March consumer and producer prices, February’s factory inventories and JOLTS

Regular monthly reports released this week included all three major price indexes used by the BEA to adjust goods and services for inflation: March Consumer Price Index, the March Producer Price Index, and the March Import-Export Price Index, all of which were prepared by the Bureau of Labor Statistics…in addition, the BLS also released the Job Openings and Labor Turnover Survey (JOLTS) for February, while the Census Bureau released the Full Report on Manufacturers’ Shipments, Inventories and Orders for February

March Consumer Prices Up 0.4% on Higher Food, Shelter and Energy Prices

The consumer price index rose 0.4% in March on higher prices for groceries, 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 0.4% in March after it had risen 0.2% in February, been unchanged in January, in December and in November, and 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 252.776 in February to 254.202 in March, which left it statistically 1.863% higher than the 249.554 index reading in March of last year, which is reported as a 1.9% year over year increase….with higher prices for food and gasoline major reasons the increase in the overall index, seasonally adjusted core prices, which exclude food and energy, rose by just 0.1% for the month, as the unadjusted core price index rose from 261.114 to 261.836, which left the core index 2.036% ahead of its year ago reading of 256.610, which is reported as a 2.0% year over year increase, down from 2.1% in February…

The volatile seasonally adjusted energy price index rose 3.5% in March, after rising 0.4% in February, 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 is still 0.4% lower than in March a year ago…the price index for energy commodities was 6.2% higher in March, while the index for energy services rose 0.3%, after falling by 0.8% in February…the energy commodity index was up 6.2% due to a 6.4% increase in price of gasoline, the largest component, and a 2.1% increase in the index for fuel oils, while prices for other energy commodities, such as propane, kerosene, and firewood, averaged 1.6% higher…within energy services, the price index for utility gas service fell 0.1% after falling 2.4% in February and is now 1.4% lower than it was a year ago, while the electricity price index was 0.4% higher, after it had fallen 0.3% in February….energy commodities are still 0.6% lower than their year ago levels, with gasoline prices averaging 0.7% lower than they were a year ago, while the energy services price index is 0.1% lower than last March, as electricity prices are now 0.3% higher than a year ago…

The seasonally adjusted food price index was 0.3% higher in March, after rising 0.4% in February, 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 0.2% higher, as prices at fast food outlets rose 0.2% and prices at full service restaurants rose 0.1%, while food prices at employee sites and schools were on average unchanged…

In the food at home categories, the price index for cereals and bakery products was 0.3% higher even though average bread prices fell 0.1%, because breakfast cereal prices rose 1.7% and the price index for rice, pasta and cornmeal rose 2.2%….on the other hand, the price index for the meats, poultry, fish, and eggs group was 0.2% lower, even as ham prices rose 4.4%, because the poultry index fell 0.9% and shelf stable fish & seafood prices averaged 1.7% lower…meanwhile, the seasonally adjusted index for dairy products was 0.6% higher, as fresh whole milk prices rose 1.5%, while the fruits and vegetables index was 1.6% higher on a 1.6% increase in the index for fresh fruits, led by a 3.1% increase in prices for oranges, and a 2.0% 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 unchanged, as the index for frozen noncarbonated juices and drinks rose 1.6% while roast coffee prices were 0.3% lower…lastly, the index for the ‘other foods at home’ category was 0.2% higher, as the index for sugar and artificial sweeteners rose 1.3% and margarine prices rose 1.8%….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 March, just lettuce, which is now priced 18.9% 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 March after rising by 0.1% in February, and by 0.2% for the five months prior to that, after rising by 0.1% in August 0.2% in July, 0.2% in June, 0.2% in May, 0.1% in April, and by 0.2% last March, 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 0.3% higher….among the goods components, which will be used by the Bureau of Economic Analysis to adjust March retail sales for inflation in national accounts data, the index for household furnishings and supplies was unchanged, as the price index for floor coverings rose 1.8% while the price index for major appliances was 2.1% lower…on the other hand, the apparel price index was 1.9% lower on a 4.8% decrease in the price index for boy’s apparel and a 4.6% decrease in the price index for girls apparel…meanwhile, the price index for transportation commodities other than fuel was 0.1% higher, as prices for new cars and trucks rose 0.5%, prices for used cars and trucks fell 0.4%, and the price index for motor oil, coolant, and fluids was 5.2% higher…in addition, prices for medical care commodities were 0.4% higher as prescription drugs prices rose 0.6% even as the price index for medical equipment and supplies fell 1.5%….meanwhile, the recreational commodities index was unchanged as a 4.2% decrease in TV prices and a 1.2% decrease in the index for toys was offset by a 1.6% increase in the index for sports vehicles including bicycles and a 2.5% increase in the price index for sewing machines, fabric and supplies….at the same time, the education and communication commodities index was 0.1% lower on a 0.9% decrease in the index for computer software and accessories and a 1.8% decrease in the index for telephone hardware, calculators, and other consumer information items…lastly, a separate price index for alcoholic beverages was 0.1% lower, while the price index for ‘other goods’ rose 0.5% on a 1.8% increase in the price index for cigarettes…

