September’s consumer price and producer price indexes; August’s wholesale inventories and JOLTS

Major reports released this past week included the September Consumer Price Index, the September Producer Price Index, and the September Import-Export Price Index from the Bureau of Labor Statistics, which together give us most of the metrics needed to adjust other September data for inflation in order to determine the real level of economic activity for the month….in addition to those reports, the BLS released the Job Openings and Labor Turnover Survey (JOLTS) for August, the Census Bureau released the August report on Wholesale Trade, Sales and Inventories, and the Fed released the Consumer Credit Report for August…that Fed report indicated that overall consumer credit, a measure of non-real estate debt, expanded by a seasonally adjusted $17.9 billion in August, or at a 5.2% annual rate, as non-revolving credit expanded at a 7.8% rate to $3,061.9 billion while revolving credit outstanding contracted at a 2.2% rate to $1,078.6 billion, the largest drop since March…

Consumer Prices Unchanged in September as Lower Energy Prices Offset Higher Rents

The consumer price index was was unchanged in September, as higher prices for shelter and other services were offset by lower prices for energy, clothing, & used cars and trucks …the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that seasonally adjusted prices rose by 0.1% in August after rising 0.1% in August, 0.3% in July, 0.1% in June, 0.1% in May, 0.3% in April, 0.4% in March, 0.2% in February, and after they had been unchanged in January, in December and in November, and had risen 0.3% in October, and 0.1% last September…the unadjusted CPI-U index, which was set with prices of the 1982 to 1984 period equal to 100, rose from 256.558 in August to 256.759 in September, which left it statistically 1.7113% higher than the 252.439 index reading of September of last year, which is reported as a 1.7% year over year increase….with prices for most forms of energy being somewhat lower, seasonally adjusted core prices, which exclude food and energy, rose by 0.1% for the month, as the unadjusted core price index rose from 264.169 to 264.522, which left the core index 2.3577% ahead of its year ago reading of 258.429, which is reported as a 2.4% year over year increase, same as the year over year increase reported for August…

The volatile seasonally adjusted energy price index fell 1.4% in September, after falling 1.9% in August.rising 1.3% in July, falling 2.3% in June, falling 0.6% in May, rising 2.9% in April, rising 3.5% in March, rising 0.4% in February, falling 3.1% in January, falling 2.6% in December, falling 2.8% in November, rising by 2.1% in October, and falling by 1.0% last September, and hence is now 4.8% lower than in September a year ago…the price index for energy commodities was 2.3% lower in September, while the index for energy services was 0.1% lower, after falling 0.2% in August….the energy commodity index was down 2.3% due to a 2.4% decrease in the price of gasoline, the largest component, and a 0.8% decrease in the index for fuel oil, while prices for other energy commodities, including propane, kerosene, and firewood, were on average 1.9% lower…within energy services, the price index for utility gas service fell 0.7% after rising 0.1% in August and is now 2.7% lower than it was a year ago, while the electricity price index was unchanged after falling 0.3% in August….energy commodities are now averaging 8.2% lower than their year ago levels, with gasoline prices also averaging 8.2% lower than they were a year ago, while the energy services price index is 0.1% lower than last September, as electricity prices are still 0.7% higher than a year ago…

The seasonally adjusted food price index rose 0.1% September, after being unchanged in June, July & August, rising 0.3% in May, falling 0.1% in April, but after rising 0.3% in March, 0.4% in February, 0.2% in January, 0.3% in December, 0.2% in November, being unchanged in October, and rising 0.1% last September, as the price index for food purchased for use at home was unchanged in September, while the index for food bought to eat away from home was 0.3% higher, as prices at fast food outlets rose 0.2% and prices at full service restaurants rose 0.3% while food prices at elementary and secondary schools were on average 1.2% higher…

In the food at home categories, the price index for cereals and bakery products was 0.5% higher as average bread prices rose 1.6% and the price index for frozen and refrigerated bakery products, pies, tarts and turnovers rose 0.9%…at the same time, the price index for the meats, poultry, fish, and eggs group was 0.3% higher, as the beef and veal price index rose 0.6%, average pork prices rose 0.5%, and egg prices were 6.5% higher…in addition, the seasonally adjusted index for dairy products was 0.2% higher, as average prices for milk rose 0.1% and ice cream prices rose 1.1%…on the other hand, the fruits and vegetables index was 1.0% lower on a 1.2% decrease in the price index for fresh fruits and a 1.5% decrease in the price index for fresh vegetables, led by a 3.1% drop in the price of lettuce…meanwhile , the beverages index was 0.1% higher,, as prices for beverage materials including tea rose 0.8% and carbonated drink prices were 0.5% higher, while coffee prices fell 0.9%….lastly, the index for the ‘other foods at home’ category was 0.3% higher, as the price index for sugar and sweets rose 1.6% and the “other condiments” index, which excludes salt and other seasonings and spices, olives, pickles, & relishes, rose 4.4%….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 September, none of the food line items have seen a price change of more than 10% over the past year…

