August producer prices; July wholesale sales, job openings and turnover, and the July Mortgage Monitor

it’s been a fairly light week for economic reports, with the major releases being the July report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau, and the August Producer Price Index from the Bureau of Labor Statistics; in addition, this week also saw the Import and Export Price Indexes for August from the BLS, which indicated import prices declined 1.8% and export prices declined 1.4%, price changes that will be used to adjust August trade figures for deflation when they’re released the first week of October, and the July Job Openings and Labor Turnover Survey (JOLTS), providing the details behind the payroll jobs report of the month before last… the week also saw the release of the Mortgage Monitor for July (pdf) from Black Knight Financial Services, and the Consumer Credit Report for July from the Fed, which showed that overall credit expanded by a seasonally adjusted $19.1 billion, or at a 6.7% annual rate, as non-revolving credit expanded at a 5.7% rate to $2,538.8 billion and revolving credit outstanding rose at a 7.0% rate to $914.6 billion…

August Producer Prices Flat as Lower Energy Prices Offset Other Increases

wholesale prices flattened in August as the seasonally adjusted Producer Price Index (PPI) for Final Demand was unchanged, as a 0.6% decrease in prices for wholesale goods was offset by a 0.4% increase in final demand for services…although the PPI had risen 0.2% in July and 0.4% in both May and June, it still remains 0.8% below its year ago level, the same as it was in July, largely due to lower wholesale food and energy costs..

the index for final demand for goods, aka ‘finished goods’, fell by 0.6% in August after falling 0.1% in July and rising 0.7% in June, as the index for wholesale energy prices fell by 3.3%, led by 11.0% lower wholesale prices for home heating oil and 7.7% lower wholesale gasoline prices…the price index for final demand for foods was 0.3% higher, as a 32.3% increase in wholesale fresh egg prices more than offset a 10.4 drop in wholesale grain prices (see table 4)…..excluding food and energy, the index for final demand for wholesale core goods decreased by 0.2% in August after being unchanged in July, as a 1.2% decrease in wholesale prices for metal cutting tools was the largest of many price decreases..

meanwhile, the index for final demand for services rose 0.4% in August after rising 0.4% in July and 0.2% in June, as the index for final demand for trade services rose by 0.9%, more than offsetting a 0.7% drop in the index for final demand for transportation and warehousing services, while the index for final demand for services less trade, transportation, and warehousing services rose 0.2%….margins for apparel, footwear, and accessories retailers increased by 7.0%, margins of gas stations and other fuels retailers rose 10.3%, and margins on recreational activity instruction fees rose 9.1% in the largest services increases..

this month’s report also showed the price index for processed goods for intermediate demand fell by 0.6% after falling by 0.2% in July and rising 0.7% in June, as the index for intermediate processed goods slipped to 7.0% lower than in August a year ago….the decrease this month was once again precipitated by a 2.1% drop in prices for intermediate energy goods, while the index for processed foods and feeds was unchanged and the price index for processed goods for intermediate demand less food and energy slipped 0.2%…in addition, the price index for intermediate unprocessed goods fell by 4.4% in August after falling 2.9% in July, as prices for crude energy materials were 9.5% lower, the index for unprocessed foodstuffs and feedstuffs fell 0.1%, and the index for other raw materials fell 4.8%…this left the raw materials index 23.6% lower than it was a year ago, as it has now been negative year over year for 13 months running…

finally, the price index for services for intermediate demand rose by 0.7% following a 0.2% increase in July, as the index for trade services for intermediate demand rose by 1.1%, the index for transportation and warehousing services for intermediate demand fell 0.3%, and the price index for services less trade, transportation, and warehousing for intermediate demand was 0.7% higher…over the 12 months ended in July, the price index for services for intermediate demand has now risen 1.8%…   

