April consumer prices, industrial production, housing construction, and existing home sales

the most widely watched reports released this past week were the April Consumer Price Index from the Bureau of Labor Statistics, the Fed’s report on Industrial Production and Capacity Utilization for Aprilthe April report on New Residential Construction from the Census Bureau, and the April report on existing home sales from the National Association of Realtors (NAR)….in addition, this week also saw the release of the Regional and State Employment and Unemployment for April from the BLS and the Chicago Fed National Activity Index (CFNAI) for April…the latter, a weighted composite index of 85 different economic metrics, rose from a downwardly revised –0.55 in March to +0.10 in April, which left the 3 month average of the index at –0.22, indicating national economic activity was below the historical trend over those recent months….we also had the release of the first two regional Fed manufacturing indexes for May: the Empire State Manufacturing Survey from the New York Fed, which covers New York and northern New Jersey, saw their headline general business conditions index fall from +9.6 in April to -9.0 in May, indicating a return to recessionary conditions in First District manufacturing, and the Philadelphia Fed Manufacturing Survey, covering most of Pennsylvania, southern New Jersey, and Delaware, which reported its broadest diffusion index of manufacturing conditions was unchanged at -1.8 in May, its eighth negative reading in nine months, also implying an ongoing slowdown in that region’s manufacturing… 

CPI Up 0.4% in April on Higher Priced Gasoline, Services

the consumer price index rose 0.4% in April, the greatest increase in 26 months, as energy commodities and core services were higher….the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that seasonally adjusted prices rose 0.4% in April after rising 0.1% in March and falling by 0.2% in February….the unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, rose from 238.132 in March to 239.261 in April, which left it statistically 1.13% higher than the 236.599 index reading of last April….regionally, prices for urban consumers have risen 1.8% in the West, 0.9% in the South, 0.8% in the Midwest, and 1.9% in the Northeast over the past year, with generally greater price increases within regions in cities of more than 1,500,000 people…with higher energy prices leading the April advance, seasonally adjusted core prices, which exclude food and energy, rose by just 0.2% for the month, with the unadjusted core index rising from 246.358 to 246.992, which is now 2.15% ahead of its year ago reading of 241.802…

the seasonally adjusted energy price index rose by 3.4% in April after rising by 0.9% in March and falling by 6.0% in February and by 2.8% in both December and January, and thus the energy index still remains 8.9% lower than it was in April a year ago….prices for energy commodities were 7.8% higher while the index for energy services fell by 0.1%, after a 0.2% increase in March….the increase in the energy commodity index included a 8.1% increase in the price of gasoline, the largest component, and a 1.9% increase in the price of fuel oil, while prices for other fuels, including propane, kerosene and firewood, averaged a 0.4% decrease…within energy services, the index for utility gas service rose by 0.6% after falling by 0.7% in March, leaving utility gas priced 6.5% lower than it was a year ago, while the electricity price index fell by 0.3%, after rising by 0.4% in March…energy commodities are still priced 14.2% below their year ago levels, with gasoline averaging 13.8% lower than it was a year ago…meanwhile, the energy services price index is 3.1% lower than last April, as even electricity prices have fallen 2.1% over that period..

