June’s consumer & producer prices; May’s wholesale inventories & JOLTS

major reports released this past week included the June Consumer Price Index, the June Producer Price Index, the June Import-Export Price Index, and the Job Openings and Labor Turnover Survey (JOLTS) for May, all of which came from the Bureau of Labor Statistics, and the May report on Wholesale Trade, Sales and Inventories from the Census Bureau….the week also saw the Consumer Credit Report for May from the Fed, which indicated that overall consumer borrowing expanded by a seasonally adjusted $24.5 billion, or at a 7.6% annual rate, as non-revolving credit expanded at a 6.2% rate to $2,858.4 billion while revolving credit outstanding grew at a 11.4% rate to $1,039.3 billion, and the Mortgage Monitor for May (pdf) from Black Knight Financial Services, which indicated that 3.64% of all mortgages nationally were delinquent in May, down from 3.67% in April and down from 3.79% in May a year ago, and that 0.59% of all mortgages remained in the foreclosure process, down from 0.61% in April and down from 0.83% in foreclosure a year ago…

Consumer Prices Up 0.1% in June as Lower Utility Prices Weigh on Index

the consumer price index was 0.1% higher in June, as lower prices for energy services and apparel partially offset modestly higher priced gasoline, housing and medical care…the Consumer Price Index  Summary from the Bureau of Labor Statistics indicated that seasonally adjusted prices rose by 0.1% in June after rising  0.2% in May, 0.2% in April but after falling 0.1% in March, and after it had risen by 0.2% in February, 0.5% in January, 0.1% in December, 0.4% in November, 0.1% in October, 0.5% in September, 0.4% in August, and 0.1% last July….the unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, rose from 251.588 in May to 251.989 in June, which left it statistically 2.872% higher than the 244.955 index reading in June of last year, which is reported as a 2.9% increase….with lower prices for energy services a major drag on overall prices, seasonally adjusted core prices, which exclude food and energy, rose by 0.2% for the month, with the unadjusted core price index rising from 257.469 to 257.697, which left the core index 2.255% ahead of its year ago reading of 252.014, which is reported as a 2.3% annual increase….

the volatile seasonally adjusted energy price index fell by 0.3% in June, after it had increased by 0.9% in May, by 1.4% in April, fallen by 2.8% in March, risen by 0.1% in February, 3.0% in January, fallen by 0.2% in December, risen by 3.2% in November and by 2.0% in October, and is thus now 12.0% higher than in June a year ago…prices for energy commodities were 0.6% higher in June, while the index for energy services fell by 1.5%, after falling 0.1% in May and 0.5% in April….the increase in the energy commodity index was underpinned by a 0.5% increase in the retail price of gasoline, the largest component, while the price of fuel oil rose 2.9%, and prices for other fuels, including propane, kerosene and firewood, fell by an average of 0.2%…with that increase, the energy commodities index is now 24.3% above its year ago levels, with gasoline prices also averaging 24.3% higher than they were a year ago…within energy services, the index for utility (piped) gas service fell 1.7% after falling by 0.6% in May, which left utility gas priced 2.1% lower than it was a year ago, while the electricity price index was 1.4% lower, after rising 0.1% in May…the energy services price index is now 0.6% lower than last June, as even electricity prices have decreased by 0.1% over the past year…

the seasonally adjusted food price index rose 0.2% in June, after being unchanged in May, rising 0.3% in April, 0.1% in March, being unchanged in February, rising 0.2% in January, 0.2% in December, being unchanged in October and November, rising 0.1% in September, 0.1% in August, 0.2% in July, and being unchanged last June, as the index for food purchased for use at home was 0.2% higher in June, while prices for food bought for eating away from home were also 0.2% higher, as prices at fast food outlets rose 0.2% and prices at full service restaurants rose 0.1%, while food prices at at employee sites and schools were up 1.1%…