Value of July Wholesale Sales Falls 0.3%; Inventories Down 0.1%

the July report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at $449.5 billion, 0.3 percent (+/-0.5)* lower than the revised June level, and were 4.2 percent (+/-1.4%) lower than wholesale sales of a year earlier…the June preliminary estimate was revised upward $1.0 billion or 0.2 percent, and hence the value of wholesale sales reported in July was just 0.1% lower than the $449.9 billion that was reported last month for June…wholesale sales of durable goods rose 1.2 percent (+/-0.9%) from last month and were up 0.2 percent (+/-1.6%)* from a year earlier with wholesale sales of machinery and equipment 5.2% higher than in June while wholesale sales of metals dropped 4.2%, at least in part due to lower commodity prices…wholesale sales of nondurable goods were down 1.7 percent (+/-0.5%) from June and were down 8.0 percent (+/-1.9%) from last July, with wholesale sales of petroleum and petroleum products down 8.2%, and wholesale sales of farm products down 2.2% on the month, mostly on lower prices…as an intermediate activity, wholesale sales are not included in GDP except as a trade service, since they do not represent an increase in the output of the goods sold….

on the other hand, the monthly change in private wholesale inventories is a major factor in GDP, as additional goods “on the shelf” represent goods that were produced, and the Census estimated they were valued at $584.3 billion at the end of July, 0.1 percent (+/-0.4%)* lower than the revised June level but 4.9 percent (+/-1.4%) above the valuation of last July’s inventories, while June’s preliminary inventory estimate was revised down by $1.2 billion or 0.2%, so July wholesale inventories are actually 0.3% lower than the $586.2 billion reported last month for June….wholesale durable goods inventories were up were up 0.1 percent (+/-0.4%)* from June and 5.0 percent (+/-1.8%) higher than a year earlier, as the value of inventories of vehicles and parts were 1.0% higher than June, while the value of inventories of metals and minerals were down 1.4%…inventories of nondurable goods were valued 0.5 percent (+/-0.7%) lower than June, but were valued 4.8 percent (+/-1.8%) higher than last July, as the value of inventories of petroleum and petroleum products was down 4.8% and inventories of drugs and druggists’ supplies were down 3.2 percent while inventories of raw farm products were 13.3% higher than in June..with the July producer price index for finished goods down by 0.1% on 0.6% lower energy prices, while intermediate wholesale prices fell 0.2%, real wholesale inventories appear to be up marginally from June but not enough to make a positive contribution to 3rd quarter GDP..

July Job Openings at All Time High as Hires Falls 199K

the largest increase in job openings since April 2010 propelled the total count of openings to the highest level since the labor department started tracking this metric in December 2000 ..the July Job Openings and Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics estimated that seasonally adjusted job openings rose by 430,000 to 5,753,000 in July after June job openings were revised from 5,249,000 to 5,323,000…July’s jobs openings were also 21.7% higher than the 4,726,000 job openings reported in July a year ago, as the ratio of the unemployed to openings fell to 1.44, the lowest since March 2007…the increases in openings were spread across most industries, topped by the broad professional and business services category, which saw an increase of 122,000 job openings in July (see table 1)…like most BLS releases, the press release for report is easily readable and also refers us to the associated table for the data cited, linked at the end of the release…

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 includes retirements and deaths….in July, seasonally adjusted new hires totaled 4,983,000, down 199,000 from the revised 5,082,000 who were hired or rehired in June, as the hiring rate as a percentage of all employed fell from 3.7% to 3.5%, and was even lower than the hiring rate of 3.6% in July a year earlier (details of hiring by industry are in table 2)….total separations also fell by nearly the same number, from 4,906,000 in June to 4,716,000 in July, as the separations rate as a percentage of the employed fell from 3.5% to 3.3, down from a separations rate of 3.4% a year ago (see table 3)…subtracting the 4,716,000 total separations from the total hires of 4,983,000 would imply an increase of 267,000 jobs in July, a bit more than the revised payroll job increase of 245,000 for July reported by the August establishment survey last week, not an unexpected difference considering the large margins of error in both surveys…

