October’s retail sales, September’s inventories and job openings, & the 3rd quarter’s mortgage delinquencies

it was a fairly light week for economic data, with the key release being on retail sales for October from the Census Bureau; in addition, there were also two Census reports on September wholesale and business inventories, which might have an impact on third quarter GDP revisions…we also saw the Job Openings and Labor Turnover Survey (JOLTS) for September from the Bureau of Labor Statistics, and the 3rd quarter National Delinquency Survey from the Mortgage Banker’s Association, a report which covers the same data as the monthly mortgage monitor…

Retail Sales Increase 0.3% in October

the Advance Retail Sales Report for October (pdf) from the Census Bureau estimated that our total seasonally adjusted retail and food services sales were at $444.5 billion in October, which was an increase of 0.3% (±0.5%)* from the revised September sales of $443.0 billion, and 4.1% (±0.9%) above sales in October of last year…..recall that the asterisk on September’s sales indicates that from their small sampling of retail outlets, Census cannot yet determine for sure whether sales rose or fell for the month…September’s seasonally adjusted sales were originally reported at $442.7 billion, and although there was a small upward revision, the percentage change from August to September remained unrevised as a drop of 0.3% (±0.2%)…..estimated unadjusted sales in October, extrapolated from surveys of a small sampling of retailers, indicated sales rose to $440,562 million in October from $425,110 million in September, and up from the $421,358 million in October a year ago, so we can see there were small upward seasonal adjustments to sales data for both months…

to break down the details of this October retail sales estimate, we’ll again start by including the table of monthly and yearly percentage changes in sales by business type taken from the Census pdf…..the first double column below gives us the seasonally adjusted percentage change in sales for each type of retail business type from September to October in the first sub-column, and then the year over year percentage change for those businesses since last October in the 2nd column; the second pair of columns gives us the revision of last month’s September advance estimates (now called “preliminary”) as revised in this report, likewise for each business type, with the August to September change under “August 2014 revised” and the revised September 2013 to September 2014 percentage change in the last column shown…for reference, here is what those September percentage changes looked like before this month’s revision….  

October 2014 retail sales table

looking at the details for October sales in the first column above, we see that motor vehicle and parts sales rose by 0.5% to a seasonally adjusted $89,659 million after falling 1.2% in September; however, excluding motor vehicles and parts, retail sales still rose 0.3% in October to $354,832…other than automotive products, October’s retail sales gains were stronger than average for nonstore (online and mail order) retailers, where sales rose 1.9% to $40,839 million; for specialty stores, such as sporting goods, book and music stores, where sales rose 1.2% to $7,479 million; for bars and restaurants, where sales rose 0.9% to $48,645 million; for health and drug stores, where sales rose 0.7% to $25,491 million; for miscellaneous store retailers, where sales rose 0.6% to $10,065 million, and for clothing stores, where sales rose 0.5% to $21,122 million…on the other hand, October sales were weaker at electronics and appliance stores, where sales fell 1.6% from the September high to $9,189 million, at gas stations, where sales fell 1.5% to $43,860 million on lower gas prices, and at department stores, where sales fell 0.3% to $13,785 million, while overall sales at general merchandise stores were flat at $55,760 million..

although the September 0.3% decrease in overall retail sales went essentially unrevised, there were revisions in sales for many of the component business types worth noting…the table of component changes from last month’s advance release is here, while the revised changes for September are shown in the last two columns in the table above…we can first note that September sales at auto dealers, the largest component of retail sales, were revised from the originally reported 0.8% decrease to a drop of 1.3%, although the decrease for the entire automotive sales group was a bit less at 1.2%…what that revision means is that retail sales for September excluding the automotive sales was unchanged, rather than the 0.2% decline reported a month earlier…other retail businesses seeing a sizable negative revision to their September sales included general merchandize stores, which had been reported seeing 0.2% sales growth, and are now seen with a 0.2% decline in sales, miscellaneous stores, whose September sales were revised from a decrease of 0.2% to a 1.7% decrease, and clothing stores, where a 1.2% decrease was revised to 1.5% lower sales…several business types also saw their September sales revised higher; sales at electronics and appliance stores, which had been reported with a 3.4% increase, have been revised to show a 4.7% increase, largely on the strength of iphone6 sales; furniture stores, where sales had been reported down 0.8%, are now seen as unchanged; nonstore or online sales, originally reported down 1.1%, are now seen dropping just 0.3% in September; similarly, sales at  building materials and garden supply stores, which were originally reported as down 1.1%, have been revised to a 0.6% decrease; sales at specialty store sales, as sporting goods, book and music stores, were also revised from a 0.1% decrease to a 0.5% increase, and sales at food and beverage stores, originally reported as unchanged, are now seen as 0.4% higher in September…

