December retail sales and producer price index; November wholesale sales, business inventories, and JOLTS

reports released this past week included Retail Sales for DecemberWholesale Trade, Sales and Inventories for November, and Business Sales and Inventories for November, all from the Census Bureau, and the December Import-Export Price Index and the December Producer Price Index from the Bureau of Labor Statistics…in addition, the BLS also released the Job Openings and Labor Turnover Survey (JOLTS) for November and the Fed released the Consumer Credit Report for November…the later showed that overall consumer credit, a measure of non-real estate debt, expanded by a seasonally adjusted $24.6 billion, or at a 7.9% annual rate, as non-revolving credit expanded at a 5.9% rate to $2,757.6 billion and revolving credit outstanding rose at a 13.5% rate to $992.4 billion…the Mortgage Monitor for November (pdf) Black Knight Financial Services, a private report that we usually review, was also released this week..

Retail Sales Up 0.6% in December after Prior Months Revised Higher

seasonally adjusted retail sales increased in December after retail sales for October and November were revised higher…the Advance Retail Sales Report for December (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $469.1 billion during the month, which was up 0.6 percent (±0.5%) from November’s revised sales of $466.2 billion and 4.1 percent (±0.9%) above the adjusted sales in December of last year…November’s seasonally adjusted sales were revised up from $465.5 billion to $466.2 billion, while October’s sales were also revised higher, from $456.1 billion to $456.3 billion; as a result, the October to November change was revised up from up 0.1 percent (±0.5%) to up 0.2 percent (±0.2%), and the year over year increase for the 4th quarter came in at 4.1%…..estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated sales rose 15.5%, from $468,555 million in November to $541,175 million in December, while they were up 4.4% from the $518,253 million of sales in December a year ago, so we can see how the large seasonal adjustment to holiday sales brought the headline sales into line vis-a-vis the Holiday increase that would normally be expected in December…

since it’s the end of the quarter and the end of the year 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 this table shows, the first double column below shows us the seasonally adjusted percentage change in sales for each kind of business from the November revised figure to this month’s December “advance” report in the first sub-column, and then the year over year percentage sales change since last December in the 2nd column; the second double column pair below gives us the revision of the November advance estimates (now called “preliminary”) as of this report, with the new October to November percentage change under “Oct 2016 r” (revised) and the November 2015 to November 2016 percentage change as revised in the 2nd column of the pair (for your reference, the table of last month’s advance estimate of November 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 (October, November and December) from the preceding three months of the 3rd quarter (July, August and September) and then from the same three months (October, November and December) of a year earlier….that first column of the last pair thus gives us a snapshot comparison of 3rd quarter sales to fourth quarter sales, which will useful in estimating the impact of this report on 3rd quarter GDP after we get the December price data next week….

December 2016 retail sales table

from the above table, we can see that a 2.4% increase to $98,699 million in seasonally adjusted sales at motor vehicle and parts dealers was mostly responsible for the December sales strength, because without those automotive sales, retail sales were only up 0.2%…automotive sales for November were also revised higher, from the originally reported 0.5% decrease to a decrease of just 0.2%, and hence accounted for about half of the upward revision to that month’s sales…also note the 2.0% increase to 35,858 million in sales at gas stations, which was likely the result of higher prices for gasoline…take gas station and automotive sales out, and December retail sales were statistically unchanged from November….still, without knowing the change in price for each of these components, it’s difficult to ascertain the net economic impact of this month’s retail sales, so we’ll defer that judgment until we get the price data from the CPI next week…

Producer Prices Up 0.3% in December on Higher Food and Energy

the seasonally adjusted Producer Price Index (PPI) for final demand rose 0.3% in December as prices for finished wholesale goods increased 0.7%, while margins of final services providers increased by 0.1%…this followed a November report that indicated the overall PPI had increased 0.4%, with prices for finished goods up 0.2% while final demand for services rose 0.5%, and an October report that indicated the PPI was unchanged, with prices for finished goods up 0.4% while final demand for services fell 0.3%….producer prices are now up 1.6% from a year ago, a figure which is now rapidly increasing, since most of the price decreases relating to lower oil and commodity prices went by the boards in early 2015…

as noted, the price index for final demand for goods, aka ‘finished goods’, rose by 0.7% in December, after rising by 0.2% in November, 0.4% in October, 0.5% in September, but after falling by 0.4% in August, as the index for wholesale energy prices rose 2.6% from November to December while the price index for wholesale foods was 0.7% higher and the index for final demand for core wholesale goods (ex food and energy) rose 0.3%…major wholesale energy price increases in December included a 20.1% increase in wholesale prices for liquefied petroleum gas, a 9.6% increase for wholesale heat oil, and a 7.8% increase in wholesale gasoline prices, while among wholesale food prices, a 63.2% increase in the prices of eggs was partially offset by a 13.2% decrease for fresh fruits and melons…among wholesale core goods, prices for passenger cars increased 1.1%, prices for light trucks rose 1.3%, while wholesale prices for appliances were down 1.1%…

