July’s consumer and producer prices, June’s wholesale inventories & JOLTS

Government agency reports released this past week included the the July Consumer Price Index and the July Producer Price Index from the Bureau of Labor Statistics, and the June report on Wholesale Trade, Sales and Inventories from the Census Bureau…the BLS also released the Job Openings and Labor Turnover Survey (JOLTS) for June, while the Fed released the Consumer Credit Report for June, which indicated that overall consumer credit, a measure of non-real estate debt, expanded by a seasonally adjusted $10.2 billion, or at a 3.1% annual rate, as non-revolving credit expanded at a 4.4% rate to $2,868.8 billion and revolving credit outstanding contracted at a 0.2% rate to $1,038.8 billion….

Consumer Prices Up 0.2% in July on Higher Prices for Shelter, Vehicles

The consumer price index was 0.2% higher in July, as higher prices for shelter, new & used cars and trucks, and most services were only partially offset by lower prices for energy and apparel…the Consumer Price Index  Summary from the Bureau of Labor Statistics indicated that seasonally adjusted prices rose by 0.2% in July after rising 0.1% in June, 0.2% in May, 0.2% in April but after falling 0.1% in March 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 251.989 in June to 252.006 in July, which left it statistically 2.9495% higher than the 244.786 index reading in July of last year, which is reported as a 2.9% increase….with lower prices for energy offsetting somewhat higher prices for food, seasonally adjusted core prices, which exclude food and energy, also rose by 0.2% for the month, with the unadjusted core price index rising from 257.697 to 257.867, which left the core index 2.354% ahead of its year ago reading of 251.936, which is reported as a 2.4% annual increase, the largest YoY core price index increase since September 2008….

The volatile seasonally adjusted energy price index fell by 0.3% in July, after it had decreased by 0.3% in June, increased by 0.9% in May and by 1.4% in April, decreased by 2.8% in March, increased by 0.1% in February and by 3.0% in January, and is now 12.1% higher than in July a year ago…prices for energy commodities were 0.6% lower in July, while the index for energy services fell by 0.4%, after falling 1.5% in June…the energy commodity index was lower despite a 1.2% increase in the index for fuel oils because the price of gasoline, the largest component, was down 0.6%, while prices for other energy commodities, such as propane, kerosene, and firewood, averaged 0.1% higher…within energy services, the index for utility gas service fell by 0.5% after falling by 1.7% in June and is now priced 1.3% lower than it was a year ago, while the electricity price index was down 0.4%, after it fell 1.4% in June….energy commodities are now 25.4% higher than their year ago levels, with gasoline prices also averaging 25.4% higher than they were a year ago, while the energy services price index is now 1.0% lower than last July, as even electricity prices have decreased by 0.8% over that period…

The seasonally adjusted food price index rose 0.1% in July, after rising 0.2% in June, 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, and 0.2% last July, as the index for food purchased for use at home was 0.2% higher in July, while prices for food bought for eating away from home were 0.1% higher, as prices at fast food outlets were unchanged while prices at full service restaurants rose 0.2% and food prices at at employee sites and schools were up 1.8%…

