us a complete picture of the business contribution to the economy for that month….according to the Census Bureau, total manufacturer’s and trade sales were estimated to be valued at a seasonally adjusted $1,465.7 billion in November, up 0.7 percent (±0.2%) from October’s revised sales, and up 1.0 percent (±0.4%) from November sales of a year earlier…note that total October sales were concurrently revised from the previously reported $1,456.0 billion to $1,454.9 billion, now down 0.2% from September….manufacturer’s sales rose 0.3% to $502,166 million in November; retail trade sales, which exclude restaurant & bar sales from the revised November retail sales reported earlier, rose 0.4% to $462,883 million, and wholesale sales rose 1.5% to $500,651 million..

Meanwhile, total manufacturer’s and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $2,037.4 billion at the end of November, down 0.2 percent (±0.1 percent) from October, but 2.8 percent (±0.5 percent) higher than in November a year earlier…at the same time, the value of end of October inventories was revised from the $2,042.8 billion reported a month ago to $2,041.2 billion, now just a 0.1% increase from September…. seasonally adjusted inventories of manufacturers were estimated to be valued at $700,989 million, up 0.1% from October, while inventories of retailers were valued at $661,499 million, 0.7% lower than in October, and inventories of wholesalers were estimated to be valued at $674,943 million at the end of November, 0.1% lower than in October…

For GDP purposes, all inventories, including retail, will be adjusted for inflation with appropriate component price indices of the producer price index for November, which was up 0.3% for finished goods, including an increase of 0.2% ex food & energy…last week, we looked at real factory inventories with price adjustments for goods at various stages of production, and judged the negative change in those inventories would have a substantial negative impact on 4th quarter GDP growth…also last week, we found that real wholesale inventories were at least 0.4% lower for the month, following a 0.6% real decrease in October, and that they would also subtract substantially from 4th quarter GDP growth….since nominal retail inventories for November have now been shown to 0.7% lower, real retail inventories for the month, considering the 0.3% finished goods price adjustment, would have thus decreased by 1.0% from October, after a real 0.6% decrease in that month…since the third quarter saw total inventories increase at an inflation adjusted $80 billion annual rate, these real inventory decreases we now have indicated for the 4th quarter would necessarily subtract that amount, plus the amount of the real 4th quarter decrease, from the growth of 4th quarter GDP…

Job Openings Much Lower In November; Hiring & Quitting Rise, Layoffs Fall

The Job Openings and Labor Turnover Survey (JOLTS) report for November from the Bureau of Labor Statistics estimated that seasonally adjusted job openings decreased by 561,000, from 7,361,000 in October to 6,800,000 in November, after October job openings were revised 96,000 higher, from 7,267,000 to 7,361,000…November’s jobs openings were thus 10.8% lower than the 7,626,000 job openings reported in November a year ago, as the job openings ratio expressed as a percentage of the employed fell to 4.3% in November from 4.6% October, and was also down from 4.8% in November a year ago….the largest percentage decrease in November openings appears to be a 112,000 job opening decrease to 214,000 openings in the construction sector, while the health care and social assistance sector saw job openings increase by 47,000 to 1,180,000 (see table 1 for more job openings details)…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 November, seasonally adjusted new hires totaled 5,821,000, up by 39,000 from the revised 5,782,000 who were hired or rehired in October, as the hiring rate as a percentage of all employed remained at 3.8% in November, while it was still down from 3.9% in November a year ago (details on hiring by region and by sector since July are in table 2)….meanwhile, total separations fell by 4,000, from 5,652,000 in October to 5,648,000 in November, as the separations rate as a percentage of the employed remained at 3.7%, same it was in November a year ago (see table 3)…subtracting the 5,648,000 total separations from the total hires of 5,821,000 would imply an increase of 173,000 jobs in November, somewhat less than the revised payroll job increase of 256,000 for November reported in the December establishment survey last week, but still within the expected +/-115,000 margin of error in these incomplete samplings

Breaking down the seasonally adjusted job separations, the BLS finds that 3,536,000 of us voluntarily quit our jobs in November, up by 39,000 from the revised 3,479,000 who quit their jobs in October, while the quits rate, widely watched as an indicator of worker confidence, remained unchanged at 2.3% of total employment, also the same as it was a year earlier (see job quitting details in table 4)….in addition to those who quit, another 1,749,000 were either laid off, fired or otherwise discharged in November, down by 46,000 from the revised 1,795,000 who were discharged in October, as the discharges rate fell from 1.2% to 1.1% of total employment, which was also down from the discharges rate of 1.3% in November a year ago….meanwhile, other separations, which includes retirements and deaths, were at 363,000 in November, up from 360,000 in October, for an ‘other separations rate’ of 0.2%, which was the same rate as in October and as in November 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 easily using the links to tables at the bottom of the press release