meanwhile, the index for final demand for services rose by 0.1% in December after rising 0.5% in November and falling by 0.3% in October, as the index for final demand for trade services rose 0.2%, the index for final demand for transportation and warehousing services fell 0.4% and the index for final demand for services less trade, transportation, and warehousing services was 0.2% higher….among trade services, seasonally adjusted margins for TV, video, and photographic equipment retailers increased 6.3% after rising 6.0% in November, margins for paper and plastics products wholesalers increased 4.6%, and margins for major household appliances retailers increased 2.4%, while margins for fuels and lubricants retailers fell 13.4%.. among transportation and warehousing services, margins for airline passenger services fell 2.4% and margins for air transport of freight fell 0.4% while all other transportation and warehousing services were higher.. in the core final demand for services index, margins for securities brokerage, dealing, and investment advisers rose 4.4%, margins for passenger car rentals were 5.7% higher, while margins for vehicle rental and lodging arrangement were 1.8% lower…

this report also showed the price index for processed goods for intermediate demand was 0.5% higher, after rising 0.3% in both October and November and by a revised 0.4% in September…prices for intermediate processed goods are now 1.8% higher than in December a year ago, only the second year over year increase after 16 months of lower year over year comparisons, as intermediate goods prices fell every month from July 2015 through March 2016…. in November, the price index for intermediate energy goods rose 2.1% and prices for intermediate processed foods and feeds rose 0.8%, while the core price index for processed goods for intermediate demand less food and energy was just 0.1% higher, despite a 13.1% increase in intermediate wholesale prices for asphalt…

at the same time, the price index for intermediate unprocessed goods rose 8.3% in December, the largest increase since a 9.0% jump in February 2007, after being unchanged in November, and falling a 0.6% in October, 0.7% in September, and 2.0% in August….the index for crude energy goods rose 14.6% as prices for crude oil rose 18.9%, the price index for unprocessed foodstuffs and feedstuffs was rose 5.8%, as the index for slaughter steers and heifers rose 29.2 percent and raw milk prices rose 19.2%…moreover, the index for core raw materials other than food and energy materials rose 3.6%, on an 15.0% increase in wholesale prices for iron and steel scrap… this raw materials index is now up 13.2% from year ago, in contrast to its maximum year over year decrease of 26.4% that was seen 13 months ago, in November of 2015…

lastly, the price index for services for intermediate demand was 0.4% higher in December, after being 0.2% higher in November, 0.6% lower in October, 0.4% higher in September, and being unchanged in August… the index for trade services for intermediate demand was 1.1% higher as margins for intermediate paper and plastics products wholesalers rose 4.6% and margins for intermediate metals, minerals, and ores wholesalers rose 2.3%…the index for transportation and warehousing services for intermediate demand was up 0.1%, as pricing for intermediate air mail and package delivery services rose 1.4%, while the intermediate index for transportation of passengers (partial) fell 2.4%, and the core price index for services less trade, transportation, and warehousing for intermediate demand rose 0.4%, as a 9.0% increase in the index for prices for advertising space sales in newspapers accounted for much of the increase in intermediate services…over the 12 months ended in November, the year over year price index for services for intermediate demand, which has never turned negative on an annual basis, is now 2.4% higher than it was a year ago…  

November Wholesale Sales Up 0.4%, Wholesale Inventories Up 1.0%

the November report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at $452.6 billion, up by 0.4 percent (+/0.5%) from the revised October level of $446.1 billion, and 3.4 percent (±0.9 percent) above the value of wholesale sales of a year earlier…the October preliminary sales estimate was revised downward $1.3 billion, which now means October sales were 1.1% (±0.5%) more than those of September, rather than 1.4% as reported last month….wholesale sales of durable goods were up 0.4 percent (+/-0.7%) from last month and were up 2.5 percent (+/-1.4%) from a year earlier, with wholesale sales of furniture 5.2% higher than in October while wholesale sales of  electrical and electronic goods fell 2.4%…wholesale sales of nondurable goods were also up by 0.4 percent (+/-0.9%) from October, and were up 4.2 percent (+/-1.4%) from last November, with wholesale sales of drugs and druggist sundries up 2.1%, while wholesale sales of petroleum and petroleum products were down 3.5% for the month…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 $595.3 billion at the end of November, 1.0 percent (±0.2 percent) higher than the revised October level and 1.4 percent (+/-1.2%)* above the valuation of last November’s inventories…October’s preliminary inventory estimate was revised up from the previously reported $587.7 billion to $589.4 billion, and hence October wholesale inventories were down just 0.1% from September…wholesale durable goods inventories were up 1.0 percent (+/-0.4%)* from October but were 0.3 percent (+/-1.4%) lower than a year earlier, as the value of automotive inventories was 3.0% higher, while the value of inventories of computers and related equipment was up 2.0%…inventories of nondurable goods were also valued 1.0 percent (+/-0.7%) higher than in October and were valued 4.1 percent (+/-2.1%) higher than last November, as the value of inventories of petroleum and petroleum products was up 2.7% and the value of inventories of farm products was 5.0% higher than in October…with the November producer price index for finished goods up by 0.2% on 0.6% higher food prices, real wholesale inventories appear to be up on the order of 0.8% in November, more than reversing their revised September to October decrease of 0.5%…that follows a third quarter when real wholesale inventories were essentially flat, so this two month increase should add about 0.22 percentage points to 4th quarter GDP…

