August’s consumer and producer prices, retail sales, and industrial production; July’s business inventories and JOLTS

reports released this past week included Retail Sales for August and Business Sales and Inventories for July from the Census Bureau, August Industrial Production and Capacity Utilization from the Fed, and the August Consumer Price Index, the August Producer Price Index, the Job Openings and Labor Turnover Survey (JOLTS) report for July and the Regional and State Employment and Unemployment report for August, all from the Bureau of Labor Statistics…this week also saw the release of the Empire State Manufacturing Survey for September from the New York Fed, which covers New York and northern New Jersey; they reported their headline general business conditions index fell from +25.2 in August to +24.4 in September, still suggesting that First District manufacturing was growing at a robust pace…

Consumer Prices Up 0.4% in August on Higher Prices for Gasoline, Shelter

the consumer price index rose 0.4% in August, as much higher prices for gasoline and shelter were only slightly offset by lower prices for groceries…the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that seasonally adjusted prices rose 0.4% in August after rising 0.1% in July, being unchanged in June and  falling 0.1% in May, but after rising 0.2% in April….the unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, rose from 244.786 in July to 245.519 in August, which left it statistically 1.939% higher than the 240.849 index reading in August of last year…with prices for energy much higher, seasonally adjusted core prices, which exclude food and energy, rose by 0.2% for the month, as the unadjusted core index rose from 251.936 to 252.460, which left the core index 1.684% ahead of its year ago reading of 248.278…

the volatile seasonally adjusted energy price index was 2.8% higher in August after it had fallen 0.1% in July, 1.6% in June, and 2.7% in May, but after it rose by 1.1% in April, fell by 3.2% in March and by 1.0% in February, but after it had risen by 4.0% in January, 1.5% in December, 1.2% in November, 3.5% in October, and by 2.9% last September….thus, energy prices are now averaging 6.4% higher than a year ago, after seeing negative year over year comparisons through most of 2015 and 2016…prices for energy commodities were up by 6.1% in August, while the index for energy services fell by 0.1%, after falling  0.2% in July and 0.5% in June… the increase in the energy commodity index included a 6.3% jump in the price of gasoline, the largest component, and a 2.9% increase in the price of fuel oil, while prices for other fuels, including propane, kerosene and firewood, rose by an average of 1.1%…within energy services, the index for utility gas service fell by 0.5% after decreasing by 2.3% in July, but utility gas is still priced 5.1% higher than it was a year ago, while the electricity price index was unchanged, after increasing by 0.4% in July…energy commodities are now priced 10.3% above their year ago levels, with gasoline prices averaging 10.4% higher than they were a year ago…meanwhile, the energy services price index is now 2.9% higher than last August, as electricity prices have risen by 2.3% over that period..

the seasonally adjusted food price index was up 0.1% in August, after rising 0.2% in July, being unchanged in June, rising 0.2% in May, 0.2% in April, 0.3% in March, 0.2% in February, and 0.1% in January, but after being unchanged in each of the prior 6 months, as prices for food purchased for use at home fell 0.2% in August, while prices for food bought to eat away from home was 0.3% higher, as prices at fast food outlets and at full service restaurants both rose 0.2%, while food at work sites and schools rose 3.9%…in the food at home categories, the price index for cereals and bakery products increased by 0.3%, as prices for bread other than white rose 1.3% and cookie prices rose 1.4%…the price index for the meats, poultry, fish, and eggs group was down 0.2% as roast beef prices fell 2.1% and ham prices fell 2.2%, while the index for dairy products was 0.4% lower on 1.5% decrease in the price of fresh whole milk…the fruits and vegetables index was 0.2% lower on a 1.0% decrease in prices for fresh fruits, as prices for oranges fell 5.2%…at the same time, the beverages index was 0.4% lower as roast coffee prices were down 2.4% and tea prices fell 1.4%….lastly, prices in the ‘other foods at home’ category were 0.1% lower on average, as salad dressing prices fell 2.1% while prepared frozen foods prices were 1.4% lower…….among food at home line items, only bacon, which is now priced 12.5% higher than a year ago has 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 0.2% in August and by 0.1% in each of the prior 4 months, the composite of all goods less food and energy goods was down 0.1% in August, while the more heavily weighted composite for all services less energy services was 0.4% higher….among the goods components, which will be used by the Bureau of Economic Analysis to adjust August retail sales for inflation in national accounts data, the index for household furnishings and supplies was unchanged as prices for bedroom furniture rose 2.6% while prices for living room, kitchen, and dining room furniture fell 1.0%…the apparel price index, meanwhile, was 0.1% higher, as prices for boys’ apparel rose 9.6% while prices for women’s dresses fell 4.9%….prices for transportation commodities other than fuel were down 0.1%, as prices for new cars and prices for used cars and trucks both fell 0.2%…prices for medical care commodities were also 0.1% lower on a 0.5% decrease in prices for nonprescription drugs…at the same time, the recreational commodities index fell 0.4% on a 2.0% drop in TV prices and 2.7% lower prices for video equipment other than TVs…meanwhile, the education and communication commodities index was 0.8% lower on a 1.1% decrease in prices for computer software and accessories and 1.3% lower prices for educational books and supplies…lastly, a separate price index for alcoholic beverages was up 0.1%, while the price index for ‘other goods’ was down 0.4% on 1.1% decreases in the indexes for hair, dental, shaving, and miscellaneous personal care products and for stationery, stationery supplies, and gift wrap..