Housing Starts at a 13 Year High in December, New Permits Down

the December report on New Residential Construction (pdf) from the Census Bureau estimated that the number of new housing units started in December was at a seasonally adjusted annual rate of 1,608,000, a 13 year high, which was 16.9 percent (±12.8 percent) above the revised November estimated annual rate of 1,375,000 housing units started, and was 40.8 percent (±20.5 percent) above last December’s annual rate of 1,142,000 housing starts…the figures in parenthesis are the most likely range of the change indicated; in other words, December housing starts could have been up by 4.1% or by as much as 29.7% more those of last December, with revisions of a greater magnitude in either direction possible…in this report, the annual rate for November housing starts was revised from the 1,365,000 reported last month to 1,375,000, while October starts, which were first reported at a 1,314,000 annual rate, were revised from last month’s initial revised figure of 1,323,000 annually to a 1,340,000 annual rate with this report….

those annual rates of starts reported here were extrapolated from a survey of a small percentage of US building permit offices visited by canvassing Census field agents, which estimated that 108,500 housing units were started in December, up from the 103,100 units that were started in November, unusual in that construction usually slows during the winter months…of those housing units started in December, an estimated 68,600 were single family homes and 38,700 were units in structures with more than 5 units, down from the revised 68,700 single family starts in November, but up from the 32,700 units started in structures with more than 5 units in November…

the monthly data on new building permits, with a smaller margin of error, are probably a better monthly indicator of new housing construction trends than the volatile and often revised housing starts data….in December, Census estimated new building permits for housing units were being issued at a seasonally adjusted annual rate of 1,416,000, which was 3.9 percent (±1.6 percent) below the revised November rate of 1,474,000 permits, but was 8.8 percent (±1.1 percent) above the rate of building permit issuance in December a year earlier…the annual rate for housing permits issued in November was revised down from the originally reported 1,482,000 but was still the highest since May 2007….again, these annual estimates for new permits reported here were extrapolated from the unadjusted estimates collected monthly by canvassing census agents, which showed permits for roughly 107,300 housing units were issued in December, down from the revised estimate of 107,500 new permits issued in November…the December permits included 62,400 permits for single family homes, down from 63,800 single family permits issued in November, and 41,700 permits for housing units in apartment buildings with 5 or more units, up from 40,800 such multifamily permits a month earlier… for more graphs and commentary on this report, see the following two posts by Bill McBride at Calculated Risk: Housing Starts increased to 1.608 Million Annual Rate in December and Comments on December Housing Starts

 

(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 picked from the aforementioned GGO posts, contact me…)      

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tables and graphics for January 18

retail sales:

December 2020 retail sales table

rig count summary:

January 17 2020 rig count summary

OPEC production:

December 2019 OPEC crude output via secondary sources

global supply:

 December 2019 OPEC report global oil supply

global demand:

 December 2019 OPEC report global oil demand

OPEC supply cuts plus adjustment:

.

OPEC supply cut targets as of October 2019

OPEC additional supply cuts as of December 2019

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smallest January natgas draw in 21 years; gasoline supplies rise most in 4 years as gasoline demand falls to a 3 year low

oil prices fell for the first ​​week in six​​ and by the most in one week since July​ this past week​, following the lack of any significant disruption to oil supplies in the wake of ​the latest U.S.-Iran ​missile exchange…after rising 2.2% to $63.05 a barrel last week following the US assassination of Iran’s top General, the benchmark price of US light sweet crude for February delivery opened higher on Monday and rose to as high as $64.72 as Trump and Tehran continued to trade bellicose rhetoric, but backed off that high to settle with an increase of just 22 cents at $63.27 a barrel on growing doubts that Iran would strike back in a way that would disrupt oil supplieswith oil supplies remaining uninterrupted​​, oil prices opened lower on Tuesday and continued falling to register their first loss in 4 days, ending down 57 cents as $62.70 a barrel, as oil traders reconsidered the likelihood of the feared supply disruptions and cashed in their profits…but ​then ​oil prices spiked nearly $3 higher to start trading on Wednesday, first because the API had reported a larger than expected drawdown of US crude supplies, and then because Iranian missiles had struck US military bases in Iraq…however prices turned around that afternoon and doubled that ​big ​early ​spike in a downward tumble, falling nearly 10% from the day’s high to end down $3.09 at $59.61 a barrel, after the EIA reported an increase in US crude supplies again​st​ the expected draw and Trump said Iran “appears to be standing down” following those overnight missile strikes…oil prices then fell for a third day on Thursday, drifting below the levels prevailing before the ​initial ​U.S. attack and ending down 5 cents at $59.56 a barrel as calm in the Mideast prevailedwith both countries appearing to take a step back from the brink on Friday, oil prices fell another 52 cents to close at $59.04 a barrel, leaving the front-month oil contract 6.4% lower on the week, it’s biggest weekly loss since July

natural gas prices, on the other hand, finished modestly higher, after bouncing off a life-of-contract low last weekafter falling 4.5% to $2.130 per mmBTU on ‘exceptionally bearish’ weather forecasts last week, the price of natural gas for February delivery opened lower and fell to below $2.10 on Monday before recovering to close half a cent higher at $2.135 per mmBTU.. natural gas prices rose 2.7 cents to $2.162 per mmBTU​ ​on Tuesday as some models began to show an extended stretch of below-normal temperatures, but then gave 2.1 cents of that gain back on wednesday, as oversupply continued to weigh on prices …but despite widespread warmth on Thursday, prices rose 2.5 cents as natural gas traders “eyed an end to the blowtorch regime”…prices then rallied a bit on Friday on the prospect of a return to something resembling winter temperatures later this month and closed 3.6 cents higher at $2.202 per mmBTU, thus finishing th​is week ​3.4% higher than last​…

