August’s retail sales, consumer prices, industrial production, new housing, state jobs; July’s business inventories

the past week saw the release of the lion’s share of the major monthly reports on August: Retail Sales from the Census Bureau, 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…the week also brought the Regional and State Employment and Unemployment Summary for August and the final major report for July: the Manufacturing and Trade: Inventories and Sales report, which is covered in the financial press as the business inventories report, and with the release of the Consumer Price Index, the August report on Real Average Hourly Earnings, which indicated that inflation adjusted and seasonally adjusted earnings for all employees increased by 0.5% from July to August, which resulted from a 0.3% increase in average hourly earnings and a 0.1% decrease in the CPI, while real average weekly earnings increased by 0.7% on the 0.5% increase in real average hourly earnings and a 0.3% increase in the average workweek (totals don’t add up due to rounding)…in addition, this week also saw the release of the first two regional Fed manufacturing indexes for September: the Empire State Manufacturing Survey from the New York Fed, which covers New York and northern New Jersey, reported their headline general business conditions index remained negative at -14.7 in September, nearly unchanged from the 6 year low of -14.9 in August, indicating recession-like conditions in the region’s manufacturing sector, while the Philadelphia Fed Manufacturing Survey, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest diffusion index of manufacturing conditions fell from 8.3 in August to -6.0 in September, suggesting the onset of a regional contraction in that area’s manufacturing facilities….

August Retail Sales 0.3% Higher Than Was Reported for July

seasonally adjusted headline retail sales rose less than the expected 0.3% in August, but an upward revision to July sales accounted for the difference…..the Advance Retail Sales Report for August (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $446.5 billion, which was an increase of 0.2 percent (±0.5%) from July’s revised sales of $446.9 billion and 2.2 percent (±0.7%) above the sales of August of last year…July’s seasonally adjusted sales were revised from the $446.5 billion first reported to $446.9 billion, while June’s sales, which were revised up to $443.9 billion from the originally reported $442.0 billion last month, were revised down a bit to $443.7 billion with this report….hence, this report implies a small downward revision to 2nd quarter personal consumption expenditures that may not even be statistically significant for GDP….estimated unadjusted sales in August, extrapolated from surveys of a small sampling of retailers, indicated unadjusted sales rose 0.16%, from $456,635 million in July to $457,352 million in August, while they were up 1.6% from the $450,365 million of sales in August a year ago…

once again, included below is the table of monthly and yearly percentage changes in sales by business type taken from the Census pdf, which you should all be familiar with by now…..the first double column below gives us the seasonally adjusted percentage change in sales for each type of retail business type from July to August in the first sub-column, and then the year over year percentage change for those businesses since last August in the 2nd column; the second pair of columns gives us the revision of last month’s July advance monthly estimates (now called “preliminary”) as revised in this report, likewise for each business type, with the June to July change under “June 2015 revised” and the revised July 2014 to July 2015 percentage change in the last column shown…for your reference, the table of last month’s advance July estimates before this month’s revision is here….

August 2015 retail sales table

here we can see that once again it was the 0.7% increase to $93,160 million in sales at automobile and parts dealers that underpinned the August sales increase; without those automotive sales, retail sales only increased by 0.1% to $354,555 million…both types of food retailers also saw 0.7% sales increases in August, as sales at food and beverage stores rose to $57,297 million and sales at restaurants and bars rose to $52,314 million…in addition, drug stores saw sales rise 0.8% to $28,547 million, and miscellaneous store retailers saw sales rise 0.9% to $10,338 million…on the other hand, three types of retailers saw their seasonally adjusted sales decrease significantly in August: sales at sales at building material and garden supply stores saw a 1.8% decrease to $27,153 million in sales; sales at furniture stores were down 0.9% to $8,580 million, and sales at gas stations fell 1.8% to $37,142 million, though the later was down due to a drop in the price of gasoline…for the past year, the 8.2% increase in sales at restaurants and bars was the largest increase of any retail type, while the 17.2% drop in gasoline stations sales was the greatest decrease and obviously due to lower gasoline prices…

