November retail sales, producer prices; October business inventories, job openings, Mortgage Monitor

the key reports of this past week were on retail sales for November and on business inventories report for October, both from the Census bureau, and the Producer Price Index for November from the Bureau of Labor Statistics, and they were all released on Friday…leading up to the business inventories report, the Census also released the October report on Wholesale Trade, Sales and Inventories (pdf), while the BLS also released the Import and Export Price Indexes for November and the Job Openings and Labor Turnover Survey (JOLTS) for October…the week also saw the release of the the Mortgage Monitor for October (pdf) from Black Knight Financial Services, and the Consumer Credit Report for October from the Fed, which showed that overall credit expanded by a seasonally adjusted $16.0 billion, or at a 5.5% annual rate, as non-revolving credit expanded at a 7.4% rate to $2,588.8 billion and revolving credit outstanding inched up at a 0.2% rate to $923.6 billion…

November Retail Sales Increase 0.2% as Auto Dealer Sales Fall Again

seasonally adjusted retail sales rose 0.2% in November after retail sales for both October and September were revised a bit lower…the Advance Retail Sales Report for November (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $448.1 billion, which was an increase of 0.2 percent (±0.5%) from October’s revised sales of $447.1 billion and 1.4 percent (±0.7%) above the sales of November of last year…October’s seasonally adjusted sales were revised from the $447.3 billion first reported to $447.1 billion, while September’s sales, which were revised down to $447.0 billion from the originally reported $447.7 billion last month, were revised down again, to $446.855 billion with this report, revisions which were not statistically significant enough to change the month over month sales percentage changes…estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated unadjusted sales actually fell 0.3%, from $444,984 million in October to $443,714 in November, while they were up 1.5% from the $437,196 million of sales in November a year ago, surprisingly showing just a small seasonal adjustment to this month’s report…while we can’t judge the economic impact of this month’s report until the consumer price index is released next week, the revision to September sales should reduce 3rd quarter GDP by about 0.03 percentage points…

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 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 2015 revised” and the revised October 2014 to October 2015 percentage change in the last column shown…for your reference, the table of last month’s advance October estimates before this month’s revision is here….

November 2015 retail sales table

>looking at the above table, it’s clear that a surprise 0.4% decrease to $93,683 million in seasonally adjusted sales at automobile and parts dealers was largely responsible for the November sales weakness; without the nominal drop in automotive sales, other retail sales increased by 0.4% to $354,434 million…0.8% lower sales gasoline stations were also a drag, but at $34,478 million they’re a smaller part of the aggregate than they were when gasoline prices were higher…meanwhile, retailers showing above average increases in November sales included grocery stores, where sales were up 0.8% to $50,990 million, clothing stores, where sales were also up 0.8% to $21,313 million, specialty shops such as sporting goods and book stores, where sales also rose 0.8% to $7,572 million, general merchandise stores, where sales rose 0.7% to $57,205 million, miscellaneous store retailers, where sales rose 0.7% to $10,161 million, bars and restaurants, where sales also rose 0.7% to $52,957 million, electronics and appliance stores, where sales rose 0.6% to $8,746 million, and miscellaneous store retailers, where sales rose 0.6% to $10,161 million…building material and garden supply stores, with a 0.3% decrease in sales to $27,869 million, and furniture stores, also with a 0.3% decrease in sales to $8,779 million, were the only core retail groups to see lower nominal sales in November…

Producer Prices increased 0.3% in November on Higher Margins for Retailers

the seasonally adjusted Producer Price Index (PPI) for Total Final Demand unexpectedly increased in November as prices for finished wholesale goods fell by 0.1%, while margins of final services providers were 0.5% higher…this followed a October report that showed the overall PPI down 0.4%, with prices for finished goods down 0.4% while final demand for services was down 0.3%….producer prices remain 1.1% lower than they were a year ago, as the November increase was only the third in the last 12 months…

