July consumer prices, industrial production, and new home construction

this week’s key reports were the July Consumer Price Index from the Bureau of Labor Statistics, the July report on Industrial Production and Capacity Utilization from the Fed, and the July report on New Residential Construction from the Census Bureau…other reports released this week included Regional and State Employment and Unemployment for July from the BLS, and the first two regional Fed manufacturing surveys for August: 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 fell from +0.55 in July to -4.21 in August, suggesting First District manufacturing was again contracting, while the Philadelphia Fed Manufacturing Survey for August, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest diffusion index of manufacturing conditions rose from -2.9 in July to +2.0 in August, suggesting a subdued level of growth has returned to that region’s manufacturing for only the 3rd time in the past year…

July Consumer Price Index Nets Zero Change on Lower Gasoline, Groceries

the consumer price index was unchanged in July, as price increases for most core services were offset by lower prices for groceries and energy commodities…the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that seasonally adjusted price index for July was unchanged after rising 0.2% in June, 0.2% in May, 0.4% in April and 0.1% in March….the unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, actually fell, from 241.038 in June to 240.647 in July, which left it statistically 0.835% higher than the 238.638 index reading of last July….regionally, prices for urban consumers have risen 1.4% in the West, 0.8% in the Northeast, 0.7% in the South, and 0.4% in the Midwest over the past year, with generally greater price increases within regions in cities of more than 1,500,000 people…with mostly lower commodity prices mostly offsetting higher prices for services, seasonally adjusted core prices, which exclude food and energy, rose by 0.1% for the month, with the unadjusted core index also falling from 247.821 to 247.768, which put it 2.20% ahead of its year ago reading of 242.436…

the volatile seasonally adjusted energy price index fell by 1.6% in July after rising by 1.3% in June, 1.2% in May and 3.4% in April, but after falling by more than 11.5% over this past winter, and thus the energy price index still remained 10.9% lower than it was in July a year ago….prices for energy commodities were 4.4% lower while the index for energy services rose by 1.0%, after falling by by 0.5% in June….the decrease in the energy commodity index included a 4.6% drop in the price of gasoline, the largest component, and a 1.6% decrease in the price of fuel oil, while prices for other fuels, including propane, kerosene and firewood, averaged a 1.4% increase…within energy services, the index for utility gas service rose by 3.1% after falling by 0.4% in June, but utility gas was still priced 0.4% lower than it was a year ago, while the electricity price index rose by 0.5%, after falling by 0.5% in June…energy commodities are now priced 19.4% below their year ago levels, with gasoline prices averaging 19.9% lower than they were a year ago…meanwhile, the energy services price index is still 0.9% lower than last July, as even electricity prices have fallen 1.0% over that period..

the seasonally adjusted food price index was unchanged in July, after it fell by 0.2% in June, as 0.2% lower prices for food purchased for use at home offset 0.2% higher prices for food bought to eat away from home, where average prices at both fast food outlets and at full service restaurants rose 0.2%…in the food at home categories, the price index for cereals and bakery products was 0.2% lower on 0.7% lower prices for rice and cuts in prices for cookies and pastries….the price index for the meats, poultry, fish, and eggs group fell by 0.6% as prices for beef fell 1.4% and both pork and egg prices averaged 0.6% lower….in addition, the index for dairy products was 0.4% lower on a 1.4% drop in prices for fresh whole milk… meanwhile, the fruits and vegetables index rose 0.3% after falling by 0.1% in June, 0.7% in May and 0.5% in April, as a 0.4% increase in prices for fresh fruits and a 0.9% increase for canned vegetables more than offset a 2.1% drop in lettuce prices and 1.8% lower priced potatoes…the beverages index was also 0.3% higher on a 0.6% increase in prices for noncarbonated juices and drinks and a 1.9% pop in prices for non-coffee beverage materials including tea… lastly, prices in the other foods at home category were on average 0.2% lower as 1.1% higher prices for margarine and 1.4% higher salad dressing were offset by a 2.1% drop in prices for peanut butter and 1.3% lower prices soups…..among food line items, only eggs, which are now priced 29.0% lower than a year ago, and ground beef, which has fallen by 10.2%, have seen a price change 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 0.1% in July after rising by 0.2% in April, in May and in June, the composite of all goods less food and energy goods fell by 0.1%, while the composite for all services less energy services was 0.2% higher….among the goods components, which will be used by the Bureau of Economic Analysis to adjust July retail sales for inflation in national accounts data, the index for household furnishings and supplies was unchanged as a 1.8% decrease in prices for major appliances was offset by 1.4% higher floor and window coverings, and the apparel price index was also unchanged as 0.6% higher prices for men’s apparel was offset by a 5.5% drop in girls apparel…prices for transportation commodities other than fuel were down 0.2%, as prices for used cars and trucks were down another 1.0% after falling 1.1% in June and 1.3% in May…at the same time, prices for medical care commodities were 0.4% higher after a 1.1% increase in June on a 0.9% increase in prescription drug prices…meanwhile, the recreational commodities index fell 0.4% as TV prices fell another 2.0%, and the education and communication commodities index was 0.3% lower as a 1.7% price drop for telephone hardware more than offset a 0.4% increase in prices for educational books and supplies…lastly a separate index for alcoholic beverages fell 0.1% on a 0.3% decrease in prices for wine bought for use at home, while the index for ‘other goods’ was down 0.3% on a 1.5% drop in prices for stationery, stationery supplies and gift wrap..

