September’s retail sales and producer price index; August’s business inventories and job openings

the key reports released this past week were Retail Sales for September and Business Sales and Inventories for August, and the September Import-Export Price Index, and the September Producer Price Index from the Bureau of Labor Statistics…in addition, the BLS also released the Job Openings and Labor Turnover Survey (JOLTS) for August…

Retail Sales Increase by 0.6% in September after July and August Sales Revised Higher

seasonally adjusted retail sales increased in September after retail sales for July and August were both revised higher…the Advance Retail Sales Report for September (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $459.8 billion during the month, which was up 0.6 percent (±0.5%) from August’s revised sales of $457.0 billion and 2.7 percent (±0.7%) above the adjusted sales in September of last year…August’s seasonally adjusted sales were revised from $456.3 billion to almost $457.0 billion, while July sales were also revised higher, from $457.7 billion to $458.5 billion, with this release….estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated sales actually fell 5.5%, from $471,379 million in August to $445,444 million in September, while they were up 3.4% from the $430,917 million of sales in September a year ago…the upward revisions to July and August sales should boost previous estimates of the personal consumption expenditures contribution to 3rd quarter GDP, but we’ll have to wait until the consumer price index for September is released on Tuesday of next week to determine the actual impact of September sales on economic growth…

since it’s the end of the quarter for retail sales, we’ll include the entire table from this report showing retail sales by business type, including the quarter over quarter data…again, to explain what it shows, the first double column below shows us the seasonally adjusted percentage change in sales for each kind of business from the August revised figure to this month’s September “advance” report in the first sub-column, and then the year over year percentage sales change since last September in the 2nd column; the second double column pair below gives us the revision of the August advance estimates (now called “preliminary”) as of this report, with the new July to August percentage change under “July 2016 r” (revised) and the August 2015 to August 2016 percentage change as revised in the 2nd column of the pair; for your reference, the table of last month’s advance estimate of August sales, before this month’s revisions, is here…. then, the third pair of columns shows the percentage change of the most recent 3 months of this year’s sales (July, August and September) from the preceding three months of the 2nd quarter (April, May and June) and then from the same three months (July, August and September) of a year ago….that first column of the pair gives us a snapshot comparison of 2nd quarter sales to third quarter sales, which will useful in estimating the impact of this report on 3rd quarter GDP after we get the price data next week….

September 2016 retail sales

from this table, we can see that the 0.6% increase in September sales was underpinned by a 1.1% increase to $94,683 million in seasonally adjusted sales at motor vehicle and parts dealers; without which retail sales would have shown a 0.5% increase for the month…car sales for August were also revised higher, from $92,862 million to $93,681 million, and were hence responsible for most of the upward revision to that month’s sales….also note that there was an 2.4% increase to $33,860 million in sales at gas stations, which we figure to be mostly due to higher prices…if we take out gas station sales in addition to motor vehicles and parts, we find September retail sales would just be up 0.3%…also note that sales at building materials and garden supplies dealers were up 1.4% to $29,434 million; some also eliminate those sales in addition to autos and gas to get a “core” retail sales figure, which was only up 0.1% for the month…

Producer Prices Up 0.3% in September on Higher Energy Prices, Transportation and Warehousing Services

the seasonally adjusted Producer Price Index (PPI) for final demand rose 0.3% in September as prices for finished wholesale goods increased 0.3%, while margins of final services providers rose by 0.1%…this followed a August report that indicated the overall PPI was statistically unchanged, with prices for finished goods down 0.4% while final demand for services rose 0.1%, and a July report that indicated the PPI had decreased 0.4%, with prices for finished goods down 0.4% while final demand for services fell 0.3%….producer prices are now up 0.7% from a year ago, since most of the price decreases relating to lower oil and commodity prices went by the boards in early 2015…

as we noted, the price index for final demand for goods, aka ‘finished goods’, rose by 0.3% in September, after falling 0.4% in both July and August but after rising by 0.8% in June, 0.7% in May and 0.2% in April, as the index for wholesale energy prices rose 2.5% from August to September and the price index for wholesale foods was 0.5% higher, while the index for final demand for core wholesale goods (ex food and energy) rose 0.3%…major wholesale price changes for September included a 24.2% jump in wholesale prices for eggs and an 10.5% increase in prices for fresh and dried vegetables, while 9.7% higher wholesale prices for heat oil, an 8.6% increase for diesel fuel and 9.5% higher LP gas contributed to the higher energy index..