the seasonally adjusted food price index rose 0.2% in April, after it rose by 0.2% in March, as prices for food purchased for use at home rose 0.1% while prices for food away from home rose 0.2%, as average prices at fast food outlets rose 0.3% while average prices at full service restaurants rose 0.1%…among food at home categories, the price index for cereals and bakery products was up 0.3% as prices for flour and prepared flour mixes rose 2.2% and cookie prices rose 1.6% while cakes and cupcakes fell 1.3% and prices for rice were 1.2% lower…at the same time, the price index for the meats, poultry, fish, and eggs group fell by 0.1% as prices for eggs were 6.3% lower and beef and veal prices averaged a 0.6% decrease while pork prices averaged 2.0% higher on 3.1% higher priced bacon…the index for dairy products was 0.4% higher, as cheese prices rose 0.7% while prices for whole milk were 0.2% lower… the fruits and vegetables index, meanwhile, fell 0.5% in April after falling by 1.9% in March as prices for both fresh fruits and for fresh vegetables averaged a 1.1% decrease, led by a 4.7% drop in tomato prices, while prices for processed fruits and vegetables rose 1.6% on a 2.5% increase in prices for frozen vegetables…meanwhile, the index for beverages and beverage materials was 0.3% higher as carbonated drinks prices rose 1.5% while instant and freeze dried coffee was priced 1.4% lower… lastly, prices in the other foods at home category averaged a 0.5% increase as prices for sugar and artificial sweeteners rose 2.9% and margarine was priced 2.6% higher….among food line items, only apples, which are now priced 10.5% higher than a year ago, have seen price changes greater than 10% over the past year…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 0.2% in April after rising 0.1% in March and  0.3% in both February and January, the composite of all commodities less food and energy commodities fell by 0.1% while the composite for all services less energy services was 0.3% higher….among the commodity components, which will be used by the Bureau of Economic Analysis to adjust April retail sales for inflation in national accounts data, the index for household furnishings and supplies fell by 0.4% on a 0.5% decrease in prices for bedroom furniture and a 0.7% decrease in the index for tools, hardware, outdoor equipment and supplies…at the same time, the apparel price index was 0.3% lower on a 3.1% decrease in prices for girls apparel and a 2.5% decrease in prices for infants’ and toddlers’ apparel…prices for transportation commodities other than fuel were also down 0.3%, as prices for new cars were down 0.4% while new trucks and used cars were 0.3% lower….on the other hand, prices for medical care commodities were 0.5% higher on 0.7% higher prescription drug prices, while the recreational commodities index rose 0.2% as prices for sports vehicles including bicycles rose 2.3%, which was only partially offset by 4.2% lower prices for photographic equipment…..likewise, the education and communication commodities index was 0.7% higher as a 2.6% increase in prices for  telephone hardware, calculators, and other consumer information items and 1.6% increase in prices for college textbooks was only partially offset by a 0.6% decrease in prices for personal computers and peripheral equipment, while lastly a separate index for alcoholic beverages rose 0.2$ on a 0.6% increase in prices for beer and ale, while the index for ‘other goods’ was unchanged despite a 1.5% decrease in prices for infants’ equipment…

within services, the price index for shelter rose 0.3% on a 0.3% increase in both rents and in owner’s equivalent rent while costs for lodging away from home at hotels and motels fell 0.5%, and costs for water, sewers and trash collection were 0.5% higher….medical care services also rose 0.3% as glasses and eye care services and dental services both rose 0.7%…at the same time, the transportation services index rose 0.7% on a 1.2% increase in motor vehicle insurance and a 1.1% increase in airline fares….meanwhile, the recreation services index rose 0.4% after rising 0.5% in both February and March as video & audio services including rental prices rose 2.0% and admissions to sporting events rose 0.8%… on the other hand, the index education and communication services was unchanged in April as a 1.7% decrease in postage and delivery services offset 0.3% higher college tuition and 0.4% higher elementary and high school tuition and fees……lastly, other personal services were up 0.2% on a 0.6% increase in the financial services index…among core prices, the 10.2% year over year increase in moving and storage expenses was the only line item with an annual increase greater than 10%, while only telephones, which were priced 10.8% lower, and televisions, which are now 16.1% cheaper, saw their prices drop by more than 10% over the past year…

