November’s retail sales and producer prices, October’s inventories and job openings

the key release this week was on retail sales for November from the Census Bureau; in addition, there were also two Census reports on October wholesale and business inventories, giving us the first look at what impact that the change in inventories might have on fourth quarter GDP…we also saw the Producer Price Index for November and the Job Openings and Labor Turnover Survey (JOLTS) for October, both of which were from the Bureau of Labor Statistics…

Retail Sales Rise 0.7% in November; October Increase Revised to + 0.5%

the Advance Retail Sales Report for November (pdf) from the Census Bureau estimated that our total seasonally adjusted retail and food services sales were at $449.3 billion in November, which was an increase of 0.7% (±0.5%) from the revised October sales of $446.1 billion, and 5.1% (±0.9%) above sales in November of last year….October’s seasonally adjusted sales were originally reported at $444.5 billion, and with that upward revision the percentage change from September October was revised from +0.3 percent (±0.5%)* to +0.5 percent (±0.2%)…thus, for the first two months of the fourth quarter, retail sales have grown by 1.2%, or at a 7.6% annual rate, suggesting a strong contribution from goods to 4th quarter personal consumption expenditures, which account for 23% of GDP….estimated unadjusted sales in November, extrapolated from surveys of a small sampling of retailers, indicated sales rose to $443,832 million in November from $441,814 million in October, and up from the $429,408 million of sales in November a year ago, a 3.36% year over year increase which suggests an aberration in the seasonal adjustment, likely due to the lessening influence of recession data on the basis..

to break down the details of this initial November 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 October to November in the first sub-column, and then the year over year percentage change for those businesses since last November in the 2nd column; the second pair of columns gives us the revision of last month’s October advance monthly estimates (now called “preliminary”) as revised in this report, likewise for each business type, with the September to October change under “Sep 2014 revised” and the revised October 2013 to October 2014 percentage change in the last column shown…for reference, here is what those October percentage changes looked like before this month’s revision….  

November 2014 retail sales table

looking at the details for November sales in the first column above, it’s fairly clear that the seasonally adjusted 1.7% increase in motor vehicle and parts sales to $91,929 million was a major reason for the stronger than expected headline increase for the month, but even excluding motor vehicles and parts, retail sales rose 0.5% to $357,353 million…other than automotive products, November’s retail sales were stronger than October’s for building material and garden supply stores, where sales rose 1.4% to $28,086 million, for clothing stores, where sales rose by 1.2% to $21,458 million; for non-store retailers, where sales rose by 1.0% to $41,256 million, for electronics and appliance stores, where sales rose 0.9% to $9,374 million; for drug stores, where sales rose 0.8% to $25,511 million, for bars and restaurant, where sales rose 0.7% to $49,351 million, for furniture stores, where sales rose 0.5% to $8,551 million, and for general merchandise stores, where sales also rose by 0.5% to $56,050 million…the only business types that saw seasonally adjusted sales fall in November were gas stations, where sales fell 0.8% to $43,578 million, and miscellaneous store retailers, where sales fell 1.7% to $10,032 million…

looking at the revisions to October sales in the table above and comparing them to the table from the advance report for October sales as released last month, we find that a large factor in the revision of October’s sales from an increase of 0.3% to an increase of 0.5% was the revision of sales of motor vehicles and parts, from the previously reported increase of 0.5% to an increase of 0.8%, with car dealers specifically seeing a 0.9% increase; but even so, October’s sales without automotive sales are still now up 0.5% vs the previously reported 0.3% increase..other retail businesses seeing sizable upward revisions to last months sales included the miscellaneous store category, where October sales were revised from an increase of 0.5% to a 1.3% jump, sales at specialty stores, ie, sporting goods, book and music stores, which have been revised from an increase of 1.2% to an increase of 1.8%; sales at electronic and appliance stores, which were revised from a drop of 1.6% to a decrease of 1.0%, sales at restaurants and bars, who saw sales rise 1.4% rather than the 0.9% first reported, and sales at furniture stores, which were revised from the original 0.2% gain to an increase of 0.7%…meanwhile, sales at drug stores increased by just 0.2%, not the 0.7% first reported, while October sales at non-store retailers were revised down from a 1.9% jump to an increase of 1.6%…

