tables and graphs for April 20

retail sales:

March 2019 retail sales table

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global oil surplus persists in March, despite OPEC 1st quarter output cuts exceeding 1.6 million barrels per day

oil prices rose for a 6th straight week and are now up 38% since the beginning of the year, with this week’s increase underpinned by a new OPEC report that showed they’d cut their output to the lowest in 4 yearsafter rising nearly 5% to $63.08 a barrel on tighter supplies and improving economic news last week, contract prices for US crude for May delivery rose $1.32, or more than 2%, to $64.40 a barrel on Monday, their highest level since the end of October 2018, driven higher by supply restraints due to U.S. sanctions against Iran and Venezuela, OPEC’s output cuts, and renewed fighting in Libya…however, oil prices fell from those 5 month highs on Tuesday, after the International Monetary Fund cut its global economic growth forecasts, and as Russia signaled it may retreat from its production-cutting deal with OPEC, with US crude finishing down 42 cents at $63.98 a barrel…prices then rose on Wednesday towards another new five-month high after OPEC reported their oil production had plunged to four-year low in March and held those gains despite a whopping 7 million barrel increase in US crude inventories, with May crude settling 63 cents higher at $64.61 a barrel…oil prices then retreated from that 5 month high on Thursday, sliding $1.03 to $63.58 a barrel, after sources said OPEC might raise output if Venezuelan and Iranian supplies fall further and prices keep rising…prices recovered a bit of those losses Friday, gaining 31 cents to $63.89 a barrel, as involuntary cuts from Venezuela and Iran and conflict in Libya led to perceptions of a tightening crude market, with May US oil thus ending up 1.3 percent for the week overall

natural gas prices, on the other hand, ended little changed for the second week in a row…after rising two-tenths of a cent to $2.664 per mmBTU to begin the so-called shoulder season last week, natural gas for May delivery fell four tenths of a cent over the five trading sessions of this week to end the week at $2.660 per mmBTU, as even a bullish miss of expectations on the EIA storage report was not enough to outweigh weak supply/demand balancesthe natural gas storage report for the week ending April 5th from the EIA indicated that the quantity of natural gas held in storage in the US increased by 25 billion cubic feet to 1,155 billion cubic feet over the week, which still left our gas supplies 183 billion cubic feet, or 13.7% below the 1,338 billion cubic feet that were in storage on April 6th of last year, and 485 billion cubic feet, or 29.6% below the five-year average of 1,640 billion cubic feet of natural gas that have typically remained in storage as of the first weekend in April in recent years….this week’s 25 billion cubic feet injection into US natural gas storage was less than consensus expectations of a 29 billion cubic foot addition to storage, while it was quite a bit more than the 5 billion cubic feet of natural gas that are normally added to gas storage during the first week of April….

for the coming week, the EIA’s natural gas storage dashboard indicates that 131 billion cubic feet of natural gas were consumed in residential and commercial use; that compares to the 186 billion cubic feet used by residential and commercial accounts in the week we’ve just reported on…if other demand factors are little changed otherwise, we should see an injection of around 80 billion cubic feet of natural gas into storage with next week’s report..

The Latest US Oil Supply and Disposition Data from the EIA

this week’s US oil data from the US Energy Information Administration, reporting on the week ending April 5th, indicated a modest increase our refinery usage of crude, with a corresponding decrease in our oil exports, and hence there was another surplus to add to our commercial supplies of crude for the third week in a row…our imports of crude oil fell by an average of 166,000 barrels per day to an average of 6,599,000 barrels per day, after rising by an average of 223,000 barrels per day the prior week, while our exports of crude oil fell by an average of 374,000 barrels per day to 2,349,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 4,250,000 barrels of per day during the week ending April 5th, 210,000 more barrels per day than the net of our imports minus exports during the prior week…over the same period, field production of crude oil from US wells was reported to be unchanged at a record 12,200,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from well production totaled an average of 16,450,000 barrels per day during this reporting week…

meanwhile, US oil refineries were using 16,100,000 barrels of crude per day during the week ending April 5th, 251,000 more barrels per day than the amount of oil they used during the prior week, while over the same period the EIA reported that 1,004,000 barrels of oil per day were being added to the oil that’s in storage in the US…..therefore, this week’s crude oil figures from the EIA would seem to indicate that our total working supply of oil from net imports and from oilfield production was 654,000 fewer barrels per day than what was added to storage plus the oil refineries reported they used during the week…to account for that disparity between the supply of oil and the disposition of it, the EIA inserted a (+654,000) 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 is labeled in their footnotes as “unaccounted for crude oil”….with that much oil unaccounted for, we have to figure that one or more of this week’s oil metrics is in error by a statistically significant amount.. (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 fell to an average of 6,709,000 barrels per day last week, now 15.5% less than the 7,943,000 barrel per day average that we were importing over the same four-week period last year…. the 1,004,000 barrel per day increase in our total crude inventories was all added to our commercially available stocks of crude oil, as the oil stored in our Strategic Petroleum Reserve remained unchanged…this week’s crude oil production was reported to be unchanged at 12,200,000 barrels per day because the rounded estimate for output from wells in the lower 48 states was unchanged at 11,700,000 barrels per day, while a 2,000 barrel per day increase in Alaska’s oil production to 484,000 barrels per day was not enough to make a difference in the rounded national total…last year’s US crude oil production for the week ending April 6th was at 10,525,000 barrels per day, so this reporting week’s rounded oil production figure was 15.9% above that of a year ago, and 44.8% 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 87.5% of their capacity in using 16,100,000 barrels of crude per day during the week ending April 5th, up from 86.4% of capacity the prior week, but still quite a bit lower than before Venezuelan imports of heavy crude that Gulf Coast refineries are optimized to use were cut off….similarly, the 16,100,000 barrels per day of oil that were refined this week were down by 5.4% from the 17,019,000 barrels of crude per day that were being processed during the week ending April 6th, 2018, when US refineries were operating at 93.5% of capacity… 

with the increase in the amount of oil being refined, the gasoline output from our refineries was likewise higher, rising by 356,000 barrels per day to 10,169,000 barrels per day during the week ending April 5th, after our refineries’ gasoline output had increased by 156,000 barrels per day the prior week….but even with those back to back increases in gasoline output, this week’s gasoline production was only a bit more than the 10,150,000 barrels of gasoline that were being produced daily during the same week last year….at the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) rose by 168,000 barrels per day to 5,038,000 barrels per day, after that output had decreased by 55,000 barrels per day the prior week…but even after this week’s increase, the week’s distillates production was still 4.1% less than the 5,256,000 barrels of distillates per day that were being produced during the week ending April 6th, 2018…. 

even with the increase in our gasoline production, the supply of gasoline left in storage at the end of the week fell for the 8th week in a row, decreasing by 7,700,000 barrels to 229,129,000 barrels over the week to April 5th, after supplies had fallen by 1,781,000 barrels over the prior week….the draw from our gasoline supplies was much greater this week than last because the amount of gasoline supplied to US markets increased by 675,000 barrels per day to 9,806,000 barrels per day, after increasing by 7,000 barrels per day the prior week, and because our exports of gasoline rose by 41,000 barrels per day to 656,000 barrels per day while our imports of gasoline fell by 32,000 barrels per day 714,000 barrels per day…after having reached an all time record high ten weeks ago, our gasoline inventories are now 4.1% lower than last April 6th’s level of 238,935,000 barrels, and have now fallen back to the five year average of our gasoline supplies at this time of the year…

even with the increase in our distillates production, our supplies of distillate fuels fell for the 21st time in twenty-eight weeks, but just by 116,000 barrels to 128,053,000 barrels during the week ending April 5th, after our distillates supplies had decreased by 1,998,000 barrels over the prior week…the draw on our distillates supplies was smaller this week because the amount of distillates supplied to US markets, a proxy for our domestic demand, fell by 377,000 barrels per day to 3,779,000 barrels per day, while our exports of distillates rose by 231,000 barrels per day to 1,374,000 barrels per day, while our imports of distillates fell by 46,000 barrels per day to 98,000 barrels per day…after this week’s inventory decrease, our distillate supplies were fractionally lower than the 128,447,000 barrels that we had stored on April 6th, 2018, while remaining roughly 6% below the five year average of distillates stocks for this time of the year…

finally, with record oil production, lower oil exports, and ongoing sub-par refinery runs, our commercial supplies of crude oil in storage increased for the ninth time in 12 weeks, rising by 7,029,000 barrels over the week, from 449,521,000 barrels on March 29th to 456,550,000 barrels on April 5th…that increase was enough to lift our crude oil inventories fractionally above recent five-year average of crude oil supplies for this time of year, while rising to 33.3% above the prior 5 year (2009 – 2013) average of crude oil stocks after the first week of April, with the disparity between those comparisons arising because it wasn’t until early 2015 that our oil inventories first rose above 400 million barrels…since our crude oil inventories had mostly been rising since this past Fall, after generally falling until then through most of the prior year and a half, our oil supplies as of April 5th were 6.5% above the 428,638,000 barrels of oil we had stored on April 6th of 2018, but at the same time still 14.4% below the 533,377,000 barrels of oil that we had in storage on April 7th of 2017, and 9.6% below the 505,232,000 barrels of oil we had in storage on April 8th of 2016…        