with this release, we can now attempt to estimate the economic impact of the retail sales figures from last week, which saw nominal sales rise 1.3%…for the most accurate estimate, and the way the BEA will be figuring 2nd quarter GDP at the end of July, we would have to take each type of retail sales and adjust it with the appropriate change in price to determine real sales; for instance, April’s clothing store sales, which rose by 1.0% in dollars, should be adjusted with the price index for apparel, which indicated prices were down by 0.3%, to show us that real retail sales of clothing were actually up by 1.3% in April…then, to get a GDP relevant quarterly change, we’d have to compare such adjusted real clothing sales for April with the similarly real clothing consumption for the 3 months of the first quarter, January, February and March, and then repeat that process for each other type of retailer, obviously quite a tedious task to undertake manually….the short cut we usually take to get a ballpark estimate of real sales is to apply the composite price index of all commodities less food and energy commodities, which was down 0.1%, to retail sales less grocery, gas station, and restaurant sales, which accounts for nearly 70% of the aggregate sales…those sales were up by just about 1.4% in April, while their composite price index was down 0.1%, leaving real retail sales excluding food and energy sales up by roughly 1.5%…then, for the rest of the retail aggregate, we find sales at grocery stores were up 1.1% in April, while prices for food at home were up 0.1%, suggesting a real increase of around 1.0% in the quantity of food purchased for the month…next, sales at bars and restaurants were up 0.3% in dollars, and those dollars bought 0.2% less, so real sales at bars and restaurants were only up by about 0.1%…and while gas station sales were up 2.2%, gasoline prices were up 3.4%, suggesting a real decrease in the amount of gasoline sold, with the caveat that gas stations sell more than gasoline, and we don’t have the breakout on that…weighing the food and energy components at roughly 30% of total retail sales, we can estimate that real retail sales in April were up slightly less than 1.3% from March…then, to get an approximation of the real adjusted changes for the 3 months of the first quarter, we check Table 9 in the pdf for the March personal income and outlays report, which shows real sales of goods were down 0.2% in March and down 0.6% in February….that means real, inflation adjusted April retail sales were 1.1% higher than those of February but only 0.5% higher than those of January….that still leaves real retail sales at an average of 1.0% greater than those of the first quarter, which is growth at annual rate of more than 4.0%, a pace which if continued throughout May and June, would add roughly 0.96 percentage points to 2nd quarter GDP……

Industrial Production Up 0.7% in April on Normal Weather

April gains in industrial production were stronger than expected as a return more seasonable temperatures brought utility usage back to normal from seasonally lower than normal levels in March….the Fed’s G17 release on Industrial production and Capacity Utilization indicated that industrial production rose by 0.7% in April after falling by a revised 0.9% in March…industrial production is still down 1.1% from a year ago, but that’s an improvement from last month’s year over year decrease of 2.0%…the industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, rose to 104.1 in April from 103.5 in March, which was originally reported at 103.4…at the same time, the February reading for the index was revised up from 104.0 to 104.4, January’s index remained unchanged at 104.6, and December’s index was revised from 104.1 to 104.0…despite the month over month increase in the April industrial production index, however, it remains below the average of the 1st quarter months, so to the extent that this report plays into GDP, April’s level still suggests a net subtraction from GDP in the components that this report influences…

the manufacturing index, which accounts for more than 77% of the total IP index, increased by 0.3, from 103.1 in March to 103.4 in April, while the manufacturing index for January was revised down from 103.5 to 103.4 after the December index was revised down from 103.1 to 103.0…the April increase left the manufacturing index 0.4% higher than a year earlier, unchanged from March, as year ago figures had also seen a 0.3% increase…. meanwhile, the mining index, which includes oil and gas well drilling, fell from 104.4 in March to 102.0 in April, after March mining was revised up from 103.9….the mining index has still been down 8 months in a row, however, and is 13.4% lower than it was a year ago….finally, the utility index, which often fluctuates due to above or below normal temperatures, rose 5.8% from the depressed level of March, increasing from 97.2 in March to 102.8 in April…with the utility index now closer to normal after being depressed by a warmer than normal winter, it’s now 0.4% above the level of a year ago for the first time since September 2015…

this report also includes capacity utilization figures, which are expressed as the percentage of our plant and equipment that was in use during the month, and which indicated that seasonally adjusted capacity utilization for total industry rose to 75.4% in April from 74.9% in March; after March was revised from 74.8%….capacity utilization for all manufacturing industries rose from an unrevised 75.1% in March to 75.3% in April; utilization of NAICS durable goods production facilities rose from 75.5% in March to 75.9% in April, while capacity utilization for non-durables fell from 75.4% in March to 75.3% in April….capacity utilization for the mining sector fell to 72.5% in April, from 74.0% in March, which was originally published as 73.7%, while utilities were operating at 78.6% of capacity during April, up from the revised 74.4% of capacity during March, which was originally reported as 73.7%…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 capacity utilization for a handful of other special categories…. 