meanwhile, the index for final demand for services rose by 0.1% in September after  rising by 0.1% in August, falling by 0.3% in July and rising 0.4% in June, as the index for final demand for transportation and warehousing services rose 1.3%, the index for final demand for trade services fell 0.4%, while the core services index for final demand for services less trade, transportation, and warehousing services was 0.2% higher….among transportation and warehousing services, margins for airline passenger services rose 4.1% and margins for rail transport of freight and mail rose 0.7% ..among trade services, seasonally adjusted margins for major household appliances retailers were down 12.7% and margins for TV, video, and photographic equipment and supplies retailers were 7.5% lower.. in the core final demand services index, 3.9% higher margins for securities brokerage, dealing, investment advice, and related services was the major factor in the September rise in the index…

this report also showed the price index for processed goods for intermediate demand was 0.5% higher, after slipping 0.1% in August, but after rising 0.2% in July, 0.9% in June, and 0.8% in May…however, prices for intermediate processed goods still remain 1.2% lower than in September a year ago, as they fell every month from last July through March….. the price index for intermediate energy goods rose by 2.5% in September, while prices for intermediate processed foods and feeds fell 0.7%, and the core price index for processed goods for intermediate demand less food and energy was 0.3% higher…at the same time, the price index for intermediate unprocessed goods was 1.3% higher, after falling by 2.8% in August and 0.4% in July but after rising by 2.8% in June, 1.3% in May, 3.0% in April and 1.6% in March, in the only increases in that index since June of last year…driving the September increase was a 7.4% jump in the price index for crude energy goods, as prices for crude oil rose 9.1%; at the same time, the index for unprocessed foodstuffs and feedstuffs fell 1.5%, while the index for core raw materials other than food and energy materials was 1.4% lower…. this raw materials index is still 4.8% lower than it was a year ago, but more than four-fifths of the year over year decrease of 26.4% that was seen in November 2015 has since been retraced…

lastly, the price index for services for intermediate demand was 0.4% higher in September, after being unchanged in August but rising 0.3% higher in July and 0.8% in June, as the index for  transportation and warehousing services for intermediate demand was 0.6% higher, the index for trade services for intermediate demand was 0.2% lower, while the core price index for services less trade, transportation, and warehousing for intermediate demand was up 0.5%…a factor in the increase in prices for services for intermediate demand was a 2.1% increase in the index for intermediate services related to deposit services (partial); in addition, the indexes for securities brokerage, dealing, investment advice, and related services; airline passenger services; gross rents for office buildings; minerals and ores wholesaling; and staffing services also rose, while a 2.7% decrease in intermediate margins for machinery and equipment parts and supplies wholesaling pulled the index for trade services for intermediate demand lower….over the 12 months ended in September, the year over year price index for services for intermediate demand, which has never turned negative on an annual basis, is now 2.5% higher than it was a year ago…     

August Business Sales and Business Inventories Both Up 0.2%

after the release of the September retail sales report, the Census Bureau released the composite Manufacturing and Trade Inventories and Sales report for August (pdf), which incorporates the revised August retail data from that September report and the earlier published August wholesale and factory data to give 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 $1,304.1 billion in August, up 0.2 percent (±0.2%)* from July revised sales, but virtually unchanged (±0.5%)* from August sales of a year earlier…note that total July sales were concurrently revised down from the originally reported  $1,303.6 billion to $1,302.1 million….manufacturer’s sales were little changed at $458,056 million in August, and retail trade sales, which exclude restaurant & bar sales from the revised August retail sales reported earlier, fell 0.3% to $401,824 million, while wholesale sales rose 0.7% to $444,258 million…