Consumer Prices 0.1% Lower in August on Cheaper Fuel

overall consumer inflation remained subdued in August while lower prices for fuel turned the monthly index negative again…the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that seasonally adjusted prices fell 0.1% in August after rising 0.1% in July and 0.3% in June, while lower energy costs held the year over year increase to just 0.2%….the unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, slipped to 238.316 in August from 238.654 in July, which was actually less than 0.2% higher than the 237.852 reading of August of last year….with the lower fuel costs and just a modest increase in food, core prices, which exclude food and energy, rose by 0.1% in August, as the unadjusted core index rose from 242.436 to 242.651, to a level 1.83% ahead of its year ago reading of 238.296…regionally, prices for urban consumers fell 0.1% in the West, fell 0.2% in the South and in the Northeast and were mostly unchanged in the Midwest for the month, while they’ve risen 1.3% in the West while falling slightly elsewhere over the past year, with a trend toward greater price increases within regions in cities of more than 1,500,000 people…

the seasonally adjusted energy price index fell by 2.0% in August after falling 0.1% in July and rising 1.7% in June, leaving energy prices an average of 15.0% lower than they were in August a year ago…prices for energy commodities were 4.1% lower in August while the index for energy services saw a 0.5% increase, only its 2nd increase in 6 months….the drop in the energy commodity index was driven by a 4.1% decrease in the price of gasoline, the largest component, while fuel oil prices fell 8.1% and prices for other fuels, including propane, kerosene and firewood, averaged a 0.8% decrease…within energy services, the index for utility gas service rose by 1.2% after falling 1.4% in July, leaving utility gas priced 11.5% below a year ago, while the electricity price index rose by 0.3%, while prices for electricity remained 0.6% below those of a year earlier…energy commodities are now priced 23.6% below their year ago levels, with gasoline 23.3% lower than a year ago, while the energy services price index is still 3.0% lower than last August…

the seasonally adjusted food index rose by 0.2% in August, after rising 0.2% in July and 0.3% in June, as prices for food at home rose 0.3% while prices for food away from home rose 0.2%, as average prices at fast food outlets rose 0.3% and rose 0.2% at full service restaurants while food prices at employee sites and schools fell 0.5%…the increase in prices for food at home was driven by a 1.5% increase in the fruits and vegetables index, which saw fresh fruit prices rise 2.1% despite a 2.3% drop in apple prices, saw fresh vegetables rise 1.7% despite a 1.7% drop in potato prices, while processed fruits and vegetables just rose 0.1%…there was also a 0.5% increase in the meats, poultry, fish, and eggs index as eggs rose 7.7%, more than offsetting price decreases of 0.6% for beef, 0.5% for pork, and 0.4% for poultry…in other food groups, the index for cereals and bakery products fell 0.1% on 1.6% lower priced rice and 1.5% lower priced white bread, the dairy products index fell 0.3% on a 1.5% drop in milk prices, beverage prices rose 0.1% on a 0.5% increase in carbonated drinks, and the other foods at home index fell 0.2% on 0.8% lower soups and 0.6% lower prices for condiments….over the past year, only egg prices are now up by 35.3% while all other food items have seen annual price changes of less than 10%…the itemized list for price changes in 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 August, the composite of all CPI commodities less food and energy commodities fell by 0.1%, while the composite for all services less energy services rose by 0.1% on 0.2% increase in the cost of shelter, which accounts for more than half of the services index and nearly one third of the total CPI…within the shelter components, rent of one’s primary residence rose by 0.3% and owner’s equivalent rent rose by 0.2%, while the cost of lodging away from home fell 0.6% on 0.6% lower school dorm housing and a 0.5% decrease in hotel and motel rates…among other services, the transportation services index fell 0.3% on a 3.1% drop in airline fares, while the medical care services index was unchanged as a 0.3% increase in hospital services offset a 0.3% decrease in doctor’s fees…other services seeing a price change greater than 1% in August included rental of video discs and similar media, which saw a 3.8% price increase, and admissions to sporting events, which were 1.4% higher..