OPEC’s Monthly Oil Market Report

next we’re going to review OPEC’s April Oil Market Report (covering March OPEC & global oil data), which was released on Wednesday of this past week and was a major factor in the price rally we saw that day…this report is available as a free download, and hence it’s the report we check for monthly global oil supply and demand data…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 an impartial adjudicator as to whether their output quotas and production cuts are being met, to thus resolve any potential disputes that could arise if each member reported their own figures…

March 2019 OPEC crude output via secondary sources

as we can see from this table of official oil production data, OPEC’s oil output fell by 534,000 barrels per day to 30,022,000 barrels per day in March, from their revised February production total of 30,557,000 barrels per day…however that February figure was originally reported as 30,549,000 barrels per day, so that means their production for March was, in effect, a 526,000 barrel per day decrease from the previously reported figures (for your reference, here is the table of the official February OPEC output figures as reported a month ago, before this month’s revisions)…

once again, output cuts of 324,000 barrels per day by Saudi Arabia and 289,000 barrels per day by Venezuela alone accounted for this month’s production reduction, with the drop in the oil output from Venezuela being largely involuntary, due to US sanctions on their exports….in addition, the 126,000 barrels per day cut in the output from Iraq now brings them pretty close to the output allocations assigned to each member after their December 7th 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, leaving Nigeria as the sole OPEC member who is still producing in excess of their quota to any degree….this can be seen in the table of OPEC production allocations we’ve included below:

February 6 2019 Platts on OPEC allocations

the above table came from a February 6th post on Saudi cuts and OPEC allocations at S&P Global Platts, and shows average daily production quota in millions of barrels of oil per day for each of the OPEC members for the first 6 months of this year, as was agreed to at their December 2018 meeting…note that Venezuela and Iran, whose oil exports are being sanctioned by the Trump administration, and Libya, which has been beset by disruptive civil strife, are exempt from any production quotas, and that only Libya had produced any more than they did in the 4th quarter of 2018, as shown in the fifth column of the OPEC production table above…

the next graphic we’ll include shows us both OPEC and world oil production monthly on the same graph, over the period from April 2017 to March 2019, and it comes from page 59 (pdf page 69) of the April OPEC Monthly Oil Market Report….on this graph, the cerulean blue bars represent OPEC oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the metrics for global output shown on the right scale…

March 2019 OPEC report global oil supply

OPEC’s preliminary estimate indicates that total global oil production fell by 0.14 million barrels per day to 99.26 million barrels per day in March, but that came after February’s total global output figure was revised up by 25​0​,000 barrels per day from the 99.15 million barrels per day global oil output that was reported a month ago, as non-OPEC oil production rose by a rounded 390,000 barrels per day in March after that revision, with increased oil output from US and Brazil the major reasons for the non-OPEC production increase…. the 99.26 million barrels per day produced globally in March was also 1.05 million barrels per day, or 1.1% higher than the revised 98.21 million barrels of oil per day that were being produced globally in March a year ago (see the April 2018 OPEC report online (pdf) for the originally reported March 2018 details)…after the March decrease in OPEC’s output, their March oil production of 30,022,000 barrels per day represented just 30.2% of what was produced globally during the month, down from the 30.8% share they reported for February….OPEC’s March 2018 production was reported at 31,958,000 barrels per day, which means that the 13 OPEC members who were part of OPEC last year, excluding Qatar from last year’s total and new member Congo from this year’s, are now producing 1,674,000 fewer barrels per day of oil than they were producing a year ago, when they accounted for 32.6% of global output, with a 756,000 barrel per day drop in the output from Venezuela and a 1,116,000 barrel per day decrease in output from Iran from that time more than offsetting the year over year production increases of 195,000 barrels per day from the Emirates, 130,000 barrels per day from Libya, and 96,000 barrels per day from Iraq…   

however, despite the 0.14 million barrels per day decrease in global oil output seen during March, the upward revision to February’s global output meant we still had a small surplus in the amount of oil being produced globally during the month, as this next table from the OPEC report will show us… 

March 2019 OPEC report global oil demand

the table above comes from page 34 of the February OPEC Monthly Oil Market Report (pdf page 44), 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 second column, we’ve circled in blue the figure that’s relevant for March, which is their revised estimate of global oil demand during the first quarter of 2018…        

OPEC has estimated that during the 1st quarter of this year, all oil consuming regions of the globe have been using 99.02 million barrels of oil per day, which was the same as their estimate for the 1st 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 still producing 99.26 million barrels per day during March, which means that there was a surplus of around 240,000 barrels per day in global oil production as compared to the demand estimated for the month…in addition, the upward revision of 25​0​,000 barrels per day to February’s output​ that’s implied in this report means that the global oil output surplus for February would now be revised to 380,000 barrels per day….that follows a 290,000 barrel per day global oil output surplus in January, so despite OPEC cuts now totaling more than 1.​6 million barrels per day​ over the first quarter of this year​, the global oil glut still persists…

we should also note that the previous estimate for 2018’s oil demand was revised 20,000 barrels per day lower with this report, a figure which we’ve highlighted in a green ellipse…the 2018 demand table on page 33 of the March OPEC Monthly Oil Market Report (pdf page 43) shows that ​was because ​demand for the 4th quarter was revised 80,000 barrels per day lower, while oil demand for the remainder of 2018 was unrevised from previously published figures…that revision means that for all of 2018, global oil demand exceeded production by roughly 7,090,000 barrels, a comparatively tiny net oil shortfall that would be the equivalent of less than one hour and forty​-​five minutes of global production at the December production rate…  

This Week’s Rig Count

US drilling rig activity decreased for the seventh time in eight weeks, with a surprising number of this week​’s ​changes ​occurring ​among natural gas rigs, while oil rigs ​still ​managed to eke out an increase for the 2nd week in a row…..Baker Hughes reported that the total count of rotary rigs running in the US fell by 3 rigs to 1022 rigs over the week ending April 12th, which was still 14 more rigs than the 1008 rigs that were in use as of the April 13th report of 2018, while well down from the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC announced their attempt to flood the global oil market…  

the count of rigs drilling for oil rose by 2 rigs to 833 rigs this week, which was also 18 more oil rigs than were running a year ago, while it was still well below the recent high of 1609 rigs that were drilling for oil on October 10th, 2014…at the same time, the number of drilling rigs targeting natural gas bearing formations decreased by 5 rigs to 189 natural gas rigs, which was also down by 4 rigs from the 192 natural gas rigs that were drilling a year ago, and way down from the modern era high of 1,606 natural gas targeting rigs that were deployed on August 29th, 2008…

drilling activity offshore in the Gulf of Mexico increased by 1 rig to 23 rigs this week, which was also 7 more rigs than the 16 rigs active in the Gulf a year ago, which was coming off a record low at that time…meanwhile, the number of active horizontal drilling rigs decreased by 12 rigs to 899 horizontal rigs this week, which was the least horizontal rigs deployed since April 20th of last year, but still 6 more horizontal rigs than the 883 horizontal rigs that were in use in the US on April 13th of last year, while down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014…..on the other hand, the directional rig count increased by 8 rigs to 78 directional rigs this week, which was also up by 8 rigs from the 70 directional rigs that were in use during the same week of last year….in addition, the vertical rig count increased by 1 rig to 55 vertical rigs this week, which was the same as the number of vertical rigs that were operating on April 13th of 2018… 

the details on this week’s changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes…the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the second table shows the weekly and year over year rig count changes for the major US geological oil and gas basins…in both tables, the first column shows the active rig count as of April 12th, the second column shows the change in the number of working rigs between last week’s count (April 5th) and this week’s (April 12th) count, the third column shows last week’s April 5th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running before the equivalent 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 13th of April, 2018…   

April 12 2019 rig count summary

as you can see, this week’s ​rig count decrease was driven by the drop of 6 natural gas rigs in the Marcellus shale, 5 of which came out of Pennsylvania, and one of which was pulled from West Virginia…Pennsylvania’s pullback was limited to 3 rigs, however, with the addition of two natural gas rigs in the Utica shale, one in Lawrence county and the other in Beaver county, with the latter going to a depth of less than 10,000 feet, strongly suggesting it was drilling in the Ohio valley or adjacent lowlands…meanwhile, the Utica shale also saw a rig addition in Ohio, to account for the 3 rig increase you see for the Utica above…on the other hand, two more natural gas rigs were pulled out of the Haynesville shale in northern Louisiana, while another natural gas ​rig​ was also pulled out of the Arkoma Woodford of Oklahoma, which also saw an oil rig shut down at the same time…lastly, a natural gas rig was added in an “other” basin not tracked separately by Baker Hughes, to leave us with the net decrease of 5 natural gas rigs that we reported earlier…note, however, that ​came by way of shutting down 8 rigs in the traditional dry gas plays of the Marcellus and Haynesville, and adding back three natural gas rigs in the liquids heavy Utica…that suggests that at least some of the drillers in the area may be shifting away from the underpriced dry natural gas into the more lucrative natural gas liquids, either to supply the Mariner East pipeline across Pennsylvania to the Marcus Hook refinery​,​ or​ to the coast​ for export, or ultimately as feedstock for the petrochemical crackers that are planned for the Ohio valley…

meanwhile, the two rig increase in the Permian basin masks quite a bit of movement​ inside the basin​, as 4 rigs were added in Texas Oil District 8, which corresponds to the core Permian Delaware, and 2 rigs were added in Texas Oil District 8, or the northern Permian Midland basin, while two Permian rigs were concurrently shut down in Texas Oil District 7C, or the southern Permian Midland basin…hence, since Texas added 4 Permian rigs, the two rigs shut down in New Mexico ​would have been in the Permian Delaware on their side of the state line..