within core services, the price index for shelter rose 0.5% on a 0.4% increase in rents, a 0.3% increase in owner’s equivalent rent, and a 5.1% increase in costs for lodging away from home at hotels and motels, while household operation costs were 0.3% higher…the index for medical care services was up 0.2% as prices for prescription eyeglasses and eye care rose 1.4%, while the transportation services index was 0.4% higher despite a 2.1% decrease in car and truck rentals on a 1.0% increase in motor vehicle insurance…at the same time, the recreation services price index was up 0.5% as admissions to movies, theaters, and concerts rose 1.0%, while the index for education and communication services was unchanged as a 0.9% increase in technical and business school tuition and fees was offset by a 0.3% decrease for college tuition….lastly, the index for other personal services was 0.1% higher as tax return preparation and other accounting services were 0.8% higher…among core prices, only the index for clocks, lamps, and decorator items, which is now 12.5% lower than a year ago, prices for toys, which have fallen by 10.45, and prices for wireless phone services, which have now dropped 13.2% from a year ago, have seen prices drop by more than 10% over the past year, while no line item has seen prices rise by a double digit magnitude in that span..   

Retail Sales Down by 0.2% in August after June and July Sales Revised Lower

seasonally adjusted retail sales were down in August after retail sales for June and July were revised much lower…the Advance Retail Sales Report for August (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $474.8 billion during  the month, which was down 0.2 percent (±0.5%)* from July’s revised sales of $475.8 billion but 3.2 percent (±0.7 percent) above the adjusted sales in August of last year…July’s seasonally adjusted sales were revised from $478.9 billion to $475.8 billion, while June sales were also revised lower, from $476.0 billion to $474.5 billion, with this release….estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated sales actually rose 2.7%, from $476,699 million in July to $489,851 million in August, while they were up 3.5% from the $473,169 million of sales in August a year ago…the revision to June sales means that 2nd quarter sales were roughly $1.5 billion lower than previously reported, which would be enough to knock 0.12 percentage points from 2nd quarter GDP when the 3rd estimate is published at the end of the month…

included below is the table of the monthly and yearly percentage changes in retail sales by business type taken from the August Census Marts pdf….the first double column below gives us the seasonally adjusted percentage change in sales for each type of retail business from July to August in the first sub-column, and then the year over year percentage change for those businesses since last August in the 2nd column; the second pair of columns gives us the revision of last month’s July advance monthly estimates (now called “preliminary”) as revised in this report, likewise for each business type, with the June to July change under “Jun 2017 (r)evised” and the revised July 2016 to July 2017 percentage change in the last column shown…for your reference, our copy of the table of last month’s advance July sale estimates, before this month’s revision, is here….

August 2017 retail sales table

Industrial Production Down 0.9% in August on Weather

August saw the largest drop in US industrial production since May 2009, as Hurricane Harvey impacted Gulf of Mexico and inland oil & gas production and southeast Texas manufacturing and refining, while unseasonably cool temperatures on the East Coast reduced the demand for electricity….the Fed’s G17 release on Industrial production and Capacity Utilization report indicated that industrial production fell by 0.9% in August, after rising by a revised 0.4% in July…as a result, industrial production is only up 1.5% from a year ago, as compared to last month’s year over year increase of 2.2%….the industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, fell to 104.7 in August from 105.7 in July, which was revised from the 105.5 that was reported for July a month ago…at the same time, the June reading for the index was unrevised at 105.3, the May reading for the index was revised up from 104.9 to 105.1, and the April index reading was revised from 104.7 to 104.9…

