February’s consumer and producer prices and industrial production; January’s retail sales, construction spending, durable goods, new home sales & JOLTS; December’s business inventories

Monthly economic reports that were released on their regular schedule over the past week included the February Consumer Price Index, the February Producer Price Index and the February Import-Export Price Index from the Bureau of Labor Statistics (BLS),  and the February report on Industrial Production and Capacity Utilization from the Fed…in addition, the BLS also released both the Job Openings and Labor Turnover Survey (JOLTS) for January and the Regional and State Employment and Unemployment Report for January during this same week, an oddity but apparently scheduled that way…meanwhile, Census Dept reports that were delayed in the aftermath of the government shutdown that were finally released this week included the Retail Sales report for January and the Business Sales and Inventories report for December, the Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders for January, the January report on Construction Spending, and the January report on new home sales…this week also saw the release of the first regional Fed manufacturing surveys for March: the Empire State Manufacturing Survey from the New York Fed, which covers all of New York state, one NYC suburban county in Connecticut, Puerto Rico and northern New Jersey, reported their headline general business conditions index fell to a 22 month low of +3.7, down from +8.8 in February, suggesting a slowing of the modest expansion of First District manufacturing…

Retail Sales Up 0.2% in January after November and December Revised Lower

Seasonally adjusted retail sales increased 0.2% in January after retail sales for November and December were revised lower…the Advance Retail Sales Report for January (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $504.4 billion during the month, which was up 0.2 percent (±0.5%) from December’s revised sales of $503.4 billion and 2.3 percent (±0.7%) above the adjusted sales in January of last year….December’s seasonally adjusted sales were revised down from $505.8 billion to $503.4 billion, while November’s sales were also revised lower, from $512.2 billion to $511.6 billion; as a result, the November to December change was revised down 1.2 percent (±0.5 percent) to down 1.6 percent (±0.3 percent)…..the revisions to November and December sales would indicate that 4th quarter personal consumption expenditures were lower at a rate of more than a $12 billion annually, which would thereby reduce 4th quarter GDP by around 0.28 percentage points….estimated unadjusted retail sales, extrapolated from surveys of a small sampling of retailers, indicated sales actually fell 19.2%, from $565,105 million in December to $456,426 million in January, while they were 2.6% higher than the $444,738 million of sales in January a year ago, so we can see how a large seasonal adjustment to holiday and post holiday sales brought the headline sales into line, compared to the big sales decrease that would normally be expected in January…

Included below is the table of the monthly and yearly percentage changes in retail sales by business type taken from the January Census Marts pdf….the first pair of columns below gives us the seasonally adjusted percentage change in sales for each kind of business from the revised December figure to this month’s January “advance” report in the first sub-column, and then the year over year percentage sales change since last January in the 2nd column…the second double column pair below gives us the revision of the December advance estimates (now called “preliminary”) as of this report, with the new November to December percentage change under “Nov 2018 r” (revised) and the December 2017 to December 2018 percentage change as revised in the last column shown…for your reference, the table of last month’s advance estimate of December sales, before this month’s revisions, is here.…

January 2019 retail sales table

To compute January’s real personal consumption of goods data for national accounts from this January retail sales report, the BEA will use the corresponding price changes from the January consumer price index, which we reviewed when it was released a month ago…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 January retail sales excluding the 2.0% price-related decrease in sales at gas station were up by 0.4%….then, pulling the 1.1% increase in grocery & beverage sales and the 0.7% increase in food services sales out from that total, we find that core retail sales were up by less than 0.2% for the month…since the CPI report showed that the composite price index for all goods less food and energy goods was 0.4% higher in January, we can thus figure that real retail sales excluding food and energy will be down by more than 0.2%…however, the actual adjustment in national accounts 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 2.4%, the January price index for for transportation commodities other than fuel was up 0.2% on a 0.2% increase in prices for new cars and trucks, which would mean that real unit sales at auto & parts dealers were probably on the order of 2.6% lower, with real car sales 2.8% lower.. similarly, while nominal sales at clothing stores were 1.3% lower in January, the apparel price index was 1.1% higher, which means that real sales of clothing probably fell around 2.4%…