In the food at home categories, the price index for cereals and bakery products fell 0.2% as cookies prices fell 1.7%, prices for rice fell 0.7%, and prices for breakfast cereals fell 0.4%…at the same time, the price index for the meats, poultry, fish, and eggs group was up 0.3%, after falling 0.6% in June, as beef and veal prices rose 0.5% and the poultry index was 0.6% higher….meanwhile, the index for dairy products was 0.6% lower on a 0.8% decrease in the price of fresh whole milk and 1.0% lower cheese prices…on the other hand, the fruits and vegetables index was 1.0% higher on a 1.9% increase in the price index for fresh vegetables and a 1.7% increase in prices for apples….at the same time, the beverages index was unchanged, as frozen juice and drink prices rose 0.7% while carbonated drink prices were priced 1.1% lower…lastly, the index for the ‘other foods at home’ category was up 0.1%, as the index for fats and oils rose 0.6% and prices for salad dressing rose 0.8%….among food at home line items, only prices for eggs, which are still up 16.7% since last July, have seen prices 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 for this release, 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 July after rising by 0.2% in June, 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 up 0.1% in July, 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 June retail sales for inflation in national accounts data, the index for household furnishings and supplies increased by 0.3%, as the index for major appliances rose 3.5%, and the index for housekeeping supplies was 0.6% higher…on the other hand, the apparel price index was 0.3% lower, as prices for women’s suits and separates fell 2.9% and the index for boy’s apparel was 3.0% lower…at the same time, prices for transportation commodities other than fuel were up 0.7%, as prices for new cars and trucks rose 0.3% and prices for used cars and trucks rose 1.3%…however, prices for medical care commodities were 1.1% lower as prescription drugs prices fell 1.0%…meanwhile, the recreational commodities index rose 0.2% on 0.6% higher prices for audio equipment and 2.2% higher prices for sports vehicles including bicycles, while the education and communication commodities index was 0.9% lower for the second month in a row on a 2.0% decrease in prices for personal computers…lastly, a separate price index for alcoholic beverages was down 0.1% on 0.3% lower priced beer at home, while the price index for ‘other goods’ was unchanged…

Within core services, the price index for shelter rose 0.3% on a 0.3% increase in rents, a 0.3% increase in homeowner’s equivalent rent, and a 0.4% increase in costs for lodging away from home at hotels and motels, while the sub-index for water, sewers and trash collection rose 0.2%, and other household operation costs were on average 0.4% higher….at the same time, the index for medical care services was up by 0.1%, as hospital services rose 0.4%, while the transportation services index was up by 0.5% as car and truck rentals rose 1.7% and airline fares rose 2.7%….meanwhile, the recreation services index rose 0.1% as cable and satellite television service rose 0.2% and video disc rentals rose 0.4%….in addition, the index for education and communication services rose 0.4%, as internet and electronic information services rose 1.3%…lastly, the index for other personal services was up 0.1% as tax return preparation and other accounting fees rose 0.6%…among core line items, prices for televisions, which are still 18.4% cheaper than a year ago, the price index for audio equipment, which has fallen 12.7% 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 dishes and flatware, which is now 11.2% lower than last June, have all seen prices fall by more than 10% over the past year, while only prices for laundry equipment, which have risen 15.4% over the past year, have seen prices rise by a double digit magnitude over that span…

Producer Prices Flat in July As Lower Margins for Trade Services Offset Higher Core Prices

The seasonally adjusted Producer Price Index (PPI) for final demand was unchanged in July, as prices for finished wholesale goods increased 0.1%, while margins of final services providers decreased by 0.1%…that followed a June report that indicated the PPI rose 0.3%, as prices for finished wholesale goods averaged 0.1% higher, while margins of final services providers increased by 0.4%, and 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% ….on an unadjusted basis, producer prices are still 3.3% higher than a year ago, down from the year over year increase of 3.4% that was indicated in last month’s report, which had been the largest one year increase in the PPI since November 2011…meanwhile, the core producer price index, which excludes food, energy and trade services, was up by 0.3% for the month, and is now 2.8% higher than in July a year ago…

As noted, the price index for final demand for goods, aka ‘finished goods’, was up 0.1% in July, after rising by 0.1% in June and by 1.0% in May, but after falling a revised 0.1% in April, and rising a revised 0.3% in March….the price index for wholesale energy was down 0.5% in July after rising 0.8% in June, 4.6% in May, being unchanged in April, and falling 2.0% in March, while the price index for wholesale foods fell 0.1%, and the index for final demand for core wholesale goods (ex food and energy) was 0.3% higher for the 6th month out of the last seven….the largest wholesale energy price change was a 5.3% increase in wholesale prices for LP gas, which was more than offset by wholesale price decreases of 3.9% home heating oil and 0.8% for residential electricity, while wholesale gasoline prices were 0.1% lower…the wholesale food price index, meanwhile, saw a 49.3% increase in wholesale prices for fresh eggs offset by a 15.0% decrease in wholesale prices for oilseeds….among wholesale core goods, wholesale prices for pharmaceutical preparations increased 0.7%, as did wholesale prices for passenger cars…

