April’s trade deficit, job openings, factory inventories, and wholesale sales, et al

monthly government issued reports released this week included the Commerce Dept’s report on our International Trade in Goods and Services for April, the Full Report on Manufacturers’ Shipments, Inventories and Orders for April and the April report on Wholesale Trade, Sales and Inventories, both from the Census Bureau, the Job Openings and Labor Turnover Survey (JOLTS) for April from the Bureau of Labor Statistics, and the Consumer Credit Report for April from the Fed…the latter showed that overall consumer credit, a measure of non-real estate personal debt, expanded by a seasonally adjusted $9.2 billion, or at a 2.9% annual rate, as non-revolving credit expanded at a 3.0% rate to $2810.4 billion and revolving credit outstanding rose at a 2.6% rate to $1030.7 billion…while April’s expansion represented the slowest consumer credit growth in 7 months, it’s possible the April seasonal adjustments are out of whack for this report, since last April’s credit growth was reported as the slowest in nearly 6 years, and the April before that showed the slowest growth in 2 years…

privately issued reports released this week included the May Non-Manufacturing Report On Business from the Institute for Supply Management (ISM), which saw the NMI (non-manufacturing index) rise to 58.6% in May from 56.8% in April, indicating a larger plurality of service industry purchasing managers reported expansion in various facets of their business in May, and the Mortgage Monitor for April (pdf) from Black Knight Financial Services, which indicated that 3.67% of mortgages were delinquent in April, down from 3.73% delinquent in March, and down from the 4.08% delinquency rate in April 2017, and that 0.61% of mortgages remained in the foreclosure process in April, down from 0.63% of all mortgages in March and down from 0.85% a year ago……

April Trade Deficit Decreases 2.1% on a Big Drop in Cellphone Imports

our trade deficit decreased by 2.1% in April, after our March trade deficit was revised 3.6% lower…the Census report on our international trade in goods and services for April indicated that our seasonally adjusted goods and services trade deficit fell by $1.0 billion to $46.2 billion in April, from a March deficit that was revised from the originally reported $48.96 billion to $47.2 billion, a revision which should result in a upward revision of about 0.15 percentage points to 1st quarter GDP when the third estimate is released at the end of June …in rounded numbers, the value of our April exports rose by $0.6 billion to $211.2 billion on a $0.3 billion increase to $141.2 billion in our exports of goods and an increase of $0.3 billion to $70.0 billion in our exports of services, while our imports fell by $0.4 billion to $257.4 billion on a $0.7 billion decrease to $209.5 billion in our imports of goods, which was partially offset by a $0.3 billion increase to $47.9 billion in our imports of services…export prices averaged 0.6% higher in April, so the real growth in exports for the month was less than the nominal dollar value by that percentage, while import prices were 0.3% higher, meaning real imports would be reduced from the nominal dollar values reported here by that percentage…

the increase in our April exports of goods came about as a result of higher exports of industrial supplies and foods and feeds, which were partially offset by a decrease in our exports of capital goods…referencing the Full Release and Tables for April (pdf), in Exhibit 7 we find that our exports of our exports of industrial supplies and materials rose by $1,345 million to $45,656 million on a $530 million increase in our exports of fuel oil and a $226 million increase in our exports of other petroleum products, and that our exports of foods, feeds and beverages rose by $653 million to $12,414 million on a $340 million increase in our exports of soybeans and a $310 million increase in our exports of corn…in addition, our exports of consumer goods rose by $70 million to $17,217 million…partially offsetting those increases, our exports of capital goods fell by $1,420 million to $46,126 million as a $2,844 million decrease in our exports of civilian aircraft was offset by increases in exports of other capital goods, while our exports of automotive vehicles, parts, and engines fell by $215 million to $13,919 million on $319 million lower exports of passenger cars, and our exports of other goods not categorized by end use fell by $143 million to $5,293 million…

Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our goods imports and shows that lower imports of cell phones was the major reason for the April decrease in our imports…our imports of consumer goods fell by $2,786 million to $51,895 million on a $2,195 million decrease in our imports of cellphones; in addition, our imports of automotive vehicles, parts and engines fell by $902 million to $30,003 million on a $961 million decrease in our imports of passenger cars and $246 million lower imports of trucks, buses, and special purpose vehicles, partially offset by a $356 million increase in our imports of parts and accessories of vehicles other than engines, bodies, chassis, and tires…in addition, our imports of foods, feeds, and beverages fell by $58 million to $12,274 million…partially offsetting decreases in those categories, our imports of industrial supplies and materials rose by $1,167 million to $47,901 million, as our imports of crude oil rose by $978 million, our imports of other petroleum products rose by $348 million, and our imports of iron and steel mill products rose by $228 million, while our imports of capital goods rose by $397 million to $56,916 million on a $249 million increase in our imports of electric apparatuses, and our imports of other goods not categorized by end use rose by $1288 million to $8,972 million…

to gauge the impact of April trade on 2nd quarter growth figures, we use exhibit 10 in the pdf for this report, which gives us monthly goods trade figures by end use category and in total, already adjusted for inflation in chained 2009 dollars, the same inflation adjustment that’s used by the BEA to compute trade figures for GDP, with the only difference being that they are not annualized here…from that table, we can figure that 1st quarter real exports of goods averaged 146,834.3 million monthly in 2009 dollars, while inflation adjusted April exports were at 150,584 million in that same 2009 dollar quantity index representation… annualizing the change between those two figures, we find that April’s real exports were rising at a 10.6% annual rate from those of the 1st quarter, or at a pace that would add about 0.84 percentage points to 2nd quarter GDP if it were continued through May and June…..from that same table, we can figure that our 1st quarter real imports averaged 229,287.3 million monthly in chained 2009 dollars, while inflation adjusted April imports were at 228,057 million in that same 2009 dollar representation…that would indicate that so far in the 2nd quarter, our real imports have decreased at a 2.1% annual rate from those of the 1st quarter…since imports subtract from GDP because they represent the portion of consumption or investment that occurred during the quarter that was not produced domestically, their decrease at a 2.1% rate would conversely add another 0.27 percentage points to 2nd quarter GDP….hence, if the April trade deficit is maintained at the same level throughout the 2nd quarter, our improving balance of trade in goods would add about 1.11 percentage points to the growth of 2nd quarter GDP….note that we have not computed the impact of the less volatile change in services here because the Census does not provide handy inflation adjusted data on those, and we don’t have easy access to the details on their price changes..

Job Openings at a Record High in April; Hiring and Firing Rise, Job Quitting Slows

the Job Openings and Labor Turnover Survey (JOLTS) report for April from the Bureau of Labor Statistics estimated that seasonally adjusted job openings rose by 65,000, from 6,633,000 in March to a record high of 6,698,000 job openings in April, after March job openings were revised higher, from 6,550,000 to 6,633,000…April’s jobs openings were also 9.7% higher than the 6,108,000 job openings reported in April a year ago, as the job opening ratio expressed as a percentage of the employed was unchanged at 4.3% in April, while it was up from 4.0% a year ago…the greatest increase in April job openings was in the professional and business services category, where openings rose by 95,000 to 1,255,000, while job openings in finance and insurance fell by 84,000 to 197,000 …(details on job openings by industry and region can be viewed in Table 1)…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 to 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 April, seasonally adjusted new hires totaled 5,578,000, up by 92,000 from the revised 5,486,000 who were hired or rehired in March, as the hiring rate as a percentage of all employed rose from 3.7% to 3.8%, which was also up from the 3.6% hiring rate in April a year earlier (details of hiring by industry since December are in table 2)….meanwhile, total separations also rose, by 86,000, from 5,322,000 in March to 5,408,000 in April, as the separations rate as a percentage of the employed remained at 3.6%, but was up from 3.5% in April a year ago (see table 3)…subtracting the 5,408,000 total separations from the total hires of 5,578,000 would imply an increase of 170,000 jobs in April, a bit more than the revised payroll job increase of 159,000 for April reported by the May establishment survey last week, but well within the expected +/-115,000 margin of error in these incomplete samplings