In addition to figuring those core retail sales, we should adjust food and energy retail sales for their price changes separately…the January CPI report showed that the food price index was 0.2% higher, with the index for food purchased for use at home 0.1% higher, while prices for food bought to eat away from home were 0.3% higher… thus, while nominal sales at food and beverage stores were 1.1% higher, real sales of food and beverages would be roughly 1.0% higher in light of the 0.1% higher prices…meanwhile, the 0.7% increase in nominal sales at bars and restaurants, once adjusted for 0.3% higher prices, suggests that real sales at bars and restaurants rose about 0.4% during the month…in addition, while sales at gas stations were down 2.0%, there was a 5.5% decrease in the retail price of gasoline during the month, which would suggest that real sales of gasoline were up on the order of 3.5%, with a caveat that gasoline stations do sell more than gasoline… averaging real sales that we have thus estimated together, we can then estimate that the income and outlays report for January will show that real personal consumption of goods fell by less than 0.1% in January, after falling by a revised 1.8% in December, but rising by a revised 1.2% in November…at the same time, the 0.4% increase in real sales at bars and restaurants would boost January’s real personal consumption of services by less than 0.1%…

February Consumer Prices Up 0.2% on Higher Food, Shelter and Energy

The consumer price index rose 0.2% in February on higher prices for food, shelter and gasoline….the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that the seasonally adjusted price index for urban consumers rose 0.2% in February after it had been unchanged in November, in December and in January, had risen 0.3% in October, 0.1% in September, 0.1% in August, and 0.2% in July…the unadjusted CPI-U index, which was set with prices of the 1982 to 1984 period equal to 100, rose from 251.712 in January to 252.776 in January, which left it statistically 1.520% higher than the 248.991 index reading in January of last year, which is reported as a 1.5% year over year increase….with higher prices for food and gasoline contributing to the increase in the overall index, seasonally adjusted core prices, which exclude food and energy, rose by 0.1% for the month, as the unadjusted core price index rose from 260.122 to 261.114, which left the core index 2.084% ahead of its year ago reading of 255.783, which is reported as a 2.1% year over year increase, down from 2.2% in January…

The volatile seasonally adjusted energy price index rose 0.4% in February, after falling  3.1% in January, 2.6% in December, 2.8% in November, rising by 2.1% in October, and falling by 1.0% in September, and thus is still 5.0% lower than in January a year ago…the price index for energy commodities was 1.5% higher in February, while the index for energy services fell by 0.8%, after falling by 0.5% in January…the energy commodity index was up 1.5% due to a 1.5% increase in price of gasoline, the largest component, and an 1.5% increase in the index for fuel oils, while prices for other energy commodities, such as propane, kerosene, and firewood, averaged 0.1% higher…within energy services, the price index for utility gas service fell 2.4% after falling 0.3% in January and is now 2.6% lower than it was a year ago, while the electricity price index was 0.3% lower, after it had fallen 0.6% in January….energy commodities are still 8.6% lower than their year ago levels, with gasoline prices averaging 9.1% lower than they were a year ago, while the energy services price index is now 0.6% lower than last February, as electricity prices are now unchanged from a year ago…

The seasonally adjusted food price index was 0.4% higher in February, after rising 0.2% in January, 0.3 in December, 0.2% in November, being unchanged in October, rising 0.1% in September, 0.1% in August, and 0.1% in July, as the price index for food purchased for use at home rose 0.4% in February, and the index for food bought to eat away from home was also 0.4% higher, as prices at fast food outlets rose 0.5% and prices at full service restaurants rose 0.3%, while food prices at employee sites and schools averaged 0.3% higher…