in addition to the changes in the major producing states shown in the table above, we also have to note that Alabama had a rig added back this week after 5 weeks without, which was still down from the 2 rigs deployed in the state a year ago, that Mississippi also added a rig and now has 4 rigs drilling in the state, up from 2 rigs a year ago, and that the lone rig that started up in Nebraska last week was shut down this week…Nebraska has only seen drilling activity two other weeks out of the past year; one week in July and one week in October…

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March consumer and producer prices, February’s factory inventories and JOLTS

Regular monthly reports released this week included all three major price indexes used by the BEA to adjust goods and services for inflation: March Consumer Price Index, the March Producer Price Index, and the March Import-Export Price Index, all of which were prepared by the Bureau of Labor Statistics…in addition, the BLS also released the Job Openings and Labor Turnover Survey (JOLTS) for February, while the Census Bureau released the Full Report on Manufacturers’ Shipments, Inventories and Orders for February

March Consumer Prices Up 0.4% on Higher Food, Shelter and Energy Prices

The consumer price index rose 0.4% in March on higher prices for groceries, shelter and gasoline….the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that the seasonally adjusted price index for urban consumers rose 0.4% in March after it had risen 0.2% in February, been unchanged in January, in December and in November, and had risen 0.3% in October, 0.1% in September, 0.1% in August, and 0.2% in July…the unadjusted CPI-U index, which was set with prices of the 1982 to 1984 period equal to 100, rose from 252.776 in February to 254.202 in March, which left it statistically 1.863% higher than the 249.554 index reading in March of last year, which is reported as a 1.9% year over year increase….with higher prices for food and gasoline major reasons the increase in the overall index, seasonally adjusted core prices, which exclude food and energy, rose by just 0.1% for the month, as the unadjusted core price index rose from 261.114 to 261.836, which left the core index 2.036% ahead of its year ago reading of 256.610, which is reported as a 2.0% year over year increase, down from 2.1% in February…

The volatile seasonally adjusted energy price index rose 3.5% in March, after rising 0.4% in February, falling 3.1% in January, 2.6% in December, 2.8% in November, rising by 2.1% in October, and falling by 1.0% in September, and is still 0.4% lower than in March a year ago…the price index for energy commodities was 6.2% higher in March, while the index for energy services rose 0.3%, after falling by 0.8% in February…the energy commodity index was up 6.2% due to a 6.4% increase in price of gasoline, the largest component, and a 2.1% increase in the index for fuel oils, while prices for other energy commodities, such as propane, kerosene, and firewood, averaged 1.6% higher…within energy services, the price index for utility gas service fell 0.1% after falling 2.4% in February and is now 1.4% lower than it was a year ago, while the electricity price index was 0.4% higher, after it had fallen 0.3% in February….energy commodities are still 0.6% lower than their year ago levels, with gasoline prices averaging 0.7% lower than they were a year ago, while the energy services price index is 0.1% lower than last March, as electricity prices are now 0.3% higher than a year ago…

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

In the food at home categories, the price index for cereals and bakery products was 0.3% higher even though average bread prices fell 0.1%, because breakfast cereal prices rose 1.7% and the price index for rice, pasta and cornmeal rose 2.2%….on the other hand, the price index for the meats, poultry, fish, and eggs group was 0.2% lower, even as ham prices rose 4.4%, because the poultry index fell 0.9% and shelf stable fish & seafood prices averaged 1.7% lower…meanwhile, the seasonally adjusted index for dairy products was 0.6% higher, as fresh whole milk prices rose 1.5%, while the fruits and vegetables index was 1.6% higher on a 1.6% increase in the index for fresh fruits, led by a 3.1% increase in prices for oranges, and a 2.0% increase in the price index for fresh vegetables, which included a 4.9% jump in the price of lettuce….at the same time, the beverages index was unchanged, as the index for frozen noncarbonated juices and drinks rose 1.6% while roast coffee prices were 0.3% lower…lastly, the index for the ‘other foods at home’ category was 0.2% higher, as the index for sugar and artificial sweeteners rose 1.3% and margarine prices rose 1.8%….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 March, just lettuce, which is now priced 18.9% higher than a year ago, is the only ‘food at home’ line item that has seen prices change by more than 10% over the past year…

Among the seasonally adjusted core components of the CPI, which rose by 0.1% in March after rising by 0.1% in February, and by 0.2% for the five months prior to that, after rising by 0.1% in August 0.2% in July, 0.2% in June, 0.2% in May, 0.1% in April, and by 0.2% last March, the composite price index of all goods less food and energy goods was 0.2% lower, while the more heavily weighted composite for all services less energy services was 0.3% higher….among the goods components, which will be used by the Bureau of Economic Analysis to adjust March retail sales for inflation in national accounts data, the index for household furnishings and supplies was unchanged, as the price index for floor coverings rose 1.8% while the price index for major appliances was 2.1% lower…on the other hand, the apparel price index was 1.9% lower on a 4.8% decrease in the price index for boy’s apparel and a 4.6% decrease in the price index for girls apparel…meanwhile, the price index for transportation commodities other than fuel was 0.1% higher, as prices for new cars and trucks rose 0.5%, prices for used cars and trucks fell 0.4%, and the price index for motor oil, coolant, and fluids was 5.2% higher…in addition, prices for medical care commodities were 0.4% higher as prescription drugs prices rose 0.6% even as the price index for medical equipment and supplies fell 1.5%….meanwhile, the recreational commodities index was unchanged as a 4.2% decrease in TV prices and a 1.2% decrease in the index for toys was offset by a 1.6% increase in the index for sports vehicles including bicycles and a 2.5% increase in the price index for sewing machines, fabric and supplies….at the same time, the education and communication commodities index was 0.1% lower on a 0.9% decrease in the index for computer software and accessories and a 1.8% decrease in the index for telephone hardware, calculators, and other consumer information items…lastly, a separate price index for alcoholic beverages was 0.1% lower, while the price index for ‘other goods’ rose 0.5% on a 1.8% increase in the price index for cigarettes…

Within core services, the price index for shelter rose 0.4% on a 0.4% increase in rents, a 0.3% increase in homeowner’s equivalent rent, and a 0.9% increase in lodging away from home at hotels and motels, while the shelter sub-index for water, sewers and trash collection rose 0.3%, and other household operation costs were on average 0.2% lower….at the same time, the price index for medical care services was 0.3% higher, as inpatient hospital services rose 0.5% and health insurance rose 1.3%…meanwhile, the transportation services index was unchanged as car and truck rentals fell 1.9% while vehicle maintenance and servicing rose 0.9% and intercity bus fares rose 9.0%…on the other hand, the recreation services price index was 0.4% higher as the index for rental of video discs and other media rose 2.4% and admissions to sporting events rose 5.2%….in addition, the index for education and communication services was 0.1% higher as college tuitions rose 0.8%….lastly, the index for other personal services was down 0.3% as the price index for tax return preparation and other accounting fees fell 7.8%…among core line items, prices for televisions, which are now 19.3% cheaper than a year ago, the price index for telephone hardware, calculators, and other consumer information items, which is down by 14.9% since last March, and the price index for dishes and flatware, which is down by 10.7% from a year ago, have all seen prices drop by more than 10% over the past year, while the price index for sewing machines, fabric and supplies, which has now increased 10.3% year over year, is the only line item to increase by a double digit magnitude over that span….

Producer Prices up 0.6% in March on Higher Energy Prices

The seasonally adjusted Producer Price Index (PPI) for final demand rose 0.6% in March, as prices for finished wholesale goods averaged 1.0% higher, while average margins of final services providers rose 0.3%…that followed that followed a February report that showed the PPI had increased by 0.1%, with prices for finished wholesale goods on average 0.4% higher, while margins of final services providers were unchanged, a January report that showed the PPI 0.1% lower, as prices for finished wholesale goods were on average 0.8% lower, while margins of final services providers increased by 0.3%, revised December figures that had the PPI down 0.2%, with prices for finished wholesale goods down 0.5% while margins of final services providers were unchanged, and revised November figures that indicated the PPI was 0.1% lower, with prices for finished wholesale goods falling 0.5% while margins of final services providers increased 0.1%…on an unadjusted basis, producer prices are 2.2% higher than a year ago, up from the 1.9% year over year increase that had been indicated by last month’s report…meanwhile, the core producer price index, which excludes food, energy and trade services, was unchanged for the month, and is now just 2.0% higher than in March a year ago, down from 2.3% a month ago…

As we noted, the price index for final demand for goods, aka ‘finished goods’, was 1.0% higher in March, after being 0.4% higher in February, 0.8% lower in January, 0.5% lower in December, 0.5% lower in November, 0.8% higher in October, and 0.1% lower in September….the finished goods index rose because the price index for wholesale energy was 5.6% higher, after rising 1.8% in February falling 3.8% in January 4.3% in December and 5.2% in November, and as the price index for wholesale foods rose 0.3% after falling 0.3% in February, while the index for final demand for core wholesale goods (excluding food and energy) was 0.2% higher….wholesale energy prices rose on a 16.0% jump in the wholesale price for gasoline and a 12.6% increase in the wholesale price of diesel fuel, while the wholesale food price index rose on a 17.6% increase in wholesale prices for fresh and dry vegetables….among wholesale core goods, wholesale prices for cigarettes rose 3.4%, railroad equipment prices rose 2.4% and wholesale prices for tires rose 1.1%..