At the same time, the index for final demand for services fell 0.1% in July, after rising 0.4% in June, 0.3% in May, and a revised 0.2% in April and 0.3% in March, as the July index for final demand for trade services fell 0.8%, while the index for final demand for transportation and warehousing services rose 0.3%, as did the core index for final demand for services less trade, transportation, and warehousing services….among trade services, seasonally adjusted margins for fuels and lubricants retailers fell 12.7% and margins for machinery and equipment parts and supplies wholesalers fell 4.6%… among transportation and warehousing services, margins for truck transportation of freight rose 0.7% and margins for air transportation of freight rose 2.8%…among the components of the core final demand for services index, the index for guestroom rental rose 3.9% while margins for tax preparation and planning services services rose 2.6%..

This report also showed the price index for intermediate processed goods was unchanged in July, after rising 0.7% in June, 1.5% in May and a revised 0.3% in April….the price index for intermediate energy goods fell 1.3%, as refinery prices for jet fuel fell 3.2% and producer prices for commercial electric power fell 2.4%, while prices for intermediate processed foods and feeds fell 0.9%, as the intermediate price index for meats fell 3.0%…meanwhile, the core price index for processed goods for intermediate demand less food and energy was 0.3% higher on a 2.1% increase in the index for basic organic chemicals and a 3.9% increase in prices for building paper and board….prices for intermediate processed goods remain 6.8% higher than in July a year ago, now the 20th 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 rose 2.7% in July, after falling 1.0% in June, rising 2.5% in May, falling a revised 0.1% in April, and falling a revised 3.5% in March….that was as the July price index for crude energy goods rose 8.6% as crude oil prices rose 14.1%, while the index for unprocessed foodstuffs and feedstuffs fell 2.0%, as producer prices for oilseeds fell 15.0%, prices for wheat fell 9.1%, and producer prices for alfalfa hay fell 9.0%…at the same time, the index for core raw materials other than food and energy materials was 1.2% lower, as prices for aluminum base scrap fell 3.5% and prices for copper base scrap fell 2.1%…this raw materials index is now up by 8.2% from a year ago, up from the 5.8% year over year increase that we saw in June…

lastly, the price index for services for intermediate demand rose 0.2% in July, after rising 0.1% in June, 0.3% in May, 0.3% in April, 0.3% in March and 0.3% in February…the price index for intermediate trade services was down 0.7%, as margins for intermediate machinery and equipment parts and supplies wholesalers fell 4.6% and margins for chemicals and allied products wholesalers fell 0.4%…the index for transportation and warehousing services for intermediate demand rose 0.2%, as the index for air transportation of freight rose 2.8% and the index for water transportation of freight rose 1.9%…meanwhile, the core price index for intermediate services less trade, transportation, and warehousing was 0.3% higher, as the index for securities brokerage, dealing, investment advice rose 1.5% while the index for intermediate traveler accommodation services rose 3.5%….over the 12 months ended in July, the year over year price index for services for intermediate demand, which has never turned negative on an annual basis, is now 3.0% higher than it was a year ago… 

June Wholesale Sales Down 0.1%, Inventories Up 0.1%

The June report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at $506.7 billion, down 0.1 percent (+/-0.4%) from the revised May level, but still up 10.2 percent (±3.3%) from wholesale sales of June 2017… the May preliminary estimate was revised down $2.0 billion or 0.4% to $507.0 billion from the $509.0 billion sales reported last month, which is still 2.1% more than April’s sales … since June wholesale sales were down across a broad array of non-durable goods, the June decrease, the first since January, does not appear to be price related, but rather a pullback from the unusually elevated sales activity in May…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 additional goods on the shelf or in intermediate storage represent goods that were produced but not sold, and this June report estimated that wholesale inventories were valued at a seasonally adjusted $632.4 billion at month end, an increase of 0.1 percent (+/-0.2%)* from the revised May level and 5.1 percent (±3.9 percent) higher than in June a year ago, with the May preliminary estimate revised lower, from $633.5 billion to $632.0 billion at the same time, now just a 0.3% increase from April….