Within core services, the price index for shelter rose 0.4% on a 0.4% increase in rents, a 0.3% increase in homeowner’s equivalent rent, and a 0.9% increase in lodging away from home at hotels and motels, while the shelter sub-index for water, sewers and trash collection rose 0.3%, and other household operation costs were on average 0.2% lower….at the same time, the price index for medical care services was 0.3% higher, as inpatient hospital services rose 0.5% and health insurance rose 1.3%…meanwhile, the transportation services index was unchanged as car and truck rentals fell 1.9% while vehicle maintenance and servicing rose 0.9% and intercity bus fares rose 9.0%…on the other hand, the recreation services price index was 0.4% higher as the index for rental of video discs and other media rose 2.4% and admissions to sporting events rose 5.2%….in addition, the index for education and communication services was 0.1% higher as college tuitions rose 0.8%….lastly, the index for other personal services was down 0.3% as the price index for tax return preparation and other accounting fees fell 7.8%…among core line items, prices for televisions, which are now 19.3% cheaper than a year ago, the price index for telephone hardware, calculators, and other consumer information items, which is down by 14.9% since last March, and the price index for dishes and flatware, which is down by 10.7% from a year ago, have all seen prices drop by more than 10% over the past year, while the price index for sewing machines, fabric and supplies, which has now increased 10.3% year over year, is the only line item to increase by a double digit magnitude over that span….

Producer Prices up 0.6% in March on Higher Energy Prices

The seasonally adjusted Producer Price Index (PPI) for final demand rose 0.6% in March, as prices for finished wholesale goods averaged 1.0% higher, while average margins of final services providers rose 0.3%…that followed that followed a February report that showed the PPI had increased by 0.1%, with prices for finished wholesale goods on average 0.4% higher, while margins of final services providers were unchanged, 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%, revised December figures that had the PPI down 0.2%, with prices for finished wholesale goods down 0.5% while margins of final services providers were unchanged, and revised November figures that indicated the PPI was 0.1% lower, with prices for finished wholesale goods falling 0.5% while margins of final services providers increased 0.1%…on an unadjusted basis, producer prices are 2.2% higher than a year ago, up from the 1.9% 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 just 2.0% higher than in March a year ago, down from 2.3% a month ago…

As we noted, the price index for final demand for goods, aka ‘finished goods’, was 1.0% higher in March, after being 0.4% higher in February, 0.8% lower in January, 0.5% lower in December, 0.5% 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 5.6% higher, after rising 1.8% in February falling 3.8% in January 4.3% in December and 5.2% in November, and as the price index for wholesale foods rose 0.3% after falling 0.3% in February, while the index for final demand for core wholesale goods (excluding food and energy) was 0.2% higher….wholesale energy prices rose on a 16.0% jump in the wholesale price for gasoline and a 12.6% increase in the wholesale price of diesel fuel, while the wholesale food price index rose on a 17.6% increase in wholesale prices for fresh and dry vegetables….among wholesale core goods, wholesale prices for cigarettes rose 3.4%, railroad equipment prices rose 2.4% and wholesale prices for tires rose 1.1%..

At the same time, the index for final demand for services rose 0.3%, after being unchanged in February, rising 0.3% in January, being unchanged in December, rising 0.1% in November, 0.8% in October, and 0.2% in September, as the February index for final demand for trade services rose 1.1% while the index for final demand for transportation and warehousing services fell 0.8%, and the core index for final demand for services less trade, transportation, and warehousing services was unchanged….among trade services, seasonally adjusted margins for apparel, jewelry, footwear and accessories retailers rose 4.2%, margins for major household appliances retailers rose 6.8%, and margins for computer hardware, software, and supplies retailers rose 3.0%, while margins for fuels and lubricants retailers fell 5.9%… among transportation and warehousing services, margins for airline passenger services fell 1.5% and margins for truck transportation of freight fell 0.8%…among the components of the core final demand for services index, margins for deposit services (partial) rose 6.3% and margins for arrangement of cruises and tours rose 5.9%..