At the same time, the index for final demand for services rose 0.3%, after being unchanged in February, rising 0.3% in January, being unchanged in December, rising 0.1% in November, 0.8% in October, and 0.2% in September, as the February index for final demand for trade services rose 1.1% while the index for final demand for transportation and warehousing services fell 0.8%, and the core index for final demand for services less trade, transportation, and warehousing services was unchanged….among trade services, seasonally adjusted margins for apparel, jewelry, footwear and accessories retailers rose 4.2%, margins for major household appliances retailers rose 6.8%, and margins for computer hardware, software, and supplies retailers rose 3.0%, while margins for fuels and lubricants retailers fell 5.9%… among transportation and warehousing services, margins for airline passenger services fell 1.5% and margins for truck transportation of freight fell 0.8%…among the components of the core final demand for services index, margins for deposit services (partial) rose 6.3% and margins for arrangement of cruises and tours rose 5.9%..

This report also showed the price index for intermediate processed goods rose 0.8% in March, after rising 0.4% in February, falling 1.4% in January, falling  a revised 1.1% in December and a revised 0.6% in November, after rising 0.7% in October and 0.1% in September….the price index for intermediate energy goods rose 1.6%, as refinery prices for gasoline rose 16.0% and refinery prices for diesel fuel rose 12.6%, while producer prices for natural gas sold to electric utilities fell 4.7%…on the other hand, prices for intermediate processed foods and feeds fell 0.3%, as the price index for wholesale meats fell 2.0% and producer prices for prepared animal feeds fell 0.9%…meanwhile, the core price index for intermediate processed goods less food and energy was unchanged as a 2.5% decrease in the index for plastic resins and materials offset a 2.7% increase in the price index for building paper and board …prices for intermediate processed goods are still 0.8% higher than in March a year ago, now the 28th consecutive year over year increase, after 16 months of negative year over year comparisons, as intermediate goods prices fell every month from July 2015 through March 2016….

Meanwhile, the price index for intermediate unprocessed goods rose 2.3% in March after falling 4.6% in February, 9.3% in January, rising a revised 8.9% in December, and falling a revised 3.3% in November….that was as the March price index for crude energy goods rose 7.3% on a 15.3% jump in crude oil prices, while the price index for unprocessed foodstuffs and feedstuffs fell 2.3% as producer prices for alfalfa hay fell 9.3%, producer prices for slaughter chickens fell 8.7% and producer prices for wheat fell 8.4%…at the same time, the index for core raw materials other than food and energy materials rose 1.2%, as prices for scrap iron and steel rose 5.9% and prices for nonferrous metal ores rose 3.8%…this raw materials index is still 3.5% lower than a year ago, after being as much as 9.1% higher year over year as recently as December…

Lastly, the price index for services for intermediate demand rose 0.4% in March, after falling 0.1% in February, rising 0.2% in January, rising a revised 0.1% in December and a revised 0.1% in November, and after rising 0.6% in October and by 0.3% in September…the price index for intermediate trade services was 0.8% higher, as margins for intermediate automotive parts and tires retailers rose 4.6% and margins for intermediate machinery and equipment parts and supplies wholesalers rose 1.1%…on the other hand, the index for transportation and warehousing services for intermediate demand fell 0.2%, as the intermediate index for long-distance motor carrying fell 1.2% and the index for transportation of passengers (partial) fell 1.5%…meanwhile, the core price index for intermediate services less trade, transportation, and warehousing rose 0.3%, as margins for intermediate television advertising time sales rose 1.8% as did the index for staffing services, while the index for executive search services fell 2.4%…..over the 12 months ended in March, the year over year price index for services for intermediate demand, which has never turned negative on an annual basis, is still 2.6% higher than it was a year ago…

Job Openings and Hiring Fall in February; Layoffs Rise

The Job Openings and Labor Turnover Survey (JOLTS) report for February from the Bureau of Labor Statistics estimated that seasonally adjusted job openings decreased by 538,000, the largest drop in 42 months, from a record high of 7,625,000 in January to 7,087,000 in February, after January job openings were revised up from the originally reported 7,581,000 …however, February’s jobs openings were still 8.5% higher than the 6,530,000 job openings reported in February a year ago, as the job opening ratio expressed as a percentage of the employed fell from 4.8% in January to 4.5% in February, which was still up from the 4.2% rate of February a year ago…job openings in all services were lower, led by a 103,000 job opening decrease in bars and restaurants, while there were modest increases in job openings in construction and manufacturing (details on job openings by industry and region can be viewed in Table 1)…like most BLS releases, the press release for this report is easy to understand and also refers us to the associated table for the data cited, which are linked at the end of the release…

The JOLTS release also reports on labor turnover, which consists of hires and job separations, which in turn is further divided into layoffs and discharges, those who quit, and ‘other separations’, which includes retirements and deaths….in February, seasonally adjusted new hires totaled 5,696,000, down by 134,000 from the revised 5,829,000 who were hired or rehired in January, as the hiring rate as a percentage of all employed fell from 3.9% in January to 3.8% in February, which was the same as the hiring rate in February a year earlier (details of hiring by sector since October are in table 2)….meanwhile, total separations rose by 24,000, from 5,532,000 in January to 5,556,000 in February, as the separations rate as a percentage of the employed was unchanged at 3,7%, while it was up from 3.6% in February a year ago (see details in table 3)…subtracting the 5,556,000 total separations from the total hires of 5,696,000 would imply an increase of 140,000 jobs in February, quite a bit more than the revised payroll job increase of 33,000 for February reported in the March 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 founds that 3,480,000 of us voluntarily quit our jobs in February, little changed from the revised 3,483,000 who quit their jobs in January, while the quits rate, widely watched as an indicator of worker confidence, remained at 2.3% of total employment, which was up from 2.1% year earlier (see details in table 4)….in addition to those who quit, another 1,742,000 were either laid off, fired or otherwise discharged in February, up by 47,000 from the revised 1,695,000 who were discharged in January, as the discharges rate rose from 1.1% to 1.2% of all those who were employed during the month, while it was unchanged from the discharges rate of a year earlier….meanwhile, other separations, which includes retirements and deaths, were at 334,000 in February, down from 355,000 in January, for an ‘other separations rate’ of 0.2%, the same as in January and as in February of last year….both seasonally adjusted and unadjusted details by industry and by region on hires and job separations, and  on job quits and discharges can be accessed using the links to tables at the bottom of the press release…  

February Factory Shipments Up 0.4%, Factory Inventories 0.3% Higher

The Full Report on Manufacturers’ Shipments, Inventories, & Orders (pdf) for February from the Census Bureau reported that the seasonally adjusted value of new orders for manufactured goods increased by $2.6 billion or 0.5 percent to $497.5 billion in February, following a statistically insignificant decrease of less than $0.1 billion to $500.1 billion in January, which was revised from an increase of $0.3 billion or less than 0.1% to $500.5 billion that was reported for January last month….however, since the Census Bureau does not even collect data on new orders for non durable goods for this widely watched “factory orders report”, both the “new orders” and “unfilled orders” sections of this report are really only useful as revised updates to the February advance report on durable goods which was released last week…on those durable goods orders 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 February, down four of the last five months, decreased $2.6 billion or 0.5 percent to $497.5 billion, the U.S. Census Bureau reported today.  This followed a virtually unchanged January decrease.  Shipments, up following four consecutive monthly decreases, increased $2.0 billion or 0.4 percent to $505.5 billion.  This followed a 0.3 percent January decrease.  Unfilled orders, down four of the last five months, decreased $3.6 billion or 0.3 percent to $1,177.6 billion.  This followed a 0.1 percent January increase.  The unfilled orders‐to‐shipments ratio was 6.54, down from 6.57 in January.   Inventories, up twenty‐seven of the last twenty‐eight months, increased $2.0 billion or 0.3 percent to $687.8 billion.  This followed a 0.5 percent January increase.  The inventories‐to‐shipments ratio was 1.36, unchanged from January.
  • New Orders – New orders for manufactured durable goods in February, down following three consecutive monthly increases, decreased $4.2 billion or 1.6 percent to $250.5 billion, unchanged from the previously published decrease.  This followed a 0.1 percent January increase.  Transportation equipment, also down following  three consecutive monthly increases, led the decrease, $4.1 billion or 4.5 percent to $86.2 billion.  New orders for manufactured nondurable goods increased $1.5 billion or 0.6 percent to $247.0 billion.
  • Shipments – Shipments of manufactured durable goods in February, up three of the last four months, increased $0.5 billion or 0.2 percent to $258.5 billion, unchanged from the previously published increase.  This followed a 0.5 percent January decrease.  Computers and electronic products, up four of the last five months, led the increase, $0.3 billion or 1.0 percent to $28.0 billion.  Shipments of manufactured nondurable goods, up following three consecutive monthly decreases, increased $1.5 billion or 0.6 percent to $247.0 billion.  This followed a 0.1 percent January decrease.  Petroleum and coal products, also up following three consecutive monthly decreases, led the increase, $1.4 billion or 2.8 percent to $51.9 billion.
  • Unfilled Orders – Unfilled orders for manufactured durable goods in February, down four of the last five months, decreased $3.6 billion or 0.3 percent to $1,177.6 billion, unchanged from the previously published decrease.  This followed a 0.1 percent January increase.  Transportation equipment, also down four of the last five months, led the decrease, $3.6 billion or 0.4 percent to $807.3 billion.
  • Inventories – Inventories of manufactured durable goods in February, up twenty‐five of the last twenty‐six months, increased $1.3 billion or 0.3 percent to $418.9 billion, unchanged from the previously published increase.   This followed a 0.5 percent January increase.  Transportation equipment, up five of the last six months, drove the increase, $1.3 billion or 1.0 percent to $134.1 billion.  Inventories of manufactured nondurable goods, up two consecutive months, increased $0.7 billion or 0.3 percent to $268.9 billion.  This followed a 0.6 percent January increase.  Petroleum and coal products, also up two consecutive months, drove the increase, $0.9 billion or 2.3 percent to $40.2 billion.