the manufacturing index, which accounts for more than 77% of the total IP index, fell by 0.3, from 103.6 in July to 103.3 in August, after July’s manufacturing index was revised up from 103.4, and is now up 1.5% from a year ago….meanwhile, the mining index, which includes oil and gas well drilling, fell from 111.2 in July to 110.3 in August, after the July index was revised up from 111.0….however, the mining index still remains 9.7% higher than it was a year ago….finally, the utility index, which often fluctuates due to above or below normal temperatures, fell by 5.5% in August after rising a revised 1.5% in July and falling a revised 1.0% in June, and is now 7.8% below last August’s level…

this report also provides 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 fell from 76.9% in July to 76.1% in August…capacity utilization of NAICS durable goods production facilities rose from 74.3 in July to 74.5 in August, after July’s figure was revised down from 74.4%, while capacity utilization for non-durables producers fell from an upwardly revised 77.9% to 77.2%…capacity utilization for the mining sector fell to 83.9% in August from 84.8% in July, which was originally reported as 84.6%, while utilities were operating at 73.9% of capacity during August, down from their 78.2% of capacity during July, which was revised up from 78.1%…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….

Producer Prices Up 0.2% in August on Higher Priced Energy Commodities

the seasonally adjusted Producer Price Index (PPI) for final demand rose 0.2% in August, as prices for finished wholesale goods increased 0.5%, while margins of final services providers increased by 0.1%…this followed a July report that indicated the PPI was down 0.1%, with prices for finished wholesale goods down 0.1%, and margins of final services providers down 0.2%, and a June report that indicated the PPI was up 0.1%, with prices for finished wholesale goods up 0.1%, and margins of final services providers up 0.2%….on an unadjusted basis, producer prices remain 1.9% higher than a year earlier, same as in June, but down from the 2.5% YoY increase seen in April, which had been the largest year over year increase in the PPI since February 2012…

as we noted, the price index for final demand for goods, aka ‘finished goods’, rose 0.5% in August, after slipping 0.1% in July, rising by 0.1% in June, falling by 0.6% in May, rising by 0.5% in April, falling by 0.2% in March, and rising by 0.4% in February, and by 1.0% in January… the index for wholesale energy prices rose 3.3% in August, while the price index for wholesale foods fell 1.3% and the index for final demand for core wholesale goods (ex food and energy) was 0.2% higher…the largest wholesale energy price changes were a 14.1% increase in the wholesale price of home heating oil and distillates and 13.4% in the wholesale price of LP gas, while wholesale gasoline prices were up 9.5%….meanwhile, a 8.6% decrease in the wholesale price of grains and a 6.5% decrease in the wholesale price for beef and veal pulled the wholesale food price index lower….among wholesale core goods, the index for industrial chemicals was up 2.9%, while wholesale prices for sanitary paper products were 1.1% lower…

at the same time, the index for final demand for services rose 0.1% in August, after falling by 0.2% in July, rising by 0.2% in June, and a revised 0.5% in May and 0.4% in April, as the July index for final demand for trade services was unchanged, the index for final demand for transportation and warehousing services rose 0.3%, while the index for final demand for services less trade, transportation, and warehousing services was 0.1% higher….among trade services, seasonally adjusted margins for fuels and lubricants retailers decreased 6.8%, while margins for TV, video, and major household appliances retailers rose 13.7%… among transportation and warehousing services, margins for truck transporters of freight were 0.9% higher…in the core final demand for services index, prices for consumer loans (partial) increased 1.7%..

this report also showed the price index for processed goods for intermediate demand was 0.4% higher, after falling 0.1% in July and 0.2% in June, but after rising by a revised 0.1% in May and 0.5% in April….the price index for intermediate energy goods rose 1.4%, while prices for intermediate processed foods and feeds fell 1.0%, and the core price index for processed goods for intermediate demand less food and energy was 0.4% higher, as prices for industrial chemicals rose 2.9%…prices for intermediate processed goods are now 4.1% higher than in August a year ago, now the tenth consecutive year over year increase, after 16 months of negative year over year comparisons, as intermediate goods prices fell every month from July 2015 through March 2016….