among consumer goods, the index for household furnishings and supplies fell 0.4% on a 2.2% drop in prices for living room, kitchen, and dining room furniture and a 1.4% decrease in prices for window coverings; apparel prices rose 0.3% as prices for men’s outerwear rose 3.0% and prices for women’s dresses rose 2.9%, while prices for women’s outerwear fell 3.4%…medical care commodities also rose 0.3% on a 0.4% increase in prescription drug prices…meanwhile, recreation commodities fell 0.4% on 1.5% cheaper TVs, 1.3% lower priced audio discs, tapes and other media, 1.1% lower priced photographic equipment, and 0.9% cheaper toys; the education and communication commodities index was 0.3% lower despite a 1.9% increase in college textbooks, while the transportation commodities less fuel index fell 0.1% one a 0.4% drop in prices for used cars and trucks while new car prices were unchanged…other than the aforementioned eggs, only telephones, which saw prices fall by 14.9%, and televisions, which were 13.0% cheaper, saw their prices change by more than 10% over the past year… 

the average 0.1% decrease in prices for core commodities would suggest that real personal consumption expenditures of goods for August will be 0.1% higher than the 0.2% increase we saw reported with retail sales, with the caveats that retail sales of gasoline and food would need to be adjusted separately with their appropriate price change index, and that the 0.7% increase in consumption at bars and restaurants would be included with personal consumption of services…as grocery store sales of food rose 0.7% with a 0.3% price increase, real consumption of food would be up 0.4% higher, while the 1.8% decrease in gas station sales adjusted with the 2.2% lower price of gasoline would suggest that real consumption of gasoline was also 0.4% higher than in July…

August Industrial Production 0.4% Lower on Drop in Autos

industrial production fell by 0.4% in August after increasing by an upwardly revised 0.9% in July…the Fed’s G17 release on Industrial production and Capacity Utilization for August showed that the 0.4% decrease in seasonally adjusted industrial production came after the increase in July production was revised from 0.6% to 0.9%,  the increase in June production was revised from 0.1% to unchanged, the decrease in May production was revised from -0.3% to -0.4%,  the decrease in April production was revised from -0.3% to 0.2%, and the decrease in March production was revised from -0.1% to -0.2%… the industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, thus fell to 107.1 in August from an unchanged reading of 107.5 in July after the June index was revised from 106.9 to 106.6 and the indexes for March, April and May were all revised 0.1 lower…the industrial production index, a measure of real output, is now only 0.9% higher than it was a year ago…to the extent that this report plays into GDP, the downward revision to April, May and June output would suggest a weaker than originally reported 2nd quarter growth rate when the 3rd estimate of GDP is released next week, which will correspondingly make 3rd quarter growth higher from a lower base…

the manufacturing index fell by 0.5% in August after a 0.9% increase in July as the 10.8% increase in production of automotive products in July was halved by a 5.4% decrease in August… the index for manufacturing fell from 105.8 to 105.3, after the the June index was revised up from 105.7 to 105.8 and the June index was unchanged at 104.9…with the decrease, the revised manufacturing index has deteriorated to 1.4% higher than a year ago, vs the 1.5% year over year increase reported last month…the mining index, which is dominated by oil and gas drilling, fell 0.6% in August after the July increase was revised from 0.2% to 1.8%, largely through downward revisions of April, May and June….the mining index now stands at 116.7 after the July index was revised from 117.1 to 117.5, which is now 3,2% below its year ago reading….the utility index, meanwhile, rose 0.6% in August after falling a revised 0.2% in July as the previously reported 2.3% increase in June was revised down to a 1.0% increase…those and other revisions to prior months left the utility index at 103.6, up from the 103.4 reported last month and now just 3.2% higher than a year ago…

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 78.0% in July to 77.6 in August…seasonally adjusted capacity utilization for all manufacturing industries was down 0.4% to 75.8% as utilization of durable goods production facilities fell from 76.6% to 75.8%…capacity utilization for mining fell from 84.7% in July to 84.0% in August, while utilities were operating at 79.2% of capacity during August, up from the revised 78.7% in July…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….

