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

Major reports released this past week included the August Consumer Price Index, the August Producer Price Index, the August Import-Export Price Index, and the Job Openings and Labor Turnover Survey (JOLTS) report for July, all from the Bureau of Labor Statistics; the Retail Sales Report for August, Wholesale Trade, Sales and Inventories for July and Business Sales and Inventories for July, all from the Census Bureau; and August’s Industrial Production and Capacity Utilization from the Fed…this week also saw the Fed’s release of the Consumer Credit Report for July, which indicated that overall consumer credit, a measure of non-real estate debt, expanded by a seasonally adjusted $16.6 billion, or at a 5.1% annual rate, as non-revolving credit expanded at a 6.4% rate to $2,881.4 billion and revolving credit outstanding expanded at a 1.5% rate to $1,036.6 billion….

Consumer Prices Rose 0.2% in August on Higher Gasoline and Rent

The consumer price index was 0.2% higher in August, as higher prices for shelter, energy, and most services were only partially offset by lower prices for medical care and apparel…the Consumer Price Index  Summary from the Bureau of Labor Statistics indicated that seasonally adjusted prices rose by 0.2% in August after rising 0.2% in July, 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, and by 0.4% last August….the unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, rose from 252.006 in July to 252.146 in August, which left it statistically 2.699% higher than the 245.519 index reading in August of last year, which is reported as a 2.7% increase….with higher prices for energy partially responsible for the August index increase, seasonally adjusted core prices, which exclude food and energy, rose by 0.1% for the month, with the unadjusted core price index rising from 257.867 to 258.012, which left the core index 2.199% ahead of its year ago reading of 252.460, which is reported as a 2.2% annual increase, down from last month’s 2.4%..

The volatile seasonally adjusted energy price index rose by 1.9% in August, after it had decreased by 0.3% in July and 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 10.2% higher than in August a year ago…prices for energy commodities were 3.0% higher in August, while the index for energy services rose by 0.4%, after falling by 0.4% in July…the energy commodity index was higher on a 3.0% increase in price of gasoline, the largest component, and a 2.2% increase in the index for fuel oils, while prices for other energy commodities, such as propane, kerosene, and firewood, averaged 0.7% higher…within energy services, the index for utility gas service rose by 0.9% after falling by 0.5% in July and is now priced 0.1% higher than it was a year ago, while the electricity price index was up 0.3%, after it was down 0.4% in July….energy commodities are now 20.4% higher than their year ago levels, with gasoline prices averaging 20.3% higher than they were a year ago, while the energy services price index is still 0.4% lower than last August, as electricity prices have decreased by 0.5% over that period…

The seasonally adjusted food price index rose 0.1% in August, after rising 0.1% in July, 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, and 0.1% last August, as the index for food purchased for use at home was unchanged in August, while prices for food bought for eating away from home were 0.2% higher, as prices at fast food outlets rose 0.3% and prices at full service restaurants rose 0.1%, while food prices at employee sites and schools were 1.2% lower…

In the food at home categories, the price index for cereals and bakery products was unchanged as bread prices rose 0.4%, prices for rice rose 1.8%, cookies prices fell 1.7%, and the index for bakery such as sweetrolls, coffeecakes and doughnuts fell 1.1%…at the same time, the price index for the meats, poultry, fish, and eggs group was 0.1% higher, as the fish and seafood price index rose 1.7% while the poultry price index was 1.0% lower…. the index for dairy products was also 0.1% higher, on a 0.7% increase in the price of fresh whole milk…on the other hand, the fruits and vegetables index was 0.3% lower on a 1.4% decrease in the price index for fresh fruits and a 1.0% decrease in prices for tomatoes…. meanwhile the beverages index was 0.2% higher, as carbonated drink prices were priced 2.2% higher…lastly, the index for the ‘other foods at home’ category was unchanged, as the index for butter and margarine fell 1.7% while peanut butter prices rose 3.2% and prices for salad dressing rose 1.3%….among food at home line items, only prices for eggs, which are still up 14.7% since last August, 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 0.1% in August after rising by 0.2% in July,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 down 0.3% in August, 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 August retail sales for inflation in national accounts data, the index for household furnishings and supplies decreased by 0.3%, as the index for major appliances fell 0.5%, and the index for window coverings was 2.4% lower…at the same time, the apparel price index was 1.6% lower, as prices for women’s outerwear fell 5.5% and the index for men’s suits, sport coats, and outerwear was 2.8% lower…on the other hand, prices for transportation commodities other than fuel were up 0.1%, as prices for used cars and trucks rose 0.4% while new car prices were unchanged…however, prices for medical care commodities were 0.3% lower as nonprescription drugs prices fell 0.5% and the index for medical equipment and supplies was 0.8% lower…meanwhile, the recreational commodities index fell 0.5% on 2.3% lower prices for audio equipment and 1.8% lower prices for sports vehicles including bicycles, while the education and communication commodities index was 0.1% higher on a 1.4% increase in prices for personal computers…lastly, a separate price index for alcoholic beverages was unchanged, as was the price index for ‘other goods’…