the natural gas storage report for the week ending January 3rd from the EIA indicated that the quantity of natural gas held in storage in the US decreased by 44 billion cubic feet to 3,148 billion cubic feet by the end of the week, which left our gas supplies 521 billion cubic feet, or 19.8% higher than the 2,627 billion cubic feet that were in storage on January 3rd of last year, and 74 billion cubic feet, or 2.4% above the five-year average of 3,074 billion cubic feet of natural gas that has been in storage as of the 3rd of January in recent years….the 44 billion cubic feet that were withdrawn from US natural gas storage this week was the smallest January ​gas ​draw since 1998, a bit below the average forecast for a 50 billion cubic feet withdrawal by analysts surveyed by S&P Global Platts, less than ​half of ​the 94 billion cubic feet withdrawal reported during the corresponding week in 2019, and less than​ a quarter of/​ the average 184 billion cubic feet of natural gas that have been pulled from natural gas storage during New Year​’​s week over the past 5 years….

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending January 3rd showed that because of a big drop in our oil exports, a sizable increase in our oil imports, and a decrease in demand for oil from our refineries, we were able to add to our stored commercial supplies of crude for the eleventh time in the past seventeen weeks…our imports of crude oil rose by an average of 379,000 barrels per day to an average of 6,730,000 barrels per day, after falling by an average of 457,000 barrels per day during the prior week, while our exports of crude oil fell by an average of 1,398,000 barrels per day to 3,064,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 3,666,000 barrels of per day during the week ending January 3rd, 1,777,000 more barrels per day than the net of our imports minus our exports during the prior week…over the same period, the production of crude oil from US wells was unchanged at 12,900,000 barrels per day, and hence our daily supply of oil from the net of our trade in oil and from well production totaled an average of 16,566,000 barrels per day during this reporting week..

meanwhile, US oil refineries were reportedly processing 16,897,000 barrels of crude per day during the week ending January 3rd, 387,000 fewer barrels per day than the amount of oil they used during the prior week, while over the same period the EIA’s surveys indicated that an average of 166,000 barrels of oil per day were being added to the supplies of oil stored in the US….hence, this week’s crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports and from oilfield production was 497,000 barrels per day less than what what was added to storage plus what our oil refineries reported they used during the week….to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a (+497,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting an error or errors of that magnitude in the oil supply & demand figures we have just transcribed…however, since the media treats these figures as gospel and since they drive oil pricing and hence decisions to drill for oil, we’ll continue to report them, just as they’re watched & believed as accurate by most everyone else (for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….   

further details from the weekly Petroleum Status Report (pdf) indicated that the 4 week average of our oil imports slipped to an average of 6,617,000 barrels per day last week, now 12.7% less than the 7,579,000 barrel per day average that we were importing over the same four-week period last year….the 166,000 barrel per day net addition to our total crude inventories was all added to our commercially available stocks of crude oil, while the quantity of oil stored in our Strategic Petroleum Reserve was unchanged….this week’s crude oil production was reported to be unchanged at 12,900,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was unchanged at 12,400,000 barrels per day, while oil production from Alaska was 4,000 barrels per day lower at 483,000 barrels per day but still added the same rounded 500,000 barrels per day to the rounded national total….last year’s US crude oil production for the week ending January 4th was rounded to 11,700,000 barrels per day, so this reporting week’s rounded oil production figure was 10.3% above that of a year ago, and 53.1% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016…   

meanwhile, US oil refineries were operating at 93.0% of their capacity in using 16,897,000 barrels of crude per day during the week ending January 3rd, down from 94.5% of capacity the prior week, and a bit below the recent average capacity utilization for the first week of January…as a result, the 16,897,000 barrels per day of oil that were refined this week were 3.8% below the 17,566,000 barrels of crude per day that were being processed during the week ending January 4th, 2018, when US refineries were operating at 96.1% of capacity….

with the decrease in the amount of oil being refined, gasoline output from our refineries was also lower, decreasing by 1,286,000 barrels per day to 8,887,000 barrels per day during the week ending January 3rd, after our refineries’ gasoline output had decreased by 96,000 barrels per day over the prior week…after this week’s big d​rop in gasoline output, our gasoline production was 5.4% lower than the 9,392,000 barrels of gasoline that were being produced daily over the same week of last year….at the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) slipped by 1,000 barrels per day to 5,310,000 barrels per day, after our distillates output had decreased by 83,000 barrels per day over the prior week…and after this week’s small decrease in distillates output, our distillates’ production for the week was 4.5% below the 5,563,000 barrels of distillates per day that were being produced during the week ending January 4th, 2018….