as noted, the index for final demand for goods, aka ‘finished goods’, fell by 0.1% in November after falling 0.4% in October, 1.2% in September and 0.6% in August, as the index for wholesale food prices was up 0.3% after back to back 0.8% decreases, as an 11.6% increase in wholesale prices for fresh fruit and a 10.8% increase in the wholesale price for fresh eggs offset lower wholesale prices for several other foods…meanwhile, the index for wholesale energy prices fell 0.6% as wholesale prices for home heating oil and distillates were down 5.2% and wholesale residential natural gas prices fell 3.1%…excluding food and energy, the index for final demand for wholesale core goods was 0.1% lower in November, as a 1.1% decrease in wholesale prices for industrial chemicals and a 1.0% increase in wholesale prices for sporting and athletic goods were the only core finished goods to see a price change greater than 1% for the month…

meanwhile, the index for final demand for services rose by 0.5% in November after falling by 0.3% in October and 0.4% in September, as the index for final demand for trade services rose 1.2%, the index for final demand for transportation and warehousing services rose 0.3%, and the index for final demand for services less trade, transportation, and warehousing services was 0.1% higher….among trade services, seasonally adjusted margins for fuels and lubricants retailers were 8.7% higher, margins for flooring and floor coverings retailers were 7.1% higher, and margins for clothing, jewelry, footwear, and accessories retailers increased by 6.2%, while computer hardware, software, and supplies retailers saw their margins contract by 5.5%…among transportation and warehousing services, a 1.3% decrease in margins for air transportation of freight only partially offset an increase in margins for other transportation and warehousing services, while in the core final demand services, a 3.9% increase in margins for portfolio management and a 3.2% increase in margins on consumer loans were offset by a 3.9% decrease in margins for securities brokerage, dealing, investment advice, and related services and a 3.6% decrease in the profitability of mining services…

this report also showed the price index for processed goods for intermediate demand fell by 0.6% after a 0.4% decrease in October, as intermediate processed goods prices have now been down 14 out of the last 16 months and are 7.1% lower than in November a year ago….all intermediate goods indices were down for the month, with prices for intermediate energy goods 1.7% lower, the index for processed foods and feeds 0.4% lower, while the price index for processed goods for intermediate demand less food and energy was down 0.4%…meanwhile, the price index for intermediate unprocessed goods fell 5.1% in November after being unchanged in October and falling 3.1% in September and 4.4% in August, as all of the raw material indexes also fell, with the index for crude energy goods down 9.2%, the index for unprocessed foodstuffs and feedstuffs down 3.0%, and producer prices for raw materials other than food and energy materials 3.4% lower… this raw materials index is now 26.6% lower than it was a year ago, as commodity prices continue to hit 16 year lows

finally, the price index for services for intermediate demand was unchanged in November after falling by 0.4% in October and 0.7% in September, as a 0.1% decrease in the index for trade services for intermediate demand offset a 0.2% increase in the index for transportation and warehousing services for intermediate demand and a 0.1% increase in the the price index for services less trade, transportation, and warehousing for intermediate demand…within such intermediate services, an 0.8% increase in margins for intermediate courier, messenger, and postal services offset a 3.7% decrease in margins for intermediate paper and plastics products wholesalers…over the 12 months ended in November, the year over year price index for services for intermediate demand, which has never turned negative, is still 0.5% higher than it was a year ago…  

A Note on Revisions to Import Prices

in addition to producer prices, this week also saw the Import and Export Price Indexes for November from the BLS, which indicated import prices declined 0.4% and export prices declined 0.6%, price changes that will be used to adjust November trade figures for deflation when they’re released the first week of January next year…however, with this release, the decrease in import prices for October was revised from -0.5% to -0.3%, while the decrease in import prices for September was revised from -0.6% to -1.1%…these price revisions will have the effect of decreasing real imports for October by ~0.2% from the previously published amount, and increasing real imports for September by ~0.5% in their inclusion in 3rd quarter GDP…thus we’ll revise our estimates of the economic impact of the October international trade report to indicate that our deteriorating balance of trade in goods in October will subtract about 0.40 percentage points from the growth of 4th quarter GDP, while the revision to 3rd quarter trade data combined with the change in September prices will subtract 0.10 percentage points from the previously published Q3 GDP figures…