Within core services, the price index for shelter rose 0.3% on a 0.4% increase in rents, a 0.3% increase in homeowner’s equivalent rent, and a 0.6% increase in costs for lodging away from home at hotels and motels, while the sub-index for water, sewers and trash collection rose 0.3%, and other household operation costs were on average unchanged….on the other hand, the price index for medical care services was down by 0.2%, as dental services fell 0.8%, while health insurance fell 0.3%…meanwhile, the transportation services index was up by 0.3% as vehicle body work rose 0.6% and airline fares rose 2.4%….at the same time, the recreation services index rose 0.1% as cable and satellite television service rose 0.9% and photo processing rose 1.6%….in addition, the index for education and communication services rose 0.2%, as the price index for elementary and high school tuition rose 1.1% and the index for child care and nursery school rose 0.7%…lastly, the index for other personal services was up 0.1% as apparel services other than laundry and dry cleaning rose 0.7%…among core line items, prices for televisions, which are still 18.0% cheaper than a year ago, the price index for audio equipment, which has fallen 14.1% over the past year, the price index for women’s outerwear, which is down by 10.3% from a year ago, and the price index for dishes and flatware, which is now 12.8% lower than last August, have all seen prices fall by more than 10% over the past year, while only prices for laundry equipment, which have risen 13.6% over the past year, have seen prices rise by a double digit magnitude over that span..

Retail Sales Up by 0.1% in August after June and July Sales Revised Higher

Seasonally adjusted retail sales inched higher in August after retail sales for June and July were revised higher…the Advance Retail Sales Report for August (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $509.0 billion during the month, which was up 0.1 percent (±0.4%)* from July’s revised sales of $508.6 billion and 6.6 percent (±0.5 percent) above the adjusted sales in August of last year…July’s seasonally adjusted sales were revised from the $507.5 billion reported last month to $508.6 billion, while June sales were also revised higher, from $504.95 billion to $505.17 billion, with this release….estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated sales actually rose 3.3%, from $508,986 million in July to $525,743 million in August, while they were up 6.9% from the $492,031 million of sales in August a year ago…the revision to June sales means that 2nd quarter sales were a bit more than $0.9 billion higher at an annual rate than previously reported, which would be enough to add 0.02 percentage points to 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 2018 (r)evised”, and the revised July 2017 to July 2018 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 2018 retail sales table

In computing the real personal consumption of goods data for national accounts from this August retail sales report, the BEA will be using the corresponding price changes from the August consumer price index, which we reviewed earlier..since that report showed that the composite price index for all goods less food and energy goods was down 0.3% in August, we can thus figure that real retail sales excluding food and energy will on average be 0.3% higher than the core retail sales shown above…however, the adjustment for each of the types of sales shown above will vary by the change in the related price index…for instance, while nominal sales at motor vehicle & parts dealers were down 0.8%, the price index for transportation commodities other than fuel was up 0.1%, as prices for new cars and trucks was unchanged while prices for used cars and trucks rose 0.4%; that would mean that real unit sales at auto & parts dealers was actually on the order of 0.9% lower…on the other hand, while sales at clothing stores were 1.7% lower in August, the apparel price index was down 1.6%, meaning that real sales of clothing probably only fell 0.1%%…similarly, since sales at drug stores were up 0.5% while prices for medical care commodities were  0.3% lower, that suggests that real sales at drug stores rose 0.8%…