even with the decrease in our gasoline production, our supply of gasoline in storage at the end of the week increased for the ninth week in a row and for the 15th time in 29 weeks, rising by 9,137,000 barrels to 251,609,000 barrels during the week to January 3rd, the largest increase in 4 years, after our gasoline supplies had increased by 3,212,000 barrels over the prior week….our gasoline supplies increased by much more this week because the amount of gasoline supplied to US markets decreased by 828,000 barrels per day to a three year low of 8,133,000 barrels per day, and because our exports of gasoline fell by 219,000 barrels per day to 806,000 barrels per day​,​ while our imports of gasoline fell by 72,000 barrels per day to 401,000 barrels per day….after this week’s increase, our gasoline supplies were 1.4% higher than last January 4th’s gasoline inventory level of 248,062,000 barrels, while they remained roughly 5% above the five year average of our gasoline supplies for this time of the year…

likewise, even with the decrease in our distillates production, our supplies of distillate fuels increased for the 5th time in 15 weeks and for 15th time in the past 40 weeks, rising by 5,330,000 barrels to 139,050,000 barrels during the week ending January 3rd, after our distillates supplies had increased by 8,776,000 barrels over the prior week….our distillates supplies increased by less this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 318,000 barrels per day to 3,373,000 barrels per day, and because our exports of distillates rose by 243,000 barrels per day to 1,428,000 barrels per day, while our imports of distillates rose by 69,000 barrels per day to 252,000 barrels per day….but even after this week’s inventory increase, our distillate supplies were 0.7% less than the 140,042,000 barrels of distillates that we had stored on January 4th, 2018, and roughly 8% below the five year average of distillates stocks for this time of the year…

finally, with this week’s big drop in oil exports, combined with higher oil imports and the decrease in the amount of oil used by refineries, our commercial supplies of crude oil in storage rose for the fourteenth time in twenty-nine weeks and for the twenty-ninth time in 49 weeks, increasing by 1,146,000 barrels, from 429,896,000 barrels on December 27th to 431,060,000 barrels on January 3rd….with that modest increase, our crude oil inventories remained near the five-year average of crude oil supplies for this time of year, but were still more than 35% higher than the prior 5 year (2009 – 2013) average of crude oil stocks as of the first weekend of January, with the disparity between those comparisons arising because it wasn’t until early 2015 that our oil inventories first rose above 400 million barrels….even though our crude oil inventories had generally been rising over this past year, except for during this past summer, after generally falling until then through most of the prior year and a half, our oil supplies as of January 4th were 2.0% below the 439,738,000 barrels of oil we had stored on January 4th of 2018, while remaining 2.8% above the 419,515,000 barrels of oil that we had in storage on January 5th of 2017, but at the same time were 10.8% below the 483,109,000 barrels of oil we had in commercial storage on January 6th of 2016…       

This Week’s Rig Count

the US rig count decreased for the 18th time in the past 21 weeks during the week ending January 10th, and is now 27.9% lower than the last count of 2018…Baker Hughes reported that the total count of rotary rigs running in the US decreased by 15 rigs to a 34 month low of 781 rigs this past week, which was also down by 294 rigs from the 1075 rigs that were in use as of the January 11th report of 201​9, and 1,148 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC began to flood the global oil market in an attempt to put US shale out of business

the number of rigs drilling for oil decreased by 11 rigs to 659 oil rigs this week, which was a 33 month low for oil rigs, 214 fewer oil rigs than were running a year ago, and much less than the recent high of 1609 rigs that were drilling for oil on October 10th, 2014….at the same time, the number of drilling rigs targeting natural gas bearing formations fell by 4 to 119 natural gas rigs, the fewest natural gas rigs deployed since December 2nd 2016, and hence a 37 month low for natural gas drilling, down by 83 gas rigs from the 202 natural gas rigs that were drilling a year ago, and way down from the modern era high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008…in addition to those rigs drilling for oil & gas, three rigs classified as ‘miscellaneous’ continued to drill this week; one on the big island of Hawaii, one in Washoe County, Nevada, and one in Lake County, California, compared to a year ago, when there were no such “miscellaneous” rigs deployed..

offshore drilling activity in the Gulf of Mexico decreased by one rig to 21 rigs this week, as another rig that had been drilling offshore from Louisiana was shut down this week…as a result, the 20 rigs that continued drilling in Louisiana waters plus the one that was drilling offshore from Texas matched the Gulf of Mexico rig count of 21 rigs a year ago, when 20 rigs were drilling offshore from Louisiana and one rig was drilling in Texas waters…since there are no rigs deployed off US shores elsewhere, nor were there a year ago, the Gulf of Mexico count for this year and last is equal to the national total in both cases..

the count of active horizontal drilling rigs was down by 3 rigs to 698 horizontal rigs this week, which was 250 fewer horizontal rigs than the 948 horizontal rigs that were in use in the US on January 11th of last year, and also well 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 down by 6 rigs to 38 vertical rigs this week, and those were also down by 27 from the 65 vertical rigs that were operating during the same week of last year….in addition, the directional rig count was also down by 6 to 45 directional rigs this week, and those were down by 17 from the 62 directional rigs that were in use on January 11th of 2019…

the details on this week’s changes in drilling activity by state and by major shale basin are shown in our screenshot below of that part of the rig count summary pdf from Baker Hughes that gives us those changes…the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the table below that 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 January 10th, the second column shows the change in the number of working rigs between last week’s count (January 3rd) and this week’s (January 10th) count, the third column shows last week’s January 3rd active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running before the same weekend 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 the 11th of January, 2019…   