In the food at home categories, the price index for cereals and bakery products was 0.7% higher as average bread prices rose 0.4%, breakfast cereal prices rose 0.9%, and the price index for cakes, cupcakes and cookies rose 1.6%….at the same time, the price index for the meats, poultry, fish, and eggs group was 0.2% higher, even as the beef and veal index fell 0.5%, because the poultry index rose 1.2% and fish & seafood prices averaged 0.8% higher…in addition, the seasonally adjusted index for dairy products was 0.3% higher, as fresh whole milk prices rose 0.6%, while the fruits and vegetables index was 0.9% higher on a 1.9% increase in the price index for fresh vegetables, which included a 4.9% jump in the price of lettuce….at the same time, the beverages index was 0.7% higher, as the index for noncarbonated juices and drinks rose 1.0%…lastly, the index for the ‘other foods at home’ category was 0.3% higher, as the index for sugar and artificial sweeteners rose 0.6%, butter prices rose 3.1%, and the index for frozen and freeze dried prepared foods was 1.6% higher….the itemized list for price changes of over 100 separate food items is included at the beginning of Table 2 for this release, which also gives us a line item breakdown for prices of more than 200 CPI items overall…since last December, just lettuce, which is now priced 14.5% higher than a year ago, is the only ‘food at home’ line item that has seen prices change by more than 10% over the past year…

Among the seasonally adjusted core components of the CPI, which rose by 0.1% in February after rising by 0.2% for the past five months in a row, after rising by 0.1% in August 0.2% in July, 0.2% in June, 0.2% in May, 0.1% in April, 0.2% in March, 0.2% last February, and by 0.3% last January, the composite price index of all goods less food and energy goods was 0.2% lower, 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 January retail sales for inflation in national accounts data, the index for household furnishings and supplies increased by 0.3%, as the price index for furniture and bedding rose 1.2% while the price index for outdoor equipment and supplies was 1.0% higher…likewise, the apparel price index was also 0.3 higher on a a 3.4% increase in the price index for men’s and boy’s apparel and a 2.0% increase in the index for boy’s and girls footwear…on the other hand, the price index for transportation commodities other than fuel was 0.4% lower, as prices for new cars and trucks fell 0.3%, prices for used cars and trucks fell 0.7%, and the price index for motor oil, coolant, and fluids fell 4.7%…in addition, prices for medical care commodities were 1.0% lower as prescription drugs prices fell 1.0% while the price index for medical equipment and supplies fell 0.6%….meanwhile, the recreational commodities index fell 0.9% on a 3.2% decrease in TV prices, a 1.9% decrease in the index for sporting goods, and a 2.3% decrease in the index for photographic equipment and supplies ….at the same time, the education and communication commodities index was 0.5% lower on a 0.9% decrease in the index for computers, peripherals, and smart home assistant devices and a 1.2% decrease in the index for telephone hardware, calculators, and other consumer information items…lastly, a separate price index for alcoholic beverages was 0.2% higher, while the price index for ‘other goods’ rose 0.5% on a 3.6% increase in the price index for miscellaneous personal goods…

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 1.4% increase in lodging away from home at hotels and motels, while the shelter sub-index for water, sewers and trash collection rose 0.1%, and other household operation costs were on average 0.3% lower….at the same time, the price index for medical care services was unchanged, as hospital services fell 0.7% while health insurance rose 1.3%..meanwhile, the transportation services index was down by 0.1% as car and truck rentals fell 6.8% while car repairs rose 0.6% and airline fares rose 0.5%…in addition, the recreation services price index was 0.2% lower even though the index for video discs and other media including rentals rose 2.1% because admissions to sporting events fell 7.2%….on the other hand, the index for education and communication services was 0.2% higher as college tuitions rose 0.3% and postage rose 1.9%….lastly, the index for other personal services was up 0.6% as the price index for legal services rose 0.9% and tax return preparation and other accounting fees rose 2.6%…among core line items, prices for televisions, which are still 16.8% cheaper than a year ago, the price index for telephone hardware, calculators, and other consumer information items, which is down by 15.1% since last February, and the price index for infant’s equipment, which is down by 11.5% from a year ago, have all seen prices drop by more than 10% over the past year, while the price index for boys’ apparel, which has now increased 10.5% year over year, the price index for major appliances, which is up 11.0% since last February, and the index for tax return preparation and other accounting fees, which is now up 13% from a year ago, have all seen prices rise by a double digit magnitude over that span….