October Business Sales Up 0.1% Business Inventories Up 0.7%

after the release of the December retail sales report, the Census Bureau released the composite Manufacturing and Trade, Inventories and Sales report for November (pdf), which incorporates the revised November retail data from that December report and the earlier published November 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 $1,326.7 billion in November, up 0.1 percent (±0.2%) from October’s revised sales, and up 2.3 percent (±0.4%) from November sales of a year earlier…note that total October sales were concurrently revised up from the originally reported $1,326.8 billion to $1,325.1 billion, so gross sales in this report were actually little changed from what was reported last month ….manufacturer’s sales fell 0.1% to $463,787 million in November; retail trade sales, which exclude restaurant & bar sales from the revised November retail sales reported earlier, were statistically unchanged at $410,284 million, and wholesale sales rose 0.4% to $452,622 million…

meanwhile, total manufacturer’s and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $1,827.5 billion at the end of November, up 0.7 percent (±0.1%)* from October, and 1.5 percent (±0.5%)* higher than in November a year earlier…at the same time, the value of end of October inventories was revised from the $1,813.0 billion reported last month to $1814.456 billion..seasonally adjusted inventories of manufacturers were estimated to be valued at $623,070 million, up 0.2% from October, while inventories of retailers were valued at $609,122 million, 1.0% more than in October, and inventories of wholesalers were estimated to be valued at $595,305 million at the end of November, also 1.0% higher than in October…

for GDP purposes, all inventories, including retail, will be adjusted for inflation with appropriate component price indices of the producer price index for November, which was up 0.2% for finished goods…last week, we looked at real factory inventories with price adjustments for goods at various stages of production, and judged that those inventories would would fractionally subtract from 4th quarter GDP….on the other hand, earlier we found that real wholesale inventories would likely add about 0.22 percentage points to 4th quarter GDP growth…this week’s real retail inventories for November, after a 0.2% price adjustment of the 1.0% nominal value increase, thus would have increased by about 0.8% from October, after a real October decrease of 0.8% from September in real retail inventories…that followed a third quarter that saw producer price index decreases of 0.2% in both July and August help boost real retail inventories by 0.5%…thus it appears that slower growth in real retail inventories over October and November are on track to subtract about 0.37 percentage points from 4th quarter GDP growth, despite their large nominal increase..

Job Openings, Hiring, Layoffs and Quitting, All Increase In November

the Job Openings and Labor Turnover Survey (JOLTS) report for November from the Bureau of Labor Statistics estimated that seasonally adjusted job openings increased by 71,000, from 5,451,000 in October to 5,522,000 in November, after October job openings were revised 83,000 lower, from 5,534,000 to 5,451,000…October’s jobs openings were 6.2% higher than the 5,198,000 job openings reported in October a year ago, as the job opening ratio expressed as a percentage of the employed at 3.7% was up from the revised 3.6% from October and from 3.5% November a year ago…the November increase in openings can be accounted for by the 99,000 job opening decrease to 1,069,000 openings in the health care and social assistance sector , while the accommodation and food services sector saw openings increase by 54,000 to 643,000 (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 November, seasonally adjusted new hires totaled 5,219,000, up by 59,000 from the revised 5,160,000 who were hired or rehired in October, as the hiring rate as a percentage of all employed remained unchanged at 3.6% in November, but was down from 3.7% in November a year earlier (details of hiring by sector since March are in table 2)….meanwhile, total separations rose by 62,000, from 4,966,000 in October to 5,028,000 in November, as the separations rate as a percentage of the employed rose from 3.4% to 3.5%, which was the same rate as in November a year ago (see table 3)…subtracting the 5,028,000 total separations from the total hires of 5,219,000 would imply an increase of 191,000 jobs in November, a bit less than the revised payroll job increase of 204,000 for November reported in the December 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 3,064,000 of us voluntarily quit our jobs in November, up from the revised 3,023,000 who quit their jobs in October, while the quits rate, widely watched as an indicator of worker confidence, remained unchanged at 2.1% of total employment, while it was up from 2.0% a year earlier (see details in table 4)….in addition to those who quit, another 1,637,000 were either laid off, fired or otherwise discharged in November, up by 68,000 from the revised 1,569,000 who were discharged in October, as the discharges rate remained unchanged at 1.1% of all those who were employed during the month, which was down from the discharges rate of 1.2% a year earlier….meanwhile, other separations, which includes retirements and deaths, were at 326,000 in November, down from 373,000 in October, for an ‘other separations rate’ of 0.2%, which was down from 0.3% in October and in November 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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