October’s consumer prices, retail sales, industrial production, producer prices, and new housing; September’s business inventories..

major agency reports released this week included Retail Sales Report for October and the Business Sales and Inventories Report for September from the Census Bureau, the October Consumer Price Index, the October Producer Price Index and the October Import-Export Price Index from the Bureau of Labor Statistics, the October report on Industrial Production and Capacity Utilization from the Fed, and the October report on New Residential Construction, also from the Census Bureau…in addition, the BLS also released the Regional and State Employment and Unemployment for October on Friday, which breaks down the establishment survey and household survey data from the monthly jobs report released two weeks ago by region and by state…

this week also saw the release of three regional Fed manufacturing surveys for November: 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 fell from +30.2 in October to +19.4 in November, still suggesting decent growth of First District manufacturing;  the Philadelphia Fed Manufacturing Survey, covering most of Pennsylvania, southern New Jersey, and Delaware, also reported its broadest diffusion index of manufacturing conditions moved lower, from a reading of +27.9 in October to +22.7 in November, also suggesting an ongoing strong expansion of that the region’s manufacturing, while the Kansas City Fed manufacturing survey, covering western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico, reported its broadest composite index fell to +16 in November, down from +23 in October and +17 in September, also suggesting an ongoing expansion in that region’s manufacturing for the twelfth month in a row…

October CPI up 0.1% on Higher Housing Costs

the consumer price index increased by 0.1% in October, as higher prices for housing were only partially offset by a retreat in gasoline prices…the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that the seasonally adjusted price index rose 0.1% in October after it had risen 0.5% in September, 0.4% in August. 0.1% in July, and after it was unchanged in June and had fallen 0.1% in May….the unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, actually fell from 246.819 in September to 246.663 in October, which left it statistically 2.041% higher than the 241.729 index reading of last October, which is reported as a 2.0% year over year increase…with the drop prices for gasoline large enough to impact the overall index, seasonally adjusted core prices, which exclude food and energy, rose by 0.2% for the month, with the unadjusted core index rising from  252.941 to 253.638, which put it 1.774% ahead of its year ago reading of 249.218…

the volatile seasonally adjusted energy price index fell by 1.0% in October, after it had risen by 6.1% in September, 2.8% in August, but after it had fallen by 0.1% in July, 1.6% in June, and 2.7% in May…prices for energy commodities were 2.3% lower while the index for energy services rose by 0.4%, after falling by 0.2% in September….the decrease in the energy commodity index included a 2.4% cut in the retail price of gasoline, the largest component, and a 2.3% increase in the price of fuel oil, while prices for other fuels, including propane, kerosene and firewood, fell by an average of 0.5%…however, energy commodities are still priced 10.8% above their year ago levels, with gasoline prices also averaging 10.8% higher than they were a year ago.…within energy services, the index for utility gas service rose by 0.3% after decreasing by 0.8% in September, leaving utility gas priced 3.2% higher than it was a year ago, while the electricity price index rose by 0.5%, after being unchanged over the prior two months…meanwhile, the energy services price index is now 2.2% higher than last October, as even electricity prices have increased by 2.0% over that period..

the seasonally adjusted food price index was unchanged in October, after rising 0.1% in September, 0.1% in August, 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 the index for food purchased for use at home was unchanged in October, while prices for food bought to eat away from home was 0.1% higher, as prices at fast food outlets and prices at full service restaurants both rose 0.2%, while food prices at schools fell 4.0%…