Producer Prices up 0.1% in February on Higher Energy Prices

The seasonally adjusted Producer Price Index (PPI) for final demand rose 0.1% in February, as prices for finished wholesale goods averaged 0.4% higher, while average margins of final services providers were statistically unchanged…that followed a January report that showed the PPI 0.1% lower, as prices for finished wholesale goods were on average 0.8% lower, while margins of final services providers increased by 0.3%, a December report that also had the PPI down 0.1%, with prices for finished wholesale goods down 0.3% while margins of final services providers were unchanged, a revised November report that indicated the PPI was 0.2% lower, with prices for finished wholesale goods falling 0.8% while margins of final services providers increased 0.1%, and a revised October report that indicated the PPI was 0.8% higher, with prices for finished wholesale goods rising 0.8% and margins of final services providers also rising 0.8%…on an unadjusted basis, producer prices are 1.9% higher than a year ago, down from the 2.0% 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 up 0.1% for the month, and is now 2.5% higher than in February a year ago…

As we noted, the price index for final demand for goods, aka ‘finished goods’, was 0.4% higher in February, after being 0.8% lower in January, 0.3% lower in December, 0.8% lower in November, 0.8% higher in October, and 0.1% lower in September….the finished goods index rose because the price index for wholesale energy was 1.8% higher, after falling 3.8% in January 4.3% in December and 5.2% in November, while the price index for wholesale foods fell 0.3% after falling 1.7% in January, and the index for final demand for core wholesale goods (excluding food and energy) was up 0.1%….wholesale energy prices rose on a 3.3% increase in the wholesale price for gasoline, a 5.4% increase in wholesale prices for LP gas, and a 7.2% jump in the wholesale price of diesel fuel …the wholesale food price index, meanwhile, included a 6.7% increase in wholesale prices for eggs and an 12.8% decrease in wholesale prices for fresh and dry vegetables….among wholesale core goods, average wholesale prices for electronic components and accessories rose 2.4% while wholesale prices for sanitary paper products rose 2.8%..

At the same time, the index for final demand for services rose 0.3%, after rising 0.3% in January, being unchanged in December, rising a revised 0.1% in November, a revised 0.8% in October, and 0.2% in September, as the February index for final demand for trade services fell 0.4% and the index for final demand for transportation and warehousing services fell 1.3%, while the core index for final demand for services less trade, transportation, and warehousing services was 0.3% higher….among trade services, seasonally adjusted margins for  fuels and lubricants retailers fell 10.5%, margins for apparel, jewelry, footwear and accessories retailers fell 3.8% and margins for TV, video, and photographic equipment and supplies retailers fell 5.9%, while margins for computer hardware, software, and supplies retailers rose 3.7%… among transportation and warehousing services, margins for airline passenger services fell 4.2% and margins for air transportation of freight fell 0.4%…among the components of the core final demand for services index, margins for for traveler accommodation services rose 5.3% while margins for arrangement of cruises and tours rose 3.2%..

This report also showed the price index for intermediate processed goods rose 0.4% in February, after falling 1.4% in January, 0.9% in December and a revised 0.8% in November, after rising a revised 0.7% in October and 0.1% in September….the price index for intermediate energy goods rose 1.6%, as refinery prices for gasoline rose 3.3% and refinery prices for residual fuels rose 19.5%, while producer prices for natural gas sold to electric utilities fell 9.0%…on the other hand, prices for intermediate processed foods and feeds fell 0.1%, as the price index for processed fats and oils fell 2.5% and producer prices for prepared animal feeds fell 1.1%…meanwhile, the core price index for intermediate processed goods less food and energy was 0.1% higher on a 2.2% increase in the index for basic organic chemicals and a 10.8% increase in the price index for agricultural chemicals other than phosphates …prices for intermediate processed goods are still 0.6% higher than in February a year ago, now the 27th 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 4.6% in February, after falling 9.3% in January, rising 11.1% in December, falling a revised 5.2% in November, rising a revised 3.3% in October and 0.9% in September….that was as the February price index for crude energy goods fell 10.9% on a 28.5% drop in raw natural gas prices, while crude oil prices rose 2.6%…at the same time, the price index for unprocessed foodstuffs and feedstuffs fell 1.0%, as producer prices for slaughter hogs fell 13.3% and producer prices for slaughter chickens fell 5.6%…at the same time, the index for core raw materials other than food and energy materials fell 0.7%, as prices for scrap iron and steel fell 4.1% and waste paper prices fell 7.3%…this raw materials index is now 8.8% lower than a year ago, after being as much as 9.1% higher year over year as recently as December…

