December’s trade deficit, wholesales sales and inventories, and job openings

the key economic release of the past week was the December report on our International Trade from the Census Bureau…the Census also released the Wholesale Trade, Sales and Inventories report for December this week, while the Bureau of Labor Statistics released the Job Openings and Labor Turnover Survey (JOLTS) for December and the Import-Export Price Index for January…in addition, the Fed released the Consumer Credit Report for December, which showed that overall consumer credit, a measure of non-real estate debt, expanded by a seasonally adjusted $14.2  billion, or at a 4.5% annual rate, as non-revolving credit expanded at a 5.1% rate to $2,767.4 billion and revolving credit outstanding rose at a 2.9% rate to $992.4 billion…the Mortgage Monitor for December (pdf) Black Knight Financial Services, a private report that we usually review, was also released this week…

December Trade Deficit Down 3.2% on Higher Exports of Aircraft and Aircraft Engines

our trade deficit fell by 3.2% in December as the value of both our exports and our imports increased….the Census report on our international trade in goods and services for December indicated that our seasonally adjusted goods and services trade deficit fell by $1.47 billion to $44.26 billion in December from a revised November deficit of $45.73 billion…the value of our December exports rose by $5.0 billion to $190.7 billion on a $4.8 billion increase to $126.9 billion in our exports of goods and a $0.2 billion increase to $63.8 billion in our exports of services, while our imports rose $3.6 billion to $235.0 billion on a $3.6 billion increase to $192.6 billion in our imports of goods, while our imports of services were nearly unchanged at $42.3 billion…the November trade deficit was revised higher from the originally reported $45.24 billion to $45.73 billion, and trade figures for every prior month of 2016 were also revised, meaning that prior quarter over quarter figures for GDP will have to be revised as well…export prices were on average 0.3% higher in December, so our real December exports would be less than the nominal value by that percentage, while import prices were 0.4% higher, meaning real imports were smaller than the nominal dollar values reported here by that percentage….

much of the increase in our December exports of goods was as a result of higher exports of capital goods, but an increase in our exports of industrial supplies also contributed…referencing the Full Release and Tables for December (pdf), in Exhibit 7 we find that our exports of capital goods rose by $3,332 million to $45,367 million on a $1,012 million increase in our exports of civilian aircraft, a $978 million increase in our exports of engines for civilian aircraft, a $463 million increase in our exports of industrial engines, a $293 million increase in our exports of other industrial machines, and a $256 million increase in our exports of generators and accessories…we also find that our exports of industrial supplies and materials rose by $731 million to $35,878 million on a $241 million increase in our exports of natural gas liquids and a $191 million increase in our exports of fuel oil, and that our exports of other goods not categorized by end use rose by $722 million to $5,940 million…in addition, our exports of automotive vehicles, parts, and engines rose by $167 million to $12,283 million on a $427 million increase in our exports of parts and accessories of vehicles other than engines, body chassis and tires, and our exports of consumer goods rose by $76 million to $16,487 million despite a $336 million decrease in our exports of pharmaceuticals, as exports of most other consumer goods line items increased…on the other hand, our exports of foods, feeds and beverages fell by $95 million to $10,626 million on a $181 million decrease in our exports of nuts…

Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our goods imports and shows that higher imports of automotive vehicles, parts, and engines, industrial supplies and materials, and capital goods were responsible for the increase in December imports…our imports of automotive vehicles, parts and engines rose by $1617 million to $30,860 million on a $1,351 million increase in our imports of new and used passenger cars, and our imports of industrial supplies and materials rose by $1,092 million to $41,015 million as our imports of natural gas rose by $914 million, our imports of organic chemicals rose by $313 million and our imports of fertilizers rose by $353 million….in addition, our imports of capital goods rose by $982 million to $50,426 million on a $216 million increase in our imports of computers and a $206 million increase in our imports of photo servicing equipment, our imports of foods, feeds, and beverages rose by $157 million to $11,306 million, and our imports of consumer goods rose by $142 million to $49,655 million despite decreases of $457 million in our imports of pharmaceuticals and $448 million in our imports of cellphones, as our imports of artwork, antiques and other collectibles rose by $244 million and our imports in most other categories of consumer goods rose as well…only slightly offsetting those import increases, our imports of other goods not categorized by end use fell by $291 million to $7,679 million…

in the advance report on 4th quarter GDP of two weeks ago, our December trade deficit was estimated based on the sketchy Advance Report on our International Trade in Goods which was released just before the GDP release…that report estimated that our December goods trade deficit was at $65.0 million, on goods exports of $125.5 billion and goods imports of $190.5 billion…this report revises that and shows that our actual goods trade deficit in December was at $65.7 billion on adjusted goods imports of $192.6 billion and adjusted goods exports of $126.9 billion…in addition, the November trade deficit was revised higher by nearly $0.5 billion…just those two revisions from the previously published data mean that the 4th quarter trade deficit in goods was roughly $1.2 billion more than was included in last week’s GDP report, or roughly $4.9 billion on an annualized basis, which would subtract about 0.11 percentage points from 4th quarter GDP….

