April retail sales, industrial production and producer prices, March business inventories and job openings

the release of the first few monthly reports for April this week, namely on retail sales from the Census Bureau, on Industrial production and Capacity Utilization from the Fed, and the producer price index from the Bureau of Labor Statistics, all point to a weak start to the 2nd quarter…the week also saw the release of March business inventories, which provides us with the last missing pieces of the first quarter data, and the March Job Openings and Labor Turnover Survey (JOLTS), providing some details behind the weak employment report before last week’s on April’s jobs…we also saw the release of the first regional Fed manufacturing survey for May, the Empire State Manufacturing Survey from the New York Fed, which covers New York and northern New Jersey, and which reported its broadest business index rose to 3.1 from a negative 1.2 in April, indicating a resumption of sluggish growth….

March Revisions Once Again More than the Monthly Change in April Retail Sales

seasonally adjusted retail sales fell by four thousand dollars in April, which is about as statistically insignificant as we’ve seen, but enough to say that sales have now failed to increase in 4 out of the last 5 months…the Advance Retail Sales Report for April (pdf) from the Census Bureau estimated that our total seasonally adjusted retail and food services sales were at $436.8 billion for the month, which was virtually unchanged (±0.5%)* from the March sales of the same amount, and just 0.9% (±0.9%)* above sales in April of last year (with the asterisks indicating that Census data is insufficient to determine with relative certainty whether sales rose or fell in April or even from a year ago)…March’s sales were revised down from the originally reported $441.4 billion, but because February sales were revised down from $437.6 billion to $431.0 billion in a benchmark revision, the reported percentage increase from February to March rose from 0.9% to 1.1%…estimated unadjusted sales in March, extrapolated from surveys of a small sampling of retailers, indicated actual sales fell 2.8%, from $401,097 million in January to $389,679 million in February, but were up 1.2% from the $384,985 million of sales in February a year ago…

we’ll again include the table of monthly and yearly percentage changes in sales by business type taken from the Census pdf, as you’re all familiar with this view…..the first double column below gives us the seasonally adjusted percentage change in sales for each type of retail business type from March to April in the first sub-column, and then the year over year percentage change for those businesses since last April in the 2nd column; the second pair of columns gives us the revision of last month’s March advance monthly estimates (now called “preliminary”) as revised in this report, likewise for each business type, with the February to March change under “Feb 2015 revised” and the revised March 2014 to March 2015 percentage change in the last column shown…for reference, here is what those March percentage changes looked like before this month’s revision….

April 2015 retail table

as you can see from the above table, weak automotive sales, down 0.4% to $89,768 million, pulled overall April sales down a bit, but even without automotive sales, retail sales only increased by 0.1%…gas stations sales once again were an anomaly, reported down 0.7% even though gasoline prices were up 15%…other major negatives were department stores sales, down 2.2%, which dragged general merchandise sales down to a 0.5% decrease, and furniture stores, where sales slumped 0.9%…on the other hand, both drug stores and online (non-store) sales rose by 0.8%, and sales at bars and restaurants rose by 0.7%…for a much more in depth and visual take on this April retail report, Robert Oak covers it with 6 FRED graphs and 3 of his own…

left unmentioned in web wide coverage on this report were the revisions to March sales, shown in the 2nd pair of columns above…comparing that data to our copy of sales as originally reported last month, we find that sales at car dealers, which were originally reported as up 2.8%, have been revised to show March growth of 3.1%…as we expected, sales at gas stations were revised from a decrease of 0.6% to an increase of 0.4%, although with a 3.9% increase in gas prices we frankly expected a greater revision…other large upward revisions included sales at department stores, which were originally reported 1.4% higher, are now seen to have been 2.7% higher, and sales at specialty stores, such as sporting goods, book and music stores, which were originally reported as up 0.2%, are now seen to have increased 1.4%…other upwards revisions of less than 0.5% were seen by furniture stores, building material and garden supply stores, groceries, non-store retailers, and bars and restaurants…. meanwhile, sales at miscellaneous stores, first reported up 1.7%, have been revised to barely growing in March at 0.1%, while sales at electronics and appliance stores were revised 0.4% lower, sales at clothing stores were revised 0.3% lower, and drug store sales were unrevised…