Lastly, the price index for services for intermediate demand fell 0.1% in February, after rising 0.2% in January, 0.1% in December, a revised 0.1% in November, a revised 0.6% in October and by 0.3% in September…the price index for intermediate trade services was 0.1% lower, as margins for intermediate hardware, building material, and supplies retailers fell 3.8% and margins for food wholesalers fell 1.2%…the index for transportation and warehousing services for intermediate demand also fell 0.1%, as the intermediate index for air transportation of passengers fell 4.2% while the index for the U.S. Postal Service rose 1.7%…meanwhile, the core price index for intermediate services less trade, transportation, and warehousing was unchanged, as intermediate cable and satellite subscriber services rose 2.4% and the index for portfolio management increased 2.1%, while the index for nonresidential real estate rents fell 2.7% and the index for internet advertising space sales fell 3.1%…..over the 12 months ended in February, the year over year price index for services for intermediate demand, which has never turned negative on an annual basis, is still 2.6% higher than it was a year ago…

Construction Spending Up 1.3% in January after December and November Revised Much Lower 

The Census Bureau’s report on January construction spending (pdf) estimated that January’s seasonally adjusted construction spending would work out to $1,279.6 billion annually if extrapolated over an entire year, which was 1.3 percent (±0.8 percent) above the revised annualized estimate of $1,263.1 billion for construction spending in December, but only 0.3 percent (±1.2 percent)* above the estimated annualized level of construction spending of January last year…the December spending estimate, published last week, was revised from $1,292.7 billion to $1,263.1 billion, while November’s annualized construction spending was revised from $1,300.6 billion to $1,273,143 million…since these figures are annualized, the combined downward revisions of $57.1 billion to November and December construction spending figures would be averaged over the 3 months of the 4th quarter and therefore lower the quarter’s annualized construction spending by around $19 billion, and would thus imply an downward revision of about 0.42 percentage points to fourth quarter GDP when the second estimate is released at the end of March, assuming there are no major changes to the previously applied inflation adjustments…

A further breakdown of the different subsets of construction spending are provided by a Census summary, which precedes the detailed spreadsheets:

  • Private Construction: Spending on private construction was at a seasonally adjusted annual rate of $966.0 billion, 0.2 percent (±0.7 percent)* above the revised December estimate of $964.2 billion. Residential construction was at a seasonally adjusted annual rate of $511.4 billion in January, 0.3 percent (±1.3 percent)* below the revised December estimate of $512.9 billion. Nonresidential construction was at a seasonally adjusted annual rate of $454.7 billion in January, 0.8 percent (±0.7 percent) above the revised December estimate of $451.2 billion.
  • Public Construction: In January, the estimated seasonally adjusted annual rate of public construction spending was $313.6 billion, 4.9 percent (±1.6 percent) above the revised December estimate of $299.0 billion. Educational construction was at a seasonally adjusted annual rate of $77.8 billion, 2.2 percent (±2.0 percent) above the revised December estimate of $76.1 billion. Highway construction was at a seasonally adjusted annual rate of $99.9 billion, 11.8 percent (±5.1 percent) above the revised December estimate of $89.3 billion.