Among the seasonally adjusted core components of the CPI, which rose by 0.1% September after rising by 0.3% in August, 0.3% in July, 0.3% in June, 0.1% in May, 0.1% in April, 0.1% in March, 0.1% in February, and by 0.2% for each of  the five months prior to that, the composite price index of all goods less food and energy goods was 0.3% 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 June retail sales for inflation in national accounts data, the price index for household furnishings and supplies was up 0.3%, as the price index for living room, kitchen, and dining room furniture rose 1.4%, the index for appliances rose 1.3%, and the price index for outdoor equipment and supplies rose 0.8%….on the other hand, the apparel price index was 0.4% lower on a 4.2% drop in the price index women’s outerwear, a 2.2% decrease in the index for girls’ apparel, and a 1.9% decrease in the price index for boys & girls footwear… in addition, the price index for transportation commodities other than fuel was 0.1% lower as prices for new cars fell 0.3% and prices for used cars and trucks fell 1.6%, while the price index for motor oil, coolant, and fluids rose 1.3%… meanwhile, prices for medical care commodities averaged 0.6% lower as nonprescription drugs prices fell 0.8%….at the same time, the recreational commodities index was 0.2% higher despite a 0.7% decrease in TV prices because the price index for sporting goods rose 1.7% and the price index for photographic equipment rose 1.6%….however, the education and communication commodities index was 1.2% lower on a 2.3% decrease in prices for college textbooks and a 1.8% decrease in the price index for telephone hardware, calculators, and other consumer information items…lastly, a separate price index for alcoholic beverages was 0.3% lower, while the price index for ‘other goods’ was unchanged as a 0.6% increase in the index for tobacco products was offset by a 1.1% decrease in the price index for miscellaneous personal goods…

Within core services, the price index for shelter rose 0.3% on a 0.4% increase in rents, a 0.3% increase in homeowner’s equivalent rent and a 2.1% increase in prices for lodging away from home at hotels and motels, while the shelter sub-index for water, sewers and trash collection rose 0.2%, and household operation costs were on average 0.2% lower….at the same time, the price index for medical care services was 0.4% higher, as nursing homes and adult day services rose 0.6% and health insurance rose 1.4%…in addition, the transportation services price index was 0.3% higher as the price index for parking fees and tolls rose 0.8%, airline fares rose 0.8%, and intercity bus fares rose 1.2%….on the other hand, the recreation services price index was unchanged as cable and satellite television service rose 0.5% and video rentals rose 0.8% while admission to sporting events fell 1.6%….meanwhile, the index for education and communication services was 0.1% higher as the index for technical and business school tuition and fees rose 0.9% and land-line telephone services rose 1.2%….lastly, the index for other personal services was up 0.1% as the price index for laundry and dry cleaning services was 0.5% higher…

Among core line items, prices for televisions, which now average 19.4% cheaper than a year ago, the price index for telephone hardware, calculators, and other consumer information items, which is down by 13.9% since last September, and the price index for women’s dresses, which is down 12.8% year over year, have all seen prices drop by more than 10% over the past year, while the cost of health insurance, which is now up by 18.8% over the past year, the price index for infants’ furniture, which has increased 12.7% year over year, and intercity bus-fare, which has increased by 20.6% since last September, are the only line items to have increased by a double digit magnitude over that span….

Producer Price Index Fell 0.3% in September On Lower Priced Energy, Trade & Transportation Services

The seasonally adjusted Producer Price Index (PPI) for final demand fell 0.3% in September, as prices for finished wholesale goods fell by 0.4% and margins of final services providers decreased by 0.2%…that followed an August report that showed the PPI rose 0.1%, even prices for finished wholesale goods fell by 0.5%, because the more heavily weighted margins of final services providers increased by 0.3%, a July report that indicated the PPI rose 0.2%, as prices for finished wholesale goods increased 0.4%, while margins of final services providers decreased by 0.1%, a revised June report that now shows the PPI fell 0.2%, as prices for finished wholesale goods decreased 0.5%, while margins of final services providers increased by 0.2%, and a revised May report that now shows the PPI was 0.2% higher, as prices for finished wholesale goods averaged 0.2% lower while average margins of final services providers were increased 0.3%….on an unadjusted basis, producer prices are now only 1.4% higher than a year ago, down from the 1.8% year over year change 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 1.7% higher than in September a year ago, down from the 1.9% YoY increase shown in August…