October Wholesale Sales Unchanged, Inventories Down 0.1%

the value of both wholesale sales and wholesale inventories were down slightly in October, a month when producer prices for finished goods were down 0.4%…the October report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at $448.0 billion, statistically unchanged (+/-0.5)* from the revised September level of $448.2 billion, and were down 3.7 percent (+/-1.4%) from the value of wholesale sales of a year earlier…the September preliminary estimate was revised upward $0.2 billion, and hence the value of wholesale sales reported in October was virtually identical to what was initially reported for last month….wholesale sales of durable goods were down 0.8 percent (+/-0.9%)* from last month and were down 2.2 percent (+/-1.8%) from a year earlier, with wholesale sales of furniture 3.4% higher than in September while wholesale sales of motor vehicles and parts fell 2.6%…wholesale sales of nondurable goods were up by 0.7 percent (+/-0.9%)* from September, but were down 5.1 percent (+/-1.8%) from last October, with wholesale sales of petroleum and petroleum products up 2.9%, and wholesale sales of farm products up 3.4% on the month, even with 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 $585.9 billion at the end of October, 0.1 percent (+/-0.5%)* lower than the revised September level but 3.6 percent (+/-1.6%) above the valuation of last October’s inventories, while September’s preliminary inventory estimate was revised down by $1.5 billion or 0.3%, and hence October wholesale inventories are actually 0.4% lower than the $588.1 billion reported last month for September….wholesale durable goods inventories were down 0.1 percent (+/-0.4%)* from September but 2.5 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 1.1%…inventories of nondurable goods were valued 0.1 percent (+/-1.4%)* lower than September, but were valued 5.4 percent (+/-2.1%) higher than last October, as the value of inventories of raw farm products was down 5.4% while the value of inventories of drugs and druggists’ supplies was 1.1% higher than in September…with the October producer price index for finished goods down by 0.4% on 0.8% lower food prices, while intermediate wholesale prices also fell 0.4%, real wholesale inventories appear to be up on the order of 0.3% from September, but probably not enough to make a positive contribution to 4th quarter GDP…meanwhile, the downward revision of September inventories will likely clip another 0.03 or 0.04 percentage points off of the 3rd quarter growth rate…

Nominal Business Inventories Virtually Unchanged in October

following the release of retail sales report, Census released the composite Manufacturing and Trade Inventories and Sales report for October (pdf), which incorporates the revised October 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 $1,317.7 billion in October, down 0.2 percent (±0.2%)* from September’s revised sales, and down 2.7 percent (±0.5%) from October sales of a year earlier…note that total September sales were revised down by less than $0.1 billion, from $1,320.3 billion to $1,320.2 billion….manufacturer’s sales fell by 0.5% from September’s sales to $475,173 million in October, retail trade sales, which exclude restaurant & bar sales from the revised October retail sales reported earlier, were statistically unchanged at $394,562 million, and wholesale sales were also statistically unchanged at $447,978 million…

meanwhile, total manufacturer’s and trade inventories, a major component of GDP, were estimated to be at a seasonally adjusted $1,814.5 billion at the end of October, virtually unchanged (±0.2%) from September but 2.0 percent (±0.5%) higher than in October a year earlier…seasonally adjusted inventories of manufacturers were estimated to be valued at $645,129 million, 0.1% less than in September, inventories of retailers were valued at $584,283 million, 0.1% greater than September, and inventories of wholesalers were estimated to be valued at $588,120 million at the end of October, down 0.1% from September…last week we judged that due to lower producer prices, an increase in real factory inventories for October could result in a small boost to 4th quarter GDP; earlier today, we hedged on the impact of wholesale inventories…since October retail inventories will be inflated by the 0.4% decrease in producer prices for finished goods for that month, we’d judge that the 0.5% increase in real retail inventories could also add incrementally to 4th quarter GDP…that judgment comes with the warning that virtually no other analysis of October inventories agrees with me on that…