As you can tell from that summary, construction spending would input into 3 subcomponents of GDP; investment in private non-residential structures, investment in residential structures, and into government investment outlays, for both state and local and Federal governments…however, getting an accurate read on the impact of January’s construction spending reported in this release on 1st quarter GDP is difficult because all figures given here are in nominal dollars and as you know, data used to compute the change in GDP must be adjusted for changes in price…there are multiple prices indexes for different types of construction listed in the National Income and Product Accounts Handbook, Chapter 6 (pdf), so in lieu of trying to adjust for all of those types of construction separately, we’ve opted to just use the producer price index for final demand construction as an inexact shortcut to make the needed price adjustment and come up with an estimate… that index showed that aggregate construction costs were up 0.6% in January, after they had increased by 0.1% in December and by 0.1% in November…

On that basis, we can thus estimate that January construction costs were roughly 0.7% more than those of November, and about 0.8% more than October, and of course, 0.6% more than December…we’ll then use those percentages to inflate the lower priced spending figures for each of the 4th quarter months and compare them to January, which is arithmetically the same as deflating January construction spending, for purposes of comparison.…this report gives annualized construction spending in millions of dollars for the 4th quarter months as $1,263,141 in December, $1,273,143 in November, and $1,290,551 in October…thus to compare January’s nominal construction spending of $1,279,636 million to inflation adjusted figures of the fourth quarter, our formula becomes:  (1,279,636 / ((( 1,263,141 * 1.006) +  (1,273,143 * 1.007) + (1,290,551 *1.008)) / 3) = 0.9961745, indicating that adjusted for inflation, construction spending in January was down 0.3826% vis a vis that of the 4th quarter, or down at a 1.52% annual rate…then, to figure the potential effect of that change on GDP, we take the difference between the 4th quarter inflation adjusted average and January’s inflation adjusted spending as a fraction of inflation adjusted 4th quarter GDP, and find that January construction spending is falling at a rate that would subtract about 0.11 percentage points from 1st quarter GDP, if in the unlikely event that there is no further change in real construction over the next two months..

    Industrial Production Rose 0.1% in February on a 3.7% Jump in Utility Output

    The Fed’s February G17 release on Industrial production and Capacity Utilization reported that industrial production increased by 0.1% in February after falling by a revised 0.4% in January, which still left industrial output 3.5% higher than a year ago…the industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, was at 109.7 in February, after the January index was revised up from the 109.4 reported last month to 109.5, the December index was revised down from 110.1 to 109.9, the November index was revised down from 110.0 to 109.8, the October index was revised down from 109.3 to 109.2, and September index was revised up from 109.0 to 109.1..

    The manufacturing index, which accounts for more than 77% of the total IP index, fell to 104.8 in February, from a January index that remained at 105.2 after the December manufacturing index was revised down from 106.1 to 105.7, November manufacturing index was revised down from 105.3 to 105.1, and the October manufacturing index was revised down from 105.0 to 104.9…after those revisions, the manufacturing index is now just 1.0% above its year ago level….meanwhile, the mining index, which includes oil and gas well drilling, rose 0.3%, from 131.4 in January to 131.8 in February, after the January index was revised up from 131.3, which left the mining index 12.5% higher than it was a year earlier…finally, the utility index, which often fluctuates due to above or below normal temperatures, rose by 3.7% in February, from 103.5 to 107.3, after the January utility index was revised from 102.8 to 103.5, now down 0.9% from December…with this February’s temperatures below the levels seen across much of the US last February, the utility index is now 9.0% higher 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 fell to 78.2% in February from 78.3% in January, which was revised up from the 78.2% reported last month …capacity utilization of NAICS durable goods production facilities fell from a revised 76.3% in January to 76.1% in February, while capacity utilization for non-durables producers fell from a downwardly revised 76.9% to 76.2%…capacity utilization for the mining sector fell to 94.6% in February from 94.9% in January, which was originally reported as 94.8%, while utilities were operating at 78.6% of capacity during February, up from their 75.9% of capacity during January, which was previously reported at 75.4%…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..