September Wholesale Inventories and Overall Business Inventories Both Rise 0.3%

the first release covering inventories we saw this week was on Wholesale Trade, Sales and Inventories for September from the Census Bureau, which reported that seasonally adjusted sales of wholesale merchants rose 0.2 percent (+/-0.9)* to $454.3 billion from the revised August estimate of $455.2 billion, and were up 5.2% (+/-1.6%) from September a year earlier…the August preliminary sales estimate was revised upward $0.4 billion or 0.1%, and hence was down 0.8% from July…September wholesale sales of durable goods were up 0.5 percent (+/-0.9%)* over August and were up 5.4 percent (+/-1.6%) from September a year ago, as wholesale hardware, plumbing & heating equipment sales rose 4.8% while miscellaneous wholesale sales fell 1.5%…seasonally adjusted sales of nondurable goods were down 0.1% (+/-1.4%)* from August but were up 5.1 percent (+/-3.0%) from last September as wholesale sales of apparel and piece goods rose 4.0% while sales of paper products fell 2.6%…note that the asterisks indicate that Census does not have sufficient statistical evidence to determine whether sales actually rose of fell for the periods indicated….in addition, this release reported that seasonally adjusted wholesale inventories were valued at $538.8 billion at the end of September, 0.3% (+/-0.4%)* higher than the revised August  level and  7.4% (+/-0.9%) above last September’s level, while August’s preliminary inventory estimate was revised downward $0.6 billion or 0.1%…wholesale durable goods inventories were up 0.8 percent (+/-0.4%) from August and up 9.0 percent (+/-1.4%) from a year ago, with wholesale inventories of computers and peripherals up 3.4% while inventories of electrical equipment were down 0.7%…inventories of nondurable goods were down 0.6%(+/-0.4%) from August while they were up 4.9% (+/-0.7%) from last September, as inventories of wholesale chemicals were up by 2.4% while wholesale inventories of petroleum and petroleum products were down 5.3%… finally, the closely watched inventory to sales ratio of merchant wholesalers was at 1.19, unchanged from August but up from the inventory to sales ratio of 1.16 in September of last year…

on Friday, the Census Bureau released the Manufacturing and Trade Inventories and Sales report for September, covered in the media as the business inventories report, which estimated the combined value of seasonally adjusted distributive trade sales and manufacturers’ shipments was at $1,352.5 billion in September, virtually unchanged (±0.3%)* from August, while 4.1% (±0.6%) above the total monthly sales level of September of last year…manufacturers sales were estimated at $503,424 million, retailer’s sales were estimated at $394,793 million, while merchant wholesalers accounted for $454,298 million of the overall total….meanwhile, total manufacturer’s and trade inventories were estimated to have increased 0.3 percent (±0.1%) from August to a seasonally adjusted $1,756.1 billion at the end of September, which was up 5.3 percent (±0.5%) from September a year earlier…seasonally adjusted inventories of manufacturers were estimated to be valued at $655,190 million, inventories of retailers were estimated to be valued at $562,078 million, and inventories of wholesalers were estimated to be valued at $538,832 million at the end of September…the month end total business inventories to total sales ratio, the metric which is watched to determine if inventories are becoming excessive, was at 1.30, unchanged from August but up from 1.28 September a year ago…

Job Openings Slip In September as Job Quits Hit Post Recession High

the September Job Openings and Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics estimated that seasonally adjusted job openings fell by 118,000 to 4,735,000 at the end of September, while the estimate for jobs open at the end of August was revised up by 18,000 from the originally reported 4,835,000 openings to 4,853,000….job openings in restaurants and hotels fell 24,000 to 605,000 and openings in construction fell 23,000 to 98,000, while openings in professional and business services rose by 36,000 to 964,000…..job openings as a percentage of the employed labor force fell to 3.3% from 3.4% in August, but it was still up from 2.8% in September a year ago and up from a low of 2.7% in January…based on 9,262,000 officially unemployed in September, there would be two unemployed who were actually looking for work during September for every job opening; that, of course, does not count those who might have wanted a job but didn’t look for work during the month…