breaking down the seasonally adjusted job separations, the BLS finds that 2,695,000 quit their jobs in July, down 45,000 from the revised 2,738,000 who quit their jobs in June, while the quits rate, widely watched as an indicator of worker confidence, was unchanged at 1.9% of total employment (see details in table 4)….in addition to those who quit, another 1,609,000 were either laid off, fired or otherwise discharged in June, down 170,000 from the 1,779,000 who were discharged in May, as the discharges rate fell from 1.3% to 1.1% of all those who were employed during the month….meanwhile, other separations, which includes retirements and deaths, were at 413,000 in July, up from 389,000 in June, 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…in addition, Robert Oak gives this report complete coverage in his post Job Openings at Record, Hires Not So Much, which includes 10 long term graphs…

Foreclosures Fall to 1.4% of July Mortgages; Time to Foreclose Still at 1,011 Days

the Mortgage Monitor for July (pdf) from Black Knight Financial Services (BKFS, formerly LPS) reported that there were 711,265 home mortgages, or 1.40% of all mortgages, remaining in the foreclosure process at the end of July, which was down from 739,498, or 1.46% of all active loans that were in foreclosure at the end of June, and down from 1.80% of all mortgages that were in foreclosure in July of last year…these are homeowners who had a foreclosure notice served but whose homes had not yet been seized, and the May “foreclosure inventory” remains the lowest percentage of homes that were in the foreclosure process since late 2007… new foreclosure starts also fell, from 79,018 in June to 75,404 in July, while they remain around 60% above the monthly level of new foreclosures we saw in the precrisis year of 2005…

in addition to homes in foreclosure, July BKFS data showed that 2,388,812 mortgages, or 4.71% of all mortgage loans, or were at least one mortgage payment overdue but not in foreclosure, down from 4.82% of homeowners with a mortgage who were more than 30 days behind in June, and down from the mortgage delinquency rate of 5.64% in July a year earlier, and also the lowest mortgage delinquency rate since 2007…of those who were delinquent in May, 886,028 home owners, or 1.75% of those with a mortgage, were considered seriously delinquent, which means they were more than 90 days behind on mortgage payments, but still not in foreclosure at the end of the month…combining these totals, we find a total of 6.11% of homeowners with a mortgage were either late in paying or in foreclosure at the end of July, and 3.15% of them were in serious trouble, ie, either “seriously delinquent” or already in foreclosure at month end…

as you may recall, the Mortgage Monitor (pdf) is a mostly graphics presentation that covers a variety of mortgage related issues each month; in addition to the summary data on delinquencies and foreclosures, this July monitor also includes several pages of graphics showing home price appreciation trends based on their own price index, net equity among US mortgage holders, and second lien and home equity loan performance data…some explanation of what those graphics reveal can be found in the BKFS press release that introduces the July Mortgage Monitor: Total Equity in U.S. Mortgage Market at $7.6 Trillion, Up $825 Billion Year-to-Date; however, since those topics are outside of our normal purview, we’ll just include below that part of the Mortgage Monitor summary table showing the monthly count of active home mortgage loans and their delinquency status, which was excerpted from page 14 of the pdf….

in the table below, the columns show the total active mortgage loan count nationally for each month given, number of mortgages that were delinquent by more than 90 days but not yet in foreclosure, the monthly count of those mortgages that are in the foreclosure process (FC), the total non-current mortgages, including those that just missed one or two payments, and then the number of foreclosure starts for each month the past year and a half and for each January shown going back to January 2008….in the last two columns, we see the average length of time that those who have been more than 90 days delinquent have remained in their homes without foreclosure, and then the average number of days those in foreclosure have been stuck in that process because of the lengthy foreclosure pipelines…the average length of delinquency for those who have been more than 90 days delinquent without foreclosure,  now at 535 days, is down just a bit from the April record of 544 days, while the average time for those who’ve been in foreclosure without a resolution is also off its record high but is still nearly three years at 1011 days…

July 2015 LPS loan counts and days delinquent

(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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