October’s consumer & producer prices, industrial production, new housing starts, old housing sales, and state jobs report, et al

the important economic reports of the past week were the October G17 release on Industrial Production from the Fed and the Consumer Price Index for October from the Bureau of Labor Statistics….the BLS also released its report on the October producer price index, which in addition to wholesale prices for goods now also includes changes in the margins received by service industries, its report on Regional and State Employment for October, and its report on real average hourly earnings for October, which indicated an inflation adjusted average 0.1% increase in earnings for all employees…for housing, we saw the October report on new home construction and the National Association of Realtor’s report on October sales of existing homes…in addition, this week also saw the first three regional manufacturing surveys for November from Fed district banks: the New York Fed reported that its November Empire State Manufacturing Survey, covering a district that includes New York and northern New Jersey, showed its composite general business conditions index at 10.2, up from 6.2 in October, in a diffusion index where values over zero indicate growth….then the Philadelphia Fed’s November Manufacturing Business Outlook Survey reported that its broadest measure of manufacturing conditions, the diffusion index of current activity, increased from 20.7 in October to 40.8, its highest reading since December 1993, as 49% of the firms in the district covering Pennsylvania, southern New Jersey, and Delaware reported expansion…lastly, the November Kansas City Fed manufacturing survey (pdf), covering a region that includes western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico, reported that their broadest composite index rose from 4 in October to 7 in November, indicating ongoing manufacturing growth at a slightly faster pace…

CPI Unchanged in October on Higher Priced Services, Cheaper Gas

overall consumer prices were flat in October after inching up in September as considerably lower energy prices offset modest price increases in food, shelter and a number of other index components…the Consumer Price Index for All Urban Consumers (CPI-U) for October from the Bureau of Labor Statistics indicated that seasonally adjusted prices were unchanged after rising 0.1% in September and falling 0.2% in August, while they were 1.7% higher than a year earlier …the unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, actually fell to 237.433 in October from 238.031 in September, while it still remained 1.66% higher than the 233.546 reading from October of last year…as the drop in energy prices energy prices was the major drag on the index in October, core prices, which exclude food and energy, rose by 0.2%, as the unadjusted core index rose from 238.841 in September to 239.413 in October, while that index was 1.81% ahead of its year ago level of 235.162…

the seasonally adjusted energy price index fell by 1.9% in October after falling a total of 3.3% over the prior two months as prices for energy commodities were 3.0% lower while the index for energy services fell 0.2%…energy commodity prices decreased on a 3.0% drop in the price of gasoline, the largest component, and a 4.0% drop in fuel oil prices, while prices for other fuels, including propane, kerosene and firewood, averaged a 0.5% decrease…within energy services, the index for utility gas service fell by 2.7%, the fourth decrease in five months, while the electricity price index rose 0.5% after falling 0.7% in September…energy commodities are now priced 4.9% below their year ago levels, with gasoline down 5.0%, while the energy services price index is 3.2% higher than last October…

the seasonally adjusted food index rose by 0.1% in October, after rising 0.3% in September, and it is now 3.1% higher than October a year ago….prices for food away from home rose by 0.2% as prices for meals at full service restaurants rose by 0.2% and prices at fast food restaurants were 0.3% higher, while prices for food at schools rose by 1.4%, and prices for food from vending machines and other food away from home fell by 0.1%….meanwhile, the price index for food at home just rose 0.1% as lower prices for meats partially offset higher prices for the other major food groups….the index for cereals and bakery products was 0.3% higher than in September as a 1.5% increase in prices for breakfast cereals and 0.6% higher priced cakes and cupcakes more than offset a 1.3% drop in bread prices…dairy products prices were 0.5% higher in October as cheese prices rose 0.7% while milk prices fell 0.5%….prices for fruits and vegetables rose 0.9% as prices for tomatoes rose 4.6%, prices for citrus fruit rose 3.8%, prices for potatoes rose 3.4%, and prices for canned vegetables rose 1.8% while frozen fruit and vegetable prices fell 1.1%…prices for nonalcoholic beverages and beverage materials were also 0.6% higher in October than September as prices for frozen juices and drinks rose 2.6% and prices for fresh juices and non-carbonated drinks rose 1.1% while coffee prices fell 0.5%…meanwhile, prices for the meats, poultry, fish, and eggs group fell by 0.4% as poultry prices fell 1.2% on 1.8% lower chicken prices, seafood prices fell 0.8% on prices for fresh fish that were 1.9% lower, pork prices fell 0.7% on 2.5% cheaper bacon, while beef prices rose 0.3% on 1.0% higher ground beef…even with some lower prices this month, prices for the various cuts of beef remain between 15.6% and 20.7% higher than a year earlier, while pork chops were up 13.7% on the year and ham prices were 12.6% more than last October…lastly, prices for other foods at home also fell by 0.4% as prices for sugar and artificial sweeteners fell 2.2%, prices for soups fell 1.6%, prices for olives, pickles, and relishes and for salt and other seasonings and spices fell 1.5%, and prices for frozen and freeze dried prepared foods fell 1.2% while butter prices rose 5.1%…for the year, butter prices have now risen 29.8%, which was the largest line item annual increase in the index…