in the food at home categories, the price index for cereals and bakery products decreased by 0.5%, as prices for bread fell 0.6% while other bakery product prices fell 1.2%…the price index for the meats, poultry, fish, and eggs group was up 0.2% as egg prices rose 5.7% and processed fish and seafood prices rose 1.6%, while the index for dairy products was 0.3% lower on 1.2% decrease in the price of fresh whole milk…the fruits and vegetables index was unchanged as a 0.4% increase in prices for fresh vegetables was offset by a 1.3% decrease in prices for canned fruits and vegetables….the beverages index was also unchanged as roast coffee prices were down 0.3% while carbonated drink prices rose 0.3%….lastly, prices in the ‘other foods at home’ category were 0.2% lower on average, as butter prices fell 2.0% and salad dressing prices were 0.8% lower….among food at home line items, only bacon, which is now priced 11.8% higher than a year ago, and oranges, which are up 10.5%, have seen a 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 0.2% in October after rising by 0.1% in September, 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 rose by 0.1%, 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 October retail sales for inflation in national accounts data, the index for household furnishings and supplies was 0.2% lower on a 1.5% decrease in prices for bedroom furniture and a 1.1% decrease in prices for furniture other than bedroom, living room and kitchen furniture, while the apparel price index was 0.1% lower as a 4.2% increase in prices for men’s suits and outerwear was offset by a 2.2% decrease in prices for women’s outwear…on the other hand, prices for transportation commodities other than fuel were up 0.1%, as prices for used cars were up 0.7% while prices for new cars fell 0.3%…meanwhile, prices for medical care commodities were unchanged as a 0.2% decrease in prescription drug prices was offset by 0.2% increase in nonprescription drug prices…at the same time, the recreational commodities index was 0.2% lower as another 3.3% drop in TV prices was only partially offset by a 1.6% increase in prices for other video equipment and a 0.7% increase in prices for photographic equipment…meanwhile, the education and communication commodities index was 0.1% higher on a 0.7% increase in prices for college textbooks and a 1.9% increase in prices for computer software and accessories…lastly, a separate price index for alcoholic beverages was up 0.1% on 0.2% higher wine prices, while the price index for ‘other goods’ was up 0.9% on a 1.6% increase in the index for tobacco and smoking products and a 1.7% increase in the index for stationery, gift wrap and other personal paper supplies..

within core services, the price index for shelter rose 0.3% on a 0.3% increase in rents, a 0.3% increase in owner’s equivalent rent, and a 1.8% increase in costs for lodging away from home at hotels and motels, while costs for water, sewers and trash collection rose 0.3% and other household operation costs were up 0.7%….at the same time, the index for medical care services was also up 0.3%, as prices for both inpatient hospital services rose 0.5% and nursing homes and adult day services were 0.7% higher…meanwhile, the transportation services index was 0.2% higher on a 0.6% increase in airline fares and 0.5% higher motor vehicle repairs….the recreation services index fell 0.1% as film processing fell 1.1% and admissions to sporting events fell 0.5%, while the index for education and communication services rose 0.2% as delivery services rose 1.2% and wireless phone services rose 0.4%…lastly, the index for other personal services rose 0.1% as tax return services rose 0.3%…among core line items, prices of televisions, which are now 10.3% lower than last October, the index for clocks, lamps, and decorator items, which is now 12.1% lower than a year ago, and prices for wireless phone services, which are still 10.8% lower than a year ago, have seen prices drop by more than 10% over the past year, while no core line item has seen prices rise by a double digit magnitude in that span…

Retail Sales Rise 0.2% in October after Big September Increase Revised 0.3% Higher

seasonally adjusted retail sales increased in October after retail sales for August and September were revised higher…the Advance Retail Sales Report for October (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $486.6 billion during the month, which was up 0.2 percent (±0.5%) from September’s revised sales of $485.4 billion and 4.6 percent (±0.7%) above the adjusted sales in October of last year…September’s seasonally adjusted sales were revised from $483.9 billion to $485.4 billion, while August’s sales were also revised a bit higher but were statistically unchanged at $476.5 billion with this release….estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated sales actually rose 1.0%, from $470,402 million in September to $475,339 million in October, while they were up 4.6% from the $454,601 million of sales in October a year ago…the total $1.5 billion upward revision to September sales should boost the previous estimate of the personal consumption expenditures contribution to 3rd quarter GDP by about 0.10 percentage points, or maybe more, since the majority of the upward revision was in lower prices auto sales…

included below is the table of the monthly and yearly percentage changes in retail sales by business type taken from the October Census Marts pdf….the first double column below gives us the seasonally adjusted percentage change in sales for each kind of business from the September revised figure to this month’s October “advance” report in the first sub-column, and then the year over year percentage sales change since last October in the 2nd column…the second double column pair below gives us the revision of the September advance estimates (now called “preliminary”) as of this report, with the new August to September percentage change under “Aug 2017 r” (revised) and the September 2016 to September 2017 percentage change as revised in the last column shown…for your reference, the table of last month’s advance estimate of September sales, before this month’s revisions, is here.….

