October’s consumer prices, retail sales, industrial production; September’s business inventories..

Major 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 and the October Import-Export Price Index from the Bureau of Labor Statistics, and the October report on Industrial Production and Capacity Utilization from the Fed…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, a suburban NYC county in Connecticut, Puerto Rico and northern New Jersey, reported their headline general business conditions index rose from +21.1 in October to +23.3 in November, suggesting stronger growth of First District manufacturing; the Philadelphia Fed Manufacturing Survey, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest diffusion index of manufacturing conditions moved lower, from a reading of +22.2 in October to +12.9 in November, suggesting a somewhat slower 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 rose to +15 in November, up from +8 in October and +13 in September, suggesting an ongoing expansion in that region’s manufacturing for the twenty-fourth month in a row…

October CPI up 0.3% on Higher Fuel, Electricity, Used Car Costs

The consumer price index increased by 0.3% in October, as higher prices for gasoline, electricity, and used vehicles were only partially offset by lower food prices…the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that the seasonally adjusted price index rose 0.3% in October after it had risen 0.1% in September, 0.2% in August, 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, and by 0.1% last  October…the unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, rose from 252.439 in September to 252.885 in October, which left it statistically 2.522% higher than the 246.663 index reading in October of last year, which is reported as a 2.5% increase….with higher prices for energy driving the CPI increase, seasonally adjusted core prices, which exclude food and energy, rose by 0.2% for the month, with the unadjusted core price index rising from 258.429 to 259.063, which left the core index 2.139% ahead of its year ago reading of 253.638, which is reported as a 2.1% year over year increase, down from the 2.2% annual increase reported a month ago..

The volatile seasonally adjusted energy price index rose by 2.4% in October, after falling by 0.5% in September, rising by 1.9% in August, falling by 0.3% in July and by 0.3% in June, rising by 0.9% in May and by 1.4% in April, falling by 2.8% in March, rising by 0.1% in February and by 3.0% in January, and hence is now 8.9% higher than in October a year ago…prices for energy commodities were 2.9% higher in October, while the index for energy services rose by 1.7%, after falling by 0.8% in September…the energy commodity index was higher due to a 3.0% increase in price of gasoline, the largest component, and a 3.7% increase in the index for fuel oils, while prices for other energy commodities, such as propane, kerosene, and firewood, averaged 0.8% lower…within energy services, the index for utility gas service fell by 0.6% after falling by 1.7% in September and is now 2.1% lower than it was a year ago, while the electricity price index was up 2.3%, after it was down 0.5% in September….energy commodities are now 16.3% higher than their year ago levels, with gasoline prices averaging 16.1% higher than they were a year ago, while the energy services price index is now 0.1% higher than last October, as electricity prices have now increased by 0.7% over that period…

The seasonally adjusted food price index was 0.1% lower in October, after being unchanged in September, rising 0.1% in August, 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, and rising 0.1% last September, as the index for food purchased for use at home fell 0.2% in October, while prices for food bought to eat away from home was 0.1% higher, as prices at fast food outlets fell 0.1%, prices at full service restaurants rose 0.2%, and food prices at employee sites and schools rose 1.0%…

In the food at home categories, the price index for cereals and bakery products was 0.6 lower even though bread prices rose 0.4%, because prices for flour and prepared flour mixes fell 2.7% and the index for rice, pasta, and cornmeal prices fell 2.8%…meanwhile, the price index for the meats, poultry, fish, and eggs group was unchanged, as the fish and seafood price index rose 1.4% while prices for beef roasts fell 3.8% and ham prices were 1.8% lower….at the same time, the index for dairy products was 0.4% lower, mostly on a 1.1% decrease in the index for cheese and related products…in addition, the fruits and vegetables index was 0.7% lower on a 1.8% decrease in the price index for fresh fruits and a 1.0% decrease in the price index for canned fruits and vegetables….on the other hand, the beverages index was 0.2% higher, as frozen noncarbonated juices and drink prices were priced 1.1% higher and instant coffee prices rose 1.5%…lastly, the index for the ‘other foods at home’ category was unchanged, as the index for sugar and sweets fell 0.7% while prices for soups rose 1.4%….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…since last October, none of the ‘food at home’ line items have seen prices change by more than 10% over the past year…