In addition to those core sales, adjusting food and energy retail sales for price changes must be done separately; the CPI report showed that the food price index rose 0.1% in July, with the index for food purchased for use at home unchanged, while prices for food bought for eating away from home was 0.2% higher…. hence, with nominal sales at food and beverage stores unchanged in August with no corresponding price change, real sales of food at groceries would also be unchanged.…likewise, the 0.2% nominal increase in sales at bars and restaurants, once adjusted for 0.2% higher prices, suggests little change in real sales at bars and restaurants either…meanwhile, while sales at gas stations were up 1.7%, there was a 3.0% increase in the retail price of gasoline, which would suggest real sales of gasoline were down on the order of 1.3%, with the caveat that gasoline stations do sell more than gasoline…averaging real sales computed thusly together, we’d estimate that income and outlays report for August will show that real personal consumption of goods rose 0.2% in August, after rising by a revised 0.4% in July… each single month of that metric will account for almost 8% of 3rd quarter GDP…

Industrial Production Up 0.4% in August After 5 Prior Months Were Revised Lower

The Fed’s G17 release on Industrial production and Capacity Utilization report indicated that industrial production rose by 0.4% in August, after rising by a revised 0.4% in July…while industrial production is now up 4.9% from a year ago, in contrast to last month’s year over year increase of 4.2%, the year ago industrial production figures had been impacted by industrial shutdowns in advance of Hurricane Harvey and unseasonably cool temperatures on the East Coast ….the industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, rose to 108.2 in August from 107.8 in July, which was revised from the 108.0 that was reported for July a month ago…at the same time, the June reading for the index was revised from 107.9 to 107.4, the May reading for the index was revised from 106.8 to 106.7, the April index reading was revised from 107.7 to 107.6, and the March index was revised from 106.5 to 106.4…

The manufacturing index, which accounts for more than 77% of the total IP index, rose by 0.3, from 104.3 in July to 104.6 in August, after July’s manufacturing index was revised down from 104.6, June’s manufacturing index was revised from 104.3 to 104.0, and April and May’s manufacturing indexes were both revised 0.1 lower…nonetheless, the manufacturing index is still up 3.1% from a year ago….meanwhile, the mining index, which includes oil and gas well drilling, rose from 123.2 in July to 124.1 in August, after the July index was revised down  from 123.4….however, the mining index still remains 14.1% higher than it was a year ago….finally, the utility index, which often fluctuates due to above or below normal temperatures, rose by 1.2%, from 104.2 in July to 105.4 in August, after the July utility index was revised down from 104.5 in July, and after the June utility index was revised from 105.0 to 104.1…nonetheless, the utility index also still remains 4.8% above its year ago reading of 100.5..

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 rose from 77.9% in July to 78.1% in August…capacity utilization of NAICS durable goods production facilities rose from 75.4 in July to 76.0 in August, after July’s figure was revised down from 75.9%, while capacity utilization for non-durables producers fell from an upwardly revised 77.5% to 77.1%…capacity utilization for the mining sector rose to 92.0% in August from 91.9% in July, which was originally reported as 92.0%, while utilities were operating at 78.0% of capacity during August, up from their 77.2% of capacity during July, which was revised down from 77.2%…year over year capacity growth rates have been 1.2% for manufacturing, 4.5% for mining, and 1.9% for utilities, for a total industry capacity growth rate of 1.7%….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 Fall in August on Lower Margins for Trade, Transportation and Warehousing Services