however, trade in goods for July, August, September and October, which all go into figuring the change in GDP, were also revised with this report as well…to assess those changes, we can view the all previously published trade details in the pdf for November’s trade report, and then compare them to the revised numbers in the pdf for December’s trade report….without going into too much detail or attempting to adjust for fractional inflation factors, the net trade deficit for July was revised from $39,626 million to $39,977 million, the net trade deficit for August was revised from $39,626 million to $39,977 million, the net trade deficit for September was revised from $39,626 million to $39,977 million, and the net trade deficit for October was revised from $39,626 million to $39,977 million…that means the trade deficit in the 3rd quarter was roughly $1.05 billion more than was reported by the GDP report, which they would have reported at a $4.2 billion annual rate, and hence the change in the deficit from the 3rd quarter to the 4th quarter was that much smaller …those 3rd quarter revisions would thus add about 0.10 percentage points back to the change 4th quarter GDP, ie, make it less negative than was reported in the advance report…

December Wholesale Sales Up 2.4%, Wholesale Inventories Up 1.0%

the December report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at $464.9 billion, up by 2.6 percent (+/0.7%) from the revised November level of $453.2 billion, and 6.8 percent (±0.9 percent) above the value of wholesale sales of a year earlier…the November preliminary sales estimate was revised up by $0.6 billion, which now means November sales were 0.5% (±0.5%) more than those of October, rather than 0.4% as reported last month….wholesale sales of durable goods were up 2.4 percent (+/-0.7%) from last month and were up 4.7 percent (+/-1.4%) from a year earlier, with wholesale sales of automotive equipment 5.5% higher than in November and wholesale sales of electrical and electronic goods up 3.7%…wholesale sales of nondurable goods were up by 2.8 percent (+/-0.8%) from November, and were up 8.7 percent (+/-1.4%) from last December, with wholesale sales of petroleum and petroleum products up 15.0%, and wholesale sales of apparel up 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 in a warehouse or “on the shelf” represent more goods that had been produced, and the Census estimated they were valued at $601.1 billion at the end of December, 1.0 percent (±0.4 percent) higher than the revised November level and 2.6 percent (±1.4 percent) above the valuation of last December’s inventories…November’s preliminary inventory estimate was revised but statistically unchanged from the previously reported $595.3 billion, and hence the November change in wholesale inventories remained at +1.0%…..wholesale durable goods inventories were up 0.7 percent (+/-0.4%) from November and were 0.8 percent (+/-0.8%) higher than a year earlier, as the value of automotive inventories was 2.0% higher, while the value of inventories of computers and related equipment was up 1.1%…inventories of nondurable goods were valued 1.4 percent (+/-0.7%) higher than in November and were valued 5.5 percent (+/-1.4%) higher than last November, as the value of inventories of petroleum and petroleum products was up 10.1% and the value of inventories of chemicals and chemical products was 3.3% higher than in November…

in the advance report on 4th quarter GDP of two weeks ago, wholesale inventories were estimated based on the sketchy Advance Report on Wholesale and Retail Inventories which was released just before the GDP release…that report estimated that our December wholesale inventories were valued at $601.1 billion, which just happens to be what this report shows…since the revisions to prior months were also statistically insignificant, that means that this report does not indicate any changes to the previously published figures on 4th quarter GDP.

Just Small Changes in Job Openings, Hiring, Layoffs and Quitting In December

the Job Openings and Labor Turnover Survey (JOLTS) report for December from the Bureau of Labor Statistics estimated that seasonally adjusted job openings decreased by 4,000, from 5,505,000 in November to 5,501,000 in December, after November job openings were revised 53,000 higher, from 5,451,000 to 5,505,000…December’s jobs openings were 4.2% higher than the 5,281,000 job openings reported in December a year ago,  as the job opening ratio expressed as a percentage of the employed at 3.6% was down from the 3.7% logged in November, while it was unchanged from December a year ago…the health care and social assistance sector, with a 35,000 job opening increase to 1,100,000, saw the largest increase, while the accommodation and food services sector saw job openings decrease by 52,000 to 604,000 (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 December, seasonally adjusted new hires totaled 5,252,000, up by 40,000 from the revised 5,212,000 who were hired or rehired in November, as the hiring rate as a percentage of all employed remained unchanged at 3.6% in December, but was down from 3.8% in December a year earlier (details of hiring by sector since March are in table 2)….meanwhile, total separations fell by 50,000, from 5,018,000 in November to 4,968,000 in December, as the separations rate as a percentage of the employed fell from 3.5% to 3.4%, which also down from 3.6% in December a year ago (see table 3)…subtracting the 4,968,000 total separations from the total hires of 5,252,000 would imply an increase of 282,000 jobs in December, quite a few more than the revised payroll job increase of 157,000 for December reported in the January establishment survey last week and outside the expected +/-115,000 margin of error in these incomplete samplings, so one or both of these surveys was off by more than would normally be expected…

breaking down the seasonally adjusted job separations, the BLS finds that 2,979,000 of us voluntarily quit our jobs in December, down from the revised 3,077,000 who quit their jobs in November, while the quits rate, widely watched as an indicator of worker confidence, slipped back 0.1% to 2.0% of total employment, while it was also down from 2.2% a year earlier (see details in table 4)….in addition to those who quit, another 1,635,000 were either laid off, fired or otherwise discharged in December, up by 16,000 from the revised 1,619,000 who were discharged in November, 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 355,000 in November, up from 322,000 in November, for an ‘other separations rate’ of 0.2%, the same as in November bu down from 0.3% in December 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 picked from the aforementioned GGO posts, contact me…)
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