in the food at home categories, the price index for cereals and bakery products rose 0.6% despite a 0.3% drop in bread prices, as prices for rice, pasta and cornmeal rose 1.3%, prices for crackers rose 2.4% and prices for cookies rose 4.3%…on the other hand, the price index for the meats, poultry, fish, and eggs group was down 0.6% after falling 0.7% in May, as egg prices fell 7.1% and the pork index was 1.1% lower….at the same time the index for dairy products was 0.7% higher on a 0.8% increase in the price of fresh whole milk and 1.4% higher cheese prices…in addition, the fruits and vegetables index was 0.5% higher on a 1.6% increase in the price index for fresh fruits and a 3.5% increase in prices for tomatoes….meanwhile, the beverages index was 0.3% higher, as coffee prices rose 0.3% and carbonated drink prices were priced 0.7% higher…lastly, the index for the ‘other foods at home’ category was up 0.1%, as prices for sweets other than candy and sugar rose 0.8% and the index for olives, pickles, and relishes rose 2.3%….among food at home line items, only prices for eggs, which are still up 14.1% since last June, have seen price increase greater than 10% over the past year, while no food item has fallen in price by more 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 June after rising by 0.2% in May, 0.1% in April, 0.1% in March, 0.2% in February, 0.3% in January, 0.3% in December, 0.1% in November, 0.2% in October, 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 was unchanged in May, while the more heavily weighted composite for all services less energy services was 0.2% higher….among the goods components, which will be used by the Bureau of Economic Analysis to adjust June retail sales for inflation in national accounts data, the index for household furnishings and supplies fell by 0.2%, as the index for floor coverings fell 1.5%, prices for dishes and flatware fell 8.2%, and prices for cookware and tableware were 2.6% lower…at the same time, the apparel price index was 0.9% lower, as prices for women’s dresses fell 3.5% while the index for women’s underwear, nightwear, sportswear and accessories was 3.4% lower…on the other hand, prices for transportation commodities other than fuel were up 0.5%, as prices for new cars and trucks rose 0.4% and prices for used cars and trucks rose 0.7%…in addition, prices for medical care commodities were 0.2% higher on a 0.4% increase in the index for drug prices…however, the recreational commodities index fell 0.2% on 1.3% lower prices for audio equipment and 5.7% lower prices for photographic equipment and supplies, while the education and communication commodities index was 0.9% lower on a 1.3% decrease in prices for college textbooks and a 0.7% decrease in prices for personal computers…lastly, a separate price index for alcoholic beverages was up 0.5% on 0.8% higher beer at home, while the price index for ‘other goods’ was down 0.4% on a 3.3% decrease in the index for infant’s equipment…

within core services, the price index for shelter rose 0.1% on a 0.3% increase in rents, and a 0.3% increase in homeowner’s equivalent rent, increases which were partially offset by a 4.1% decrease in costs for lodging away from home at hotels and motels, while the sub-index for water, sewers and trash collection rose 0.4%, and other household operation costs were on average 0.3% higher….at the same time, the index for medical care services was up 0.5%, as hospital services rose 0.8%, and the transportation services index was up 0.2 as car and truck rentals rose 1.5% while vehicle maintenance and servicing rose 0.3%….meanwhile, the recreation services index rose 0.4% as film processing rose 0.5% and admissions to sporting events rose 2.9%….in addition, the index for education and communication services rose 0.3%, as internet and electronic information services rose 1.3%…lastly, the index for other personal services was up 0.3% as haircuts rose 0.8% and apparel services other than laundry and dry cleaning rose 0.7%…among core line items, prices for televisions, which are now 19.1% cheaper than a year ago, the price index for audio equipment, which has fallen 14.5% over the past year, the price index for toys, games, hobbies and playground equipment, which is down by 10.4% from a year ago, and the price index for clocks, lamps, and decorator items, which is now 12.2% lower than last June, have all seen prices fall by more than 10% over the past year, while only laundry equipment, prices for which have risen 13.1 over the past year, has seen prices rise by a double digit magnitude over that span…