within the seasonally adjusted core components of the CPI, which rose by 0.2% in October, we find that the composite of all commodities less food and energy commodities was statistically unchanged, while the composite for all services less energy services rose by 0.3%….the index for shelter, which is almost 32% of the CPI, rose by 0.2%, with rents rising 0.3% and homeowner’s equivalent rent rising 0.2%, while prices for lodging away from home rose by 0.7%, water & sewer bills rose 0.8%, as did the cost of household operations, with lawn care services rising 1.6%….meanwhile, prices for household furnishings and supplies, the commodity component of housing, rose by 0.4%, with a 1.4% jump in prices for living room, kitchen and dining room furniture and an 0.8% increase in prices for decor items offsetting a 1.2% decrease in the price of floor coverings…the price index for apparel fell 0.2% in October as a 4.0% decrease in prices for men’s suits, coats, and outerwear, a 2.0% cut in the price of jewelry and 1.8% drop in prices for women’s outerwear was offset by increases of 4.3% in the prices of women’s dresses and 2.8% in the price of children’s footwear ..the aggregate index for medical care, meanwhile, rose 0.2% in October as the medical care services index rose 0.2% on a 0.6% increase in services from medical professionals other than doctors and dentists and a 0.3% increase in outpatient hospital services, while the medical care commodity index was unchanged after rising 0.5% in September as a 2.1% decrease in non-prescription drug prices offset a 0.7% increase in prescription medicines….then, while the transportation composite index showed a 0.7% decrease, that index includes gasoline, which you’ll recall fell in price by 3.0%; prices for transportation commodities less fuel prices, however, fell just 0.1%, as prices for new cars and trucks rose 0.2% and prices for oil & other automotive fluids rose 0.7% while prices for used cars & trucks fell 0.9% and parts and equipment prices averaged 0.1% less….at the same time, the transportation services index rose 0.8% on 2.9% higher car and truck rentals, a 2.6% increase in train fares, and a 2.4% increase in airline fares….meanwhile, the recreation price index rose 0.2% as recreation commodities were unchanged as a 1.8% increase in prices for newspapers and magazines and a 0.7% increase in prices for pets and pet supplies was offset by a 1.2% drop in prices for televisions, a similar drop in prices for photographic equipment and supplies and 1.0% lower prices for audio discs and other media, while prices for recreation services rose 0.4% on 2.0% higher rental of video discs and other media, 0.8% higher priced cable and satellite television and radio services and 0.6% higher admissions to sporting events….lastly, the aggregate education and communication price index fell 0.2% as education and communication commodities fell 0.1% as a 1.1% drop in prices for telephones and other consumer information hardware more than offset a 0.7% increase in prices for college textbooks, while education and communication services fell 0.2% as a 1.9% decrease in charges for wireless phone services was partially offset by a 0.7% increase in college tuitions and fees and 0.5% higher postage…other than the aforementioned increases in meat and butter prices, the only other line item among CPI components that showed an annual price change greater than 10% was televisions, which are now 14.1% 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 the indexes reset to 100 as of that month for an apples to apples comparison of the price changes in each since…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…  