In the advance report on 2nd quarter GDP of two weeks ago, wholesale inventories were estimated based on the sketchy Advance Report on Wholesale and Retail Inventories which was released the day before the GDP release…that report estimated that our seasonally adjusted wholesale inventories were valued at $632.54 billion at the end of June, up from $632.45 billion in May….that’s $0.14 billion more than the $632.40 billion that this report shows, which would imply that the quarterly change in 2nd quarter inventories was overestimated at roughly a $0.6 billion annual rate…assuming there’s no revision in the inflation adjustment to those inventories, that would mean that the growth rate of 2nd quarter GDP was overestimated by a bit more than 0.01 percentage point based on what this report shows…

We’d also note that Reuters made a common mistake in their coverage of this report, which was headlined US June wholesale inventories revised higher…what they did was look at the percentage change from May to June in the Advance Report on Wholesale and Retail Inventories, which showed a 0.0% percentage increase in June inventories, and assumed that because this report showed a 0.1% increase, June inventories had been revised higher….but as we have just illustrated, once the downward revision to May inventories was accounted for, June inventories were actually revised lower…

Job Openings Little Changed in June, Hiring and Job Quitting Down, Layoffs Up

The Job Openings and Labor Turnover Survey (JOLTS) report for June from the Bureau of Labor Statistics estimated that seasonally adjusted job openings rose by 3,000, from 6,659,000 in May to 6,662,000 in June, after May job openings were revised higher, from 6,638,000 to 6,659,000…June jobs openings were also 8.7% higher than the 6,125,000 job openings reported in June a year ago, as the job opening ratio expressed as a percentage of the employed remained unchanged at 4.3% in June, but was up from 4.0% a year ago…while job openings in some sectors such as financial activities increased by 35,000 or 10% to 385,000, those were mostly offset by decreased openings in sectors such as transportation, warehousing, and utilities, where the number of openings fell from 332,000 to 248,000 (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 June, seasonally adjusted new hires totaled 5,651,000, down by 96,000 from the revised 5,747,000 who were hired or rehired in May, as the hiring rate as a percentage of all employed fell from 3.9% to 3.8%, while it remained higher than the 3.7% hiring rate in June a year earlier (details of hiring by industry since January are in table 2)….meanwhile, total separations increased by 83,000, from 5,419,000 in May to 5,502,000 in June, as the separations rate as a percentage of the employed rose from 3.6% to 3.7%, which was also up from the 3.6% separations rate of June a year ago (see table 3)…subtracting the 5,502,000 total separations from the total hires of 5,651,000 would imply an increase of 149,000 jobs in June, somewhat less than the revised payroll job increase of 248,000 for June reported by the July establishment survey last week, but still within the expected +/-115,000 margin of error in these incomplete samplings

Breaking down the seasonally adjusted job separations, the BLS finds that 3,402,000 of us voluntarily quit their jobs in June, down from the revised 3,480,000 who quit their jobs in May, while the quits rate, widely watched as an indicator of worker confidence, remained unchanged at 2.3% of total employment, up from the 2.2% quits rate of a year earlier (see details in table 4)….in addition to those who quit, another 1,723,000 were either laid off, fired or otherwise discharged in June, up by 105,000 from the revised 1,618,000 who were discharged in May, as the discharges rate rose from 1.1% to 1.2% of all those who were employed during the month, which was the same as the discharges rate of 1.2% a year earlier (see table 5)…meanwhile, other separations, which includes retirements and deaths, were at 378,000 in June, up from 321,000 in May, for an ‘other separations rate’ of 0.3%, which was up from 0.2% in May and also up from 0.2% in June 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 picked from the aforementioned GGO posts, contact me…)     

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