January retail sales, consumer and producer prices, industrial production, business inventories, housing starts

this week brought us a half dozen of the regular monthly agency reports, including the Retail Sales report for January and Business Sales and Inventories for December from the Census Bureau, the January Producer Price Index and the January Consumer Price Index from the Bureau of Labor Statistics, the January report on Industrial Production and Capacity Utilization from the Fed, and the January report on New Residential Construction, also from the Census Bureau…this week also saw the release of the first two regional Fed manufacturing surveys for February: the Empire State Manufacturing Survey from the New York Fed, which covers all of New York state, one county in Connecticut, Puerto Rico and northern New Jersey, reported their headline general business conditions index rose to +18.7,  up from +6.5 in January, suggesting an accelerating growth rate in First District manufacturing….meanwhile, the Philadelphia Fed Manufacturing Survey, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest diffusion index of manufacturing conditions rose to +43.3 in February from a  reading + 23.6 in January, indicating an overwhelming plurality of the region’s manufacturing firms reported increases in their activity this month…

January Consumer Prices Rise 0.6% on Higher Fuel, Shelter, and Clothing

the consumer price index increased by 0.6% in January, the largest increase since February 2013, as higher prices for gasoline accounted for nearly half the increase…the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that the seasonally adjusted price index for urban consumers rose 0.6% in January after it had risen 0.3% in December, 0.2% in November, 0.4% in October, 0.3% in September, and 0.2% in August….the unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, rose from 241.432 in December to 242.839 in January, which left it statistically 2.500% higher than the 236.916 index reading of last January….regionally, prices for urban consumers have risen by 2.5% in the West, by 2.6% in the South, 2.5% in the Northeast and by 2.2% in the Midwest over the past year, with higher price increases in the South and Midwest in cities of less than 1,500,000 people , while the largest cities saw the greater price increases in the West…with higher prices for gasoline responsible for half the increase in the index, seasonally adjusted core prices, which exclude food and energy, rose by 0.3% for the month, with the unadjusted core index rising from 249.134 to 250.083, which left it 2.272% ahead of its year ago reading of 244.528…

the volatile seasonally adjusted energy price index increased by 4.0% in January, after it had risen by 1.5% in December, 1.2% in November, 3.5% in October, and 2.9% in September…as a result, energy prices are now 10.8% higher than a year ago, after seeing negative year over year comparisons through most of 2015 and 2016…prices for energy commodities were 7.6% higher while the index for energy services rose by 0.3%, after slipping 0.1% in December ….the increase in the energy commodity index included a 7.8% increase in the price of gasoline, the largest component, and a 3.5% increase in the price of fuel oil, while prices for other fuels, including propane, kerosene and firewood, rose by an average of 4.0%…within energy services, the index for utility gas service rose by 1.5% in its 7th increase in a row, and hence utility gas is now priced 10.1% higher than it was a year ago, while the electricity price index was unchanged, just as it was in November  and December….energy commodities are now priced 20.0% above their year ago levels, with gasoline prices averaging 20.3% higher than they were a year ago.…meanwhile, the energy services price index is now 2.9% higher than last January, as even electricity prices have increased by 1.0% over that period..

the seasonally adjusted food price index rose 0.1% in January, after it had been unchanged for 6 consecutive months, as prices for food purchased for use at home was unchanged while prices for food bought to eat away from home rose 0.4%, as average prices at fast food outlets rose 0.3% while average prices at full service restaurants rose 0.5%…the food price index is still 0.2% lower than a year ago, as a 1.9% drop in the price of food at home has been mostly offset by a 2.5% increase in prices for food away from home, which included a 2.6% increase in prices of food at employee sites and schools…

