Major agency reports that were released the past week included the Commerce Dept report on our International Trade for September, the Job Openings and Labor Turnover Survey (JOLTS) for September from the Bureau of Labor Statistics, and the Full Report on Manufacturers’ Shipments, Inventories and Orders for September, and the September report on Wholesale Trade, Sales and Inventories both from the Census Bureau….in addition, the Fed released the Consumer Credit Report for September, which showed that overall consumer credit, a measure of non-real estate debt, expanded by a seasonally adjusted $9.5 billion, or at a 2.8% annual rate, as non-revolving credit expanded at a 4.2% rate to $3,072.3 billion while revolving credit outstanding shrunk at a 1.2% rate to $1,077.0 billion…
Privately issued reports included the October Non-Manufacturing Report On Business from the Institute for Supply Management, which reported their NMI (non-manufacturing index) rose to 54.7% from 52.6% in September, indicating a greater plurality of service industry purchasing managers reported expansion in various facets of their business in October, and the Mortgage Monitor for September from Black Knight Financial Services, which indicated that 3.53% of all mortgages were delinquent in September, up from 3.45% in August but down from 3.97% in September of 2018, and that 0.48% of all mortgages were in the foreclosure process in September, unchanged from August but down from 0.52% a year ago….
Job Openings at 17 Month Low, Layoffs at a 89 Month High
The Job Openings and Labor Turnover Survey (JOLTS) report for September from the Bureau of Labor Statistics estimated that seasonally adjusted job openings fell by 277,000, from 7,293,000 in August to 7,024,000 in September, after August job openings were revised 250,000 higher, from 7,051,000 to 7,301,000…September’s jobs openings were the lowest since April of 2018 and also 5% lower than the 7,392,000 job openings reported for September a year ago, as the job opening ratio expressed as a percentage of the employed fell from 4.6% in August to 4.4% in September, and it was also down from 4.7% in September a year ago… job opening changes included a 124,000 job opening decrease to 1,071,000 openings in the health care sector and a 104,000 decrease to 714,000 openings in retail, while openings in the information sector rose by 25,000 to 162,000 (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 September, seasonally adjusted new hires totaled 5,934,000, up by 50,000 from the revised 5,884,000 who were hired or rehired in August, as the hiring rate as a percentage of all employed remained at 3.9% in September, while it was up from the 3.8% rate in September a year earlier (details of hiring by sector since March are in table 2)….meanwhile, total separations rose by 76,000, from 5,732,000 in August to 5,808,000 in September, while the separations rate as a percentage of the employed remained unchanged at 3.8%, while it was up from 3.7% in September a year ago (see table 3)…subtracting the 5,808,000 total separations from the total hires of 5,934,000 would imply an increase of 126,000 jobs in September, somewhat less than the revised payroll job increase of 180,000 for September reported in the October 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 3,498,000 of us voluntarily quit our jobs in September, down from the revised 3,601,000 who quit their jobs in August, while the quits rate, widely watched as an indicator of worker confidence, fell from 2.4% of total employment in August to 2.3% in September, same as a year earlier (see job details in table 4)….in addition to those who quit, another 1,964,000 were either laid off, fired or otherwise discharged in September, up by 152,000 from the revised 1,812,000 who were discharged in August and the highest since May 2012, as the discharges rate rose from 1.2% to 1.3% of all those who were employed during the month, which was also up from the discharges rate of 1.2% a year earlier….meanwhile, other separations, which includes retirements and deaths, were at 346,000 in September, up from 320,000 in August, for an ‘other separations rate’ of 0.2%, which was unchanged from August and from September 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…
September Trade Deficit Down 4.7% on Lower Imports of Consumer Goods, Capital Goods, and Automotive Products
Our trade deficit fell by 4.7% in September as the value of both our exports and our imports decreased, but our imports decreased by more….the Commerce Dept report on our international trade in goods and services for September indicated that our seasonally adjusted goods and services trade deficit fell by a rounded $2.6 billion to $52.450 billion in September from a revised August deficit of $55.035 billion…the value of our September exports fell by a rounded $1.8 billion to $206.0 billion on a $1.8 billion decrease to $136.8 billion in our exports of goods and a $0.1 billion increase to $69.2 billion in our exports of services, while our imports fell by a rounded $4.4 billion to $258.4 billion on a $4.5 billion decrease to $208.6 billion in our imports of goods which was offset by a $0.1 billion increase to $49.9 billion in our imports of services…export prices were 0.2% lower in September, which means the relative real decrease in exports for the month was smaller than the nominal decrease by that percentage, while import prices were 0.2% higher, meaning the decrease in real imports was greater than the nominal dollar change reported here by that percentage….