breaking down the seasonally adjusted job separations, the BLS finds that 3,351,000 of us voluntarily quit our jobs in April, down by 36,000 from the revised 3,387,000 who quit their jobs in March, while the quits rate, widely watched as an indicator of worker confidence, remained unchanged at 2.3% of total employment, which was still up from 2.1% a year earlier (see details in table 4)….in addition to those who quit, another 1,710,000 were either laid off, fired or otherwise discharged in April, up by 163,000 from the revised 1,547,000 who were discharged in March, as the discharges rate jumped from 1.0% to 1.2% of all those who were employed during the month, which took it back up to the 1.2% level of a year earlier….meanwhile, other separations, which includes retirements and deaths, were at 347,000 in April, down from 387,000 in March, for an ‘other separations’ rate of 0.2%, which was down from 0.3% in March, but the same rate as in April a year ago….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

Factory Shipments Flat in April, Factory Inventories Up 0.3%

the April Full Report on Manufacturers’ Shipments, Inventories, & Orders (pdf) from the Census Bureau reported that the seasonally adjusted value of new orders for manufactured goods fell by $4.0 billion or 0.8 percent to $494.4 billion in April, following an increase of 1.7% in March, which was revised from the 1.6% increase to $507.7 billion reported last month….however, since the Census Bureau does not even collect data on new orders for non durable goods for this widely watched “factory orders report”, both the “new orders” and “unfilled orders” sections of this report are really only useful as a revised update to the April advance report on durable goods we reported on two weeks ago…on those revisions, the Census Bureau’s summary, which precedes their detailed spreadsheet of the metrics included in this report, is quite complete, so we’ll just quote directly from that here:

  • Summary: New orders for manufactured goods in April, down following two consecutive monthly increases, decreased $4.0 billion or 0.8 percent to $494.4 billion, the U.S. Census Bureau reported today. This followed a 1.7 percent March increase. Shipments, up eleven of the last twelve months, increased $0.1 billion or virtually unchanged to $492.8 billion. This followed a 0.7 percent March increase. Unfilled orders, up five of the last six months, increased $5.4 billion or 0.5 percent to $1,153.1 billion. This followed a 0.8 percent March increase. The unfilled orders-to-shipments ratio was 6.73, up from 6.66 in March. Inventories, up eighteen consecutive months, increased $2.2 billion or 0.3 percent to $666.9 billion. This followed a 0.2 percent March increase. The inventories-to-shipments ratio was 1.35, unchanged from March.
  • New orders for manufactured durable goods in April, down following two consecutive monthly increases, decreased $4.1 billion or 1.6 percent to $248.6 billion, up from the previously published 1.7 percent decrease. This followed a 2.7 percent March increase. Transportation equipment, also down following two consecutive monthly increases, drove the decrease, $5.5 billion or 6.0 percent to $87.2 billion. New orders for manufactured nondurable goods increased $0.1 billion or 0.1 percent to $245.8 billion. 
  • Shipments of manufactured durable goods in April, down following eight consecutive monthly increases, decreased less than $0.1 billion or virtually unchanged to $247.0 billion, up from the previously published 0.1 percent decrease. This followed a 0.8 percent March increase. Transportation equipment, down following three consecutive monthly increases, drove the decrease, $1.7 billion or 2.0 percent to $83.0 billion. Shipments of manufactured nondurable goods, up ten of the last eleven months, increased $0.1 billion or 0.1 percent to $245.8 billion. This followed a 0.6 percent March increase. Food products, up five of the last six months, drove the increase, $0.3 billion or 0.5 percent to $68.1 billion.
  • Unfilled orders for manufactured durable goods in April, up five of the last six months, increased $5.4 billion or 0.5 percent to $1,153.1 billion, unchanged from the previously published increase. This followed a 0.8 percent March increase. Transportation equipment, also up five of the last six months, led the increase, $4.2 billion or 0.5 percent to $796.1 billion. 
  • Inventories of manufactured durable goods in April, up seventeen of the last eighteen months, increased $1.3 billion or 0.3 percent to $401.9 billion, unchanged from the previously published increase. This followed a 0.2 percent March increase. Fabricated metal products, up fifteen of the last sixteen months, led the increase, $0.4 billion or 0.8 percent to $52.0 billion. Inventories of manufactured nondurable goods, up ten consecutive months, increased $0.8 billion or 0.3 percent to $265.0 billion. This followed a 0.1 percent March increase. Chemical products, up six of the last seven months, led the increase, $0.4 billion or 0.5 percent to $87.8 billion.