October 2014 CPI components

Producer Prices Rose 0.2% October on Greater Demand for Trade Services

the October report on the Producer Price Index from the Bureau of Labor Statistics indicated that the seasonally adjusted producer price index for final demand rose by 0.2% from September, when producer prices fell 0.1% after they were unchanged in August, leaving the year over year  increase in the index at 1.5%…the index for final demand for services rose by 0.5%, predominately because the index for final demand for trade services, a measure of the change in margins received by wholesalers and retailers, rose by 1.5%, the biggest jump on record for this relatively new index, while the index for final demand for transportation and warehousing services fell 0.1% and  prices for final demand for services less trade, transportation, and warehousing services rose 0.1%…meanwhile, the price index for final demand for goods, aka ‘finished goods’, fell 0.4% after falling 0.2% in September and 0.3% in August…the price index for final demand for foods was up 1.0% as wholesale fresh vegetable prices rose 8.6% & and wholesale pork prices rose 8.1% while wholesale oilseeds were 3.6% lower priced than in September; however, that wholesale food price increase was more than offset by the 3.0% decrease in the price index for final demand for energy, which was driven by an 11.4% drop in the wholesale price of LP gas and a 7.1% drop in the price of home heating oil, while wholesale gasoline prices also fell 5.8%…meanwhile, the index for final demand for core goods was up 0.1%, as a 1.7% increase in wholesale prices for metal forming machine tools and a 1.1% increase in wholesale mining machinery and equipment prices was mostly offset by a 1.6% increase in the wholesale price for alcoholic beverages and a 1.2% increase in wholesale prices for tires…

meanwhile, this report also showed the price index for processed goods for intermediate demand fell 0.9%, the largest decrease since a 1.1% decline in March of 2013, as prices for intermediate processed foods and feeds fell 1.8% while prices for intermediate processed energy goods fell 3.2%, and even core intermediate producer prices were 0.2% lower….in addition, the price index for intermediate unprocessed goods fell 2.4% after rising 0.6% in September and is now 1.9% below the level of a year ago, on a 5.5% drop in the index for raw energy materials and a 2.9% drop in prices for unprocessed nonfood materials less energy, while producer prices for for unprocessed foods and feeds rose 1.0%……finally, the price index for services for intermediate demand rose 0.1% in October, as a 0.8% increase in the index for intermediate trade services and offset a 0.1% decrease in prices for intermediate services less trade, transportation, and warehousing, while prices for transportation and warehousing services for intermediate demand were unchanged…over the 12 months ended in October, the price index for services for intermediate demand rose 1.6%…

Industrial Production Falls 0.1% in October on Pullback in Gas and Oil, Utilities

the Fed’s G17 release on Industrial production and Capacity Utilization for October indicated that industrial production fell 0.1% from a September reading which was revised down from an increase of 1.0% to a increase of 0.8% …the industrial production index, which is benchmarked to 2007 production being equal to 100.0, fell to 104.9 from the previously issued reading of 105.1 for September, which was revised to 104.0, while the industrial production index for August was revised from 104.0 to 104.1 as the July index was revised from 104.2 to 104.3…the manufacturing index, which accounts for roughly 70% of the industrial composite, rose 0.2% in October to 100.6, while the manufacturing index for September was revised down from 100.5 to 100.4 after the July and August manufacturing indices were both revised up 0.2, to 100.7 and 100.2 respectively; as a result, the October manufacturing index is now 3.4% higher than the level of October 2013….. meanwhile the seasonally adjusted utility index, seeing 3.4% lower natural gas usage because of above normal October temperatures, fell 0.7% to 100.5, a reading which is now 1.3% below the level of last October… in addition, the mining index, which includes oil & gas production, fell 0.9% to 132.1 in October, after increasing by 1.6% in September, showing that the lower oil prices is finally having an impact of higher cost extraction processes, even as the index remains 9.9% higher than a year ago…

in addition to the breakdown of industrial production into the three major industry groups, this release also reports indexes for industrial production by market group…for output of final products and nonindustrial supplies, which was unchanged in October, seasonally adjusted production of consumer goods fell 0.2% after increasing a revised 0.4% in September…production of durable goods fell by 0.8% as the heavily weighted automotive products sector fell 1.7% and  production of consumer electronics fell 1.3%…meanwhile, production of non-durable goods was unchanged as output of consumer energy products fell 0.5% while output of non-energy non-durables rose 0.2%, as a 1.0% increase in the output of chemical products and a 0.5% increase in clothing production was offset by a 1.3% decrease in paper products production and unchanged food and tobacco output…over the preceding year, production of durable goods increased by 3.5%, led by 7.0% growth in output of appliances, furniture, and carpeting, and 6.9% increased output of consumer electronics, while annual production of non-durable goods grew by 0.8% as a 2.2% decrease in output of consumer energy products and a 4.4% decrease in production of paper products offset 5.1% growth of chemical products output and modest increases in output of other non-durables..