Industrial Production Falls Again in April on Weaker Drilling and Utility Output

industrial production fell for the 5th month in a row in April, as mild weather reduced normal utility usage and oil operations continued to be shuttered while manufacturing was flat…the Fed’s G17 release on Industrial production and Capacity Utilization for March showed that seasonally adjusted industrial production fell 0.3% in April after the March 0.6% decrease was revised from to 0.3% and the February 0.1% increase was revised to a decrease of the same magnitude, still leaving it 1.9% ahead of a year ago….the industrial production index, which was set with 2007 production being equal to 100.0, fell to 105.2 in April, after the March index was revised from 105.2 to 105.5, February’s index was revised from 105.9 to 105.8, and January’s index was revised from 105.8 to 105.9…..the manufacturing index, which accounts for roughly 70% of the industrial composite, was unchanged in April after rising a revised 0.3% in March and falling 0.2% in February, while the manufacturing index was at 101.5 after the March manufacturing index was revised from 101.2 to 101.5…the mining index, which is dominated by oil and gas drilling, fell 0.7% in April after falling a revised 0.1% in March, while it still remains 1.2% higher than a year ago with a April index reading of 129.3…the utility index, meanwhile, fell 1.3% in April after falling 5.4% in March and rising 4.9% in February as our prior abnormal weather, the major reason for the fluctuation in this index, returned to more normal levels…

production for most major market groups was down in April, as production of consumer goods fell 0.3% as a 0.7% decrease in output of consumer non-durables outweighed a 1.0% increase in production of consumer durables, and as production of business equipment fell 0.4%, production of defense and space equipment fell 0.3%, and output of intermediate materials fell 0.2%…only the production of construction materials, which increased by 0.3%, and production of business supplies, which was up 0.1%, saw small gains…further details for industrial production by market group, including the changes for each of the last 6 months, 3 quarters and 3 years, can be found on Table 1 and Table 4 of the report, with table 1 showing the percentage change from the prior month, quarter or year, and table 4 giving the index and subindex values for the same…

as you know, this report also gives us capacity utilization data, which is expressed as the percentage of our plant and equipment that was in use during the month, and which fell from 78.6% in March to 78.2% in April…seasonally adjusted capacity utilization for manufacturing industries was down 0.1% to 77.2% after manufacturing utilization for March was revised up from 77.1% to  77.3%…capacity utilization for mining fell from 84.9% in March to 84.0 in April as drilling rigs continued to be shut down weekly while utilities were operating at 78.8% of capacity during April, down from 79.8% in March, as utilities are now operating well below their 43 year average of 85.9%…for more details on capacity utilization by type of manufacturer, see Table 7: Capacity Utilization: Manufacturing, Mining, and Utilities, which shows the historical capacity utilization figures for a dozen types of durable goods manufacturers, 8 classifications of non-durable manufacturers, mining, utilities, and a handful of other special categories……

April Producer Prices Down 0.4, 1.3% for the Year

the Producer Price Index for April from the Bureau of Labor Statistics now indicates that producer prices have fallen by 1.3% from a year earlier, the most negative year over year reading in the short history of this new series, as the seasonally adjusted producer price index for final demand fell 0.4% in April, after rising 0.2% in March but falling 0.5% in February, 0.7% in January, 0.2% in December, and 0.3% in November…lower prices for energy were once again a factor, but core prices for goods and prices for most services were also lower in a nearly across the board decline…

the index for final demand for goods, aka ‘finished goods’, fell by 0.7%, after rising by 0.2% in March and falling for the 8 months prior to that, as the index for wholesale energy prices fell by 2.9% as gasoline prices fell 4.7% and wholesale diesel fuel prices fell 12.0% in an energy group that was down across the board, with gasoline, diesel, heat-oil and LP gas all down by around 40% over the past year (see table 4)…the price index for final demand for foods was also 0.9% lower, with producer pork down 9.0% and wholesale egg prices falling by 25.3% over the month (see table 4)…and even the index for final demand for core goods fell by 0.1% in April, as 2.2% higher prices for machine tools were offset by a decrease of 2.9% in wholesale prices for industrial chemicals…

in addition, the index for final demand for services fell by 0.1% after rising by 0.1% in March and falling 0.5% in February, as the margins for final demand for trade services fell by 0.8% and the index for final demand for transportation and warehousing services slipped 0.1%, while the index for final demand for services less trade, transportation, and warehousing services rose 0.2%…the largest increase among the services was a 7.6% increase in margins for passenger car rentals, while margins at gas stations fell 5.1% in the greatest decrease…

this report also showed the price index for processed goods for intermediate demand fell by 1.1% in April, the 10th consecutive price drop, leaving intermediate processed goods 7.8% lower priced than a year ago….that included a 3.4% decrease in prices for intermediate energy goods, a 1.7% drop in the index for processed foods and feeds, and a 0.5% decrease in the price index for processed goods for intermediate demand less food and energy…however, the price index for intermediate unprocessed goods rose by 0.9%, on a 1.7% increase in the price of crude energy materials and a 0.5% in the index for unprocessed foodstuffs and feedstuffs, while the index for other raw materials was unchanged…that followed drops of 8.9%, 3.9% and 1.7% in the first 3 months of this year, so this raw materials index remains 26.6% lower than a year ago…

finally, the price index for services for intermediate demand rose 0.5% in April, as a 0.1% decrease in the index for trade services for intermediate demand was offset by a 0.1% increase in the index for transportation and warehousing for intermediate demand and a 0.7% increase in prices for intermediate services less trade, transportation, and warehousing…over the 12 months ended in November, the price index for services for intermediate demand has risen 1.8%…