meanwhile, total manufacturer’s and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $1,816.9 billion at the end of August,  up 0.2 percent (±0.1%) from July, and 0.7 percent (±0.6%)* higher than in August a year earlier…the value of end of July inventories, although recalculated, remained statistically unrevised at the $1,813.2 billion reported last month…seasonally adjusted inventories of manufacturers were estimated to be valued at $621,952 million, 0.2% higher than in July, inventories of retailers were valued at $605,854 million, 0.6% more than in July, while inventories of wholesalers were estimated to be valued at $589,101 million at the end of August, 0.2% lower than in July…

for GDP purposes, all inventories, including retail, are adjusted for inflation with appropriate component price indices of the producer price index, which was unchanged in August after falling 0.4% in July…last week, we looked at real factory inventories with that adjustment, and judged they would provide a substantial boost to 3rd quarter GDP; likewise, we also looked at August wholesale inventories last week and found that real wholesale inventories would also add to 3rd quarter GDP….comparing real retail inventories for August to those of the 2nd quarter, we find they were 0.6% greater than those of July, which were in turn 0.2% greater than those of June after a 0.4% price adjustment of their 0.2% nominal value decline…retail inventories for the second quarter, despite nominally rising 0.9% over the three months, were adjusted to a real decrease of roughly 1.1% by producer price index increases of 0.5%, 0.7%, and 0.8% over the months of April, May and June…thus the swing in real retail inventories from a 1.1% contraction in the 2nd quarter to a 0.8% increase in the 3rd would likewise be a significant positive impact on 3rd quarter GDP..

Job Openings Crash in August; Hiring Down Too

the Job Openings and Labor Turnover Survey (JOLTS) report for August from the Bureau of Labor Statistics estimated that seasonally adjusted job openings fell by 388,000, from 5,831,000 in July to  5,443,000 in August, after June job openings were revised 40,000 lower, from 5,871,000 to 5,831,000…August jobs openings were still 2.5% higher than the 5,308,000 job openings reported in August a year ago, as the job opening ratio expressed as a percentage of the employed fell from 3.9% in July to 3.6% in August, which was nonetheless unchanged from 3.6% a year ago…although job openings decreased in most sectors, more than half of the August drop can be accounted for by the 223,000 job opening decrease to 989,000 openings in the broad professional and business services sector (see table 1 for more details)…like  most BLS releases, the press release for this report is easy to understand and also refers us to the associated table for the data cited, which are 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 August, seasonally adjusted new hires totaled 5,210,000, down by 48,000 from the revised 5,258,000 who were hired or rehired in July, as the hiring rate as a percentage of all employed remained at 3.6%, the same as in August a year earlier (details of hiring by sector since March are in table 2)….meanwhile, total separations fell by 37,000, from 4,991,000 in July to 4,954,000 in August, while the separations rate as a percentage of the employed fell from 3.5% to 3.4%, which was also down from 3.5% in August a year ago (see table 3)…subtracting the 4,954,000 total separations from the total hires of 5,210,000 would imply an increase of 256,000 jobs in August, somewhat more than the revised payroll job increase of 161,000 for August reported by the September establishment survey last week, but still within the expected +/-115,000 margin of error in these incomplete samplings

breaking down the seasonally adjusted job separations, the BLS finds that 2,981,000 of us voluntarily quit our jobs in August, little changed from the revised 2,977,000 who quit their jobs in July, while the quits rate, widely watched as an indicator of worker confidence, was unchanged at 2.1% of total employment, while it was still up from 2.0% a year earlier (see details in table 4)….in addition to those who quit, another 1,623,000 were either laid off, fired or otherwise discharged in August, down by 16,000 from the revised 1,639,000 who were discharged in July, as the discharges rate also remained unchanged at 1.1% of all those who were employed during the month, and was also down from the discharges rate of 1.2% a year earlier….meanwhile, other separations, which includes retirements and deaths, were at 350,000 in August, down from 375,000 in July, for an ‘other separations rate’ of 0.2%, which was down from the ‘other separations rate’ of 0.3% in both July and in August of last year….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


(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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