    January Durable Goods: New Orders Up 0.4%, Shipments Down 0.5%, Inventories Up 0.4%

    The Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders for January (pdf) from the Census Bureau reported that the value of the widely watched new orders for manufactured durable goods rose by $0.9 billion or 0.4 percent to $255.3 billion in January, which was also 7.8% higher than those of January 2018… at the same time, December’s new orders were revised but unchanged from the $254.4 billion reported last month, but are now indicated to be 1.3% greater than November’s new orders, revised from the 1.2% previously reported, because November orders were revised from $251.5 billion to $251.2 billion….the volatile monthly new orders for transportation equipment were responsible for the January increase, as new transportation equipment orders rose $1.0 billion or 1.2 percent to $90.9 billion, on a 15.9% increase to $15,690 million in new orders for commercial aircraft….excluding orders for transportation equipment, new orders fell 0.1%, while excluding just new orders for defense equipment, new orders rose 0.7%….at the same time, new orders for nondefense capital goods less aircraft, a proxy for equipment investment, rose $529 million or 0.8% to $68,804 million…

    Meanwhile, the seasonally adjusted value of January shipments of durable goods, which will included as inputs into various components of 1st quarter GDP after adjusting for changes in prices, decreased in value by $1.3 billion or 0.5 percent to $257.9 billion, after the value of December shipments was revised from from $259.7 billion to $259.15 billion, now up 0.7% from November…a drop in the value of shipments of transportation equipment caused the January decrease, as they fell $1.3 billion or 1.4 percent to $90.0 billion…at the same time, the value of seasonally adjusted inventories of durable goods, also a major GDP contributor, rose by $1.7 billion or 0.4 percent to $417.0 billion, after December inventories were revised from $414.7 billion to $415.3 billion, now up 0.3% from November….once again, it was inventories of transportation equipment that led the increase, as they rose $1.2 billion or 0.9 percent to $132.6 billion….

    Finally, unfilled orders for manufactured durable goods, which are probably a better measure of industry conditions than the widely watched but quite volatile monthly new orders, rose for the first time in 4 months, increasing by $1.4 billion or 0.1 percent to $1,181.9 billion, following a December decrease of 0.1% to $1,180,485 million, which was previously reported as $1,180.1 billion…a $0.9 billion or 0.1 percent to $811.6 billion in unfilled orders for transportation equipment led the increase, but unfilled orders excluding transportation equipment orders were also up 0.1% to $369,778 million…the unfilled order book for durable goods is now 4.1% above the level of last January, with unfilled orders for transportation equipment now 4.0% above their year ago level, led by a 14.3% increase in the backlog of orders for defense aircraft…

    December Business Sales Down 1.0%, Business Inventories Up 0.6%

    After the release of the January retail sales report, the Census Bureau released the composite Manufacturing and Trade, Inventories and Sales report for December (pdf), which incorporates the revised December retail data from that January report and the earlier published December 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 $1,445.0 billion in December, down 1.0 percent (±0.2 percent) from November’s revised sales, but up 2.1 percent (±0.3 percent) from December sales of a year earlier…note that total November sales were concurrently revised down from the originally reported $1,462.5 billion to $1,458.95 billion, now down 0.6% from October….manufacturer’s sales fell 0.2% to $504,894 million in December; retail trade sales, which exclude restaurant & bar sales from the revised December retail sales reported earlier, fell 1.8% to $442,972 million, and wholesale sales fell 1.0% to $497,162 million…

    Meanwhile, total manufacturer’s and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $1,994.5 billion at the end of December, up 0.6 percent (±0.1%) from November, and 4.8 percent (±0.4 percent) higher than in December a year earlier…at the same time, the value of end of November inventories was revised from the $1,980.5 billion reported last month to $1,981.9 billion, now statistically unchanged from October….seasonally adjusted inventories of manufacturers were estimated to be valued at $681,549 million in December, statistically unchanged from November, while inventories of retailers were valued at $651,103 million, 0.9% more than in November, and inventories of wholesalers were estimated to be valued at $661,843 million at the end of December, 1.1% higher than in November…

    December’s factory inventories and wholesale inventories were published in the days preceding the initial 4th quarter GDP report, so that data would have been accounted for in that GDP estimate…the December retail inventory data used in the GDP report came from estimates in the Advance Economic Indicators report published by the Census in advance of the GDP, which showed December retail trade inventories at $651,097 million…this report revises that and shows December inventories at $651,103, a statistically insignificant change that should not impact 4th quarter GDP…

