May’s industrial production, consumer prices, new housing starts, and state jobs reports

there were three widely followed releases of May data this week; the G17 on Industrial Production and Capacity Utilization from the Fed; the Consumer Price Index from the Bureau of Labor Statistics, and the New Residential Construction report (pdf) from the Census Bureau,…we also saw the release of the first two regional Fed manufacturing indexes for June: the Empire State Manufacturing Survey from the New York Fed, which covers New York and northern New Jersey, saw conditions worsen slightly as their headline general business conditions index fell five points to -2.0, indicating a minor contraction, while the Philadelphia Fed Manufacturing Survey, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest diffusion index of manufacturing conditions increased from 6.7 in May to 15.2 in June, indicating stronger growth than last month….in addition, the week also saw the release of the Regional and State Employment and Unemployment report for May from the BLS, and, coincident with the CPI, the Real earnings report for May, which found that real average hourly earnings for all employees decreased 0.1% in May because prices went up more than paychecks did..

May Industrial Production Shows 2nd Quarter Contraction

industrial production unexpectedly fell 0.2% in May after a revised 0.5% decrease in April but earlier, mostly positive revisions to data going all the way back to December ameliorated the overall negative print…the Fed’s G17 release on Industrial production and Capacity Utilization for May showed that the 0.2% decline in seasonally adjusted industrial production came after the April decrease was revised from 0.3% to 0.5%, the March 0.3% decrease was revised to unchanged, the February 0.1% decrease was revised to unchanged, the January 0.3% decrease was revised to a 0.4% decrease, and the December 0.1% decrease was revised to unchanged…the net effect of these revisions is evident in the industrial production index, a benchmark with 2007 production equal to 100.0, which fell to 105.1 in May from the originally reported 105.2 reading in April…the April index was actually revised up from 105.2 to 105.3, while the March index was revised from 105.5 to 105.8, setting up the 0.5% decrease in April…to the extent that this report plays into GDP, the upward revisions of February and March would suggest a stronger than reported 1st quarter, but that would only make the 2nd quarter downturn in April and May that much worse in comparison..

the manufacturing index, which accounts for roughly 70% of the industrial composite, fell by 0.2% in May to 101.3 after rising 0.1% to a unrevised April reading of 101.5 that was 0.1% higher than March, after originally being reported unchanged…for the manufacturing index, the revisions predate December because while the December index was unchanged at 101.9, it is now shown as down 0.1% from November, rather than unchanged as was reported last month…the revised January manufacturing index decrease to 101.2 accounted for the rest of the manufacturing weakness this year; but even with that and the May drop, the manufacturing index is still 1.8% higher than a year ago… …the mining index, which is now dominated by oil and gas activity, fell 0.3% in May after falling a revised 1.3% in April and a revised 0.3% in March, which were previously reported as declines of 0.7% and 0.1%; as a result of revisions, the mining index at 128.6 is now 0.3% lower than a year earlier, in contrast with the year over year 1.2% increase reported for this sector last month……the utility index, meanwhile, increased 0.2% in May after falling a revised 3.7% in April as this weather influenced index also saw major revisions; April’s decrease was originally reported as 1.3% while the March decrease was revised from 5.4% to 1.8%; both months representing a return to more seasonal utility usage after a January and February saw utility output rise 3.3% and 4.9% respectively on much colder than normal weather over most of the US…the May reading of 102.6 now represents a 1.3% increase from a year ago… 

in the breakdown of production by market group, the Fed reports that output of consumer goods fell 0.3% as a 0.7% decrease in output of consumer non-durables and an 0.8% decrease in production of consumer energy products outweighed a 1.1% increase in production of consumer durables which was driven by a 1.9% increase in production of automotive products and a 1.0% increase in production of home electronics….production of business equipment rose 0.2% and output of business supplies rose 0.1% while production of defense and space equipment fell 1.3%, output of construction materials fell 0.3%, and output of intermediate materials fell 0.1%….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…

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 78.3% in April to 78.1% in May, with the utilization rate for April revised up from 78.2%…seasonally adjusted capacity utilization for manufacturing industries was down 0.2% to 77.0% with April manufacturing utilization unrevised…capacity utilization for mining fell from 83.7% in April to 83.3 in May after the April utilization rate for ‘mining’ equipment’ and oil rigs was revised from 84.0%, while utilities were operating at 80% of capacity during May, up from 79.8% in April but still well below the long term 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….for more details and graphics to go with this report, see Robert Oak’s post May Industrial Production Down -0.2% With April Surprise -0.5% Revision, which included 10 FRED graphs…

May Consumer Prices Rise 0.4% on 10.4% Higher Gasoline

despite modest price changes in most major categorizes, the consumer price index rose by the most in a year in May, as much higher gasoline prices more than offset lower prices for groceries and clothing…the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that seasonally adjusted prices rose 0.4% in May after rising 0.1% in April and by 0.2% in both March and February, while falling in each of the 5 months prior to that…the unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, rose to 237.805 in May from 236.599 in April, a level that was still 0.04% lower than the 237.900 reading from May of last year…regionally, urban prices have risen 1.2% in the West, while they have fallen 0.3% in the Northeast, 0.4% in the South, and 0.8% in the Midwest over the past year, with greater increases within regions in cities of more than 1,500,000 people….since the increase in gasoline prices was the major driver in the overall index increase in May, core prices, which exclude food and energy, rose by just 0.1% in May, as the unadjusted core index rose from 241.802 to 242.119, to a level 1.72% ahead of its year ago reading of 238.029…  