The seasonally adjusted Producer Price Index (PPI) for final demand was 0.1% lower in August, the first drop in the index in 18 months, as prices for finished wholesale goods were unchanged, while margins of final services providers decreased by 0.1%…that followed a July report that indicated the PPI was unchanged, with prices for finished wholesale goods up 0.1%, while margins of final services providers decreased by 0.1%, and 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%….on an unadjusted basis, producer prices are still 2.8% higher than a year ago, albeit down from the year over year increase of 3.3% that was indicated by last month’s report…meanwhile, the core producer price index, which excludes food, energy and trade services, was up by 0.1% for the month, and is now 2.9% higher than in July a year ago…

As noted, the price index for final demand for goods, aka ‘finished goods’, was unchanged in August, after rising by  0.1% in July, 0.1% in June and by a revised 0.9% in May, but after being unchanged in April…the price index for wholesale energy was up 0.4% in August after falling 0.5% in July, rising 0.8% in June and a revised 4.2% in May, while the price index for wholesale foods fell 0.6%, and the index for final demand for core wholesale goods (ex food and energy) was unchanged….the largest wholesale energy price change was a 1.8% increase in wholesale prices for residential natural gas, while wholesale gasoline prices were 0.6% higher…the wholesale food price index, meanwhile, included a 16.5% decrease in wholesale prices for fresh eggs and an 11.3% decrease in wholesale prices for fresh fruits and melons….among wholesale core goods, wholesale prices for industrial chemicals rose 0.8% and wholesale prices for passenger cars increased 0.7%, while wholesale prices for iron and steel scrap decreased 5.6%…

At the same time, the index for final demand for services fell 0.1% in August, after falling 0.1% in July, rising 0.4% in June, 0.3% in May, 0.2% in April and 0.3% in March, as the August index for final demand for trade services fell 0.9%, the index for final demand for transportation and warehousing services fell 0.6%, 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 hardware, building materials, and supplies retailers fell 3.2%, margins for computer hardware, software, and supplies retailers fell 2.9%, and margins for machinery and equipment wholesalers fell 1.7%… among transportation and warehousing services, margins for airline passenger services fell 2.0% and margins for air transportation of freight fell 0.9%…among the components of the core final demand for services index, the index for loan services (partial) rose 3.0% while margins for bundled wired telecommunication access services rose 3.4%..

This report also showed the price index for intermediate processed goods was unchanged in August, after being unchanged in July, rising 0.7% in June, rising a revised 1.3% in May and a revised 0.4% in April….the price index for intermediate energy goods fell 0.3%, as refinery prices for diesel fuel fell 3.8% and producer prices for natural gas sold to industry fell 1.7%…prices for intermediate processed foods and feeds fell 0.9%, as the intermediate price index for meats fell 1.7% and dairy prices fell 1.2%…meanwhile, the core price index for processed goods for intermediate demand less food and energy was 0.2% higher on a 2.6% increase in the index for steel mill products and a 2.2% increase in prices for fabricated ferrous wire products….prices for intermediate processed goods are still 6.3% higher than in August a year ago, now the 21st 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 5.8% in August, after rising 2.7% in July, falling 1.0% in June, and rising a revised 1.9% in May and a revised 0.9% in April….that was as the August price index for crude energy goods fell 7.9% as crude oil prices fell 13.4%, while the index for unprocessed foodstuffs and feedstuffs fell 5.2%, as producer prices for oilseeds fell 15.0%, prices for slaughter hogs fell 29.8% and producer prices for slaughter poultry fell 17.1%…at the same time, the index for core raw materials other than food and energy materials was 1.9% lower, as prices for iron and steel scrap fell 5.6% and prices for copper base scrap fell 9.3%…this raw materials index is now up by just 2.9% from a year ago, down from the 8.2% year over year increase that we saw in July…

Lastly, the price index for services for intermediate demand rose 0.1% in August, after rising 0.2% in July, 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 1.1%, as margins for intermediate hardware, building material, and supplies retailers fell 3.2% and margins for margins for metals, minerals, and ores wholesalers fell 10.5%…the index for transportation and warehousing services for intermediate demand fell 0.1%, as the index for air transportation of freight fell 0.9% and the index for truck transportation of freight fell 0.2%…meanwhile, the core price index for intermediate services less trade, transportation, and warehousing was 0.5% higher, as the index for gross rents for retail properties rose 5.5%, the index for passenger car rental rose 3.7%, and the index for portfolio management rose 2.9%….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 still 2.9% higher than it was a year ago… 