August Home Starts and Permits Flat

the report on New Residential Construction for August (pdf) from the Census Bureau estimated that the widely watched count of new housing starts was at a seasonally adjusted annual rate of 1,126,000 in August, which was 3.0 percent (±11.3%)* below the revised July estimate of 1,161,000 annually but 16.6 percent (±10.4%) above last August’s rate of 966,000 housing starts a year…as you know, the asterisk indicates that the Census did not have sufficient data to determine whether housing starts rose or fell over the past month, with the figure in parenthesis the most likely range of the change indicated; thus, August housing starts could have been down 14.3% or up 8.3% for all they know, with subsequent revisions further obscuring the change, as the July annual rate of starts was revised down from 1,206,000 to 1,161,000 units…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 99,900 housing units were started in August, down from 108,500 units started in July, which was initially estimated at 112,300 housing starts…the unadjusted estimates also show that 66,900 single family homes were started in July, while 32,500 housing units were started in apartment buildings with 5 or more units…

the monthly data on new building permits, with a smaller margin of error, are probably a better monthly indicator of new housing construction trends than the volatile and often revised starts data…in August, Census estimated new permits were issued at a seasonally adjusted annual rate of 1,170,000, which was 3.5 percent (±1.4%) above the revised July rate of 1,130,000 permits annually and 12.5 percent (±1.9%) above the rate of permit issuance a year earlier…again,.the estimates for new permits reported here were extrapolated from the unadjusted estimate, which showed permits for 98,300 housing units were issued in August, which was down from the estimated 102,000 new permits issued in July, so we see that it was a seasonal adjustment that turned the reported permits positive…those August permits included 61,200 permits for single family homes and 34,200 permits for housing units in apartment buildings with 5 or more units, with actual permits issued down in every region of the country…

July Business Inventories and Sales Both Up 0.1%

following the release of retail sales report, Census released the composite Manufacturing and Trade Inventories and Sales report for July (pdf), which incorporates the revised July retail data and gives us a complete picture of the business contribution to the economy for that month…according to the Census Bureau, total manufacturer’s and trade sales were estimated to be valued at a seasonally adjusted $1,328.0 billion in July, 0.1% (±0.2%) higher than June revised sales, but still down 2.7 percent (±0.5%) from July a year earlier…note that total June sales were revised up more than 0.1%, from $1,325.5 billion to $1,327,245 million….manufacturer’s sales fell by 0.2% from June to $483,594 million, retail trade sales, which exclude restaurant & bar sales from the retail sales reported earlier, rose by 0.8% to $394,919 million, and wholesale sales fell by 0.3% to $449,492 million…

meanwhile, total manufacturer’s and trade inventories, a major component of GDP, were estimated to be at a seasonally adjusted $1,812.4 billion at the end of July, 0.1 percent (±0.1%) higher than in June and up 2.6 percent (±0.5%) from July a year earlier…seasonally adjusted inventories of manufacturers were estimated to be valued at $651,190 million, 0.1% less than in June, inventories of retailers were valued at $576,881 million, 0.6% greater than June, and inventories of wholesalers were estimated to be valued at $584,281 million at the end of July, down 0.1% from June…the 0.1% increase in the nominal value of July business inventories stands in stark contrast to the 7.0% annualized increase in the value of inventories from the 1st quarter to the 2nd, and with average July prices little changed, it appears that this July pullback in inventory growth will have a substantial negative impact on 3rd quarter GDP growth…

August State and Regional Employment Report

the Regional and State Employment and Unemployment Summary for August 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, with BLS referring to appropriate tables linked to at the bottom of the press release wherever relevant, and with tables and coverage of 50 states, it’s more thorough than we can meaningfully cover in a short synopsis….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 July, 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 latter two tables are very detailed, giving you both actual and seasonally adjusted totals for jobs in each state and the District of Columbia in several categories, including construction, manufacturing, trade, transportation and utilities, financial, professional and business services, education and health services, leisure and hospitality and government….the pdf version of this report also includes map graphics for both the employment rate and the year over year payroll jobs increase by state and region..

(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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