seasonally adjusted production of business equipment rose 0.6% in October after falling by a revised 0.4% in September as production of industrial equipment rose 1.3% and production of information processing equipment rose 0.8%, while production of transit equipment was fell 0.9%…over the past year, output of business equipment rose by 4.6%, as production of industrial  equipment rose by 5.7%, production of transit equipment rose by 4.4%, and output of information processing equipment rose by 1.3% ….meanwhile, production of defense and space equipment fell by 0.5% in October and grew by 0.8% over the year ending October…in addition, production of supplies for use in construction increased by 0.2% for the month and by 3.7% rate for the year, while production of business supplies fell 0.1% in October and grew 2.4% for the year…meanwhile, production of raw and intermediate materials that would input into other production processes fell by 0.2% in October while growing 5.7% over the year, with the output of energy materials up by 8.0% and the output of consumer parts up 7.2%, while raw and intermediate paper production fell 1.9% over the year ending October…

in the associated report on capacity utilization, which is the percentage of our plant and equipment that was in use during the month, the Fed found that the utilization rate for total industry fell 0.3% in October to 78.9%, which was still up from 78.2% in October last year….77.2% of our total manufacturing capacity was in use during October, down from 77.3% in September while up 1.0% from the factory operating rate of 76.2% in October of last year…the operating rate for NAICS classified durable goods manufacturers was at 77.3%, down from 77.4% in September, with capacity utilization ranging from 83.9% for manufacturers of electrical equipment, appliances, and components to a low of 64.4% for manufacturers of non-metallic mineral products, while the October operating rate for NAICS classified manufacturers of non-durables was at 78.9%, up from 78.7% in October, with the oil and coal products industry operating at 84.8% of capacity while textile mills were operating at a 72.9% rate…. meanwhile, capacity utilization by the ‘mining’ industry fell 1.5% from a revised 89.9% to 88.3%, reflecting a pullback in drilling by the oil and gas industry due to lower oil prices, while the operating rate for utilities fell from 79.1% to 78.5%, reflecting below normal consumption due to above normal temperatures….

our FRED graph for this report below shows the percentage of capacity in use for all industries monthly since 2007 in pink, while it shows the the seasonally adjusted industrial production index values for all industry in black, the manufacturing production index in blue, the utility production index in green, and the mining production index in red from the beginning of the index year of 2007, at which time they were all benchmarked to equal 100.0…the October downturn in utility and mining production is fairly evident: 

October 2014 industrial production

New Housing Construction Continues at a Million Units a Year Pace in October

according to the Census report on New Residential Construction for October (pdf) starts on new housing units were estimated to be at a seasonally adjusted annual rate of 1,009,000 in October, which was 2.8 percent (±10.0%)* below the revised estimated pace of 1,038,000 homes hypothetically being started annually in September, and 7.8 percent (±8.7%)* above the annual rate of 936,000 housing starts estimated for October a year ago…the asterisks indicate that the Census, based on their survey of a small percentage of permit offices visited by Census field agents, does not have sufficient data to determine whether housing starts rose or fell for the month or even for the year, while the numbers in parenthesis indicates their 90% confidence range, ie housing units started in October were likely at a seasonally adjusted annual rate ranging between 12.8% less and 7.2% greater than those in September…..the unadjusted estimates from which those annual rates were extrapolated indicated an estimated 84,000 total housing units were started in October, down from 95,500 in September, which was revised up from 93,200, with 57,200 of those single family dwellings, while construction was started on 26,100 apartment units in buildings with 5 or more units…

the monthly data on new building permits have a much narrower margin of error than new housing starts and hence are probably a better monthly indicator of new construction trends than the volatile and often dramatically revised starts data… in October, Census estimated new permits were issued at a seasonally adjusted annual rate of 1,080,000, a six year high which was 4.8 percent (±1.3%) above the revised September annual rate of 1,031,000 and 1.2 percent (±1.2%) above the 1,067,000 annual rate estimated for new permit issuance in October of last year…those estimates were extrapolated from the unadjusted estimate of 95,000 new permits issued in October, which was up from the estimated 90,700 new permits issued in September…of those units permitted in October, 56,100 (±1.3%) were for single family homes, and 35,700 (±3.6%) represented permits for housing units in building with 5 or more units…our FRED graph on this report below, which can also be viewed as an interactive at the FRED site, shows the seasonally adjusted annual rate of housing units started in thousands monthly in blue, and the annual rate of housing units authorized by building permits monthly in red since 2000…note that the number in thousands shown monthly for both metrics is an extrapolated estimate of how many units would be permitted or started over an entire year if that month’s pace were continued over 12 months…  