in the food at home categories, the price index for cereals and bakery products decreased by 0.1% as 1.1% higher prices for cookies and a 1.3% increase in the index for rice, pasta, cornmeal were more than offset by a 1.2% decrease in prices for breakfast cereal and a 1.5% decrease in prices for crackers…the price index for the meats, poultry, fish, and eggs group rose by 0.7% as beef prices rose 0.3% and egg prices rose 14.3%, while the index for dairy products was 0.8% higher on a 1.6% increase in the price for cheese….the fruits and vegetables index was 1.7% lower on a 1.8% drop in prices for fresh fruits and a 2.4% drop in prices for fresh vegetables…the beverages index was 0.3% lower as carbonated drinks saw an average 1.0% price cut…lastly, prices in the ‘other foods at home’ category were on average 0.2% higher, as butter prices rose 3.9% and olives, pickles and relishes averaged a 5.1% increase…..among food at home line items, eggs, which are still priced 19.4% lower than a year ago, tomatoes, which are 18.4% lower, and lettuce, which is 16.8% lower than last year, 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 0.3% in January after rising by  0.2% in December, 0.2% in November, 0.1% in October, 0.1% in September, 0.3% in August, 0.1% in July and by 0.2% in April, in May and in June, the composite of all goods less food and energy goods rose 0.4%, while the more heavily weighted composite for all services less energy services was 0.3% higher….among the goods components, which will be used by the Bureau of Economic Analysis to adjust January retail sales for inflation in national accounts data, the index for household furnishings and supplies rose by 0.4% as prices for infants’ furniture was up 7.6%, prices for dishes and flatware were 7.2% higher, and laundry equipment prices rose 2.2%…the apparel price index was 1.4% higher on a 3.8% increase in prices for men’s furnishings and a 5.2% increase in prices for women’s dresses….prices for transportation commodities other than fuel were up 0.4%, as prices for new cars rose 0.9%, while prices for medical care commodities were 0.3% higher on 0.7% higher drug prices….meanwhile, the recreational commodities index fell 0.2% on 0.4% lower priced toys and sporting goods, while the education and communication commodities index was 0.1% higher as a 2.9% increase in prices for computer software and accessories was only partially offset by a 1.5% increase in prices for educational books and supplies….lastly, a separate price index for alcoholic beverages was up 0.2% on 1.4% higher prices for whiskey bought for drinking at home, while the price index for ‘other goods’ was down 0.1% on a 1.2% decrease in the index 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, a 0.2% increase in owner’s equivalent rent, and a 0.2% decrease in lodging away from home at hotels and motels, while the household operations services index increased 0.1%….meanwhile, the index for medical care services was up 0.2% as services of medical professionals other than doctors and dentists rose 0..7%…in addition, the transportation services index was 0.3% higher on a 1.8% increase in intercity bus fare, a 2.0% increase in airline fares, and a 0.8% increase for motor vehicle insurance…at the same time, the recreation services price index was up 0.7% as admissions to sporting events rose 5.5%, while the index for education and communication services was unchanged as delivery services increased prices 2.8% while college tuition and internet services were both 0.1% lower…lastly, the index for other personal services was up 0.3% as legal service fees were 2.0% higher…among core prices, only televisions, which are now 21.8% cheaper than a year ago, have seen prices drop by more than 10% over the past year, while nothing has seen prices rise by that double digit magnitude.. 

Retail Sales Up 0.4% in January after December Revised Higher

seasonally adjusted retail sales increased 0.4% in January after retail sales for December were revised higher…the Advance Retail Sales Report for January (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $472.1 billion during the month, which was up 0.4 percent (±0.5%) from December’s revised sales of $470.5 billion and 5.9 percent (±0.9%) above the adjusted sales in January of last year…December’s seasonally adjusted sales were revised up from $469.1 billion to $470.46 billion, while November’s sales were revised lower, from $466.2 billion to $466.0 billion; as a result, the November to December change was revised up from up 0.6 percent (±0.5%) to up 1.0 percent (±0.2%)…..estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated sales actually fell 22.4%, from $541,774 million in December to $420,638 million in January, while they were up 4.9% from the $400,928 million of sales in January a year ago, so we can see how a large seasonal adjustment to holiday and post holiday sales brought the headline sales into line vis-a-vis the normal decrease that would be expected in January…

included below is the table of the monthly and yearly percentage changes in retail sales by business type taken from the January Census Marts pdf….the first pair of columns below gives us the seasonally adjusted percentage change in sales for each kind of business from the December revised figure to this month’s January “advance” report in the first sub-column, and then the year over year percentage sales change since last January in the 2nd column…the second double column pair below gives us the revision of the December advance estimates (now called “preliminary”) as of this report, with the new November to December percentage change under “Nov 2016 r” (revised) and the December 2015 to December 2016 percentage change as revised in the last column shown…for your reference, the table of last month’s advance estimate of December sales, before this month’s revisions, is here.….

January 2017 retail sales table

despite the apparent improvement in sales, this January report is much worse than it looks…for starters, the 2.3% increase to $37,156 million in gasoline station sales accounted for half the increase, and that was only due to higher gas prices…take that, and the 1.4% increase to $55,987 million in sales at bars and restaurants out, and January retail sales were flat…moreover, as we saw in the report on consumer prices, the composite of all goods less food and energy goods rose an unusual 0.4% for the month, which means real core sales were actually down by that 0.4%…especially hard hit were the auto dealers; with sales down by 1.2% and prices for new cars and trucks up 0.9%, that means their real sales fell by more than 2% for the month…and even in store types where the apparent sales were much higher, such as clothing where we see a 1.0% increase in nominal sales, prices for apparel concurrently rose by 1.4%, meaning real clothing store sales were actually down 0.4%…we would not be surprised to see real PCE for January, which will be released at the end of the February, turn negative for the first time in months…