July Business Sales Up 0.2%, Business Inventories Up 0.6%

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 $1,454.1 billion in July, up 0.2 percent (±0.1%) from June revised sales, and up 8.1 percent (±1.2 percent) from July sales of a year earlier…note that total June sales were concurrently revised down from the originally reported $1,452.2 billion to $1,451,814 million….manufacturer’s sales were up but statistically unchanged at $501,690 million in July, while retail trade sales, which exclude restaurant & bar sales from the revised July retail sales reported earlier, rose 0.5% to $446,797 million, while wholesale sales were also statistically unchanged at $505,605 million…

Meanwhile, total manufacturer’s and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $1,950.0 billion at the end of July, up 0.6% (±0.1%) from June, and 4.3 percent (±1.3 percent) higher than in July a year earlier…the value of end of June inventories was revised up slightly from the $1,937.2 billion reported last month to $1,937.57 billion…seasonally adjusted inventories of manufacturers were estimated to be valued at $675,839 million, 0.8% higher than in June, inventories of retailers were valued at $637,796 million, 0.5% more than in June, while inventories of wholesalers were estimated to be valued at $636,341 million at the end of July, up 0.6% from June…

In national accounts, all types of business inventories are adjusted for inflation with an item-appropriate component of the producer price index…the July producer price index reported that prices for finished goods were on average 0.1% higher, that prices for intermediate processed goods were on average unchanged, while prices for unprocessed goods were 2.7% higher….since real private inventories contracted at an inflation adjusted $26.9 billion rate in the 2nd quarter and subtracted 0.97 percentage points from the quarter’s growth rate, any real inventory growth in the 3rd quarter will reverse that and correspondingly add to GDP by whatever percentage of GDP that real inventory growth ends the 3rd quarter at…

Job Openings and Job Quitting at Record Highs in July,  with Layoffs Down

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 117,000, from 6,822,000 in June to a record high of 6,939,000 in July, after June job openings were revised 160,000 higher, from 6,662,000 to 6,822,000…July’s jobs openings were also 11.9% higher than the 6,202,000 job openings reported for July a year ago, as the job opening ratio expressed as a percentage of the employed remained unchanged at 4.4% in July, while it was up from 4.1% in July a year ago….job openings increased in several sectors, with the 72,000 job opening increase to 1,003,000 openings in the leisure and hospitality 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 5,679,000, up by 2,000 from the revised 5,677,000 who were hired or rehired in June, as the hiring rate as a percentage of all employed remained unchanged at 3.8% in July, while it was 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 20,000, from 5,514,000 in June to 5,534,000 in July, while the separations rate as a percentage of the employed was unchanged at 3.7%, which was also unchanged from the separations rate in July a year ago (see table 3)…subtracting the 5,534,000 total separations from the total hires of 5,679,000 would imply an increase of 145,000 jobs in July, in line with and confirming the revised payroll job increase of 147,000 for July reported by the August establishment survey last week

Breaking down the seasonally adjusted job separations, the BLS finds that a record 3,583,000 of us voluntarily quit our jobs in July, up by 106,000 from the revised 3,477,000 who quit their jobs in June, while the quits rate, widely watched as an indicator of worker confidence, rose to 2.4% of total employment, up from 2.3% in June and from 2.2% in July a year earlier (see details in table 4)….in addition to those who quit, another 1,602,000 were either laid off, fired or otherwise discharged in July, down by 50,000 from the revised 1,652,000 who were discharged in June, as the discharges rate remained unchanged at 1.1% of all those who were employed during the month, while it was down from the discharges rate of 1.2% a year earlier….meanwhile, other separations, which includes retirements and deaths, were at 349,000 in July, down from 384,000 in June, for an ‘other separations’ rate of 0.2%, which was down from 0.3% in June but the same rate as in 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 picked from the aforementioned GGO posts, contact me…)      

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