October 2014 new home construction

Existing Home Sales Increased by 1.5% in October

according to the National Association of Realtors (NAR), seasonally adjusted existing home sales rose 1.5% in October to an annual rate of 5.26 million completed transactions, from a revised annual rate of 5.18 million home sales in September, and were 2.5% above the annual sales rate of 5.13 million units that the NAR reported in October of last year….before the seasonal adjustment and conversion to an annualized figure, an estimated 444,000 homes sold in October, up 4.7% from the 436,000 homes that sold in September, and up 1.8% from the estimated 424,000 homes that sold in October a year ago…seasonally adjusted data (pdf) indicates that homes sales were up in every region of the country except the West, where they were down 5.0%, while the unadjusted data shows that sales rose in every region except the Midwest, where they were down 1.0%….

the preliminary median home selling price for all housing types was $208,300 in October, down a bit from $209,100 in September, but 5.5% higher than the $197,500 median sales price in October of last year, in home price data that is not seasonally adjusted…the average home sales price was $254,800, not much changed from the $255,000 average in September, while it was up 4.0% from the $245,000 average sales price in October a year ago, with regional average home prices ranging from a high of $339,000 in the West to the average of $197,300 for homes sold in the Midwest….foreclosed homes, which sold for an average of 15% below the price of similar homes in their market, accounted for 7% of October’s sales, while short sales, at 2% of all sales, were discounted by an average of 10%…the median time on the market for all homes was 63 days in October, up from 56 days in September, and up from a median of 54 days on the market in October a year ago.…those who bought houses with cash accounted for 27% of transactions in October, up from 24% in September but down from 31% all cash sales a year earlier, while those identified as investors accounted for 15% of all transactions, up from 14% in September but down from the 19% of all home sales to investors in October a year ago….30 year mortgage rates averaged 4.04% in October, down from 4.16% in September, and the lowest 30 year mortgage rate since June 2013; even so, the share of first time home buyers remained unchanged at 29% for the 4th consecutive month, still well below the historical average of 40%….2.22 million existing homes remained available for sale at the end of October, which would be a 5.1 month supply of unsold homes at the October sales pace, down from 5.3 months of unsold housing inventory in September but up 5.2% from the 4.9 month supply of 2.11 million existing homes available for sale a year earlier…

State and Regional Employment for October

this week also saw the release of the Regional and State Employment and Unemployment Summary for October, a report which further expands on the national employment situation summary we covered two weeks ago by breaking down the state and regional details…although we’re told in opening that 34 states and the District of Columbia had their unemployment rate decrease in October while 5 states saw a jobless rate increase and 11 states had no change, we know that the unemployment rate data comes from the household survey with its large margin of error, and they make that point later in the report when they tell us only 17 of those states had statistically significant monthly unemployment rate decreases, led by Kentucky, where the jobless rate fell from 6.7% in September to 6.2% in October, followed by four states that saw employment rates by drop by 0.4%: Colorado to 4.3%, Idaho to 4.1%, Missouri to 5.9%, and North Carolina to 6.3%…meanwhile, Washington, where the unemployment rate rose from 5.7% to 6.0%, was the only state that saw a statistically significant increase in unemployment….the BLS table with the seasonally adjusted count of the unemployed and the unemployment rate for each state is here

as with the national report, the sections of this report that correspond to the establishment survey are more informative, in that they show the number & types of jobs added or lost in each state, ranging from the increase of 41,500 jobs in California, 35,200 jobs in Texas and 34,400 jobs added in Florida, to the net decreases of 7,300 jobs in Nevada, 2,800 in Montana and 2,600 in Rhode Island…for a breakdown of payroll employment by job type for each state over the past 3 months, and the change in employment since last September, see the following two BLS tables accompanying this release: Table 5. Employees on nonfarm payrolls by state and selected industry sector, seasonally adjusted and Table 6. Employees on nonfarm payrolls by state and selected industry sector, not seasonally adjusted

(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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