October Job Openings and Layoffs Down, Hires and Quits Up

the Job Openings and Labor Turnover Survey (JOLTS) report for October from the Bureau of Labor Statistics estimated that seasonally adjusted job openings fell by 151,000, from 5,534,000 in September to 5,383,000 in October, after the September increase of a similar magnitude was revised from 5,526,000 to 5,534,000….October jobs openings were still 14.1% higher than the 4,849,000 job openings reported in October a year ago, as the ratio of the unemployed to openings rose from 1.43 in September to 1.47 in October….job openings fell most prominently in the broad-professional and business services category, where they were down by 137,000 to 1,067,000; job openings in other categories were changed little (see table 1 for more details)…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 October, seasonally adjusted new hires totaled 5,137,000, up 57,000 from the revised 5,080,000 who were hired or rehired in September, as the hiring rate as a percentage of all employed remained unchanged at 3.6%, which was down from the hiring rate of 3.7% in October a year earlier (details of hiring by industry since June are in table 2)….meanwhile, total separations fell by 23,000, from 4,886,000 in September to 4,863,000 in October, as the separations rate as a percentage of the employed also remained unchanged at 3.4%, while it was also down from the separations rate of 3.5% a year ago (see table 3)…subtracting the 4,863,000 total separations from the total hires of 5,137,000 would imply an increase of 274,000 jobs in October, a bit lower than the revised payroll job increase of 289,000 for October reported by the November establishment survey last week, not an unusual difference and well within the expected margin of error in these incomplete samplings…

breaking down the seasonally adjusted job separations, the BLS finds that 2,779,000 quit their jobs in October, up 52,000 from the revised 2,727,000 who quit their jobs in September, 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 1,670,000 were either laid off, fired or otherwise discharged in October, down 116,000 from the 1,786,000 who were discharged in September, which lowered the discharges rate from 1.3% to 1.2% of all those who were employed during the month….meanwhile, other separations, which includes retirements and deaths, were at 414,000 in October, up from 389,000 in September, 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

Mortgage Delinquencies and Foreclosures Fall in October; Mean Time in Foreclosure at 1057 Days

the Mortgage Monitor for October (pdf) from Black Knight Financial Services (BKFS, formerly LPS) reported that there were 721,435 home mortgages, or 1.43% of all mortgages outstanding, remaining in the foreclosure process at the end of October, which was down from 737,254, or 1.46% of all active loans that were in foreclosure at the end of September, and down from 1.81% of all mortgages that were in foreclosure in October of last year…these are homeowners who had a foreclosure notice served but whose homes had not yet been seized, and the October “foreclosure inventory” remains the lowest percentage of homes that were in the foreclosure process since late 2007… new foreclosure starts were also the lowest since July, falling to in 73,218 October from 79,899 in September, and while they’ve been volatile from month to month, new foreclosure starts remain in a range about 50% higher than number of new foreclosures we saw in the precrisis year of 2005…

in addition to homes in foreclosure, BKFS data showed that 2,414,583 mortgages, or 4.77% of all mortgage loans, or were at least one mortgage payment overdue but not in foreclosure in October, down from 4.87% of homeowners with a mortgage who were more than 30 days behind in September, but still up from this year’s lowest delinquency rate of 4.66% in March, while still down from the mortgage delinquency rate of 5.42% in September a year earlier…of those who were delinquent in October, 819,617 home owners, or 1.62% of those with a mortgage, were considered seriously delinquent, meaning 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 6.20% of homeowners with a mortgage were either late in paying or in foreclosure at the end of September, and 3.05% of them were in serious trouble, ie, either “seriously delinquent” or already in foreclosure at month end…

as you know, the Mortgage Monitor (pdf) is a mostly graphics presentation from what was once the Analytics division of Lender Processing Services that covers a variety of mortgage related issues each month…when we initiated coverage of it 5 years ago, it was heavily focused on the various aspects of the mortgage crisis, and included dozens of related graphs…this October report includes none of that; its focus is on the distribution of high loan-to-value mortgages, changes in the cash share of purchase transactions,  the performance of second lien home equity lines of credit (HELOCs) facing draw period expirations through the end of 2018, and home prices…so we’ll just include below that part of one Mortgage Monitor table showing the monthly count of active home mortgage loans and their delinquency status, which comes from page 16 of the pdf….

the columns in the table below 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 over the past  and for each January shown going back to January 2005….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 slipped from the April record of 536 days and is now at 514 days, while the average time for those who’ve been in foreclosure without a resolution is also off its record high set in August but is still nearly three years at 1057 days… 

October 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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