To gauge the effect of February’s dollar valued factory inventories on 1st quarter GDP, they must first be adjusted for changes in price with appropriate components of the producer price index….by stage of fabrication, the value of finished goods inventories increased 0.1% to $238,621 million; the value of work in process inventories was up 0.9% at $210,397 million, and the value of materials and supplies inventories was virtually unchanged at $238,767 million…at the same time, the producer price index for February indicated that prices for finished goods increased 0.4%, that prices for intermediate processed goods were also 0.4% higher, but that prices for unprocessed goods were on average 4.6% lower, with even core raw materials priced 0.7% lower than January’s….assuming similar valuations for like inventories, that would suggest that February’s real finished goods inventories were around 0.3% less than January’s, that real inventories of intermediate processed goods were 0.5% greater, and that real raw material inventory inventories were at least 0.7% greater….since real factory inventories in the 4th quarter were only a bit higher, any real factory inventory increases over the 1st quarter would add to the growth of 1st quarter GDP…

 

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

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graphs and tables for April 13th

rig count summary:

April 12 2019 rig count summary

OPEC production:

March 2019 OPEC crude output via secondary sources

global oil supply:

March 2019 OPEC report global oil supply

global oil demand:

March 2019 OPEC report global oil demand

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largest March natural gas surplus in 7 years on 5% drop in power generation; biggest rig count jump in 14 months

oil prices rose for a 5th straight week in continuing the rally that began after Christmas, and have now risen 37% since the beginning of the year…after rising 1.9% to $60.14 a barrel last week, largely on indications of tighter supplies globally, prices for US crude to be delivered in May continued to rally on Monday, rising $1.45, or 2.4%, to a new 2019 high of $61.59 a barrel, after better-than-expected manufacturing data from the US and China eased worries about slowing global growth and after a Reuters survey found that OPEC output fell to a four-year low in Marchthe Reuters report on the OPEC cuts pushed oil higher again on Tuesday, with prices rising 99 cents to $62.58 a barrel, as the shutdown of a key Venezuela export terminal and a report of a US shale output slowdown underpinned the ongoing rally…however, US crude prices broke below a key support level on Wednesday, after the EIA reported a surprisingly large build in US supplies, but still remained near their 5-month high in closing down 12 cents at $62.46 a barrel…US prices continued slumping on Thursday even as prices for Brent crude, the international benchmark briefly hit $70 a barrel on tight global supplies, with US crude settling 36 cents lower at $62.10 a barrel while Brent contracts for June delivery finished 9 cents higher at $69.40 a barrel…the rally in US crude resumed on Friday, after strong U.S. employment data tempered fears of weakening crude demand, as oil prices rose 98 cents to $63.08 a barrel amid fears that escalating conflict in Libya would further tighten global supplies, thus ending the week with a gain of almost 5%

meanwhile, natural gas prices were little changed in subdued trading in a narrow range, as there is not much news to drive gas prices between the winter heating season and the summer, when demand again increases as natural gas peaking generators are fired up for air conditioning…after closing last week down 4% at $2.662 per mmBTU, natural gas for May delivery rose 4.6 cents on Monday, then fell 6.5 cents over the next three days, and then rose 2.1 cents on Friday to end the week priced at $2.664 per mmBTU, just two-tenths of a cent higher than its previous weekly close…

the natural gas storage report for the week ending March 29th from the EIA indicated that the quantity of natural gas held in storage in the US increased by 23 billion cubic feet to 1,130 billion cubic feet over the week, which still left our gas supplies 228 billion cubic feet, or 16.8% below the 1,358 billion cubic feet that were in storage on March 30th of last year, and 551 billion cubic feet, or 30.9% below the five-year average of 1,635 billion cubic feet of natural gas that have typically remained in storage at the end of March in recent years….this week’s 23 billion cubic feet injection into US natural gas storage was more than the 16 billion cubic feet addition that analysts surveyed by S&P Global Platts had expected, while it was a complete reversal of the average of 23 billion cubic feet of natural gas that are normally withdrawn from gas storage during the last week of March, an early injection which has not happened to that degree since March of 2012….

the magnitude of the addition of gas to storage was a surprise to most because it wasn’t particularly warm during the reference week, as you can see on the map below that we’ve copied from the EIA’s natural gas storage dashboard; in fact, the most densely populated states in the east and California all saw temperatures slightly below normal, which would usually lead to an above normal withdrawal…but the 15 billion cubic feet withdrawal in the East was actually a bit less than the 16 billion cubic feet average withdrawal over the past 5 years for the last week in March, while it was apparently warm enough in the South Central region to have 35 billion cubic feet of natural gas left over to add to storage, in contrast to the 5 billion cubic feet of natural gas that the region typically has in surplus for the same week of the year…the only explicable circumstance we see in reviewing the data for the past week was that natural gas consumption for electrical generation over the 48 states was lower than last year’s each day of the reference week, and on several days was as much as or more than 10% lower, thus saving a total of 13 billion cubic feet of gas over those 7 days, or burning about 5% less natural gas than a year earlier….why that would happen is open to speculation, but it’s possible that enough intermittent power from wind and solar kicked in over that week to displace natural gas generation, thus leading to the unusual March surplus…

April 6 2019 temperature anomolies for week ending March 28

The Latest US Oil Supply and Disposition Data from the EIA

this week’s US oil data from the US Energy Information Administration, reporting on the week ending March 29th, indicated a modest increase in our crude oil imports and a modest decrease in our oil exports, while refinery usage was little changed, and hence there was another ​surplus to add to our commercial supplies of crude, much of which was still unaccounted for nonetheless…our imports of crude oil rose by an average of 223,000 barrels per day to an average of 6,763,000 barrels per day, after falling by an average of 392,000 barrels per day the prior week, while our exports of crude oil fell by an average of 163,000 barrels per day to 2,723,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 4,040,000 barrels of per day during the week ending March 29th, 386,000 more barrels per day than the net of our imports minus exports during the prior week…over the same period, field production of crude oil from US wells was reported to be 100,000 barrels per day higher than last week at a record 12,200,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from well production totaled an average of 16,240,000 barrels per day during this reporting week…

meanwhile, US oil refineries were using 15,849,000 barrels of crude per day during the week ending March 29th, 18,000 more barrels per day than the amount of oil they used during the prior week, while over the same period 1,034,000 barrels of oil per day were reportedly being added to the oil that’s in storage in the US…..therefore, this week’s crude oil figures from the EIA would seem to indicate that our total working supply of oil from net imports and from oilfield production was 643,000 fewer barrels per day than what was added to storage plus the oil refineries reported they used during the week…to account for that disparity between the supply of oil and the disposition of it, the EIA inserted a (+643,000) 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 is labeled in their footnotes as “unaccounted for crude oil”….with that much oil unaccounted for, we have to figure that one or more of this week’s oil metrics is in error by a statistically significant amount.. (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 fell to an average of 6,745,000 barrels per day last week, now 12.1% less than the 7,677,000 barrel per day average that we were importing over the same four-week period last year…. the 1,034,000 barrel per day increase in our total crude inventories was all added to our commercially available stocks of crude oil, as the oil stored in our Strategic Petroleum Reserve remained unchanged…this week’s crude oil production was reported to be up by 100,000 barrels per day to a record 12,200,000 barrels per day because the rounded estimate for output from wells in the lower 48 states increased by 100,000 barrels per day to 11,700,000 barrels per day, while a 7,000 barrel per day decrease in Alaska’s oil production to 482,000 barrels per day was not enough to make a difference in the rounded national total…last year’s US crude oil production for the week ending March 30th was at 10,460,000 barrels per day, so this reporting week’s rounded oil production figure was 16.6% above that of a year ago, and 44.8% 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 86.8% of their capacity in using 15,849,000 barrels of crude per day during the week ending March 29th, down from 86.6% of capacity the prior week, and quite a bit lower than before Venezuelan imports of heavy crude that Gulf Coast refineries are optimized to use were cut off….similarly, the 15,849,000 barrels per day of oil that were refined this week were down by 6.4% from the 16,936,000 barrels of crude per day that were being processed during the week ending March 30th, 2018, when US refineries were operating at 93.0% of capacity… 

with little change in the amount of oil being refined, the gasoline output from our refineries was somewhat higher, rising by 156,000 barrels per day to 9,813,000 barrels per day during the week ending March 29th, after our refineries’ gasoline output had decreased by 268,000 barrels per day the prior week….but even with that increase in the week’s gasoline output, this week’s gasoline production was still 3.0% less than the 10,115,000 barrels of gasoline that were being produced daily during the same week last year….at the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) fell by 55,000 barrels per day to 4,870,000 barrels per day, after that output had increased by 2,000 barrels per day the prior week…​and after this week’s ​modest decrease, the week’s distillates production was 2.9% less than the 5,016,000 barrels of distillates per day that were being produced during the week ending March 30th, 2018…. 