October 2017 retail sales table

from this table, we can see that October sales were again underpinned by a 0.7% increase to $101,919 million in seasonally adjusted sales at motor vehicle and parts dealers; without which retail sales would have just shown a 0.1% increase for the month…on the other hand, sales at both building material supply stores, which were up 3.0% in September, and at gas stations, which were up 6.4% in the prior month, were both down 1.2% in October, in a reversal of their hurricane driven September strength, dragging overall sales lower…as we saw in reviewing the CPI, the composite of all goods less food and energy goods rose by 0.1%, so real core sales will be roughly 0.1% lower than the nominal sales reported here…on the other hand, grocery store sales, up 0.6%, will not be deflated, as food at home prices were unchanged, while real gasoline sales would be 2.4% higher than nominal sales, reflecting the lower price for gasoline…furthermore, October sales piggyback on the September 1.9% jump, meaning that they’ll be more than 2% higher than July and August sales when the third quarter to fourth quarter comparisons are made for GDP purposes…

Industrial Production Up 0.9% in October, after prior months revised higher

the Fed’s G17 release on Industrial production and Capacity Utilization reported that  industrial production increased by 0.9% in October after rising by a revised 0.4% in September but after falling by a revised 0.5 percent in August, on “a return to normal operations after Hurricanes Harvey and Irma suppressed production in August and September.”….the industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, rose to 106.1 in October from 105.2 in September, which was revised from the 104.6 index level reported last month…at the same time, the August index was revised from 104.3 to 104.7, and the July index was revised from 105.1 to 105.2….as a result of those revisions, industrial production is now 2.9% higher than a year ago, a relatively big jump from last month’s reported 1.6% year over year increase….

the manufacturing index, which accounts for more than 77% of the total IP index, increased by 1.3%, from 103.5 in September to 104.8 in October, after September’s manufacturing index was revised up from 103.0 to 103.5, August’s index was revised up from 102.9 to 103.1, and July’s index was revised up from 103.2 to 103.3….on the other hand, the mining index, which includes oil and gas well drilling, fell by 1.3%, from 110.3 in September to 108.9 in October, after the September index was revised up from 110.1, still leaving the mining index 6.4% higher than it was a year ago….meanwhile, the utility index, which often fluctuates due to above or below normal temperatures, rose 2.0% in October, from 101.6 to 103.6, after the September utility index was revised up from 100.4 and the August utility index was revised up from 98.9 to 102.7…as a result of those & prior revisions back to May, the utility index is now 0.9% higher than it was a year earlier..

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 for total industry rose to 77.0% in October from 76.4% in September, which was revised from the 76.0% utilization reported in last month’s report …capacity utilization of NAICS durable goods production facilities rose from 75.5% in September to 75.7% in October, after September’s figure was revised down from 76.0%, while capacity utilization for non-durables producers rose from 76.4% in September to 78.1% in October, after September’s nondurables utilization was revised up from 76.3%…capacity utilization for the mining sector fell to 82.4% in October from 83.7% in September, which was originally reported as 83.5%, while utilities were operating at 77.2% of capacity during October, up from their 75.7% of capacity during September, which was revised up from the previously reported 74.8%…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 0.4% in October on Higher Gas Station Margins and Wholesale Drug Prices