Among the seasonally adjusted core components of the CPI, which rose by 0.2% in October after rising by 0.1% in September, by 0.1% in August, 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 0.3% higher, 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 October retail sales for inflation in national accounts data, the index for household furnishings and supplies increased by 0.4%, as the index for appliances rose 1.6% and the index for window and floor coverings was 2.2% higher…at the same time, the apparel price index was 0.1% higher, as the index for men’s suits, sport coats, and outerwear rose 3.9% and the index for girl’s apparel was 1.1% higher, while prices for women’s outerwear fell 6.4%…in addition, prices for transportation commodities other than fuel were up 0.8%, as prices for used cars and trucks rose 2.6% while new vehicle prices fell 0.2%…on the other hand, prices for medical care commodities were 0.1% lower as prescription drugs prices fell 0.6%, while the recreational commodities index fell 0.5% on 1.2% lower prices for televisions and 1.7% lower prices for sports vehicles including bicycles…in addition, the education and communication commodities index was 1.5% lower on a 1.6% decrease in the index for personal computers and peripheral equipment and a 2.5% drop in the index for telephone hardware, calculators, and other consumer information items…lastly, a separate price index for alcoholic beverages was 0.1% higher, while the price index for ‘other goods’ fell 0.3% on a 5.6% decrease in the price index for miscellaneous personal goods…

Within core services, the price index for shelter rose 0.2% on a 0.2% increase in rents and a 0.3% increase in homeowner’s equivalent rent, while prices for lodging away from home at hotels and motels fell 2.4%, and the sub-index for water, sewers and trash collection rose 0.3%, and other household operation costs were on average unchanged….the price index for medical care services was also up by 0.2%, as dental services rose 0.3%, nursing homes and adult day rose 0.5%, and health insurance rose 1.1%…meanwhile, the transportation services index was up by 0.1% as car and truck rentals rose 3.3% while intercity bus fares fell 2.0%…at the same time, the recreation services index was unchanged as video discs and other media services rose 5.5% while photo processing fell 1.4%….in addition, the index for education and communication services was also unchanged as the price index for college tuition and fees rose 0.6% while prices for land-line telephone services fell 1.1%…lastly, the index for other personal services was up 0.5% as haircuts rose 0.6% and the index for tax return preparation and other accounting fees rose 0.7%…among core line items, prices for televisions, which are now 17.8% cheaper than a year ago, the price index for audio equipment, which has fallen 11.9% over the past year, the price index for toys, which is down by 10.9% since last October, and the price index for miscellaneous personal goods, which has now decreased 10.0% year over year, have all seen prices fall by more than 10% over the past year, while no line item has seen prices rise by a double digit magnitude over that span…

Retail Sales Rise 0.8% in October after Prior Months Sales Revised Lower

Seasonally adjusted retail sales increased in October after retail sales for August and September were revised lower…the Advance Retail Sales Report for October (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $511.5 billion during the month, which was 0.8 percent (±0.5%) higher than September’s revised sales of $507.6 billion and 4.6 percent (±0.5%) above the adjusted sales in October of last year…September’s seasonally adjusted sales were revised from the $509.0 billion reported last month to $507.6 billion, while August’s sales were revised from $508.5 billion to $507.87 billion, and hence the August to September percent change was revised from +0.1% (±0.5 percent)* to -0.1% (±0.2 percent)*….estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated sales actually rose 4.7%, from $482,985 million in September to $505,604 million in October, while they were up 5.9% from the $477,592 million of sales in October a year ago…the total $2.03 billion downward revision to August and September’s retail sales should reduce the previous estimate of the personal consumption expenditures contribution to 3rd quarter GDP by about 0.15 percentage points, assuming the distribution of price adjustments in the revised figures is similar to that of those originally published…

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 2018 r” (revised) and the September 2017 to September 2018 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 2018 retail sales table

To compute October’s real personal consumption of goods data for national accounts from this October retail sales report, the BEA will use the corresponding price changes from the October consumer price index, which we reviewed above…to estimate what they will find, we’ll first separate out the volatile sales of gasoline from the other totals…from the third line on this table, we can see that October retail sales excluding the 3.5% price-related increase in sales at gas station were only up by 0.5%…since the CPI report showed that the composite price index for all goods less food and energy goods was up 0.2% in October, we can thus approximate that real retail sales excluding food and energy will on average be 0.2% lower than the core retail sales shown above, or show an increase of roughly 0.3%…however, the actual 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 up 1.1%, the price index for for transportation commodities other than fuel were up 0.8%, which would mean that real unit sales at auto & parts dealers was actually only the order of 0.3% higher… similarly, while sales at clothing stores were 0.5% higher in October, the apparel price index was 0.1% higher, which means that real sales of clothing rose around 0.4%.…on the other hand, while nominal sales at sporting goods, hobby, music and book stores rose 0.5%, the price index for recreational commodities fell 0.5%, so real sales of recreational goods were up on the order of 1.0%…