Producer Prices Up 0.3% in June on Higher Margins for Trade Services

the seasonally adjusted Producer Price Index (PPI) for final demand was up 0.3 in June, as prices for finished wholesale goods increased 0.1%, while margins of final services providers increased by 0.4%…this followed a May report that indicated the PPI was up 0.5%, with prices for finished wholesale goods up 1.0%, while margins of final services providers increased by 0.3%, and an April report that indicated the PPI rose 0.1%, as prices for finished wholesale goods averaged no change, while margins of final services providers increased by 0.1% ….on an unadjusted basis, producer prices are now 3.4% higher than a year ago, up from the year over year increase of 3.1% that was indicated in last month’s report, and largest one year increase in the PPI since November 2011…meanwhile, the core producer price index, which excludes food, energy and trade services, was also up by 0.3% for the month, and is now 2.7% higher than in June a year ago…

as noted, the price index for final demand for goods, aka ‘finished goods’, was up 0.1% in June, after rising 1.0% in May, being unchanged in April, rising a revised 0.2% in March, and rising a revised 0.1% in February…the price index for wholesale energy was up 0.8% in June after rising 4.6% in May, 0.1% in April, falling 2.1% in March, and rising 0.1% in February and 2.9% in January, while the price index for wholesale foods fell 1.1%, and the index for final demand for core wholesale goods (ex food and energy) was 0.3% higher for the 6th month in a row….the largest wholesale energy price change was a 8.0% increase in wholesale prices for home heating oil, while wholesale prices for gasoline were 0.5% higher…the wholesale food price index, meanwhile, saw a 13.8% decrease in wholesale prices for fresh and dry vegetables and a 6.3% decrease in wholesale prices for oilseeds….among wholesale core goods, prices for commercial furniture increased 1.6%, while the index for trailers and campers moved up 0.9%…

at the same time, the index for final demand for services rose 0.4% in June, after rising 0.3% in May, 0.1% in April, 0.3% in March and a revised 0.2% in February, as the June index for final demand for trade services rose 0.7%, the index for final demand for transportation and warehousing services rose 0.5%, while the core index for final demand for services less trade, transportation, and warehousing services rose 0.3%….among trade services, seasonally adjusted margins for fuels and lubricants retailers rose 21.8% and margins for automobile and automobile parts retailers rose 4.5%… among transportation and warehousing services, margins for truck transportation of freight rose 1.3%…among the components of the core final demand for services index, the index for hospital outpatient care rose 1.0% while margins for tax preparation and planning services services rose 2.9%..

this report also showed the price index for intermediate processed goods was 0.7% higher in June, after rising 1.5% in May and 0.5% in April, falling 0.3% in March, but rising by 0.6% in February….the price index for intermediate energy goods rose 1.8%, as refinery prices for diesel fuel rose 6.4% and producer prices for LP gas rose 3.9%, while prices for intermediate processed foods and feeds fell 1.1%, as the index for processed poultry fell 4.0%…meanwhile, the core price index for processed goods for intermediate demand less food and energy was 0.7% higher on a 2.4% increase in the index for basic organic chemicals and a 4.0% increase in mill prices for softwood lumber, which are now up 23.2% from a year ago, after 20% tariffs were imposed on Canadian imports….prices for intermediate processed goods are now 6.8% higher than in June a year ago, now the 19th 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 1.0% in June, after rising 2.5% in May, 0.9% in April, falling a revised 4.5% in March, and rising a revised 1.7% in February….that was as the price index for crude energy goods fell 2.1% as crude oil prices fell 9.5%, while the index for unprocessed foodstuffs and feedstuffs rose 0.2%, as producer prices for corn fell 7.5% and prices for oilseeds fell 6.3%…at the same time, the index for core raw materials other than food and energy materials was 0.2% lower, as prices for iron and steel scrap fell 1.8% and prices for nonferrous metal ores fell 1.0%…this raw materials index is now up by 5.8% from a year ago, the same year over year increase that we saw in June a year ago…

lastly, the price index for services for intermediate demand rose 0.1% in June, after rising 0.3% in May, 0.3% in April, 0.3% in March and a revised 0.3% in February…the index for trade services for intermediate demand was up 0.1%, as margins for intermediate hardware, building material, and supplies retailers rose 2.4% and margins for chemicals and allied products wholesalers fell 1.5%…the index for transportation and warehousing services for intermediate demand rose 0.2%, as the index for truck transportation of freight rose 1.3%…meanwhile, the core price index for services less trade, transportation, and warehousing for intermediate demand was unchanged, as the index for business loans (partial) rose 2.6% while the index for nonresidential real estate rents fell 2.4%….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 2.9% higher than it was a year ago… 