The decrease in our September exports of goods resulted from lower exports of foods, feeds, and beverages and of automotive vehicles, parts, and engines, which were partly offset by a increase in exports of capital goods…referencing the Full Release and Tables for September (pdf), in Exhibit 7 we find that our exports of foods, feeds and beverages fell by $1506 million to $10,756 million on a $1,035 million decrease in our exports of soybeans and that our exports of automotive vehicles, parts, and engines fell by $1001 million to $13,279 million on a $339 million decrease in our new and used passenger cars and a $282 million decrease in our exports of trucks, buses, and special purpose vehicles…in addition, our exports of industrial supplies and materials fell by $270 million to $44,070 million on an $790 million decrease in our exports of fuel oil even as our exports of crude oil and natural gas were both up by more than $500 million, and our exports of other goods not categorized by end use fell by $421 million to $5,691 million…partially offsetting the decreases in those export categories, our exports of capital goods rose by $848 million to $45,104 million on a $659 million increase in our exports of civilian aircraft and a $602 million increase in our exports of engines for civilian aircraft, and our exports of consumer goods rose by $490 million to $17,366 million on a $455 million increase in our exports of pharmaceuticals…
Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our goods imports and shows that lower imports of consumer goods, capital goods, and of automotive vehicles, parts, and engines were responsible for the $4.5 billion decrease in our goods imports…our imports of consumer goods fell by $2,510 million to $54,716 million on a $809 million decrease in our imports of cellphones, a $557 decrease in our imports of toys, games, and sporting goods, a $377 decrease in our imports of artwork, antiques, and other collectibles and a $286 decrease in our imports of textiles and apparel other than those of wool or cotton, and our imports of capital goods fell by $1,105 million to $56,162 million on a $589 million decrease in our imports of semiconductors and a $232 million decrease in our imports of industrial machines other than those itemized separately, while our imports of automotive vehicles, parts and engines fell by $1,099 million to $30,851 million on a $372 million decrease in our imports of trucks, buses, and special purpose vehicles, $317 million decrease in our imports of vehicle parts and accessories other than bodies and chassis, engines and tires, and a $310 million decrease in our imports of of new and used passenger cars….in addition, our imports of industrial supplies and materials fell by $620 million to $41,923 million on a $359 million decrease in our imports non-monetary a $339 million decrease in our imports of petroleum products other than fuel oil, and a $224 million decrease in our imports of fuel oil…slightly offsetting those decreases, our imports of foods, feeds, and beverages rose by $159 million to $12,772 million on a $210 million increase in our imports of fruits and fruit juices, and our imports of other goods not categorized by end use rose by $840 million to $10,389 million…
The Full Release and Tables pdf for this month’s report also summarizes Exhibit 19, which gives us surplus and deficit details on our goods trade with selected countries:
The September figures show surpluses, in billions of dollars, with South and Central America ($5.0), Hong Kong ($2.1), Brazil ($1.0), OPEC ($1.0), Singapore ($0.9), United Kingdom ($0.7), and Saudi Arabia ($0.3). Deficits were recorded, in billions of dollars, with China ($28.0), European Union ($15.7), Mexico ($9.1), Japan ($5.9), Germany ($5.0), Italy ($3.0), Canada ($2.5), Taiwan ($2.1), India ($2.0), France ($1.7), and South Korea ($1.2).