even with the increase in our gasoline production, the supply of gasoline left in storage at the end of the week fell by 1,781,000 barrels to 236,839,000 barrels over the week to March 29th, after supplies had fallen by 2,883,000 barrels over the prior week….the draw from our gasoline supplies was smaller this week than last because our imports of gasoline rose by 58,000 barrels per day to 746,000 barrels per day while our exports of gasoline fell by 78,000 barrels per day to 615,000 barrels per day, while the amount of gasoline supplied to US markets increased by 7,000 barrels per day to 9,131,000 barrels per day, after decreasing by 285,000 barrels per day the prior week…after having reached an all time record high ten weeks ago, our gasoline inventories are now fractionally lower than last March 30th’s level of 238,477,000 barrels, even as they remain roughly 2% above the five year average of our gasoline supplies at this time of the year…

with the ​modest decrease in our distillates production, our supplies of distillate fuels fell for the 20th time in twenty-eight weeks, decreasing by 1,998,000 barrels to 128,169,000 barrels during the week ending March 29th, after our distillates supplies had decreased by 2,075,000 barrels over the prior week…the draw on our distillates supplies was a bit smaller this week because the amount of distillates supplied to US markets, a proxy for our domestic demand, fell by 60,000 barrels per day to 4,156,000 barrels per day, and because our exports of distillates fell by 57,000 barrels per day to 1,143,000 barrels per day, while our imports of distillates fell by 51,000 barrels per day to 144,000 barrels per day…with this week’s inventory decrease, our distillate supplies ended the week 1.0% below the 129,491,000 barrels that we had stored on March 30th, 2018, while falling to roughly 6% below the five year average of distillates stocks for this time of the year…

finally, with higher oil production​, higher oil imports and lower oil exports, our commercial supplies of crude oil in storage increased for the eighth time in 11 weeks, rising by 7,238,000 barrels over the week, from 442,283,000 barrels on March 22nd to 449,521,000 barrels on March 29th…that increase was enough to bring our crude oil inventories back in line with the recent five-year average of crude oil supplies for this time of year, while remaining around 30% above the prior 5 year (2009 – 2013) average of crude oil stocks after the last week of March, with the disparity between those ​comparisons arising because it wasn’t until early 2015 that our oil inventories first rose above 400 million barrels…since our crude oil inventories had mostly been rising since this past Fall, after generally falling until then through most of the prior year and a half, our oil supplies as of March 29th were 5.7% above the 425,332,000 barrels of oil we had stored on March 30th of 2018, but at the same time still 16.1% below the 535,543,000 barrels of oil that we had in storage on March 31st of 2017, and 9.8% below the 498,598,000 barrels of oil we had in storage on April 1st of 2016…          

This Week’s Rig Count

US drilling rig activity increased for the first time in seven weeks, as US E&P companies appear to be returning to the field after the largest single quarter pullback in 3 years….Baker Hughes reported that the total count of rotary rigs running in the US rose by 19 rigs to 1025 rigs over the week ending April 5th, the largest jump in rig activity since February 9th, 2018, and 22 more rigs than the 1003 rigs that were in use as of the April 6th report of 2018, while still well down from the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC announced their attempt to flood the global oil market…  

the count of rigs drilling for oil rose by 15 rigs to 831 rigs this week, which was also 23 more oil rigs than were running a year ago, while it was well below 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 increased by 4 rigs to 194 natural gas rigs, which was the same number of natural gas rigs that were drilling a year ago, but way down from the modern era high of 1,606 natural gas targeting rigs that were deployed on August 29th, 2008…

​even with the overall increase, ​drilling activity offshore in the Gulf of Mexico decreased by 1 rig to 22 rigs this week, which was still 10 more than the 12 rigs active in the Gulf a year ago, which was near a record low at that time…at the same time, a drilling platform was set up to drill ​through an inland body of water in southern Louisiana, where there are now 3 of those so-called “inland water rigs” active, still less than the 4 “inland waters” rigs active in the state a year earlier…

the ​number of active horizontal drilling rigs increased by 10 rigs to 901 horizontal rigs this week, which was also 17 more horizontal rigs active than the 884 horizontal rigs that were in use in the US on April 6th of last year, but was down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014…..at the same time, the vertical rig count increased by 3 rigs to 54 vertical rigs this week, which was still down by 2 rigs from the 56 vertical rigs that were in use during the same week of last year….in addition, the directional rig count increased by 6 rigs to 70 directional rigs this week, which was also up by 7 rigs from the 63 directional rigs that were operating on April 6th of 2018… 

the details on this week’s changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes…the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the second table shows the weekly and year over year rig count changes for the major US geological oil and gas basins…in both tables, the first column shows the active rig count as of April 5th, the second column shows the change in the number of working rigs between last week’s count (March 29th) and this week’s (April 5th) count, the third column shows last week’s March 29th active rig count, the 4th column shows the change between the number of rigs running on Friday and t​he number running before the equivalent 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 6th of April, 2018…   

April 5 2019 rig count summary

as you can see, the 8 rig increase in the Permian basin of western Texas and New Mexico accounted for the lion’s share of the week’s horizontal rig increase, coming right after that basin had seen 10 rigs shut down over the previous two weeks…this week’s Permian increases include 3 rigs that were added in Texas Oil District 8, which would correspond to the core Permian Delaware, and three rigs added in Texas Oil District 8A, which would be in the northern Permian Midland…meanwhile, one rig was pulled out of Texas Oil District 7C, or the southern Midland, which would thus mean there was a net increase of 5 Permian rigs in Texas, while 3 Permian rigs were added in New Mexico’s Permian Delaware, which would include the ​Bone Spring formation…two more rigs were also added in Texas Oil District 6, which would include the natural gas producing Haynesville shale that Texas shares with northern Louisiana, but since that province of Louisiana shows no change, it’s not clear whether Texas added 2 Haynesville rigs while Louisiana shut one down, or whether Texas added one Haynesville rig and another one in Texas Oil District 6 that was not targeting the Haynesville…other than that Haynesville addition, the only other natural gas rig changes were in the Marcellus, where 4 natural gas rigs were added in West Virginia, while one Marcellus rig was shut down in Pennsylvania…also note that other than the major producing states shown above, Nebraska also saw a rig added this week in only the third week of drilling activity in that state since July 2016…

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March jobs; February’s retail sales, construction spending & durable goods; January’s business inventories

Major monthly reports released over the past week included the Employment Situation Summary for March from the Bureau of Labor Statistics, the Retail Sales report for February and the Business Sales and Inventories report for January, the February report on Construction Spending, and the Advance report on Durable Goods for February, all from the Census Bureau…in addition, the Fed released the Consumer Credit Report for February, which indicated that overall consumer credit, a measure of non-real estate debt, expanded by a seasonally adjusted $15.2 billion, or at a 4.5% annual rate, as non-revolving credit expanded at a 4.9% annual rate to $2,984.8 billion and revolving credit outstanding grew at a 3.3% rate to $1,061.0 billion…

Privately issued reports released this week included the ADP Employment Report for March and the light vehicle sales report for March from Wards Automotive, which estimated that vehicles sold at a 17.48 annual rate in March, up from the 16.53 annual sales rate in February, and up from the 17.40 million rate a year earlier…in addition, the week saw both of the widely followed purchasing manager’s surveys from the Institute for Supply Management (ISM): the March Manufacturing Report On Business indicated that the manufacturing PMI (Purchasing Managers Index) rose to 55.3% in March, up from 54.2% in February, which suggests an ongoing modest expansion in manufacturing firms nationally, and the March Non-Manufacturing Report On Business; which saw the NMI (non-manufacturing index) fall to 56.1% in March, down from 59.7% in February, indicating a somewhat smaller plurality of service industry purchasing managers reported expansion in various facets of their business in March…both of those ISM reports are easy to read and include anecdotal comments from purchasing managers from the 34 business types who participate in those surveys nationally… 

Employers Add 196,000 Jobs in March, Labor Force Participation Rate Falls 0.2% to 63.0%