meanwhile, the price index for intermediate unprocessed goods fell 0.7% in August, after falling 0.4% in July, rising 1.5% in June, falling a revised 2.0% in May, and rising a revised 1.6% in April….the price index for crude energy goods rose 4.0%, as crude oil prices rose 11.0%, while the index for unprocessed foodstuffs and feedstuffs fell 5.2%, as prices for wheat dropped 20.6% and prices for slaughter steers and heifers fell 10.0%…in addition, the index for core raw materials other than food and energy materials rose 0.9%, as prices for iron and steel scrap rose 5.4% and wholesale prices for copper scrap rose 4.1% …this raw materials index is now up 6.8% from a year ago, up from the year over year increase of 5.2% that we saw in June…

lastly, the price index for services for intermediate demand rose 0.2% in August after falling 0.3% in July, which was its first decrease since last September… the index for trade services for intermediate demand was 0.5% lower, as margins for intermediate chemicals and chemical products wholesalers fell 4.3 percent…the index for transportation and warehousing services for intermediate demand was up 0.3%, as intermediate prices for air mail and package delivery services other than USPS rose 1.3%…at the same time, the core price index for services less trade, transportation, and warehousing for intermediate demand was also 0.3% higher, as margins for business loans (partial) rose 5.3%, and intermediate services related to portfolio management rose 1.9%…over the 12 months ended in June, the year over year price index for services for intermediate demand, which has never turned negative on an annual basis, is now 2.6% higher than it was a year ago…

July Business Sales and Business Inventories Both Up 0.2%

after the release of the August retail sales report, the Census Bureau released the composite Manufacturing and Trade Inventories and Sales report for July(pdf), which incorporates the revised July retail data from that August report and the earlier published 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 $1,358.8 billion in July, up 0.2 percent (±0.1%) from June revised sales, and up 4.9 percent (±0.4 percent) from July sales of a year earlier…note that total June sales were concurrently revised down from the originally reported $1,356.8 billion to $1,356,076 million….manufacturer’s sales were up 0.3% to $474,337 million in July, and retail trade sales, which exclude restaurant & bar sales from the revised July retail sales reported earlier, also rose 0.3% to $419,400 million, while wholesale sales fell 0.1% to $446,437 million…

meanwhile, total manufacturer’s and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $1,873.9 billion at the end of July, up 0.2% (±0.1%) from June, and 3.0 percent (±0.3 percent) higher than in July a year earlier…the value of end of June inventories was revised up slightly from the $1,869.3 billion reported last month to $1,869.4 billion…seasonally adjusted inventories of manufacturers were estimated to be valued at $651,560 million, 0.2% higher than in June, inventories of retailers were valued at $619,956 million, 0.1% less than in June, while inventories of wholesalers were estimated to be valued at $602,352 million at the end of July, up 0.6% from June…

Job Openings were at a Record High in July,  with Hiring and Job Quitting Both Up

the Job Openings and Labor Turnover Survey (JOLTS) report for July from the Bureau of Labor Statistics estimated that seasonally adjusted job openings rose by 54,000, from 6,116,000 in June to a record high of 6,170,000 in July, after June job openings were revised lower, from 6,163,000 to 6,116,000…July jobs openings were also 3.3% higher than the 5,973,000 job openings reported for July a year ago, as the job opening ratio expressed as a percentage of the employed remained unchanged at 4.0% in July, which was also unchanged from a year ago…job openings increased in several sectors, with the 70,000 job opening increase to 253,000 openings in the transportation, warehousing, and utilities sector the largest increase for the month (see table 1 for more details)…like most BLS releases, the press release for 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 July, seasonally adjusted new hires totaled 5,501,000, up by 69,000 from the revised 5,432,000 who were hired or rehired in June, as the hiring rate as a percentage of all employed rose from 3.7% in June to 3.8% in July, which was also up from 3.7% in July a year earlier (details of hiring by sector since March are in table 2)….meanwhile, total separations rose by 23,000, from 5,309,000 in June to 5,332,000 in July, while the separations rate as a percentage of the employed was unchanged at 3.6%, which was up from the separations rate of 3.5% in July a year ago (see table 3)…subtracting the 5,332,000 total separations from the total hires of 5,501,000 would imply an increase of 169,000 jobs in July, a bit less than the revised payroll job increase of 189,000 for July reported by the August establishment survey last week, but still not an unusual difference and well within the expected +/-115,000 margin of error in these incomplete samplings

breaking down the seasonally adjusted job separations, the BLS finds that 3,164,000 of us voluntarily quit our jobs in July, up by 34,000 from the revised 3,130,000 who quit their jobs in June, while the quits rate, widely watched as an indicator of worker confidence, inched up to 2.2% of total employment, from 2.1% in June and from 2.1% a year earlier (see details in table 4)….in addition to those who quit, another 1,783,000 were either laid off, fired or otherwise discharged in July, down by 23,000 from the revised 1,806,000 who were discharged in June, as the discharges rate remained unchanged at 1.2% of all those who were employed during the month, which was up from the discharges rate of 1.1% a year earlier….meanwhile, other separations, which includes retirements and deaths, were at 384,000 in July, up from 373,000 in June, for an ‘other separations rate’ of 0.3%, which was unchanged from both June and from July 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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