to estimate the effect of those April factory inventories on 2nd quarter GDP, they must first be adjusted for changes in price with appropriate components of the producer price index…by stage of fabrication, the value of finished goods inventories rose by 0.1% to $233,666 million; the value of work in process inventories rose 0.5% to $206,186 million, and materials and supplies inventories were valued 0.4% higher at $227,015 million…the April producer price index reported that prices for finished goods were on average unchanged, that prices for intermediate processed goods were 0.5% higher, while prices for unprocessed goods were 0.9% higher….assuming similar valuations for like types of inventories, that would suggest that April’s real finished goods inventories were about 0.1% higher, that real inventories of intermediate processed goods were roughly unchanged, and real raw material inventory inventories were about 0.5% lower…since real NIPA factory inventories were a bit smaller in the 1st quarter, and this report seems to indicate a similar real decrease in April, it appears that the real change in April factory inventories will have a negligible impact on the growth rate of 2nd quarter GDP…

    April Wholesale Sales Up 0.8%, Wholesale Inventories Up 0.1%

    the April report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at $493.3 billion, up 0.8 percent (+/-0.4%) from the revised March level, and up 7.8 percent (±3.3 percent) from wholesale sales of April 2016… the March preliminary estimate was unrevised from the annual benchmark revision undertaken May 25th… April wholesale sales of durable goods were up 0.8 percent from last month and were up 8.0 percent from a year earlier, with wholesale sales of lumber up 3.8% on higher prices, while wholesale sales of nondurable goods were up 0.7% from March and  were up 7.5 percent from last April, with wholesale sales of farm products up 7.7% despite lower prices…as an intermediate activity, wholesale sales are not included in GDP except insofar as they are a trade service, since the traded goods themselves do not represent an increase in the output of the goods produced or finally sold….

    on the other hand, the monthly change in private inventories is a major factor in GDP, as any goods on the shelf or in intermediate storage represent goods that were produced but not sold, and this April report estimated that wholesale inventories were valued at a seasonally adjusted $630.2 billion at month end, an increase of 0.1 percent (+/-0.2%)* from the revised March level and 5.8 percent (±3.9 percent) higher than in April a year ago, with the March preliminary estimate revised up about 0.1% from the benchmark revision at the same time….inventories of durable goods were up 0.2% from March, and up 6.2% percent from a year earlier, while the value of wholesale inventories of nondurable goods was statistically unchanged from March but up 5.8 percent from last April, as the value of inventories of raw farm products inventories rose 38.0% over the past year…the upward revision to March wholesale inventories implies an upward revision of about 0.02 percentage points to 1st quarter GDP, while April wholesale inventories, after an adjustment for price changes for each category of wholesale goods as indicated by the components of the April producer price index, appears to indicate a real wholesale inventory decrease heading into the 2nd quarter, a major negative against the $25.8 billion increase in real wholesale inventories that was indicated by the key source data and assumptions (xls) in the second estimate 1st quarter GDP…

     

    (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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