This report also showed the price index for intermediate processed goods rose 0.8% in March, after rising 0.4% in February, falling 1.4% in January, falling  a revised 1.1% in December and a revised 0.6% in November, after rising 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 16.0% and refinery prices for diesel fuel rose 12.6%, while producer prices for natural gas sold to electric utilities fell 4.7%…on the other hand, prices for intermediate processed foods and feeds fell 0.3%, as the price index for wholesale meats fell 2.0% and producer prices for prepared animal feeds fell 0.9%…meanwhile, the core price index for intermediate processed goods less food and energy was unchanged as a 2.5% decrease in the index for plastic resins and materials offset a 2.7% increase in the price index for building paper and board …prices for intermediate processed goods are still 0.8% higher than in March a year ago, now the 28th consecutive year over year increase, after 16 months of negative year over year comparisons, as intermediate goods prices fell every month from July 2015 through March 2016….

Meanwhile, the price index for intermediate unprocessed goods rose 2.3% in March after falling 4.6% in February, 9.3% in January, rising a revised 8.9% in December, and falling a revised 3.3% in November….that was as the March price index for crude energy goods rose 7.3% on a 15.3% jump in crude oil prices, while the price index for unprocessed foodstuffs and feedstuffs fell 2.3% as producer prices for alfalfa hay fell 9.3%, producer prices for slaughter chickens fell 8.7% and producer prices for wheat fell 8.4%…at the same time, the index for core raw materials other than food and energy materials rose 1.2%, as prices for scrap iron and steel rose 5.9% and prices for nonferrous metal ores rose 3.8%…this raw materials index is still 3.5% 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 rose 0.4% in March, after falling 0.1% in February, rising 0.2% in January, rising a revised 0.1% in December and a revised 0.1% in November, and after rising 0.6% in October and by 0.3% in September…the price index for intermediate trade services was 0.8% higher, as margins for intermediate automotive parts and tires retailers rose 4.6% and margins for intermediate machinery and equipment parts and supplies wholesalers rose 1.1%…on the other hand, the index for transportation and warehousing services for intermediate demand fell 0.2%, as the intermediate index for long-distance motor carrying fell 1.2% and the index for transportation of passengers (partial) fell 1.5%…meanwhile, the core price index for intermediate services less trade, transportation, and warehousing rose 0.3%, as margins for intermediate television advertising time sales rose 1.8% as did the index for staffing services, while the index for executive search services fell 2.4%…..over the 12 months ended in March, 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…

Job Openings and Hiring Fall in February; Layoffs Rise

The Job Openings and Labor Turnover Survey (JOLTS) report for February from the Bureau of Labor Statistics estimated that seasonally adjusted job openings decreased by 538,000, the largest drop in 42 months, from a record high of 7,625,000 in January to 7,087,000 in February, after January job openings were revised up from the originally reported 7,581,000 …however, February’s jobs openings were still 8.5% higher than the 6,530,000 job openings reported in February a year ago, as the job opening ratio expressed as a percentage of the employed fell from 4.8% in January to 4.5% in February, which was still up from the 4.2% rate of February a year ago…job openings in all services were lower, led by a 103,000 job opening decrease in bars and restaurants, while there were modest increases in job openings in construction and manufacturing (details on job openings by industry and 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 February, seasonally adjusted new hires totaled 5,696,000, down by 134,000 from the revised 5,829,000 who were hired or rehired in January, as the hiring rate as a percentage of all employed fell from 3.9% in January to 3.8% in February, which was the same as the hiring rate in February a year earlier (details of hiring by sector since October are in table 2)….meanwhile, total separations rose by 24,000, from 5,532,000 in January to 5,556,000 in February, as the separations rate as a percentage of the employed was unchanged at 3,7%, while it was up from 3.6% in February a year ago (see details in table 3)…subtracting the 5,556,000 total separations from the total hires of 5,696,000 would imply an increase of 140,000 jobs in February, quite a bit more than the revised payroll job increase of 33,000 for February reported in the March 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 founds that 3,480,000 of us voluntarily quit our jobs in February, little changed from the revised 3,483,000 who quit their jobs in January, while the quits rate, widely watched as an indicator of worker confidence, remained at 2.3% of total employment, which was up from 2.1% year earlier (see details in table 4)….in addition to those who quit, another 1,742,000 were either laid off, fired or otherwise discharged in February, up by 47,000 from the revised 1,695,000 who were discharged in January, as the discharges rate rose from 1.1% to 1.2% of all those who were employed during the month, while it was unchanged from the discharges rate of a year earlier….meanwhile, other separations, which includes retirements and deaths, were at 334,000 in February, down from 355,000 in January, for an ‘other separations rate’ of 0.2%, the same as in January and as in February 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…  