the seasonally adjusted Producer Price Index (PPI) for final demand rose 0.4% in October, as prices for finished wholesale goods increased 0.3%, while margins of final services providers increased by 0.5%…this followed a September report that indicated the overall PPI had increased by 0.4%, as prices for finished wholesale goods increased 0.7%, while margins of final services providers increased by 0.4%, and an August report that indicated the PPI was up 0.2%, with prices for finished wholesale goods up 0.5%, and margins of final services providers up 0.1%….excluding food, energy and trade services, core producer prices were up 0.2% in October, after also rising 0.2% in both August and September…on an unadjusted basis, producer prices are now 2.8% higher than a year earlier, the highest annual producer inflation reading since the same increase was logged in February 2012, while the core producer price index increased to 2.3% higher than a year earlier…

as we noted, the price index for final demand for goods, aka ‘finished goods’, rose 0.3% in October, after rising 0.7% in September, 0.5% in August, slipping 0.1% in July, being unchanged in June, falling by a revised 0.5% 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 was unchanged in October after rising 3.4% in September and 3.3% in August, while the price index for wholesale foods rose 0.5% and the index for final demand for core wholesale goods (ex food and energy) was 0.3% higher…the largest wholesale energy price change was a 14.5% increase in the wholesale price of home heating oil and distillates, while the wholesale price of gasoline fell 4.5%….meanwhile, a 29.0% increase in the wholesale price of eggs and a 12.1% increase in wholesale prices for fresh and dry vegetables pushed the food index higher….among wholesale core goods, wholesale prices for pharmaceutical preparations rose 2.1% and accounted for nearly half of the increase in goods prices, while the index for industrial chemicals was up 5.2%…

at the same time, the index for final demand for services rose 0.5% in October, after rising 0.4% in September, 0.1% in August, and after a revised 0.1% increase in July and a revised unchanged June, as the October index for final demand for trade services rose 1.1%, the index for final demand for transportation and warehousing services rose 1.0%, 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 increased 24.9% and accounted for nearly half of the increase in services, while margins for book retailers fell 10.8%… among transportation and warehousing services, margins for airline passenger services were 3.2% higher and margins for rail passenger services rose 1.6%…in the core final demand for services index, the index for portfolio management rose 1.7%, while the index for gaming receipts (partial) fell 2.3%…

this report also showed the price index for processed goods for intermediate demand was 1.0% higher, after rising 0.5% in September, 0.4% in August, but after falling by a revised  0.1% in July and rising by a revised 0.1% June….the price index for intermediate energy goods rose 1.8% as diesel fuel rose 8.4% and industrial electric power rose 3.0%, while prices for intermediate processed foods and feeds rose 0.8% on a 4.7% jump in wholesale prices for prepared animal feeds, and the core price index for processed goods for intermediate demand less food and energy was also 0.8% higher on a 5.2% increase in the index for industrial chemicals…prices for intermediate processed goods are now 5.0% higher than in September a year ago, now the twelfth 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 was unchanged in October, after falling  0.4% in September, 0.7% in August, but after rising a revised 0.1% in June and July….the price index for crude energy goods rose 2.1% as crude oil prices rose 6.6%, while the index for unprocessed foodstuffs and feedstuffs rose 0.4%, as increases in the indexes for slaughter cattle, ungraded chicken eggs and farm fresh vegetables (except potatoes) more than offset a 13.0% drop in prices for slaughter hogs…however, the index for core raw materials other than food and energy materials fell 3.7%, as prices for carbon steel scrap fell 9.5 and prices for wastepaper fell 28.8%…this raw materials index is still up 7.7% from a year ago, up from the year over year increase of 7.0% that we saw in September…

lastly, the price index for services for intermediate demand rose 0.3% in October after rising 0.1% in September and 0.2% in August, but after falling a revised 0.1% in July…the index for trade services for intermediate demand was 0.5% higher, as margins for metals, minerals, and ores wholesalers rose 5.7 percent…the index for transportation and warehousing services for intermediate demand was also up 0.5%, as intermediate prices for transportation of passengers (partial) rose 3.0%…meanwhile, the core price index for services less trade, transportation, and warehousing for intermediate demand was 0.2% higher, as margins for securities brokerage, dealing, and investment advice rose 2.0%…over the 12 months ended in October, the year over year price index for services for intermediate demand, which has never turned negative on an annual basis, is now 2.9% higher than it was a year ago…