March Business Inventory Growth Less Than Estimated

following the release of retail sales report, Census released the composite Manufacturing and Trade Inventories and Sales report for March, which is covered in the media as the “business inventories” report, and is important in this case because the BEA estimated the inventories that are included here when computing first quarter GDP…according to the Census, total manufacturer’s and trade inventories were estimated to be at a seasonally adjusted $1,786.2 billion at the end of March, 0.1% (±0.1%) higher than February’s revised inventories, and up 2.9 percent (±0.9%) from March a year earlier…February’s inventories were revised from the originally reported $1,790.2 billion to $1,784.9 billion in the annual benchmark revision of April 30th…seasonally adjusted inventories of manufacturers were estimated to be valued 0.2% lower than February at $650,961 million, inventories of retailers were estimated to be 0.3% higher and valued at $561,156 million, and inventories of wholesalers were estimated to be valued at $580,618 million at the end of March, up 0.1% from February…ex the benchmark revisions, there was a 0.1% increase from the original estimates of February retail inventories, and a 0.1% decrease to a 0.2% increase in February wholesale inventories, ie a virtual wash…

in the technical note explaining the advance estimate of first quarter GDP, the BEA notes that they assumed that wholesale and retail inventories had increased and that nondurable manufacturing inventories had decreased in March in computing that estimate…while the BEA had the direction in each of those changes in private inventories correct, their estimate implied a significantly larger magnitude than this report indicates…for instance, for retail inventories excluding autos they penciled in an 0.8% increase, vs the 0.1% increase that’s shown for that metric in this report…since a $30.3 billion growth to an inflation adjusted $110.3 billion added 0.74 percentage points to the 1st quarter’s growth rate, we can expect to see that reduced by the $3.4 billion difference here, plus or minus any inflation adjustment..

Job Openings Slip while Hiring and Firing Increases in March

the March Job Openings and Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics estimated that seasonally adjusted job openings fell by 150,000 to 9,994,000 at the month end, down from the revised 14 year high set in February…job openings as a percentage of the employed labor force slipped back to 3.4% from 3.5% in February, but was still higher than the 3.0% ratio of a year ago…the decrease in openings was concentrated in retail, where job openings fell 48,000 to 495,000 and in health care, where openings fell 58,000 to 760,000 (see table 1) …like most BLS releases, the press release for report is very readable and also refers us to the associated table for the data cited, linked at the end of the release…

this 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 March, seasonally adjusted new hires totaled 5,067,000, up 56,000 from the 5,011,000 hired or rehired in February, as the hiring rate as a percentage of all employed remained unchanged at 3.6%, but was up from the 3.4% hiring rate in March a year earlier (details are in table 2)…..total separations also rose, from 4,793,000 in February to 4,983,000 in March, as the separations rate as a percentage of the employed rose from 3.4% to 3.5%, but was also up from 3.3% a year ago (see table 3)…it’s worth noting that this March report lags the current data, and recent weeks have indicated the lowest percentage of new unemployment claims in the history of the weekly data…subtracting the 4,983,000 total separations from the total hires of 5,067,000 would imply an increase of 84,000 jobs in March, virtually equal to the revised payroll job increase of 85,000 for March reported by the BLS establishment survey last week

breaking down the seasonally adjusted job separations, the BLS finds that 2,783,000 quit their jobs in March, up from the revised 2,720,000 who quit their jobs in February, while the quits rate, a widely watched as an indicator of worker confidence, rose from 1.9% to 2.0% of total employment (see table 4)….in addition to those who quit, another 1,793,000 were either laid off, fired or otherwise discharged in March, up from the 1,688,000 discharges in February, which also increased the discharges rate from 1.2% to 1.3% of all those who were employed during the month….meanwhile, other separations, which includes retirement and death, were at 407,000 in March, up from 385,000 in February, for an ‘other separations’ rate of 0.3%, which was unchanged…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

(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 from the aforementioned GGO posts, contact me…)

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