February Factory Shipments Up 0.4%, Factory Inventories 0.3% Higher

The Full Report on Manufacturers’ Shipments, Inventories, & Orders (pdf) for February from the Census Bureau reported that the seasonally adjusted value of new orders for manufactured goods increased by $2.6 billion or 0.5 percent to $497.5 billion in February, following a statistically insignificant decrease of less than $0.1 billion to $500.1 billion in January, which was revised from an increase of $0.3 billion or less than 0.1% to $500.5 billion that was reported for January last month….however, since the Census Bureau does not even collect data on new orders for non durable goods for this widely watched “factory orders report”, both the “new orders” and “unfilled orders” sections of this report are really only useful as revised updates to the February advance report on durable goods which was released last week…on those durable goods orders revisions, the Census Bureau’s own summary, which precedes their detailed spreadsheet of the metrics included in this report, is quite clear and complete, so we’ll just quote directly from that summary here:

  • Summary: New orders for manufactured goods in February, down four of the last five months, decreased $2.6 billion or 0.5 percent to $497.5 billion, the U.S. Census Bureau reported today.  This followed a virtually unchanged January decrease.  Shipments, up following four consecutive monthly decreases, increased $2.0 billion or 0.4 percent to $505.5 billion.  This followed a 0.3 percent January decrease.  Unfilled orders, down four of the last five months, decreased $3.6 billion or 0.3 percent to $1,177.6 billion.  This followed a 0.1 percent January increase.  The unfilled orders‐to‐shipments ratio was 6.54, down from 6.57 in January.   Inventories, up twenty‐seven of the last twenty‐eight months, increased $2.0 billion or 0.3 percent to $687.8 billion.  This followed a 0.5 percent January increase.  The inventories‐to‐shipments ratio was 1.36, unchanged from January.
  • New Orders – New orders for manufactured durable goods in February, down following three consecutive monthly increases, decreased $4.2 billion or 1.6 percent to $250.5 billion, unchanged from the previously published decrease.  This followed a 0.1 percent January increase.  Transportation equipment, also down following  three consecutive monthly increases, led the decrease, $4.1 billion or 4.5 percent to $86.2 billion.  New orders for manufactured nondurable goods increased $1.5 billion or 0.6 percent to $247.0 billion.
  • Shipments – Shipments of manufactured durable goods in February, up three of the last four months, increased $0.5 billion or 0.2 percent to $258.5 billion, unchanged from the previously published increase.  This followed a 0.5 percent January decrease.  Computers and electronic products, up four of the last five months, led the increase, $0.3 billion or 1.0 percent to $28.0 billion.  Shipments of manufactured nondurable goods, up following three consecutive monthly decreases, increased $1.5 billion or 0.6 percent to $247.0 billion.  This followed a 0.1 percent January decrease.  Petroleum and coal products, also up following three consecutive monthly decreases, led the increase, $1.4 billion or 2.8 percent to $51.9 billion.
  • Unfilled Orders – Unfilled orders for manufactured durable goods in February, down four of the last five months, decreased $3.6 billion or 0.3 percent to $1,177.6 billion, unchanged from the previously published decrease.  This followed a 0.1 percent January increase.  Transportation equipment, also down four of the last five months, led the decrease, $3.6 billion or 0.4 percent to $807.3 billion.
  • Inventories – Inventories of manufactured durable goods in February, up twenty‐five of the last twenty‐six months, increased $1.3 billion or 0.3 percent to $418.9 billion, unchanged from the previously published increase.   This followed a 0.5 percent January increase.  Transportation equipment, up five of the last six months, drove the increase, $1.3 billion or 1.0 percent to $134.1 billion.  Inventories of manufactured nondurable goods, up two consecutive months, increased $0.7 billion or 0.3 percent to $268.9 billion.  This followed a 0.6 percent January increase.  Petroleum and coal products, also up two consecutive months, drove the increase, $0.9 billion or 2.3 percent to $40.2 billion.

To gauge the effect of February’s dollar valued factory inventories on 1st quarter GDP, they must first be adjusted for changes in price with appropriate components of the producer price index….by stage of fabrication, the value of finished goods inventories increased 0.1% to $238,621 million; the value of work in process inventories was up 0.9% at $210,397 million, and the value of materials and supplies inventories was virtually unchanged at $238,767 million…at the same time, the producer price index for February indicated that prices for finished goods increased 0.4%, that prices for intermediate processed goods were also 0.4% higher, but that prices for unprocessed goods were on average 4.6% lower, with even core raw materials priced 0.7% lower than January’s….assuming similar valuations for like inventories, that would suggest that February’s real finished goods inventories were around 0.3% less than January’s, that real inventories of intermediate processed goods were 0.5% greater, and that real raw material inventory inventories were at least 0.7% greater….since real factory inventories in the 4th quarter were only a bit higher, any real factory inventory increases over the 1st quarter would add to the growth of 1st quarter GDP…

 

(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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