December’s industrial production & producer prices, et al

The major reports released this week were the December report on Industrial Production and Capacity Utilization from the Fed, and the December Producer Price Index and the December Import-Export Price Index, both from the Bureau of Labor Statistics…in addition, the BLS also released the Regional and State Employment and Unemployment for December 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…the regular reports on Retail Sales for December and Business Sales and Inventories for November from the Census Bureau, which had been scheduled for Wednesday, were postponed because of the Bureau’s shutdown, as was the November report on New Residential Construction, which the Census Bureau had scheduled for Thursday… 

The week also saw the release of the first two regional Fed manufacturing surveys for January: the Empire State Manufacturing Survey from the New York Fed, which covers all of New York state, one county in Connecticut, Puerto Rico and northern New Jersey, reported their headline general business conditions index fell from +23.3 in November and from +10.9 in December to +3.9 in January, its lowest level since May 2017, suggesting much slower growth of First District manufacturing…. meanwhile, the Philadelphia Fed Manufacturing Survey, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest diffusion index of manufacturing conditions rose from a revised reading of +9.1 in December to + 17.0 in January, indicating a larger plurality of the region’s manufacturing firms reported increases in their manufacturing activity this month…

Industrial Production Rose 0.3% in December After October & November Output Were Revised Higher

The Fed’s G17 release on Industrial production and Capacity Utilization indicated that industrial production rose by a seasonally adjusted 0.3% in December after rising by a revised 0.4% in November and after rising by a revised 0.2% in October, which together meant that industrial production rose at a 3.8% annual rate in the 4th quarter, after rising by a revised 4.7% rate in the 3rd quarter….the industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, rose to 109.9 in December from 109.6 in November, which was revised from the 109.4 reported last month, while at the same time the index for October was revised from 108.7 to 109.1, now a 0.2% increase from September, rather than the 0.2% decrease previously reported….year over year industrial production is now up 4.0%, up from the 3.9% year over year increase reported a month ago….

The manufacturing index, which accounts for more than 75% of the total IP index, rose 1.1% to 106.2 in December, after both the October index and the November indices were revised up from 104.9 to 105.0, the September manufacturing was revised from 105.0 to 105.1, the August index was revised from 104.8 to 104.9, and the July manufacturing index was revised from 104.3 to 104.4….meanwhile, the mining index, which includes oil and gas well drilling, rose from 128.5 in November to 130.5 in December, after the November mining index was revised down from 128.9, which lifted the mining index to a level 13.4% higher than it was a year earlier…finally, the seasonally adjusted utility index, which often fluctuates due to above or below normal temperatures, fell by 6.3% in December, from 108.9 to 102.0, after the November utility index was revised from 107.8 to 108.9, now 1.1% higher than October…since December 2017, like November of this year, was colder than normal, the utility index had been elevated at that time due to more heating, and hence the utility index is now 4.3% lower than it was a year ago…

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 rose to 78.7% in December from 78.6% in November, which was revised from the 78.5% reported last month …capacity utilization of NAICS durable goods production facilities rose from an upwardly revised 76.6% in November to 77.5% in December, while capacity utilization for non-durables producers rose from an unrevised 76.6% to 77.2%…capacity utilization for the mining sector rose to 94.8% in December from 93.9% in November, which was originally reported as 94.1%, while utilities were operating at 75.0% of capacity during December, down from 80.2% of capacity during November, which was previously reported at 79.4%…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 Down 0.2% in December on Lower Fuels,  Trade and Transportation Margins

The seasonally adjusted Producer Price Index (PPI) for final demand fell 0.2% in December, the largest drop since August 2016, as prices for finished wholesale goods were on average 0.4% lower, while margins of final services providers decreased by 0.1%…that followed an November report that indicated the PPI was 0.1% higher, with prices for finished wholesale goods falling 0.4% while margins of final services providers increased 0.3%, an October report that indicated the PPI was 0.6% higher, with prices for finished wholesale goods rising 0.6% and margins of final services providers rising 0.7%, a revised September report that indicated the PPI was unchanged, with prices for finished wholesale goods 0.3% lower and margins of final services providers 0.1% higher, and a revised August report that also indicated the producer price index was unchanged, with prices for finished wholesale goods rising 0.2% while margins of final services providers decreased by 0.1%….on an unadjusted basis, producer prices are still 2.5% higher than a year ago, same as the year over year increase that had been indicated by last month’s report…meanwhile, the core producer price index, which excludes food, energy and trade services, was unchanged for the month, and is now 2.8% higher than in December a year ago…