Producer Prices Fall 0.2% in November; Intermediate and Raw Goods Lower on the Year

the November report on the Producer Price Index from the Bureau of Labor Statistics showed that the seasonally adjusted producer price index for final demand fell by 0.2%, after rising 0.2% in September and falling 0.1% in August, reducing the year over year increase in the index to 1.4%, the lowest year over year reading since February…lower prices overall were led by the price index for final demand for goods, aka ‘finished goods’, which fell by 0.7% after falling 0.4% in October, 0.2% in September and 0.3% in August, as the price index for final demand for energy fell 3.1%, driven by a 6.5% drop in the wholesale price of LP gas and a 6.3% drop in wholesale gasoline prices…the price index for final demand for foods was 0.2% lower, as 11.0% higher prices for wholesale fresh vegetables and 10.6% higher priced oilseeds offset lower prices in other foods, including a 8.7% drop in wholesale pork products…even the index for final demand for core goods fell by 0.1% in November, as prices for industrial chemicals were 3.3% lower…meanwhile, the index for final demand for services rose by 0.1%, even though the index for final demand for transportation and warehousing services fell 0.8%, as the index for final demand for trade services and the index for final demand for services less trade, transportation, and warehousing services both rose 0.1%…

this report also showed the price index for processed goods for intermediate demand fell by 1.0%, the largest decrease since a 1.1% decline in March of 2013, and is now negative for the year, as prices for intermediate processed energy goods fell 3.4%, while prices for intermediate processed foods and feeds fell 0.3% and even core intermediate producer prices were 0.5% lower as intermediate materials used in nondurable manufacturing were priced 2.2% lower….in addition, the price index for intermediate unprocessed goods fell by 1.3% after falling 2.4% in October and is now 1.6% below the level of a year ago, on a 3.7% drop in the index for raw energy materials and a 1.6% drop in prices for unprocessed nonfood materials less energy, while producer prices for for unprocessed foods and feeds rose by 0.9%……finally, the price index for services for intermediate demand rose 0.3% in November, as a 0.3% decrease in the index for  transportation and warehousing services for intermediate demand was offset by a 0.4% decrease in prices for intermediate services less trade, transportation, and warehousing, while prices for trade services for intermediate demand were unchanged…over the 12 months ended in November, the price index for services for intermediate demand rose 1.5%…

October Wholesale Inventories Increase 0.4%; Overall Business Inventories Rise 0.2%

the first release on inventories we saw this week was the Wholesale Trade, Sales and Inventories Report for October from the Census Bureau, which estimated that seasonally adjusted sales of wholesale merchants rose 0.2 percent (+/-0.9)* to $454.6 billion from the revised September estimate of $453.7 billion, and were up 4.3% (+/-1.6%) from October a year earlier…the September preliminary sales estimate was revised down by $0.6 billion or 0.1%, and hence was statistically unchanged from August….October wholesale sales of durable goods were up 0.8 percent (+/-1.2%)* over September and were up 6.0 percent (+/-1.4%)* from October a year ago, as wholesale electrical and electronics sales rose 1.9% while wholesale automotive sales fell 1.1%…seasonally adjusted sales of nondurable goods were down 0.3% (+/-1.1%)* from September but were up 2.8 percent  (+/-2.5%) from last October as wholesale sales of farm products rose 8.0% while wholesale sales of petroleum and petroleum products fell 5.8%…note that the asterisks indicate that Census does not yet have sufficient statistical evidence to determine whether sales actually rose of fell for the periods indicated….this release also reported that seasonally adjusted wholesale inventories were valued at $542.0 billion at the end of October, 0.4% (+/-0.4%)* higher than the revised September level and  6.8% (+/-1.1%) above last October’s level, while September’s preliminary inventory estimate was revised up by $0.9 billion or 0.2%…wholesale durable goods inventories were up statistically unchanged (+/-0.4%) from September and up 8.5 percent (+/-1.4%) from a year ago, with wholesale inventories of computers, peripherals and software down 3.6% while inventories of hardware and plumbing and heating equipment were up 1.6%….inventories of nondurable goods were up 1.2% (+/-0.7%) from September while they were up 4.2% (+/-1.2%) from last October, as wholesale inventories of drugs and drugstore supplies were up by 3.2% while wholesale inventories of petroleum and petroleum products were down 1.9%… finally, the closely watched inventory to sales ratio of merchant wholesalers was at 1.19, unchanged from September but up from the inventory to sales ratio of 1.16 in October of last year…