- The deficit with Germany decreased $1.9 billion to $5.0 billion in September. Exports increased $0.7 billion to $5.6 billion and imports decreased $1.2 billion to $10.7 billion. •
- The deficit with China decreased $0.9 billion to $28.0 billion in September. Exports decreased $1.0 billion to $9.0 billion and imports decreased $1.9 billion to $37.0 billion.
- The deficit with Canada increased $0.9 billion to $2.5 billion in September. Exports decreased $0.3 billion to $24.5 billion and imports increased $0.6 billion to $27.0 billion.
In last week’s advance report on 3rd quarter GDP, the contribution of September trade was estimated based on the sketchy Advance Report on our International Trade in Goods which was released last week, just before the GDP release…that report estimated that our seasonal adjusted September goods trade deficit was at $70,394 million on a Census basis, down from the $73,055 million goods deficit in August, on goods exports of $135,894 million and goods imports of $206,288 million…this report revises that and shows that our actual goods trade deficit in September was $71,718 billion on a balance of payments basis, and $70,547 million on a Census basis, on Census adjusted goods imports of $208,551 million and Census adjusted goods exports of $136,833 million…in addition, the Census basis August goods trade deficit was revised from $73,055 million to $73,023 million…together, those revisions from the previously published data mean that the 3rd quarter trade deficit in goods was on the order of $0.12 billion more than was included in last week’s GDP report, or roughly $0.5 billion on an annualized basis, which could subtract 0.01 percentage point from 3rd quarter GDP when the 2nd estimate is released at the end of November…
Factory Shipments Down 0.2% in September, Factory Inventories Up 0.3%
The Full Report on Manufacturers’ Shipments, Inventories, & Orders (pdf) for September from the Census Bureau reported that the seasonally adjusted value of new orders for manufactured goods fell by $2.9 billion or 0.6 percent to $496.7 billion in September, following an decrease of 0.1% to $499.6 billion in August, which was revised from the 0.1 percent decrease to $499.8 billion reported for August 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 September advance report on durable goods we reported on two weeks ago…on those durable goods 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 September, down two consecutive months, decreased $2.9 billion or 0.6 percent to $496.7 billion, the U.S. Census Bureau reported today. This followed a 0.1 percent August decrease. Shipments, down three consecutive months, decreased $1.1 billion or 0.2 percent to $501.1 billion. This followed a 0.3 percent August decrease. Unfilled orders, down following two consecutive monthly increases, decreased $0.1 billion or virtually unchanged to $1,163.3 billion. This followed a 0.1 percent August increase. The unfilled orders‐to‐shipments ratio was 6.69, up from 6.68 in August. Inventories, up nine of the last ten months, increased $2.2 billion or 0.3 percent to $697.9 billion. This followed a 0.1 percent August decrease. The inventories‐to‐shipments ratio was 1.39, unchanged from August.
- New orders for manufactured durable goods in September, down following three consecutive monthly increases, decreased $3.1 billion or 1.2 percent to $247.7 billion, down from the previously published 1.1 percent decrease. This followed a 0.2 percent August increase. Transportation equipment, also down following three consecutive monthly increases, led the decrease, $2.4 billion or 2.8 percent to $84.3 billion. New orders for manufactured nondurable goods increased $0.1 billion or 0.1 percent to $249.0 billion.
- Shipments of manufactured durable goods in September, down three consecutive months, decreased $1.2 billion or 0.5 percent to $252.1 billion, down from the previously published 0.4 percent decrease. This followed a 0.2 percent August decrease. Transportation equipment, also down three consecutive months, led the decrease, $1.2 billion or 1.3 percent to $84.4 billion. Shipments of manufactured nondurable goods, up two of the last three months, increased $0.1 billion or 0.1 percent to $249.0 billion. This followed a 0.4 percent August decrease. Petroleum and coal products, also up two of the last three months, drove the increase, $0.2 billion or 0.4 percent to $51.3 billion.