The Employment Situation Summary for March indicated that payroll job growth was in line with recent averages, while the labor force participation rate fell because of a large decrease in those who reported being employed…seasonally adjusted estimates extrapolated from the establishment survey data projected that employers added 196,000 jobs in March, after the previously estimated payroll job increase for January was revised up from 311,000 to 312,000 and the payroll jobs increase for February was revised up from 20,000 up to 33,000…including those revisions, this report thus represents a total of 210,000 more seasonally adjusted payroll jobs than were reported last month, a bit less than the 2018 average increase of 223,000 jobs per month…the unadjusted data shows that there were actually 714,000 more payroll jobs extant in March than in February, as the usual seasonal job increases in sectors such as construction, administrative and waste services, and in leisure and hospitality were normalized by the seasonal adjustments…

Seasonally adjusted job increases in March were spread through both the goods producing and the service sectors, with only manufacturing and the retail sector showing job losses a seasonally adjusted basis, while both of those sectors actually added a jobs on an unadjusted basis…seasonally adjusted manufacturing employment was down 6,000 but remains 209,000 higher than a year ago, while the retail sector showed a seasonally adjusted 11,700 job decrease, as drug stores cut 7,700 employees and general merchandise stores cut 7,200 jobs, probably due to widespread store closings…meanwhile, employment in health care rose by 49,100, with the addition of 13,600 jobs in hospitals, and the broad professional and business services sector added 37,000 jobs, as 9,600 more were employed in computer systems design and related services…the leisure and hospitality sector, which actually added 248,000 employees, saw a 33,000 seasonally adjusted payroll job increase, as an adjusted 27,400 more jobs were added in bars and restaurants…similarly, the construction sector saw the addition of 16,000 seasonally adjusted jobs, with 13,000 of those working for specialty contractors, after aberrant weather caused the sector to ‘show’ an increase of 56,000 jobs in January and a decrease of 25,000 jobs in February…at the same time, government sector jobs increased by 12,000, with the addition of 8,200 in local government education….in addition, there was also a 12,200 payroll job increase in social assistance sector, with the addition of 10,000 jobs in individual and family services, and the financial sector saw an 11,000 job increase, with 7,400 of those in the insurance business…meanwhile the other major sectors, including resource extraction, wholesale trade, transportation and warehousing, utilities, information, and private education all saw smaller increases in payroll employment over the month…

The establishment survey also showed that average hourly pay for all employees rose by 4 cents an hour to $27.70 an hour in March, after it had increased by a revised 10 cents an hour in February; at the same time, the average hourly earnings of production and non-supervisory employees increased by 6 cents to $23.24 an hour…employers also reported that the average workweek for all private payroll employees increased by 0.1 hour to 34.5 hours in March, while hours for production and non-supervisory personnel rose 0.1 hour to 33.7 hours…however, the manufacturing workweek was unchanged at 40.7 hours, while average factory overtime decreased by 0.1 hours to 3.4 hours…

Meanwhile, the March household survey indicated that the seasonally adjusted extrapolation of those who reported being employed fell by an estimated 201,000 to 162,960,000, while the similarly estimated number of those qualified as unemployed fell by 24,000 to 6,211,000; which thus meant a rounded decrease of 224,000 in the total labor force…since the working age population had grown by 145,000 over the same period, that meant the number of employment aged individuals who were not in the labor force rose by 369,000 to 95,577,000….with the number of those in the labor force decreasing while the civilian noninstitutional population was increasing, the labor force participation rate fell by 0.2% to 63.0%….at the same time, the decrease in number employed as a percentage of the increase in the population was enough to lower the employment to population ratio from 60.7% to 60.6%…however, the small decrease in the number unemployed was not enough to impact the unemployment rate, which remained at 3.8%….meanwhile, the number who reported they were involuntarily working part time rose by 189,000 to 4,499,000 in March, which apparently wasn’t enough to change the alternative measure of unemployment, U-6, which includes those “employed part time for economic reasons”, as it remained at 7.3% in March, which in February had been the lowest since January 2001…..

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.. 

Retail Sales Down 0.2% in February after January Sales Revised 0.5% Higher

Seasonally adjusted retail sales decreased 0.2% in February after retail sales for January were revised higher…the Advance Retail Sales Report for February (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $506.0 billion during the month, which was 0.2 percent (±0.5%) lower than January’s revised sales of $507.0 billion but still 2.2 percent (±0.7 percent) above the adjusted sales in February of last year…January’s seasonally adjusted sales were revised up from $504.4 billion to $507.0 billion, while December’s sales were revised from $503.4 billion to $503.327 million; as a result, the December to January change was revised up from up 0.2 percent (±0.5%) to up 0.7 percent (±0.2%).…the downward revision to December sales was not large enough to have a material impact on 4th quarter GDP…estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated sales were down 2.7%, from $459,480 million in January to $446,952 million in February, while they were up 2.2% from the $437,520 million of sales in February of a year ago…

Included below is the table of the monthly and yearly percentage changes in retail sales by business type taken from the February Census Marts pdf….the first pair of columns below gives us the seasonally adjusted percentage change in sales for each kind of business from the January revised figure to this month’s February “advance” report in the first sub-column, and then the year over year percentage sales change since last February is in the 2nd column…the second double column pair below gives us the revision of the January advance estimates (now called “preliminary”) as of this report, with the new December to January percentage change under “Dec 2018 (r)” (revised) and the January 2018 to January 2019 percentage change as revised in the last column shown…for your reference, our copy of the table of last month’s advance estimate of January sales, before this month’s revisions, is here.…

February 2019 retail sales table

The revision to January’s sales is actually the bigger story here than February’s sales themselves…last week we reported on personal consumption expenditures for January and estimated their likely impact on 1st quarter GDP…more than a third of that figure was consumption of goods, which was sourced from the January retail sales report, which this report revises….in the January income and outlays report, personal consumption expenditures were seen barely growing at a 0.06% rate in January, largely because the $17.5 billion annualized increase in services spending for services was more than offset by a $17.6 billion annualized decrease in spending for durable goods…now January retail sales for major durable goods categories have been significantly revised higher: the previously reported 2.6% decrease in sales at auto dealers has been revised to a 2.0% decrease; the previously reported 1.2% decrease in sales at furniture stores has been revised to a 0.3% decrease; and the previously reported 0.3% decrease in sales at appliance stores has now been revised to a 0.6% increase….since there was no change in the January PCE price index for goods, the entirety of the $2.6 billion upward revision to January retail sales will go to the bottom line of January real PCE when it’s revised at the end of this month.…but remember, retail sales shown here are a monthly figure, while personal consumption expenditures are expressed as an annual rate…that means the $2.6 billion upward revision to January retail sales will show up in PCE as a revision roughly 12 times that amount, or something on the order of $31 billion annualized, more than enough for a 0.2% upward revision to January PCE…

Meanwhile, to compute February’s real personal consumption of goods data for national accounts from this February retail sales report, the BEA will use the corresponding price changes from the February consumer price index, which we reviewed when it was released in mid-March…to estimate what they will find, we first separate out the volatile sales of gasoline from the other totals…from the third line on the above table, we can see that February retail sales excluding the 1.0% price-related increase in sales at gas station were down by 0.3%….then, pulling the 1.2% decrease in grocery & beverage sales and the 0.1% increase in food services sales out from that total, we find that core retail sales were down by less than 0.2% for the month…since the February CPI report showed that the the composite price index of all goods less food and energy goods was 0.2% lower in February, we can thus figure that real retail sales excluding food and energy will show a small real increase…however, the actual adjustment in national accounts for each of the types of sales shown above will vary by the change in the related price index…for instance, while nominal sales at motor vehicle & parts dealers were up 0.7%, the February price index for for transportation commodities other than fuel was 0.4% lower, as prices for new cars and trucks fell 0.3% and prices for used cars and trucks fell 0.7%…that would mean that real unit sales at auto & parts dealers were probably on the order of 1.1% higher, with real new car sales 1.0% higher.. on the other hand, while nominal sales at clothing stores were 0.4% lower in February, the apparel price index was 0.3% higher, which means that real sales of clothing likely fell around 0.7%…

In addition to figuring those core retail sales, we’ll need to adjust food and energy retail sales for their price changes separately, just as the BEA will do…the February CPI report showed that the food price index was 0.4% higher, with the both the index for food purchased for use at home and prices for food bought to eat away from home 0.4% higher…thus, while nominal sales at food and beverage stores were 1.2% lower, real sales of food and beverages would be roughly 1.6% lower in light of the 0.4% higher prices…meanwhile, the 0.1% increase in nominal sales at bars and restaurants, once adjusted for 0.4% higher prices, suggests that real sales at bars and restaurants fell about 0.3% during the month…in addition, while sales at gas stations were up 1.0%, there was 1.5% increase in the retail price of gasoline during the month, which would suggest that real sales of gasoline were down on the order of 0.5%, with a caveat that gasoline stations do sell more than gasoline… averaging real sales that we have thus estimated together, and excluding food services, we can then estimate that the income and outlays report for February will show that real personal consumption of goods fell by more than 0.1% in February, after rising by a revised 0.3% in January, but after falling by 2.0% December…at the same time, the 0.3% decrease in real sales at bars and restaurants would clip February’s real personal consumption of services by less than 0.1%…

Construction Spending Rose 1.0% in February after January & December Revised Much Higher