January 10 2020 rig count summary

in the Texas Permian basin, there was a three rig reduction in Texas Oil District 8, or the core Permian Delaware, and ​a ​one rig reduction in Texas Oil District 8A, or the northern Permian Midland, while one rig was added in Texas Oil District 7C, the southern Permian Midland…in addition, two rigs were pulled out of Texas Oil District 7B, often shown as east of the Permian but ​a region ​which nonetheless has accounted for Permian rig additions in recent weeks…with the New Mexico rig count also down by two, we have to figure either one of those, or one of the retired rigs from Texas District 7B, had not been targeting the Permian…​meanwhile, ​most the other changes were pretty straightforward; oil rigs were pulled out of North Dakota’s Williston shale and Colorado’s Niobrara chalk, while rigs ​targeting oil ​were added in Oklahoma’s Ardmore Woodford and Cana Woodford…for rigs targeting natural gas, one was added in Pennsylvania’s Marcellus shale, one was shut down in Ohio’s Utica shale, and four were shut down in the Haynesville shale…for those, the northern Louisiana region that includes the Haynesville shale was down 2 rigs to 31, while the adjacent Texas Oil District 6 was down 3 rigs to 16, so with the Haynesville down four, one of those rigs  ​was apparently​ ​not targeting that formation…

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December’s jobs report; November’s trade deficit, factory inventories, and wholesale trade…

Major economic reports released the past week were the Employment Situation Summary for December from the Bureau of Labor Statistics, the November report on our International Trade from agencies within the Commerce Dept, and the Full Report on Manufacturers’ Shipments, Inventories and Orders for November and the November report on Wholesale Trade, Sales and Inventories (pdf), both from the Census Bureau….in addition, this week the Fed released the Consumer Credit Report for November, which showed that overall consumer credit, a measure of non-real estate debt, expanded by a seasonally adjusted $12.5 billion, or at a 3.6% annual rate, as non-revolving credit expanded at a 5.8% rate to $3,089.7 billion in November while revolving credit outstanding shrank at a 2.7% rate to $1,086.3 billion… 

Privately issued reports released this week included the ADP Employment Report for December and the December Non-Manufacturing Report On Business; which saw the NMI (non-manufacturing index) come in at 55.0%, up from 53.9% in November, indicating that a greater plurality of service industry purchasing managers reported expansion in various facets of their business in December than did in November….

Employers Add 145,000 Jobs in December, Unemployment Rate Steady at 50 Year Low

The Employment Situation Summary for December indicated that employers added the smallest number of jobs since May, but that the unemployment rate remained at a 50 year low and the U-6 unemployment rate fell to the lowest on record…estimates extrapolated from the seasonally adjusted establishment survey data projected that employers added 145,000 jobs in December, after the previously estimated payroll job increase for November revised down by 10,000 from 266,000, to 256,000, and the payroll jobs increase for October was revised down by 4,000 from 156,000 to 152,000…that means that this report represents a net of just 131,000 more seasonally adjusted payroll jobs than were reported last month, and that brought the average monthly job increase for 2019 down to 176,000 jobs, down from the 2018 average increase of 223,000 jobs per month….the unadjusted data, meanwhile, shows that there were actually 278,000 fewer payroll jobs extent in December than in November, as the usual seasonal layoffs in areas such as construction and other outdoor services were normalized by the seasonal adjustments to show the job increases indicated..

Seasonally adjusted job increases in De​cember were concentrated in the private service sector and in construction, as manufacturing employment fell by 12,000, resource exploitation employment fell by 9,000, and employment in transportation and warehousing fell by 10,500…however, even after a downward seasonal adjustment, retail sales still added 41,200 more workers, led by a 33,200 increase in those working in clothing and accessories stores and a 7,000 job increase in building material and garden supply stores….another 40,000 seasonally adjusted jobs were added in the leisure and hospitality sector, with the addition of 15,900 more jobs in bars and restaurants and 14,400 more in amusements, gambling, and recreation….meanwhile, employment in health care and social assistance increased by 33,900 jobs during the month, as 8,800 more employees were added by hospitals and 7,300 more were employed by outpatient care centers…after seasonal adjustment, construction work saw a relative job increase of 20,000, as non-residential specialty trade contractors employed 9,800 more workers than would have been expected for December…meanwhile, employment in the other major sectors including the broad professional and business services sector, wholesale trade, utilities, financial activities, information, and government, all saw somewhat smaller job gains over the month..