within core services, the price index for shelter rose 0.2% on a 0.2% increase in rents and a 0.3% increase in owner’s equivalent rent while costs for lodging away from home at hotels and motels dropped 2.7%, and costs for water, sewers and trash collection were 0.3% lower….the index for medical care services rose 0.5% as physicians’ services rose 0.7%, while the transportation services index fell 0.2% on a 2.6% decrease in car and truck rentals…at the same time, the recreation services index rose 0.1% as video & audio rental services fell 2.9% while admissions to sporting events rose 2.4%… meanwhile, the index for education and communication services fell 0.2% as college tuition fell 0.3% as did wireless telephone service…lastly, other personal services were up 0.4% on a 1.6% increase in legal fees…among core prices, a 12.3% year over year increase in moving and storage expenses was the only line items with an annual increase greater than 10%, while only telephone hardware, which has fallen by 11.3%, and televisions, which are now 20.1% cheaper than a year ago, saw prices drop by more than 10% over the past year…

Industrial Production Up 0.7% in July, Largest Increase in 20 Months

the Fed’s G17 release on Industrial production and Capacity Utilization indicated that industrial production rose by 0.7% in July after rising by a revised 0.4% in June…however, industrial production is still down 0.5% from a year ago, as it has seen three consecutive quarterly decreases…the industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, rose to 104.8 in July from 104.1 in June, which was essentially unchanged from a month ago…at the same time, the May reading for the index was revised up from 103.5 to 103.7, and April reading for the index was revised up 103.8 to 103.9…

the manufacturing index, which accounts for more than 77% of the total IP index, increased by 0.5, from 103.1 in June to 103.6 in July, after June’s manufacturing index was revised down from 103.2…. meanwhile, the mining index, which includes oil and gas well drilling, rose from 103.4 in June to 104.2 in July, after the June index was revised up from 102.7 and prior months were revised higher as well….nonetheless, the mining index still remains 10.2% lower than it was a year ago….finally, the utility index, which often fluctuates due to above or below normal temperatures, rose 2.1% in July after rising a revised 2.1% in June, as warmer weather than is typical for July over most of the country boosted use of air conditioning and pushed the utility index to 3.5% above its year earlier reading…

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 from 75.4 in June to 75.9% in July….capacity utilization by NAICS durable goods production facilities rose from 76.1 in June to 76.5 in July, while capacity utilization for non-durables producers rose from 74.6% to 74.9%….capacity utilization for the mining sector rose to 74.9% in July, up from 74.1% in June, which was originally reported as 73.6%, while utilities were operating at 81.0% of capacity during July, up from their 79.4% of capacity during June…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….   

New Housing Construction Little Changed in July

the July report on New Residential Construction (pdf) from the Census Bureau estimated that the widely watched count of new housing units started in July was at a seasonally adjusted annual rate of 1,211,000, which was 2.1 percent (±8.8%) above the revised June estimated annual rate of 1,186,000 housing units started, and was 5.6 percent (±14.7%) above last July’s pace of 1,147,000 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, July’s housing starts could have been down by 6.7% or up by as much as 10.9% from those of June, with even larger revisions possible…in this report, the annual rate for June housing starts was revised from the 1,189,000 reported last month to 1,186,000, while May starts, which were first reported at a 1,164,000 annual rate, were revised down from last month’s initial revised figure of 1,136,000 annually to 1,128,000 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 114,000 housing units were started in July, up from the 110,600 units started in June…of those housing units started in July, an estimated 72,700 were single family homes and 40,500 were units in structures with more than 5 units, down from the revised 75,400 single family starts in June, but up from the 33,500 units started in structures with more than 5 units in June…

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 July, Census estimated new building permits were being issued at a seasonally adjusted annual rate of 1,152,000 housing units, which was just 0.1 percent (±1.2%) below the revised June rate of 1,153,000 permits, but was 0.9 percent (±1.5%) above the rate of building permit issuance in July a year earlier…the annual rate for housing permits issued in June was unrevised….again, these annual estimates for new permits reported here were extrapolated from the unadjusted estimates collected by canvassing census agents, which showed permits for 95,800 housing units were issued in July, down from the revised estimate of 114,400 new permits issued in June…the July permits included 61,100 permits for single family homes, down from 74,700 in June, and 32,200 permits for housing units in apartment buildings with 5 or more units, down from 36,900 such multifamily permits a month earlier… for graphs and commentary on this report, see the following two posts by Bill McBride at Calculated Risk: Housing Starts increased to 1.211 Million Annual Rate in July and Comments on July Housing Starts


(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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