then on Thursday, the Census Bureau released the Manufacturing and Trade Inventories and Sales report for October, which is  covered in the media as the business inventories report, and which estimated the combined value of seasonally adjusted distributive trade sales and manufacturers’ shipments was at $1,350.9 billion in October, down 0.1% (±0.3%)* from September, while 3.4% (±0.5%) above the total monthly sales level of October of last year…manufacturers sales were estimated at $499,247 million, down 0.8%, while retailer’s sales were estimated up 0.4% at $397,048 million and merchant wholesalers, up 0.2%, accounted for $454,587 million of the overall total….meanwhile, total manufacturer’s and trade inventories were estimated to have increased 0.2 percent (±0.1%) from September to a seasonally adjusted $1,760.4 billion at the end of October, which was up 4.8 percent (±0.5%) from October a year earlier…seasonally adjusted inventories of manufacturers were estimated to be valued at $655,603 million, inventories of retailers were estimated to be valued at $562,780 million, and inventories of wholesalers were estimated to be valued at $541,985 million at the end of October…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 September but up a bit from 1.29 October a year ago…

October Job Openings and Quits Remain Near Post Recession Highs

the October Job Openings and Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics estimated that seasonally adjusted job openings rose by 149,000 to 4,834,000 at the end of October, while the estimate for jobs open at the end of September was revised down by 50,000 from the originally reported 4,735,000 openings to 4,685,000….job openings in restaurants and hotels rose by 61,000 to 669,000 and openings in construction rose by 24,000 to 136,000, while openings for state and local government jobs fell by 41,000 to 354,000…..job openings as a percentage of the employed labor force rose to 3.3% from 3.2% in September, up from 2.8% in October a year ago and up from a low of 2.7% in January…based on 8,995,000 officially unemployed in October, there would be 1.9 unemployed who were actually looking for work during October 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 October, seasonally adjusted new hires totaled 5,055,000, down 20,000 from the 5,075,000 hired or rehired in September, as the hiring rate as a percentage of all employed remained unchanged at 3.6%, while up from 3.4% in August and up from the 3.4% hiring rate in October a year earlier…while hiring rose by 85,000 to 778,000 in retail, it fell by 89,000 to 1,079,000 in professional and business services…. meanwhile, total separations rose, from 4,809,000 in September to 4,824,000 in October, as the separations rate as a percentage of the employed rose from 3.4% to 3.5%, and up from 3.1% a year earlier…subtracting the 4,824,000 total separations from the total hires of 5,055,000 would imply an increase of 231,000 jobs in October, 12,000 less than the revised payroll job increase of 243,000 jobs for October 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 2,720,000 quit their jobs in October, 15,000 less than the revised post recession high of 2,735,000 who quit their jobs in September, while the quits rate, an indicator of worker confidence which is being watched by the Fed, fell from 2.0% to 1.9% of total employment… addition to those who quit, another 1,618,000 were either laid off, fired or otherwise discharged in October, up 45,000 from the 1,573,000 discharges in September, which nonetheless 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 405,000 in October, down from 420,000 in September, 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, slightly down from the post recession high….    

October 2014 JOLTS

(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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