Depressed by the aforementioned increases in mostly lower paying jobs, the establishment survey also showed that average hourly pay for all employees rose by just 3 cents an hour to $28.32 an hour in December, after it had increased by a revised 9 cents an hour in November; that brought the average pay gain for the year to 79 cents, an increase of 2.9% since last December….meanwhile, the average hourly earnings of production and non-supervisory employees increased by 2 cents to $23.79 an hour…employers also reported that the average workweek for all private payroll employees was unchanged at 34.3 hours in December, while hours for production and non-supervisory personnel was unchanged at 33.5 hours…at the same time, the manufacturing workweek held steady at 40.5 hours, while average factory overtime was unchanged at 3.2  hours…

Meanwhile, the December household survey indicated that the seasonally adjusted extrapolation of those who reported being employed rose by an estimated 267,000 to 158,803,000, while the estimated number of those unemployed fell by 58,000 to 5,753,000; which together meant there was a net 209,000 increase in the total labor force…since the working age population had grown by 161,000 over the same period, that meant the number of employment aged individuals who were not in the labor force fell by 48,000 to 95,625,000…with the increase of those in the labor force not much larger than the increase in the civilian noninstitutional population, the labor force participation rate remained unchanged at 63.2% in December….meanwhile, the increase in number employed as a percentage of the increase in the population was not significant enough to change the employment to population ratio, which we could think of as an employment rate, as it was also unchanged at 61.0%…at the same time, the relatively small decrease in the number considered unemployed was not enough to lower the unemployment rate, which remained at a 50 year low of 3.5% in December.. meanwhile, the number of those who reported they were forced to accept just part time work fell by 140,000, from 4,288,000 in November to 4,148,000 in December, which was enough to lower the alternative measure of unemployment, U-6, which includes those “employed part time for economic reasons”, by 0.2% to 6.7% of the labor force in December, which appears to be an all time low

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..

Trade Deficit Fell 8.2% in November on Lower Imports of Capital Goods & Consumer Goods

Our trade deficit fell by 8.2% in November as the value of our exports increased while the value of our imports decreased….the Census report on our international trade in goods and services for November indicated that our seasonally adjusted goods and services trade deficit fell by a rounded $3.9 billion to $43.1 billion in November, from an October deficit of $46.9 billion, which was revised from the $47.2 billion trade deficit reported for October a month ago…the value of our November exports rose by $1.4 billion to $208.6 billion on a $1.0 billion increase to $137.2 billion in our exports of goods and a $0.4 billion increase to $71.5 billion in our exports of services, while the value of our imports fell $2.5 billion to $251.7 billion on a $2.9 billion decrease to $201.1 billion in our imports of goods, which was partly offset by an increase of $0.4 billion to $50.7 billion in our imports of services…export prices were on average 0.2% higher in November, which means the relative real increase in exports for the month was smaller than the nominal increase by that percentage, while import prices were also 0.2% higher, meaning the decrease in real imports was greater than the nominal dollar decrease reported here by that percentage…

The $1.4 billion increase in the value of our November exports of goods largely resulted from greater exports of capital goods and consumer goods, which was partially offset by lower exports of industrial supplies and materials and of “other” goods…referencing the Full Release and Tables for November (pdf), in Exhibit 7 we find that the value of our exports of capital goods rose by $610 million to $45,325 million on a $377 million increase in our exports of drilling & oilfield equipment and a $278 million increase in our exports of civilian aircraft engines, and that our exports of consumer goods rose by $484 million to $17,105 million on a $305 million increase in our exports of gem diamonds and a $389 million increase in our exports of pharmaceuticals…in addition, our exports of automotive vehicles, parts, and engines rose by $434 million to $13,399 million on $105 million increases in our exports of automotive engines and of passenger cars and a $94 million increase in our exports of vehicle accessories other than bodies, engines and tires, while our exports of foods, feeds and beverages rose by $192 million to $10,705 million on a $250 million increase in our exports of soybeans…partially offsetting the increases in those export categories, our exports of industrial supplies and materials fell by $490 million to $44,381 million as a $796 million decrease in our exports crude oil and a $253 million decrease in our exports of precious metals other than gold was partly offset by a $248 million increase in our exports of petroleum products other than fuel oil and a $201 million increase in our exports of nonmonetary gold, while our exports of other goods not categorized by end use fell by $511 million to $5,656 million…

Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our goods imports, and shows that lower imports of capital goods and consumer goods accounted for the lion’s share of the November decrease in our imports…our imports of capital goods fell by $1,156 million to $55,406 million on a $635 million decrease in our imports of civilian aircraft, a $599 million decrease in our imports of computers, and a $391 million increase in our imports of semiconductors, and our imports of consumer goods fell by $1,003 million to $51,309 million on a $458 million decrease in our imports of cellphones, a $349 million decrease in our imports of artwork, antiques and other collectibles, a $224 million decrease in our imports of pharmaceuticals, and a $206 million decrease in our imports of furniture and related household goods….at the same time, the value of our imports of industrial supplies and materials fell by $618 million to $40,773 million on a $410 million decrease in our imports of petroleum products other than fuel oil and a $211 million decrease in our imports of nuclear fuel materials, our imports of foods, feeds, and beverages fell by $164 million to $12,238 million, and our imports of other goods not categorized by end use fell by $811 million to $9,719 million….partly offsetting the decreases in those import categories, our imports of automotive vehicles, parts and engines rose by $1,065 million to $30,114 million on a $539 million increase in our imports of vehicle accessories other than bodies, engines and tires, a $257 million increase in our imports of, trucks, buses, and special purpose vehicles, and a $207 million increase in our imports of automotive engines and engine parts..