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 include retirements and deaths…. in September, seasonally adjusted new hires totaled 5,026,000, up 284,000 from the 4,742,000 hired or rehired in August, as the hiring rate as a percentage of all employed rose from 3.4% to 3.6%, the same level as July and also up from the 3.4% hiring rate in September a year earlier…while hiring fell in construction by 54,000 to 276,000, it rose by 111,000 to 548,000 in health care services and rose by 48,000 to 280,000 in manufacturing….total separations also rose, from 4,531,000 in August to 4,788,000 in September, as the separations rate as a percentage of the employed rose from 3.3% to 3.4%, and up from 3.3% a year ago…subtracting the 4,788,000 total separations from the total hires of 5,026,000 would imply an increase of 238,000 jobs in September, 18,000 less than the revised payroll job increase of 256,000 for September reported by the BLS establishment survey last week, a difference not unexpected between these two surveys that both have wide confidence intervals…

further breaking down the seasonally adjusted job separations, we find that a post recession high of 2,753,000 quit their jobs in September, 243,000 more than the revised 2,510,000 who quit their jobs in August, while the quits rate, an indicator of worker confidence which is being watched by the Fed, rose from 1.8% to 2.0% of total employment…..in addition to those who quit, another 1,647,000 were either laid off, fired or otherwise discharged in September, up 28,000 from the 1,619,000 discharges in August, which left the discharges rate unchanged at 1.2% of all those who were employed during the month….meanwhile, other separations, which includes retirement and death, were at 388,000 in September, down from 402,000 in August, for an ‘other separations’ rate of 0.3%, which was unchanged….our FRED graph for this report below shows job openings in blue in thousands monthly since January 2005, and monthly hires in orange and monthly separations in violet over the same span…note that months when separations in purple were above hires in orange, we were losing jobs…the two major components of separations are also included below, the count of layoffs and firings is tracked in red, while the number of those quitting their jobs monthly is shown in green, clearly visible as a post recession high….    

September 2014 JOLTS

3rd Quarter Mortgage Delinquency and Foreclosure Rates Lowest Since 2007

this week also saw the release of the Mortgage Bankers Association’s (MBA) National Delinquency Survey for the 3rd Quarter, which, like the September Mortgage Monitor we reviewed last week, gives us a snapshot of mortgages that are in trouble as of the end of September, except that the MBA seasonally adjusts mortgage delinquencies and foreclosures, and since historically the 3rd quarter has been a bit higher for mortgage delinquencies & foreclosures, MBA’s 3rd quarter numbers have been adjusted downward a bit…in addition, the MBA has historically reported a higher rate of delinquencies and foreclosures, presumably from the same mortgage data…with those caveats, the MBA reported that 2.39% of all mortgages were in the foreclosure process at the end of the quarter, down from 2.49% at the end of the 2nd quarter and down from 3.08% that were in foreclosure a year earlier; the MBA also reported an additional 5.85% of home owners with a mortgage were at least one month overdue on their payments but not in foreclosure at the end of the quarter, down from a delinquency rate of 6.04% at the end of the 2nd quarter and down from 6.41% who were delinquent on their mortgages at the end of the 3rd quarter last year…the seriously delinquent rate, which is the percentage of mortgages that are more than 90 days overdue or in the process of foreclosure, was at 4.65%, down from 4.80% last quarter and down from 5.65% who were seriously delinquent a year ago…in contrast to this MBA report, last week the BKFS Mortgage Monitor reported an unadjusted foreclosure inventory rate of 1.76% of all mortgages, a delinquency rate of 5.90%, and a serious delinquency rate of 3.97%…the MBA also reports that foreclosures were started on 0.40% of mortgages in the 3rd quarter, which would not be directly comparable to the 91,038 new foreclosures the Mortgage Monitor indicated for the single month of September. but the three month total of foreclosure starts would be roughly 0.51% of the active loan count at the end of Septemberthe bar graph below, taken from Bill McBride’s coverage of this MBA report, is a color coded representation of the percentage of mortgages in foreclosure and delinquent since the 1st quarter of 2005….each bar shows the portion of 30 day delinquencies reported by the MBA for each quarter in violet, the percentage of 60 to 90 day delinquent mortgages for each quarter in the blue portion of each bar, the percentage of mortgages more than 90 days late in yellow, and the percentage of homes in foreclosure in each quarter in red…we can see that the percentage of mortgages in trouble peaked at 14.7% in the first quarter of 2010 and has been trending downward since, although it’s still well above the levels of the pre-crisis year of 2005, especially with regards to 90 day delinquencies and homes stuck in foreclosure…

3rd qtr 2014 MBA delinquency survey via McBride

(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 that accompanies these commentaries, most from the aforementioned GGO posts, contact me…)

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