the seasonally adjusted energy price index rose by 4.3% in May after falling 1.3% in April; nonetheless, energy prices are still averaging 16.3% lower than they were in April a year ago…prices for energy commodities were 9.6% higher while the index for energy services fell 1.0% in its third monthly decrease in a row….the increase in the energy commodity index was driven by a 10.4% jump in the price of gasoline, the largest component, while fuel oil prices rose 0.7% and prices for other fuels, including propane, kerosene and firewood, averaged a 1.0% decrease…within energy services, the index for utility gas service, down every prior month this year, was unchanged, leaving utility gas priced 15.4% below a year ago, while the electricity price index fell by 1.2% after it was unchanged in April…energy commodities are still priced 24.8% below their year ago levels, with gasoline still 25.0% lower than a year ago, while the energy services price index is now 3.3% lower than last May…   

the seasonally adjusted food index was statistically unchanged, just as it was in April, as prices for food at home fell 0.2% and prices for food away from home rose 0.2% on a 0.3% average price increase at fast food joints…among food at home categories, prices for dairy and related products fell 0.7% on a 2.0% drop in ice cream prices and 0.9% lower milk; prices for the meat, poultry, fish, and egg group fell 0.5% on a 2.4% drop in chicken prices, beverages and beverage materials were 0.2% lower on a 1.4% decrease in prices for roast coffee, and prices for cereals and bakery products fell 0.1% on a 0.9% drop in non-white bread prices in part offset by 1.3% higher priced cookies…meanwhile, the fruit and vegetable index rose 0.3% on a 1.2% increase in prices for fresh vegetables, while the index for other foods at home rose 0.1%….only beef prices remain 10% higher than a year ago, with beef roasts up 10.6%, while bacon prices are 17.4% lower, with most of that bacon price drop occurring in the last 4 months…the itemized list for prices of over 100 separate food items is included at the beginning of Table 2, which gives us a line item breakdown for prices of more than 200 CPI items overall

among the seasonally adjusted core components of the CPI, which rose by 0.1% in May,  the composite of all commodities less food and energy commodities fell by 0.1%, while the composite for all services less energy services rose by 0.2%…lower prices for commodities suggests even higher real consumption of them in May that was indicated by last week’s 1.2% jump in retail sales, with the caveat that gasoline and food retail sales will be adjusted separately with their appropriate price change index… otherwise, noteworthy price increases in May included a 5.7% increase in airline fares, a 2.6% increase in car & truck rental costs, a 2.2% increase in prices for men’s outerwear, a 1.9% increase in tickets for sporting events, and a 1.8% increase in rentals of videos….meanwhile, women’s dresses were 2.9% cheaper, women’s footwear saw a 2.5% decrease, hotel and motel prices fell 2.6%, sports equipment prices averaged 2.1% lower, and within the household furnishings category, both window coverings and furniture other than bedroom, living room, dining room and kitchen furniture both fell by 2.2%….other than the aforementioned beef, bacon, and energy commodities, only televisions, which were 14.5% cheaper, telephones, which fell by 12.8%, and photographic equipment, which was 10.4% lower, saw their prices change by more than 10% over the past year… for graphics for this report, see Robert Oak’s post ‘Inflation Returns on Gas‘, which includes 11 FRED graphs…

May New Housings Starts Fall from April High; Building Permits Highest Since August 2007

the May report on New Residential Construction (pdf) from the Census Bureau estimated that the widely watched count of new housing starts were at a seasonally adjusted annual rate of 1,036,000 in May, which was 11.1 percent (±10.4%) below the revised April estimate of 1,165,000 annually but still 5.1 percent (±11.2%)* above last May’s rate of 986,000 housing starts a year…the asterisk indicates that the Census does not have sufficient data to determine whether housing starts rose or fell over the past year, with the figure in parenthesis the most likely range of the change indicated….the annual rates of starts indicated by the headline change are extrapolated from a survey of a small percentage of permit offices visited by Census field agents, which estimated that 96,800 housing units were started in May, down from 105,500 started in April, which was initially estimated at 103,600 starts…single family houses accounted for 65,000 of the May starts, while 31,100 units were started in apartment buildings with 5 or more units…housing starts were down in every region, with starts in the volatile Northeast falling to 12,900 in May after 16,700 units were started in that region in April, 8,000 were started in March, and 2,800 in February…

as we’ve noted previously, the monthly data on new building permits, with a smaller margin of error, are probably a better monthly indicator of new construction trends than the volatile and often revised starts data… in May, Census estimated new permits were issued at a seasonally adjusted annual rate of 1,275,000, which was 11.8 percent (±1.8%) above the slightly revised April rate of 1,140,000 annually and 25.4 percent (±2.1%) above the rate of permit issuance a year earlier, and the most permits issued in any month since August 2007….those estimates were extrapolated from the unadjusted estimate which showed permits for 113,300 housing units were issued in May, which was up from the estimated 104,800 new permits issued in April, and driven by a jump from 16,200 to 27,100 in new permits issued in the Northeast, all but 4,400 of which were permits for units in multifamily structures…

for graphs and additional commentary on this new housing report, see the following two posts from Bill McBride: Housing Starts decreased to 1.036 Million Annual Rate in May and Comments on May Housing Starts

May State and Regional Employment Report

the Regional and State Employment and Unemployment Summary for May, released on Friday, expands on the national employment situation summary of two weeks ago by breaking down the state and regional details…as with most BLS reports, the press release is very readable & self explanatory, better than we can restate, with BLS referring to appropriate tables linked to at the bottom of the press release wherever relevant…the BLS table corresponding to household survey data, including the seasonally adjusted count of the unemployed and the unemployment rate for each state, is here….for a breakdown of payroll employment by job type for each state over the past 3 months, and the change in employment since last April, 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 …this report was also covered by Bill McBride with his graphs here: BLS: Twenty-Five States had Unemployment Rate Increases in May

(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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