Job Openings and Firings Down in May, Hiring and Quitting at Record Highs

the Job Openings and Labor Turnover Survey (JOLTS) report for May from the Bureau of Labor Statistics estimated that seasonally adjusted job openings fell by 202,000, from 6,840,000 in April to 6,638,000 in May, after April’s record job openings were revised 142,000 higher, from 6,698,000 to 6,840,000…May jobs openings were still 16.7% higher than the 5,688,000 job openings reported in May a year ago, as the job opening ratio expressed as a percentage of the employed fell from 4.4% in April to 4.3% in May, while it was still up from 3.7% in May a year ago…the greatest drop in May job openings was in professional and business services, where openings fell by 64,000 to 1,190,000, while job openings in government rose by 25,000 to 602,000 (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 May, seasonally adjusted new hires totaled a record high of 5,754,000, up by 173,000 from the revised 5,581,000 who were hired or rehired in April, as the hiring rate as a percentage of all employed was rose from 3.8% to 3.9%, and was also up from the hiring rate of 3.7% in May a year earlier (details of hiring by industry since January are in table 2)….meanwhile, total separations also rose, by 44,000, from 5,424,000 in April to 5,468,000 in May, while the separations rate as a percentage of the employed remained at 3.7%, while it was up from the separations rate of 3.6% in May a year ago (see table 3)…subtracting the 5,468,000 total separations from the total hires of 5,754,000 would imply an increase of 286,000 jobs in May, somewhat more than the revised payroll job increase of 244,000 for May reported by the June establishment survey last week, but still not an unusual difference and within the expected +/-115,000 margin of error in these incomplete samplings

breaking down the seasonally adjusted job separations, the BLS reports that a record 3,561,000 of us voluntarily quit their jobs in May, up by 212,000 from the revised 3,340,000 who quit their jobs in April, while the quits rate, widely watched as an indicator of worker confidence, rose from 2.3% to 2.4% of total employment, which was also up from 2.2% a year earlier (see details in table 4)….in addition to those who quit, another 1,588,000 were either laid off, fired or otherwise discharged in May, down by 143,000 from the revised 1,731,000 who were discharged in April, as the discharges rate fell from 1.2% to 1.1% of all those who were employed during the month, and was also down from 1.2% a year earlier….meanwhile, other separations, which includes retirements and deaths, were at 320,000 in May, down from 344,000 in April, for an ‘other separations’ rate of 0.2%, same as in April and in May 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

May Wholesale Sales Up 2.5%, Wholesale Inventories Up 0.6% in Hit to 2Q GDP

the May report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at $509.0 billion, up 2.5 percent (+/-0.4%) from the revised April level, and up 11.8 percent (±3.3 percent) from the wholesale sales of May 2017… the April preliminary estimate was revised from the $493.3 billion reported a month ago to $496.4 billion…May’s wholesale sales increase was the largest since March 2011 and was driven by an 8.3% increase in the value of oil and petroleum products, which was at least partially price related…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 left on the shelf or in intermediate storage represent goods that were produced but not sold, and this May report estimated that wholesale inventories were valued at a seasonally adjusted $633.5 billion at month end, an increase of 0.6 percent (+/-0.2%)* from the revised April level and 5.9 percent (±3.7 percent) higher than in May a year ago, with the April preliminary estimate revised from $630.2 billion to $629.865 billion at the same time, still a 0.1% increase from March…for national accounts purposes, May wholesale inventories will be adjusted for price changes by category with the appropriate components of the May producer price index, which indicated a 1.0% increase in prices for finished goods, a 1.5% increase in prices for intermediate goods, and a 2.5% increase in prices for unprocessed goods….therefore the modest 0.6% increase in the value of May inventories appears to indicate a real decrease of wholesale inventories so far in the 2nd quarter, which will be a major negative when compared to the $23.7 billion increase in real wholesale inventories that was indicated by the key source data and assumptions (xls) in the 3rd estimate of 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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