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

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

Unfilled Orders for Durable Goods Rose 0.8% in June

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

June Consumer Price Index Rises 0.3% on Higher Gasoline Prices

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

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

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

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

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

June 2014 CPI components

Existing Home Sales Rise Modestly; New Home Sales Down Sharply

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

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

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

June 2014 new and existing homes sold

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

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