The Census Bureau’s report on February construction spending (pdf) reported that “Construction spending during February 2019 was estimated at a seasonally adjusted annual rate of $1,320.3 billion, 1.0 percent (±0.8 percent) above the revised January estimate of $1,307.3 billion. The February figure is 1.1 percent (±1.5 percent)* above the February 2018 estimate of $1,305.5 billion. During the first two months of this year, construction spending amounted to $181.9 billion, 1.4 percent (±1.3 percent) above the $179.4 billion for the same period in 2018.”…the January annualized spending estimate was revised 2.2% higher, from $1,279.6 billion to $1,307.3 billion, while December’s construction spending was revised from $1,263.1 billion to $1,275.953 billion annually, which together meant that the January construction spending increase was revised from 1.3% to 2.5%…the $12.85 billion upward revision to December’s annualized spending would mean we’d see a upward revision of about 11 basis points to 4th quarter GDP when the annual revisions are released later this summer…

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

  • Private Construction: Spending on private construction was at a seasonally adjusted annual rate of $994.5 billion, 0.2 percent (±0.8 percent)* above the revised January estimate of $993.0 billion. Residential construction was at a seasonally adjusted annual rate of $540.9 billion in February, 0.7 percent (±1.3 percent)* above the revised January estimate of $536.9 billion. Nonresidential construction was at a seasonally adjusted annual rate of $453.6 billion in February, 0.5 percent (±0.8 percent)* below the revised January estimate of $456.0 billion. 
  • Public Construction: In February, the estimated seasonally adjusted annual rate of public construction spending was $325.8 billion, 3.6 percent (±1.6 percent) above the revised January estimate of $314.4 billion. Educational construction was at a seasonally adjusted annual rate of $76.3 billion, 0.8 percent (±2.0 percent)* above the revised January estimate of $75.7 billion. Highway construction was at a seasonally adjusted annual rate of $111.1 billion, 9.5 percent (±5.3 percent) above the revised January estimate of $101.5 billion.

As you can tell from that summary, construction spending data would input into 3 subcomponents of GDP; investment in private non-residential structures, investment in residential structures, and into government investment outlays, for both state and local and Federal governments…however, getting an accurate read on the impact of February’s construction spending reported in this release on 1st quarter GDP is difficult because all figures given here are in nominal dollars and as you know, data used to compute the change in GDP must be adjusted for changes in price to determine the actual change in construction put in place…there are multiple prices indexes for different types of construction listed in the National Income and Product Accounts Handbook, Chapter 6 (pdf), so in lieu of trying to adjust for all of those types of construction separately, we’ve opted to just use the producer price index for final demand construction as an inexact shortcut to make the needed price adjustment and come up with an estimate…

That price index showed that aggregate construction costs were down 0.1% in February, after they had increased by 0.6% in January, and had increased by 0.1% in December and in November…on that basis, we can estimate that February construction costs were roughly 0.5% more than those of December, 0.6% more than those of November, and 0.7% more than those of October, and of course 0.1% less than January…we then use those relative percentages to inflate the lower cost spending figures for each of the 4th quarter months vis a vis February, which is arithmetically the same as adjusting higher priced January and February construction spending downward, for purposes of comparison….this report gives annualized construction spending in millions of dollars for the 4th quarter months as $1,275,953 in December, $1,273,143 in November, and $1,290,551 in October, while annualized construction spending was at $1,320,305 in February and $1,272,178 in January….thus to compare January’s nominal construction spending of $1,307,335 and February’s figure of $1,320,305 to inflation adjusted figures of the fourth quarter, our formula becomes:  ((1,320,305 +1,307,335 * 0.999) / 2 ) / ((1,275,953 * 1.005 + 1,273,143 * 1.006 + 1,290,551 * 1.007)/ 3) = 1.01988, which tells us that real construction spending over January and February was up by 1.988% from that of the 4th quarter period, or up at a 8.19% annual rate…then, to figure the potential effect of that change on GDP,  we take the difference between the 4th quarter inflation adjusted average and that of January’s & February’s adjusted spending as a fraction of 4th quarter GDP, and find that 1st quarter construction spending is rising at a rate that would add about 0.63 percentage points to 1st quarter GDP, an estimate which assumes there would be little change in real construction in March..

February Durable Goods: New Orders Down 1.6%, Shipments Up 0.2%, Inventories Up 0.3%

The Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders for February (pdf) from the Census Bureau reported that the value of the widely watched new orders for manufactured durable goods decreased by $4.2 billion or 1.6 percent to $250.6 billion in February, after January’s new orders were revised from the $255.3 billion reported last month to $254.7 billion, now just 0.1% more than December’s new orders…nonetheless, year to date new orders are still up by 4.4% from those of 2018…the volatile monthly new orders for transportation equipment were responsible for the month’s decrease, as new transportation equipment orders fell $4.3 billion or 4.8 percent to $86.0 billion, on a 31.1% drop to $10,185 million in new orders for commercial aircraft….excluding orders for transportation equipment, new orders rose 0.1%, while excluding just new orders for defense equipment, new orders fell 1.9%….new orders for nondefense capital goods less aircraft, a proxy for equipment investment, were also weak, falling $66 million or 0.1% to $68,873 million…

Meanwhile, the seasonally adjusted value of February shipments of durable goods, which will ultimately be included as inputs into various components of 1st quarter GDP after adjusting for changes in prices, increased by $0.5 billion or 0.2 percent to $258.6 billion, after the value of January shipments was revised from $257.9 billion to $258.062 billion, now down 0.4% from December….higher shipments of computers and electronic products led the February increase, as their shipments increased by $0.3 billion or 1.1 percent to $28.0 billion…

At the same time, the value of seasonally adjusted inventories of durable goods, also a major GDP contributor, rose by $1.3 billion or 0.3 percent to $418.9 billion, after end of January inventories were revised from $417.0 billion to $416.6 billion, now up 0.5% from December….increasing inventories of transportation equipment were responsible for the February increase, as they rose $1.3 billion or 1.0 percent to $134.1 billion….

Finally, unfilled orders for manufactured durable goods, which are probably a better measure of industry conditions than the widely watched but very volatile new orders, fell for the 4th time in five months, decreasing by $3.6 billion or 0.3 percent to $1,177.6 billion, following a January increase of 0.1% to $1,181.27 billion, which was revised from the previously reported $1,181.9 billion…a $3.8 billion or 0.5 percent decrease to $807.2 billion in unfilled orders for transportation equipment was responsible for the overall decrease, while unfilled orders excluding transportation equipment orders were up $135 million to $370,450 million…the unfilled order book for durable goods is still 3.3% above the level of last February, with unfilled orders for transportation equipment 2.9% above their year ago level, boosted by a 15.3% increase in the backlog of orders for defense aircraft…

January Business Sales up 0.3%, Business Inventories Up 0.8%

After the release of the February retail sales report, the Census Bureau released the composite Manufacturing and Trade, Inventories and Sales report for January (pdf), which incorporates the revised January retail data from that February report and the earlier published January 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 $1,449.6 billion in January, up 0.3 percent (±0.3%)* from December’s revised sales, and up 2.8 percent (±0.3 percent) from January sales of a year earlier…note that total December sales were concurrently revised up from the originally reported $1,445.0 billion to $1,445.5 billion, now just a 0.9% decrease from November….manufacturer’s sales fell 0.4% to $503,052 million in January; retail trade sales, which exclude restaurant & bar sales from the revised January retail sales reported earlier, rose 0.8% to $446,712 million, while wholesale sales rose 0.5% to $499,822 million…

Meanwhile, total manufacturer’s and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $2,013.9 billion at the end of January, up 0.8 percent (±0.1%) from the end of December, and 5.3  percent (±0.4 percent) higher than in January a year earlier…at the same time, the value of end of December inventories was revised from the $1,994.5 billion reported last month to $1,997.0 billion, which would imply an upward revision of about 0.05 percentage points to 4th quarter GDP….seasonally adjusted inventories of manufacturers were estimated to be valued at $685,681 million in January, up 0.5% from December, and inventories of retailers were valued at $658,352 million, 0.8% more than in December, while inventories of wholesalers were estimated to be valued at $678,241 million at the end of January, 1.2% higher than in December…

For GDP purposes, all inventories, including retail, are adjusted for inflation with appropriate component price indices of the producer price index for January, which was down 0.8% for finished goods…two weeks ago, we looked at real factory inventories with price adjustments for goods at various stages of production, and judged those inventories would have a positive impact on 1st quarter GDP…also last week, we found that real wholesale inventories would be up by more than 2% but still not be enough to add to 1st quarter GDP growth yet, given the big jump in 4th quarter wholesale inventories….since nominal retail inventories for January have now been shown to be 0.8% higher, real retail inventories for the month, after the 0.8% finished goods price adjustment, thus would have thus increased by around 1.6% from December, after a fourth quarter that saw retail inventories increase at a 8.3% annual rate…so while the real retail inventory increase is not year enough to add to GDP, they are increasing at a rate greater than in the 4th quarter and hence well on their way to contributing positively to 1st quarter GDP by the end of March…

 

(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 graphs for April 6

rig count summary:

April 5 2019 rig count summary

temperature anomalies:

April 6 2019 temperature anomolies for week ending March 28

natural gas exports:

April 3 2019 natural gas exports via Kemp

retail sales:

February 2019 retail sales table

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