April Shows Little Discernible Change in Housing Construction Trends

the April report on New Residential Construction (pdf) from the Census Bureau estimated that the widely watched count of new housing units started was at a seasonally adjusted annual rate of 1,172,000, which was 6.6 percent (±10.2%)* above the revised March estimated seasonally adjusted annual rate of 1,099,000 housing units started, but which was still 1.7 percent (±10.1%)* below last April’s rate of 1,192,000 housing starts a year…the asterisks indicate that the Census does not have sufficient data to determine whether housing starts actually rose or fell over the past month or even over the past year, with the figure in parenthesis the most likely range of the change indicated; in other words, April housing starts could have been down by 3.6% or up by as much as 16.8% from those of March, with even larger revisions subsequently possible…in this report, the annual rate for March housing starts was revised from the 1,089,000 reported last month to 1,099,000, while February starts, which were first reported at a 1,178,000 annual rate, were revised up from last month’s initial revised figure of 1,194,000 annually down to 1,213,000 annually with this report….those annual rates of starts reported here were extrapolated from a survey of a small percentage of US building permit offices visited by Census field agents, which estimated that 108,000 housing units were started in April, up from the 89,600 units started in March…of those housing units started in April, an estimated 73,800 were single family homes and 32,400 were units in structures with more than 5 units, up from the revised 62,400 single family starts and 26,500 units started in structures with more than 5 units in March….

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 housing starts data…in April, Census estimated new building permits were being issued at a seasonally adjusted annual rate of 1,116,000 housing units, which was 3.6 percent (±1.3%) above the revised March annual rate of 1,077,000 permits, but 5.3 percent (±1.3%) below the rate of permit issuance in April a year earlier…the annual rate for housing permits issued in March was revised from 1,086,000 to 1,177,000….again, these annual estimates for new permits reported here were extrapolated from the unadjusted estimates, which showed permits for 98,400 housing units were issued in April, up from the estimated 97,700 new permits issued in March…those April permits included 67,500 permits for single family homes, unchanged from March, and 28,200 permits for housing units in apartment buildings with 5 or more units, up from 27,300 such multifamily permits a month earlier… 

Existing Home Sales Rise 1.7% in April

the National Association of Realtors (NAR) reported that seasonally adjusted existing home sales rose 1.7% from March to April, projecting that 5.45 million homes would sell over an entire year if the April home sales pace were extrapolated over that year, which was also 6.0% greater than the annual sales rate projected in April of a year ago…that came after an annual sales rate of 5.36 homes in March, which was revised from the originally reported 5.33 million annual sales rate, and an annual home sales rate of 5.07 million in February…the NAR also reported that the median sales price for all existing-home types in March was $232,500, which was 6.3% higher than a year earlier, which they tell us is “the 50th consecutive monthly year over year increase in home prices”, even though month to month price changes are quite volatile…the NAR press release, which is titled Existing-Home Sales Rise in April for Second Straight Month, is in easy to read plain English, so if you’re interested in the details on housing inventories, cash sales, distressed sales, first time home buyers, etc., you can easily find them in that press release…as sales of existing properties do not add to our national output, neither these home sales nor the prices for which these homes sell are included in GDP, except insofar as real estate, local government and banking services are rendered…

since this report is entirely seasonally adjusted and at a not very informative annual rate, we usually look at the raw data overview (pdf), which gives us a close approximation to the actual number of homes that sold each month…this data indicates that roughly 471,000 homes sold in April, up by 11.9% from the 421,000 homes that sold in March and 4.9% more than the 405,000 homes that sold in April of last year, so we can see there was a seasonal adjustment in the published figures of over 10% to correct for the typical increase in spring home sales…that same pdf indicates that the median home selling price for all housing types rose 5.0% from a revised $221,500 in March to $232,500 in April, while the average home sales price was $275,000, up 4.0% from the $264,400 average in March, and up 4.2% from the $263,900 average home sales price of April a year ago, with the regional average home sales prices ranging from a low of $215,100 in the Midwest to a high of $364,700 in the West…for additional coverage with long term graphs on this report, see “Existing Home Sales increased in April to 5.45 million SAAR” and “A Few Comments on April Existing Home Sales” from Bill McBride at Calculated Risk…

(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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