As noted, the price index for final demand for goods, aka ‘finished goods’, was 0.4% lower in December, after being 0.4% lower in November, 0.6% higher in October, 0.3% lower in September, but after rising by a revised 0.2% in August, being unchanged in July after rising by 0.2% in June and by 0.9% in May….the goods index fell because the price index for wholesale energy was 5.4% lower, after falling 5.0% in November, rising 2.7% higher in October falling a revised 1.1% in September, rising a revised 0.6% in August, and falling 0.8% in July, while the price index for wholesale foods rose 2.6% after rising 1.3% in November, and the index for final demand for core wholesale goods (excluding food and energy) was up 0.1%….wholesale energy prices fell largely on a 13.1% decrease in the wholesale price for gasoline and a 9.7% decrease in the wholesale price of diesel fuel …the wholesale food price index, meanwhile, included a 48.9% increase in wholesale prices for fresh fruits and melons and an 28.5% increase in wholesale prices for fresh and dry vegetables….among wholesale core goods, wholesale prices for construction machinery and equipment rose 3.1% while wholesale prices for industrial chemicals fell 6.7%..

At the same time, the index for final demand for services fell 0.1%, after rising 0.3% in November, 0.7% in October, and a revised 0.1% in September, after falling a revised 0.1% in August, and rising a 0.2% in July, 0.3% in June, 0.3% in May, 0.2% in April and 0.3% in March, as the December index for final demand for trade services fell 0.3% and the index for final demand for transportation and warehousing services fell 0.2%, while the core index for final demand for services less trade, transportation, and warehousing services rose 0.1%….among trade services, seasonally adjusted margins for fuels and lubricants retailers fell 2.1%, margins for sporting goods and boat retailers fell 3.3%, and margins for food retailers fell 2.5%… among transportation and warehousing services, margins for airline passenger services fell 1.5% while margins for truck transportation of freight rose 0.4%…among the components of the core final demand for services index, margins for guestroom rentals rose 2.9% while margins for cellular phone and other wireless telecommunications services fell 5.2%..

This report also showed the price index for intermediate processed goods fell 0.9% in December, after falling 0.7% in November, rising 0.8% in October, falling a revised 0.1% in September, but after rising a revised 0.2% in August….the price index for intermediate energy goods fell 2.6%, as refinery prices for gasoline fell 13.1% and refinery prices for jet fuel fell 14.0%, while producer prices for natural gas sold to electric utilities rose 27.6%…prices for intermediate processed foods and feeds rose 0.5%, as the intermediate price index for fats and oils rose 1.4% and producer prices for perishable prepared foods jumped 17.7%…meanwhile, the core price index for intermediate processed goods less food and energy was 0.7% lower on a 7.7% decrease in the index for basic organic chemicals and a 3.4% decrease in the price index for synthetic rubber….prices for intermediate processed goods are still 3.0% higher than in December a year ago, now the 25th 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 11.2% in December, the largest increase since November 2006, after falling 5.3% in November, rising 3.6% in October and a revised 0.8% in September, and falling a revised 3.7% in August….that was as the December price index for crude energy goods jumped 24.1% on a 64.3% spike in raw natural gas prices, even as crude oil prices fell 3.7%…in addition, the price index for unprocessed foodstuffs and feedstuffs rose 3.1%, as producer prices for slaughter turkeys rose 8.6% and producer prices for alfalfa hay rose 17.8%…at the same time, the index for core raw materials other than food and energy materials rose 1.5%, as prices for nonferrous metal ores rose 3.7% and raw cotton rose 4.8%…this raw materials index is now 9.1% higher than a year ago, a reversal of the 0.7% year over year decrease that we saw in November, which had been the first negative year over year reading in the index since October 2016…

Lastly, the price index for services for intermediate demand rose 0.1% in December, after rising 0.2% in November, 0.4% in October, a revised 0.3% in September, and being a revised unchanged in August…the price index for intermediate trade services was 0.2% higher, as margins for machinery and equipment parts and supplies wholesalers rose 1.1% and margins for paper and plastics products wholesalers rose 1.9%…the index for transportation and warehousing services for intermediate demand fell 0.2%, as the intermediate index for air transportation of passengers fell 1.5% and the index for air mail and package delivery services, excluding by USPS fell 1.0%…meanwhile, the core price index for intermediate services less trade, transportation, and warehousing was unchanged, as the index for gross rents for retail properties rose 3.8% while television advertising time sales fell 9.1%….over the 12 months ended in December, the year over year price index for services for intermediate demand, which has never turned negative on an annual basis, is still 3.1% higher than it was a year ago… 

 

(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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