The Full Release and Tables pdf for this month’s report also summarizes Exhibit 19, which gives us surplus and deficit details on our goods trade with selected  countries:

The November figures show surpluses, in billions of dollars, with South and Central America ($4.9), Hong Kong ($1.8), Brazil ($1.7), United Kingdom ($1.3), OPEC ($0.7), Singapore ($0.6), and Saudi Arabia ($0.1). Deficits were recorded, in billions of dollars, with China ($25.6), European Union ($13.5), Mexico ($8.5), Japan ($5.7), Germany ($5.2), India ($2.4), Italy ($2.3), Taiwan ($1.7), Canada ($1.7), South Korea ($1.2), and France ($1.2).

  • • The deficit with China decreased $2.2 billion to $25.6 billion in November. Exports increased $1.4 billion to $8.9 billion and imports decreased $0.8 billion to $34.5 billion.
  • • The deficit with Canada decreased $1.6 billion to $1.7 billion in November. Exports increased $0.1 billion to $24.0 billion and imports decreased $1.5 billion to $25.7 billion.
  • • The deficit with Japan increased $1.3 billion to $5.7 billion in November. Exports decreased $0.6 billion to $5.8 billion and imports increased $0.7 billion to $11.6 billion.

To estimate the impact of October’s and November’s trade in goods on the eventual 4th 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 in chained 2012 dollars, the same inflation adjustment used by the BEA to compute trade figures for GDP, with the exception that they are not annualized here….from that table, we can figure that 3rd quarter real exports of goods averaged 149,243.3 million monthly in 2012 dollars, while similarly inflation adjusted October and November exports were at 147,973 million and 148,707 million respectively in that same 2012 dollar quantity index representation…annualizing the change between the average monthly real exports of the two quarters, we find that the 4th quarter’s real exports of goods are falling at a 2.399% annual rate from those of the 3rd quarter, or at a pace that would subtract about 0.19 percentage points from 4th quarter GDP if it were to continue at the same pace through December….in a similar manner, we find that our 3rd quarter real imports of goods averaged 233,955.7 million monthly in chained 2012 dollars, while inflation adjusted October and November imports were at 226,925 million and 223,960 million in 2012 dollars respectively…those chained dollar representations of real goods would indicate that so far in the 4th quarter, real imports have been shrinking at annual rate of 13.78% from those of the 3rd quarter…since imports are subtracted from GDP because they represent the portion of the consumption and investment components of GDP that occurred during the quarter that was not produced domestically, their decrease at a 13.78% rate would conversely add about 1.62 percentage points to 4th quarter GDP….hence, if our October and November trade deficit in goods is maintained at these levels throughout December, our improving balance of trade in goods would add about 1.43 percentage points to the growth of 4th quarter GDP….(note, however, that we have not computed the impact on GDP of the usually less volatile change in services here, mostly because the BEA does not provide inflation adjusted data on those, and we don’t have an easy way to adjust for all their price changes)…

Factory Shipments Up 0.3% in November, Factory Inventories Up 0.3%, Both on Higher Prices

The Full Report on Manufacturers’ Shipments, Inventories, & Orders (pdf) for November from the Census Bureau reported that the seasonally adjusted value of new orders for manufactured goods fell by $3.6 billion or 0.7 percent to $493.0 billion in November, following an increase of 0.2% to $496.6 billion in October, which was revised from the 0.3% increase to $497.0 billion that was reported for October a month ago….however, since the Census Bureau does not even collect data on new orders for non durable goods for this widely watched “factory orders report”, both the “new orders” and “unfilled orders” sections of this report are really only accurate as revised updates to the October advance report on durable goods we reported on two weeks ago…on those durable goods revisions, the Census Bureau’s own summary, which precedes their detailed spreadsheet of the metrics included in this report, is quite clear and complete, so we’ll just quote directly from that summary here:

  • Summary: New orders for manufactured goods in November, down three of the last four months, decreased $3.6 billion or 0.7 percent to $493.0 billion, the U.S. Census Bureau reported today.  This followed a 0.2 percent October increase.  Shipments, up two consecutive months, increased $1.7 billion or 0.3 percent to $502.2 billion.  This followed a 0.1 percent October increase.  Unfilled orders, down two of the last three months, decreased $4.9 billion or 0.4 percent to $1,158.7 billion.  This followed a virtually unchanged October increase.  The unfilled orders‐to‐shipments ratio was 6.67, down from 6.68 in October.  Inventories, up eleven of the last twelve months, increased $2.0 billion or 0.3 percent to $701.0 billion.  This followed a 0.2 percent October increase.  The inventories‐to‐shipments ratio was 1.40, unchanged from October.
  • New orders for manufactured durable goods in November, down two of the last three months, decreased $5.2 billion or 2.1 percent to $242.2 billion, down from the previously published 2.0 percent decrease.   This followed a 0.2 percent October increase.  Transportation equipment, down three consecutive months, led the decrease, $5.0 billion or 5.9 percent to $79.0 billion.  New orders for manufactured nondurable goods increased $1.6 billion or 0.6 percent to $250.8 billion.
  • Shipments of manufactured durable goods in November, up following four consecutive monthly decreases, increased $0.1 billion or virtually unchanged to $251.4 billion, down from the previously published 0.1 percent increase.  This followed a 0.1 percent October decrease.  Electrical equipment, up two of the last three months, drove the increase, $0.3 billion or 2.2 percent to $11.8 billion.  Shipments of manufactured nondurable goods, up two consecutive months, increased $1.6 billion or 0.6 percent to $250.8 billion.  This followed a 0.3 percent October increase.  Petroleum and coal products, up four of the last five months, led the increase, $1.4 billion or 2.7 percent to $53.5 billion.
  • Unfilled orders for manufactured durable goods in November, down two of the last three months, decreased $4.9 billion or 0.4 percent to $1,158.7 billion, unchanged from the previously published decrease.  This followed a virtually unchanged October increase.  Transportation equipment, down following four consecutive monthly increases, led the decrease, $4.8 billion or 0.6 percent to $790.1 billion. 
  • Inventories of manufactured durable goods in November, up sixteen of the last seventeen months, increased $1.6 billion or 0.4 percent to $433.7 billion, unchanged from the previously published increase.   This followed a 0.3 percent October increase.  Transportation equipment, also up sixteen of the last seventeen months, drove the increase, $1.8 billion or 1.2 percent to $149.2 billion.  Inventories of manufactured nondurable goods, up following seven consecutive monthly decreases, increased $0.3 billion or 0.1 percent to $267.3 billion.  This followed a 0.1 percent October decrease.  Petroleum and coal products, up two consecutive months, drove the increase, $0.7 billion or 1.7 percent to $39.6 billion. 

To gauge the impact of November factory inventories on 4th 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 November’s finished goods inventories was 0.1% higher at $243,579 million; the value of work in process inventories was 0.7% higher at $219,930 million, and materials and supplies inventories were valued 0.1% higher at $237,480 million…the producer price index for November indicated that prices for finished goods increased 0.3%, that prices for intermediate processed goods were 0.2% higher, and that prices for unprocessed goods were on average 3.9% higher….assuming similar valuations for like types of inventories, those price changes would suggest that November’s real finished goods inventories were down about 0.1%, that real inventories of intermediate processed goods were around 0.5% greater, and real raw material inventories were 3.8% smaller…those inventory changes follow an October report that indicated real finished goods inventories were about 0.7% lower, that real inventories of intermediate processed goods were 0.1% lower, and that real raw material inventory inventories were about 0.9% lower…since real factory inventories in the 3rd quarter were substantial higher, any inventory decreases in the 4th quarter such as we see indicated here will not only subtract from GDP in and of themselves, but also reverse the inventory gains of the 3rd quarter…

November Wholesale Sales Up 1.5%, Wholesale Inventories Down 0.1%

The November report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at “$500.7 billion, up 1.5 percent (±0.5 percent) from the revised October level and .. up 0.8 percent (±1.1 percent)* from the November 2018 level. The September 2019 to October 2019 percent change was revised from the preliminary estimate of down 0.7 percent (±0.5 percent) to down 0.9 percent (±0.5 percent).*“…as an intermediate activity, wholesale sales are not included in GDP except insofar as they are a trade service, since the traded goods themselves do not represent an increase in the output of the goods produced or finally sold…

On the other hand, the monthly change in private inventories is a major factor in GDP, as additional goods left in a warehouse represent goods that were produced but not sold, and this November report estimated that wholesale inventories were valued at a seasonally adjusted “$674.9 billion at the end of November, down 0.1 percent (±0.2 percent)* from the revised October level. Total inventories were up 3.3 percent (±1.2 percent) from the revised November 2018 level. ..the value of inventories at the end of October was revised to $675.4 billion from the $675.6 billion indicated by last month’s report, still up 0.1% from September..

To estimate the impact of November wholesale inventories on 4th quarter GDP, we must first adjust them for changes in price with appropriate components of the producer price index…although details are not broken out in this report, we’ve previously estimated that about 2/3rd of wholesale inventories are finished goods, with notable exceptions such as crude oil and farm product inventories…as we noted earlier, the producer price index for November indicated that prices for finished goods rose 0.3%, that prices for intermediate processed goods rose 0.2%, and that prices for unprocessed goods were on average 3.9% higher; thus the 0.1% decrease in the nominal value of wholesale inventories was despite rising prices, and hence real wholesale inventories were at least 0.4% lower for the month, and that follows an October when real whole inventories were roughly 0.6% lower….since real wholesale inventories in the 3rd quarter were mostly higher, any decrease in 4th quarter inventories such as we see indicated here will subtract both the 4th quarter decrease and the inventory gains of the 3rd quarter from 4th 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 picked from the aforementioned GGO posts, contact me…)      

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table for January 11th

rig count summary:

January 10 2020 rig count summary

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