Producer Prices Up 0.6% in January on Higher Energy Prices

the seasonally adjusted Producer Price Index (PPI) for final demand rose 0.6% in January, the largest increase since May 2015, as prices for finished wholesale goods increased 1.0%, while margins of final services providers increased by 0.3%…this followed a revised December report that indicated the PPI was 0.2% higher, with prices for finished goods up 0.6% while final demand for services rose 0.1%, and a November report that indicated the overall PPI had increased 0.5%, with prices for finished goods up 0.2% while final demand for services rose 0.5%…note that monthly PPI readings for the entirety of 2016 were revised with this report to reflect a recalculation of seasonal adjustment factors…on an unadjusted basis, producer prices remain 1.6% higher than a year earlier, same as in December…

as noted, the price index for final demand for goods, aka ‘finished goods’, rose by 1.0% in January, after rising by 0.6% in December, 0.2% in November, 0.3% in October, and 0.5% in September, as the index for wholesale energy prices rose 4.7% from December to January while the price index for wholesale foods was unchanged and the index for final demand for core wholesale goods (ex food and energy) rose 0.4%…major wholesale energy price increases in December included a 14.5% increase in wholesale prices for heat oil, and a 12.9% increase in wholesale gasoline prices, while among wholesale food prices, a 7.0% increase in the wholesale price of pork was partially offset by a 7.2% decrease for wholesale beef…among wholesale core goods, prices for women’s, girls’, and infants’ apparel increased 2.4% and wholesale prices for appliances rose 1.8%, while wholesale prices for tires were down 1.3%…

meanwhile, the index for final demand for services rose by 0.4% in January after rising by 0.1% in December, by 0.5% in November and falling by 0.4% in October, as the index for final demand for trade services rose 0.9%, the index for final demand for transportation and warehousing services rose 1.1%, while the index for final demand for services less trade, transportation, and warehousing services was 0.1% lower….among trade services, seasonally adjusted margins for apparel, jewelry, footwear, and accessories retailers increased 4.8% and accounted for nearly half of the January increase in the index for final demand services, while margins for TV, video, and photographic equipment retailers increased 14.1% after rising 6.3% in December and  6.0% in November… among transportation and warehousing services, margins for airline passenger services rose 3.7%… in the core final demand for services index, margins for securities brokerage, dealing, and investment advisers rose 2.5%, while margins for passenger car rentals were 10.4% lower…

this report also showed the price index for processed goods for intermediate demand was 1.1% higher, the largest increase since February 2013, after rising 0.4% in December, 0.3% in November and by a revised 0.4% in October…prices for intermediate processed goods are now 3.8% higher than in January a year ago, the third 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 January, the price index for intermediate energy goods rose 4.8%, prices for intermediate processed foods and feeds rose 0.5%, while 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 rose 3.8 in January, after rising 8.4% in December, but falling by 0.4% in November, 0.5% in October, 0.6% in September, and 2.1% in August….the index for crude energy goods rose 6.7% as prices for raw natural gas rose 23.6%, and the price index for unprocessed foodstuffs and feedstuffs rose 2.2%, as the index for slaughter hogs rose 10.3 percent and raw milk prices rose 15.2%…moreover, the index for core raw materials other than food and energy materials rose 3.2%, on an 14.8% increase in wholesale prices for iron and steel scrap… this raw materials index is now up 17.6% from year ago, in contrast to a prior year over year decrease of 26.4% that we saw just 14 months ago, in November of 2015…

lastly, the price index for services for intermediate demand was 0.3% higher in January, after being 0.4% higher in December and 0.1% higher in November and October.. the index for trade services for intermediate demand was 0.2% lower as margins for intermediate building materials, paint, and hardware wholesalers fell 3.2%…the index for transportation and warehousing services for intermediate demand was also down 0.2%, as pricing for intermediate courier and messenger services fell 4.6%, while the core price index for services less trade, transportation, and warehousing for intermediate demand rose 0.4%, as a 5.5% increase in the index for business loans (partial) accounted for much of the increase in the intermediate services index…over the 12 months ended in January, the year over year price index for services for intermediate demand, which has never turned negative on an annual basis, is now 1.5% higher than it was a year ago…  

Industrial Production Slips 0.3% in January on Mild Weather

the Fed’s G17 release on Industrial production and Capacity Utilization indicated that industrial production fell by 0.3% in January after rising by a revised 0.6% in December, which left it unchanged from a year ago…the industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, was actually unchanged from the previously published 104.6 in January, after the December index was revised up from there to 104.8, the November index was revised from the 103.7 reported last month to 104.2, while at the same time the index for September was revised from 104.2 to 104.1….