In addition to figuring those core retail sales, we should adjust food and energy retail sales for price changes separately…the CPI report showed that the food price index was 0.1% lower in October, with the index for food purchased for use at home 0.2% lower in October, while prices for food bought to eat away from home were 0.1% higher… hence, with nominal sales at food and beverage stores 0.3% higher, real sales of food and beverages would be roughly 0.5% higher in light of the 0.2% lower prices…on the other hand, the 0.2% decrease in nominal sales at bars and restaurants, once adjusted for 0.1% higher prices, suggests that real sales at bars and restaurants fell 0.3%…meanwhile, while sales at gas stations were up 3.5%, there was a 3.0% increase in the retail price of gasoline, which would suggest real sales of gasoline were up on the order of 0.5%, with the caveat that gasoline stations do sell more than gasoline… averaging real sales computed thusly together, we’d estimate that the income and outlays report for August will show that real personal consumption of goods rose around 0.3% in October, after rising by a revised 0.2% in September…that October increase will account for almost 8% of 4th quarter GDP…

Industrial Production Up 0.1% in October, after Prior Months Revised much higher

The Fed’s G17 release on Industrial production and Capacity Utilization reported that industrial production increased by 0.1% in October after rising by a revised 0.2% in September and by a revised 0.8% in August, as “hurricanes lowered the level of industrial production in both September and October, but their effects appear to be less than 0.1 percent per month.“….the industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, rose to 109.1 in October from 109.0 in September, which was revised from the 108.5 index level reported last month…at the same time, the August index was revised from 108.2 to 108.8, primarily as a result of a large upward revision to mining output, and the July index was revised from 107.8 to 107.9….as a result of those revisions, industrial production is now 4.1% higher than a year ago, while third quarter output is now reported to have increased at an annual rate of 4.7 percent, appreciably above the 3.3% annualized increase reported initially….

The manufacturing index, which accounts for more than 77% of the total IP index, increased by 0.3%, from 105.1 in September to 105.4 in October, after September’s manufacturing index was revised up from 104.8 to 105.1, August’s index was revised up from 104.6 to 104.8, and July’s index was revised up from 104.3 to 104.4….on the other hand, the mining index, which includes oil and gas well drilling, fell by 0.3%, from 126.7 in September to 126.3 in October, after the September mining index was revised up from 124.8, and the August index was revised from 124.3 to 126.9, leaving the mining index 13.1% higher than it was a year ago….meanwhile, the utility index, which often fluctuates due to above or below normal temperatures, fell 0.5% in October, from an unrevised 105.2 to 104.7, after August utility index was revised up from 105.2 to 105.4, leaving the utility index 1.7% 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 fell to 78.4% in October from 78.5% in September, which was revised from the 78.1% utilization reported in last month’s report …capacity utilization of NAICS durable goods production facilities rose from 76.4% in September to 76.6% in October, after September’s figure was revised up from 76.3%, while capacity utilization for non-durables producers rose from 77.2% in September to 77.3% in October, after September’s nondurables utilization was revised up from 77.0%…capacity utilization for the mining sector fell to 92.7% in October from 93.5% in September, which was originally reported as 92.2%, while utilities were operating at 77.3% of capacity during October, down from their 77.8% of capacity during September, which was revised from the previously reported 77.7%…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…. 

Business Sales Up 0.4% in September, Business Inventories Up 0.3%

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 $1,468.0 billion in September, up 0.4 percent (±0.2 percent) from August’s revised sales, and up 6.6 percent (±1.3 percent) from September sales of a year earlier…note that total August sales were concurrently revised up from the originally reported $1,461.9 billion to $1,462.0 billion….manufacturer’s sales were up 0.9% to $509,779 million in September, and retail trade sales, which exclude restaurant & bar sales from the revised September retail sales that we reported earlier, rose 0.2% to $447,088 million, while wholesale sales rose 0.2% to $511,169 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, up 0.3% (±0.1%) from August, and 4.4  percent (±1.3 percent) higher than in September a year earlier…the value of end of August inventories were revised from the $1,960.8 billion reported last month to $1,961.0 billion…seasonally adjusted inventories of manufacturers were estimated to be valued at $680,400 million, up 0.5% from August, inventories of retailers were valued at $642,496 million, 0.1% more than in August, while inventories of wholesalers were estimated to be valued at $644,556 million at the end of September, 0.4% higher than in August…

We had previously estimated that 3rd quarter GDP was underestimated by around 0.03 percentage points based on what the wholesales report showed, and that 3rd quarter GDP was overestimated by around 0.04 percentage points based on what the factory inventories report showedthe BEA’s Key source data and assumptions (xls) that accompanied the release of the advance estimate of 3rd quarter GDP indicates that they had estimated that the value of retail inventories would be unchanged in September before adjustment with the PPI, so the $0.423 billion increase that this report shows means that they underestimated the annualized 3rd quarter inventory component at an annual rate of around $1.7 billion….that would imply that the contribution of the retail inventory component of 3rd quarter GDP was underestimated by around 0.03 percentage points, so after netting out the 3 inventory changes, this report indicates an upward adjustment of around 0.02 percentage points to 3rd quarter GDP when the 2nd estimate is released at the end of November…

 

(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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