As noted, the price index for final demand for goods, aka ‘finished goods’, was 0.4% lower in September, after being 0.5% lower in August, 0.4% higher in July, 0.5% lower in June, 0.2% lower in May, 0.4% higher in April, 1.0% higher in March, 0.3% higher in February, 0.6% lower in January, 0.6% lower in December, 0.5% lower in November, 0.8% higher in October, and 0.1% lower in September of 2018….the finished goods index fell in September because the wholesale price index for energy was 2.5% lower, after falling by 2.5% in August, rising by 2.3% in July, but after falling by a revised 3.9% in June and by a revised 0.4% in May, while the price index for wholesale foods rose 0.3% in September after falling 0.6% in August, rising 0.2% in July and 0.6% in June, and while the index for final demand for core wholesale goods (excluding food and energy) was 0.1% lower after being unchanged in August….wholesale energy prices were lower despite a 21.7% jump in wholesale prices for liquefied petroleum gas due to a 7.2% decrease in wholesale prices for gasoline and 1.8% lower wholesale prices for residential electric power, while the wholesale food price index rose on a 1.9% increase in the wholesale price index for meats and a 18.4% increase in the wholesale price index for fresh eggs….among wholesale core goods, wholesale prices for industrial chemicals fell 3.1% and wholesale prices for iron and steel scrap fell 11.7%, while wholesale prices for both travel trailers and campers and for women’s, girls’, and infants’ apparel rose 1.5%..

At the same time, the index for final demand for services fell 0.2% in September, after rising 0.3% in August, falling 0.1% in July, rising a revised 0.2% in June, and rising a revised 0.3% in May, as the index for final demand for trade services and the index for final demand for transportation and warehousing services both fell 1.0% in September 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 10.8%, margins for automobile retailers fell 2.7%, margins for apparel, footwear, and accessories retailers fell 4.5%, and margins for for machinery and vehicle wholesalers fell 2.7%, while margins for lawn, garden, and farm equipment and supplies retailers rose 5.6%… among transportation and warehousing services, margins for truck transportation of freight fell 0.6% and margins for airline passenger services fell 2.6%…among the components of the core final demand for services index, margins for bundled wired telecommunications access services rose 3.9%, margins for mining services rose 1.3%, and margins for hospital outpatient care rose 1.1%..

This report also showed the price index for intermediate processed goods fell 0.4% in September, after falling 0.7% in August, rising 0.2% in July, and falling a revised 1.0% in June and a revised 0.4% in May….the price index for intermediate energy goods fell 0.7%, as refinery prices for gasoline fell 7.2%, refinery prices for residual fuels fell 7.3%, and prices for commercial electric power fell 1.1%…however, prices for intermediate processed foods and feeds rose 0.7%, as the producer price index for prepared animal feeds rose 0.9% and producer prices for meats rose 1.9%… meanwhile, the core price index for intermediate processed goods less food and energy fell 0.3% as producer prices for prices for basic organic chemicals fell 3.8% and producer prices for building paper and board decreased 2.1%… prices for intermediate processed goods are now 3.4% lower than in September a year ago, the fifth consecutive year over year decrease following 29 months of year over year increases, which had been preceded by 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 1.4% in September, after falling 1.0% in August, rising 1.6% in July, falling revised 4.0% in June, and falling a revised 3.1% in May…that was as the September price index for crude energy goods fell 0.8% as crude oil prices fell 1.1% and unprocessed natural gas prices fell 1.2%, while the price index for unprocessed foodstuffs and feedstuffs fell 1.9% on a 10.3% decrease in producer prices for slaughter hogs, a 5.1% decrease in producer prices for slaughter chickens, and a 3.7% decrease in producer prices for slaughter cattle….at the same time, the index for core raw materials other than food and energy materials fell 1.6%, as prices for copper base scrap fell 1.6% and prices for unprocessed iron and steel scrap fell 11.7%…this raw materials index is now 10.1% lower than a year ago, as the year over year change on this index has been negative all year…

Lastly, the price index for services for intermediate demand rose 0.1% in September, after rising 0.5% in August, falling 0.2% in July, being unchanged in June (revised), and rising a revised 0.1% in May, rising 0.4% in April, and 0.5% in March…the price index for intermediate trade services was 1.2% higher, as as margins for intermediate paper and plastic product wholesalers rose 5.2%, margins for intermediate machinery and equipment parts and supplies wholesalers rose 1.7% and margins for intermediate building materials, paint, and hardware wholesalers rose 1.6%…at the same time the index for transportation and warehousing services for intermediate demand was unchanged, as the price index for intermediate arrangement of freight and cargo transportation rose 3.4% while the price index for transportation of passengers (partial) fell 2.5%…meanwhile, the core price index for intermediate services less trade, transportation, and warehousing fell 0.2%, as the price index for television advertising time sales fell 4.1%, nonresidential real estate rents fell 1.8% and the index for business loans (partial) fell 2.8%, while the intermediate price index for bundled wired telecommunication access services rose 3.9%….over the 12 months ended in September, the year over year price index for services for intermediate demand, which has never turned negative on an annual basis, is now 2.4% higher than it was a year ago…