the manufacturing index, which accounts for more than 77% of the total IP index, rose to 103.8 in January, after the December index was revised from 103.2 to 103.5, the November index was revised from 103.0 to 103.3, the October index was revised from 103.2 to 103.3, the September index was revised from 102.9 to 103.0, and the August index was revised from 102.8 to 102.9….meanwhile, the mining index, which includes oil and gas well drilling, rose from 105.7 in December to 108.3 in January after the December index was revised down from 107.1, which left the mining index 0.4% than it was a year earlier…finally, the utility index, which often fluctuates due to above or below normal temperatures, fell by 5.7% in January, from 104.8 to 98.8, after the December utility index was revised from 104.0 to 104.8…with January 2016 heating requirements somewhat closer to normal, the utility index is now 2.6% lower than it was a year ago…

this report also includes capacity utilization data, which is expressed as the percentage of our plant and equipment that was in use during the month, and which indicated that seasonally adjusted capacity utilization forutotal industry fell to 75.3% in January from 75.6% in December, which was revised from the 75.5% reported last month …capacity utilization of NAICS durable goods production facilities fell from a upwardly revised 76.4% in December to 76.2% in January, while capacity utilization for non-durables producers rose from an upwardly revised 74.6% to 75.0%…capacity utilization for the mining sector rose to 78.1% in January from 77.1% in December, which was originally reported as 78.1%, while utilities were operating at 75.1% of capacity during January, down from their 79.7% of capacity during December, which was previously reported at 79.1%…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…. 

December Business Sales Up 2.0%, Business Inventories Up 0.4%

after the release of the January retail sales report, the Census Bureau released the composite Manufacturing and Trade, Inventories and Sales report for December (pdf), which incorporates the revised December retail data from that December report and the earlier published December 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 $1,356.0 billion in December, up 2.0 percent (±0.2%) from November’s revised sales, and up 5.2 percent (±0.4%) from December sales of a year earlier…note that total November sales were concurrently revised up from the originally reported $1,326.7 billion to $1,328.8 billion, so gross sales in this report were actually up 2.2% from what was reported last month ….manufacturer’s sales rose 2.2% to $475,843 million in December; retail trade sales, which exclude restaurant & bar sales from the revised December retail sales reported earlier, rose 1.2% t0 $415,242 million, and wholesale sales rose 2.6% to $464,905 million…

meanwhile, total manufacturer’s and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $1,835.7 billion at the end of December, up 0.4 percent (±0.2%) from November, and 2.0 percent (±0.5%) higher than in December a year earlier…at the same time, the value of end of November inventories was revised from the $1,827.5 reported last month to $1828.97 billion….seasonally adjusted inventories of manufacturers were estimated to be valued at $625,585 million, up 0.1% from November, while inventories of retailers were valued at $609,010 million, also 0.1% more than in November, and inventories of wholesalers were estimated to be valued at $601,147 million at the end of December, 1.0% higher than in November…

January Housing Starts Down from December, Permits Up

the January report on New Residential Construction (pdf) from the Census Bureau estimated that their widely watched count of new housing units started in January was at a seasonally adjusted annual rate of 1,285,000, which was 2.6 percent (±11.0 percent)* below the revised estimated December annual rate of 1,279,000, but was 10.5 percent (±15.3%)* above last January’s rate of 1,160,000 housing starts a year…the asterisks indicates that the Census does not have sufficient data to determine whether housing starts actually rose or fell during the month or even over the past year, with the figures in parenthesis the most likely range of the change indicated; in other words, January housing starts could have been down by 4.8% or up by as much as 25.8% from those of last January, with revisions of a greater magnitude in either direction possible…in this report, the annual rate for December housing starts was revised from the 1,226,000 reported last month to 1,285,000, while November starts, which were first reported at a 1,090,000 annual rate, were revised from last month’s initial revised figure of 1,102,000 annually up to a 1,149,000 annual rate with this report….these annual rates of starts reported here were extrapolated from a survey of a small percentage of US building permit offices visited by canvassing Census field agents, which estimated that 82,500 housing units were started in January, down from the 87,000 units that were started in December and the 87,700 units that were started in November

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 January, Census estimated new building permits for housing units were being issued at a seasonally adjusted annual rate of 1,285,000, which was 4.6 percent (±2.0 percent) above the revised December rate of 1,228,000 permits, and 8.2 percent (±1.6 percent) above the rate of building permit issuance in January a year earlier…the annual rate for housing permits issued in December was revised up from the originally reported 1,210,000….again, these annual estimates for new permits reported here were extrapolated from the unadjusted estimates collected monthly by canvassing census agents, which showed permits for roughly 86,800 housing units were issued in January, down from the revised estimate of 91,400 new permits issued in December…. for graphs and commentary on this report, see the following two posts by Bill McBride at Calculated Risk: Housing Starts at 1.246 Million Annual Rate in January and Comments on January 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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