- Unfilled orders for manufactured durable goods in September, down following two consecutive monthly increases, decreased $0.1 billion or virtually unchanged to $1,163.3 billion, unchanged from the previously published decrease. This followed a 0.1 percent August increase. Fabricated metal products, down following three consecutive monthly increases, drove the decrease, $0.2 billion or 0.2 percent to $86.9 billion.
- Inventories of manufactured durable goods in September, up fourteen of the last fifteen months, increased $2.0 billion or 0.5 percent to $430.3 billion, unchanged from the previously published increase. This followed a 0.3 percent August increase. Transportation equipment, also up fourteen of the last fifteen months, drove the increase, $2.2 billion or 1.5 percent to $145.5 billion. Inventories of manufactured nondurable goods, up following five consecutive monthly decreases, increased $0.2 billion or 0.1 percent to $267.6 billion. This followed a 0.6 percent August decrease. Chemical products, up following two consecutive monthly decreases, drove the increase, $0.5 billion or 0.5 percent to $91.1 billion. By stage of fabrication, September materials and supplies increased 0.1 percent in durable goods and decreased 0.5 percent in nondurable goods. Work in process increased 1.2 percent in durable goods and 0.5 percent in nondurable goods. Finished goods were virtually unchanged in durable goods and increased 0.3 percent in nondurable goods.
The BEA’s key source data and assumptions (xls) for 3rd quarter GDP indicates that they had estimated that the value of non-durable goods inventories would decrease by $1.7 billion on a Census basis in September before they estimated the 3rd quarter’s output, so the actual $0.2 billion increase would indicate that they underestimated the end of 3rd quarter GDP inventory component by about $1.9 billion, or ~$7.6 billion on an annualized basis, which would imply that 3rd quarter GDP will have to be revised upwards by about 0.14 percentage points to account for what this report shows..
September Wholesale Sales Flat, Wholesale Inventories Down 0.4%
The September report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at $498.6 billion, statistically unchanged (±0.5 percent)* from the revised August level, but down 0.6 percent (±0.7 percent)* from the wholesale sales of September 2018… the August preliminary estimate was revised down to $498.1 billion from the $499.1 billion in wholesale sales reported last month, which thus revised the July to August change in sales from virtually unchanged (+/-0.4%) to down 0.1 percent (±0.4 percent)*….as an intermediate economic 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, since additional goods left in a warehouse represent goods that were produced but not sold, and this September report estimated that wholesale inventories were valued at a seasonally adjusted $676.7 billion at month end, down 0.4 percent (±0.2 percent)* from the revised August level but 4.8 percent (±1.2 percent) higher than in September a year ago….August’s inventory value was revised from the $680.7 billion reported last month to $679.5 billion, which meant that the July to August percent change was revised from last month’s estimate of up 0.2 percent (+/-0.2%)* to up 0.1 percent (±0.2 percent)..
In the advance report on 3rd quarter GDP of last week, wholesale inventories were estimated based on the sketchy Advance Report on Wholesale and Retail Inventories which was released the day before the GDP release…that report estimated that our seasonally adjusted wholesale inventories were valued at $677,426 billion at the end of September, down from a revised $679,437 billion in August….that’s $0.716 billion more than the $676,710 billion for the end of the quarter that this report shows, which would imply that the quarterly change in 3rd quarter inventories was overestimated at roughly a $2.9 billion annual rate…assuming there’s no revision in the inflation adjustment to those inventories, that would mean that the growth rate of 3rd quarter GDP was overestimated by around 0.06 percentage points based just on what this report shows, which would thus partially offset the underestimation we saw in factory inventories…
(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…)