August Wholesale Sales Flat, Wholesale Inventories Up 0.2%

The August report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at $499.1 billion, virtually unchanged (+/-0.4%) from the revised July level, but down 0.7 percent (±0.9 percent)* from wholesale sales of August 2018… the July preliminary estimate was revised down to $499,050 million from the $499.6 billion in wholesale sales reported last month, which meant that the June to July change was revised from the preliminary estimate of up 0.3 percent (±0.4 percent)* to up 0.2 percent (±0.4 percent)*….as an intermediate activity, wholesale sales are not included in GDP except insofar as they are a trade service, since the traded goods themselves do not represent an increase in the output of the goods produced or finally sold….

On the other hand, the monthly change in private inventories is a major factor in GDP, as additional goods on the shelf represent goods that were produced but not sold, and this August report estimated that wholesale inventories were valued at a seasonally adjusted $680.7 billion at month end, up 0.2 percent (+/-0.2%)* from the revised July level, and 6.2 percent (±0.9 percent) higher than in August a year ago…July’s inventory value was revised from $679,084 million to $679,131 million, while this report says “the June to July inventory change was revised from the preliminary estimate of up 0.4 percent (±0.2 percent) to up 0.2 percent (±0.2 percent)*”….however, the archived July report shows that the preliminary June to July inventory change was originally published as “up 0.2 percent (±0.2 percent)*” from June, so the change is statistically unchanged from what was published last month…

August wholesale inventories would be adjusted for inflation with the appropriate sub-indices of the August producer price index, which showed that aggregate prices for finished goods were down 0.5% in August, that prices for intermediate processed goods were down 0.7%, while prices for unprocessed goods were 1.0% lower….hence, the real August wholesale inventories were at least 0.5% higher than in July, which themselves were little changed from the end of the second quarter…since real wholesale inventories grew at an inflation adjusted $32.4 billion annual rate (in 2012 dollars) in the 2nd quarter, or by about 0.7%, the real inventory increase by the end of the 3rd quarter will have to top that increase in order to avoid subtracting from 3rd quarter GDP…

Job Openings, Hiring and Job Quitting Lower in August, Layoffs Unchanged

The Job Openings and Labor Turnover Survey (JOLTS) report for August from the Bureau of Labor Statistics estimated that seasonally adjusted job openings decreased by 123,000, from 7,174,000 in July to 7,051,000 openings in August, after July job openings were revised 43,000 lower, from 7,217,000 to 7,174,000…August jobs openings were also 4.0% lower than the 7,342 ,000 job openings reported in August a year ago, as the job opening ratio expressed as a percentage of the employed fell from 4.5% in July to 4.4% in August, which was also down from 4.7% a year ago…the largest percentage decrease appears to have been the 47,000 job opening decrease to 130,000 openings in the information sector, while openings in the transportation, warehousing, and utilities sector increased by 21,000 to 315,000 (see table 1 for more details)…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 August, seasonally adjusted new hires totaled 5,779,000, down by 199,000 from the revised 5,978,000 who were hired or rehired in July, as the hiring rate as a percentage of all employed fell from 3.9% to 3.8%, which was also down from 3.9% hiring rate in August a year earlier (details of hiring by sector since March are in table 2)….meanwhile, total separations fell by 172,000, from 5,810,000 in July to 5,636,000 in August, while the separations rate as a percentage of the employed fell from 3.8% to 3.7%, which was the same as in August a year ago (see table 3)…subtracting the 5,638,000 total separations from the total hires of 5,779,000 would imply an increase of 141,000 jobs in August, somewhat less than  the revised payroll job increase of 168,000 for August reported by the September 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 3,526,000 of us voluntarily quit our jobs in August, down by 142,000 from the revised 3,668,000 who quit their jobs in July, while the quits rate, widely watched as an indicator of worker confidence, fell from 2.4% to 2.3% of total employment, the same quits rate as a year earlier (see details in table 4)….in addition to those who quit, another 1,787,000 were either laid off, fired or otherwise discharged in August, down by 1,000 from the revised 1,788,000 who were discharged in July, as the discharges rate remained at 1.2% of all those who were employed during the month, same as the discharges rate of a year earlier….meanwhile, other separations, which includes retirements and deaths, were at 325,000 in August, down from 353,000 in July, for an ‘other separations rate’ of 0.2%, the same as in July and as in August 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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