    January New Home Sales Reported Lower Than in December and in January a Year Ago

    The Census report on New Residential Sales for January (pdf) estimated that new single family homes were selling at a seasonally adjusted pace of 607,000 homes annually in January, which was s 6.9 percent (±16.3 percent)* below the revised December annual sales rate of 652,000, and 4.1 percent (±14.0 percent)* below the estimated 633,000 annual rate that new single family homes were selling at in January of last year….the asterisks indicate that based on their small sampling, Census could not be certain whether January new home sales rose or fell from those of December, or even from January sales of a year ago, with the figures in parenthesis representing the 90% confidence range for reported data in this report, which has the largest margin of error and is subject to the largest revisions of any census construction series….with this report; sales of new single family homes in December were revised from the annual rate of 621,000 reported last week to an annual rate of 652,000, and new home sales in November, initially reported at an annual rate of 657,000 and revised to a 599,000 rate last week, were revised back up to a 628,000 a year rate with this report, while October’s annualized new home sales rate, initially reported at an annual rate of 544,000 and revised from a 562,000 to a 549,000 a year rate last week, were again revised to a 552,000 rate with this release..

    The annual rates of sales reported here are seasonally adjusted after extrapolation from the estimates of canvassing Census field reps, which indicated that approximately 45,000 new single family homes sold in January, down from the estimated 47,000 new homes that sold in December and the 46,000 that sold in November….the raw numbers from Census field agents further estimated that the median sales price of new houses sold in January was $317,200, down from the median sale price of $319,100 in December and down from the median sales price of $329,600 in January a year ago, while the average January new home sales price was $373,100, down from the $374,000 average sales price in December, and down from the average sales price of $377,800 in January a year ago….a seasonally adjusted estimate of 336,000 new single family houses remained for sale at the end of January, which represents a 6.6 month supply at the January sales rate, up from the revised 6.3 months of new home supply now indicated for December and for November…for graphs and additional commentary on this report, see the following two posts by Bill McBride at Calculated Risk: New Home Sales decreased to 607,000 Annual Rate in January and A few Comments on January New Home Sales

    Job Openings at a Record High In January, Hiring, and Quitting Up, Layoffs Down

    The Job Openings and Labor Turnover Survey (JOLTS) report for January from the Bureau of Labor Statistics estimated that seasonally adjusted job openings increased by 102,000, from 7,479,000 in December to a record high of 7,581,000 in January, after December job openings were revised 144,000 higher, from 7,335,000 to 7,479,000, as part of an annual revision of all 2018 job openings and labor turnover data…January’s jobs openings were also 15.0% higher than the revised 6,591,000 job openings now reported for January of a year ago, as the job opening ratio expressed as a percentage of the employed increased to 4.8% from the 4.7% logged in December, which was also up from the 4.3% rate of January a year ago…(details on job openings by industry and by region can be viewed in Table 1)…like most BLS releases, the press release for this 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 January, seasonally adjusted new hires totaled 5,801,000, up by 84,000 from the revised 5,717,000 who were hired or rehired in December, as the hiring rate as a percentage of all employment rose from 3.8% in December to 3.9% in January, and was also up from the 3.7% hiring rate in January a year earlier (details of hiring by sector since September are in table 2)….meanwhile, total separations rose by 81,000, from 5,469,000 in December to 5,550,000 in January, as the separations rate as a percentage of the employed rose from 3.6% to 3.7%, which was also up from 3.6% in January a year ago (see table 3)…subtracting the 5,550,000 total separations from the total hires of 5,801,000 would imply an increase of 251,000 jobs in January, somewhat less than the revised payroll job increase of 311,000 for January reported in the February 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 3,490,000 of us voluntarily quit our jobs in January, up by 99,000 from the revised 3,391,000 who quit their jobs in December, while the quits rate, widely watched as an indicator of worker confidence, was unchanged at 2.3% of total employment, while it was up from the 2.0% 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 January, down by 28,000 from the revised 1,751,000 who were discharged in December, as the discharges rate fell from 1.2% to 1.1% of all those who were employed during the month, which was also down from the discharges rate of 1.3% a year earlier….meanwhile, other separations, which includes retirements and deaths, were at 336,000 in January, up from 327,000 in December, for an ‘other separations rate’ of 0.2%, the same as as in December and in January 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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