Housing Starts, Building Permits Increase in October

the October report on New Residential Construction(pdf) from the Census Bureau estimated that new housing units were being started at a seasonally adjusted annual rate of 1,290,000 units during the month, which was 13.7 percent (±10.5 percent) above the revised September estimated annual rate of 1,135,000 housing unit starts, but was still 2.9 percent (±10.1 percent)* below last October’s pace of 1,328,000 housing starts a year…the asterisk indicates that the Census does not have sufficient data to determine whether housing starts actually rose or fell from a year ago, with the figure in parenthesis the most likely range of the change indicated; in other words, in other words, this October’s housing starts could have been up by 7.2% or down by as much as 13.0% from those of October a year ago, with even larger revisions possible after a number of months…in this report, the annual rate for September housing starts was revised from the 1,127,000 reported last month to 1,135,000, and the annual rate for August housing starts, which was revised from 1,180,000 to 1,183,000 last month, was revised down to 1,172,000 with this report….

those 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 112,300 housing units were started in October, up from the 101,900 units that were started in September…of those housing units started in October, an estimated 74,900 were single family homes and 35,600 were units in structures with more than 5 units, up from the revised 72,800 single family starts in September, and up from the 27,500 units started in structures with more than 5 units in September…

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 October, Census estimated new building permits were being issued at a seasonally adjusted annual rate of 1,297,000 housing units, which was 5.9 percent (±1.4 percent) above the September rate of 1,225,000 permits, and was 0.9 percent (±1.6 percent) above the rate of building permit issuance in October a year earlier…the annual rate for housing permits issued in September was revised from 1,215,000 to 1,225,000….again, these annual estimates for new permits reported here were extrapolated from the unadjusted data collected monthly by canvassing census agents, which estimated that permits for 112,100 housing units were issued in October, up from the revised estimate of 101,400 new permits issued in September…the October permits included 69,800 permits for single family homes, up from 66,600 single family permits issued in September, and 38,300 permits for housing units in apartment buildings with 5 or more units, up from 33,700 such multifamily permits a month earlier…

Business Sales Up 1.4% in September, Business Inventories Flat

after the release of the October retail sales report, the Census Bureau released the composite Manufacturing and Trade Inventories and Sales report for September (pdf), which incorporates the revised September retail data from that October report and the earlier published September 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 $1,389.7 billion in September, up 1.4 percent (±0.2 percent) from August’s revised sales, and up 6.4 percent (±0.4 percent) from September sales of a year earlier…note that total August sales were concurrently revised up from the originally reported $1,369.2 billion to $1,370.8 billion….manufacturer’s sales were up 0.8% to $480,390 million in September, and retail trade sales, which exclude restaurant & bar sales from the revised September retail sales reported earlier, rose 2.1% to $428,747 million, while wholesale sales rose 1.3% to $480,524 million…

meanwhile, total manufacturer’s and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $1,888.7 billion at the end of September, statistically unchanged (±0.1%)* from August, and 3.5 percent (±0.3 percent) higher than in September a year earlier…the value of end of August inventories were revised from the $1,889.0 billion reported last month to $1,888.0 billion…seasonally adjusted inventories of manufacturers were estimated to be valued at $660,752 million, up 0.7% from August, inventories of retailers were valued at $618,408 million, 0.9% less than in August, while inventories of wholesalers were estimated to be valued at $609,535 million at the end of September, 0.3% higher than in August…

the BEA’s key source data and assumptions (xls) for 3rd quarter GDP appears to indicate that they had estimated that the value of non-durable goods inventories would decrease at a $45.3 billion annual rate in September, before adjustment with the PPI, so the $0.7 billion one month increase would be at roughly an $8.5 billion annual rate, meaning that they underestimated the September inventory component at an annual rate of $53.8 billion….if i’ve figured out what they’ve done there correctly, that would imply that the contribution of inventory component of 3rd quarter GDP will be revised upwards by around 0.34 percentage points to account for what this report shows..

 

(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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