December’s consumer & producer prices, retail sales, industrial production, & housing starts; November’s business inventories & JOLTS

Major reports that were released this past week included the December Consumer Price Index, the December Producer Price Index, the December Import-Export Price Index, and the Job Openings and Labor Turnover Survey (JOLTS) for November, all from the Bureau of Labor Statistics; the December report on Industrial Production and Capacity Utilization from the Fed, and the Advance Retail Sales Report for December, the New Residential Construction report for December (pdf), and the Full Report on Manufacturers’ Shipments, Inventories and Orders for November, all from the Census Bureau..

The week also saw the release of the first two regional Fed manufacturing surveys for January: the Empire State Manufacturing Survey from the New York Fed, which covers all of New York state, one county in Connecticut, Puerto Rico and northern New Jersey, reported their headline general business conditions index rose from +2.9 in November and from +3.5 in December to +4.8 in January, suggesting ongoing slow growth of First District manufacturing…. meanwhile, the Philadelphia Fed Manufacturing Survey, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest diffusion index of manufacturing conditions rose from a revised reading of +2.4 in December to + 17.0 in January, indicating a return to faster growth for that region’s manufacturing firms this month…

Consumer Prices Rose 0.2% in December on Higher Prices for Gasoline, Clothing, & Insurance

The consumer price index rose 0.2% in December, as higher prices for gasoline, fast food, clothing and health insurance were only partly offset by lower prices for electricity, used cars and airline fares…the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that seasonally adjusted prices rose by 0.2% in December after rising 0.3% in November, 0.4% in October, being unchanged in September, rising 0.1% in August, rising 0.3% in July, rising 0.1% in June, rising 0.1% in May, rising 0.3% in April, rising 0.4% in March, rising 0.2% in February, and after they had been unchanged in January, in December and last November…the unadjusted CPI-U index, which was set with prices of the 1982 to 1984 period equal to 100, actually fell from 257.208 in November to 256.974 in December, which left it statistically 2.285% higher than the 251.233 index reading of November of last year, which is reported as a 2.3% year over year increase, up from 2.1% a month ago….with prices for energy a major contributor to the overall index increase, seasonally adjusted core prices, which exclude food and energy, rose by 0.1% for the month, as the unadjusted core price index also fell from 265.108 to 264.935, which left the core index 2.2587% ahead of its year ago reading of 259.083, which is also reported as a 2.3% year over year increase, same as was reported for October…

The volatile seasonally adjusted energy price index rose 1.4% in December, after rising 0.8% in November and by 2.7% in October, but after falling 1.4% in September. 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, and falling by 2.6% last December, and hence is now 3.4 higher than in December a year ago…the price index for energy commodities was 2.8% higher in December, while the index for energy services was 0.3% lower, after rising 0.4% in November….the energy commodity index was up 2.8% due to a 2.8% increase in the price of gasoline, the largest component, and a 1.6% increase in the index for fuel oil, while prices for other energy commodities, including propane, kerosene, and firewood, were on average 2.9% higher…within energy services, the price index for utility gas service rose 0.3% after rising 1.1% in November but is still 3.5% lower than it was a year ago, while the electricity price index fell 0.5% after rising 0.3% in November….energy commodities are now averaging 7.4% higher than their year ago levels, with gasoline prices averaging 7.9% higher than they were a year ago, while the energy services price index is now 1.2% lower than last December, as electricity prices are now 0.4% lower than a year ago…

The seasonally adjusted food price index rose 0.2% December, after rising 0.1% in November, 0.2% October, 0.1% September, 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, and by 0.3% last December, as the price index for food purchased for use at home was 0.1% higher in December, while the index for food bought to eat away from home was 0.3% higher, as prices at fast food outlets rose 0.4% and prices at full service restaurants rose 0.2% while food prices at employee sites and schools were on average 0.5% lower…

In the food at home categories, the price index for cereals and bakery products was 0.4% lower as average bread prices fell 0.6%, prices for fresh cakes and cupcakes fell 3.3%, rice prices fell 2.1% and cookie prices fell 1.6%…on the other hand, the price index for the meats, poultry, fish, and eggs group was 1.3% higher, as egg prices rose 2.9%, chicken prices rose 3.3%, and the fresh fish and seafood price index rose 1.4%…meanwhile, the seasonally adjusted index for dairy products was unchanged, as average prices for fresh whole milk rose 0.3% while the index for ice cream & related products fell 1.6%…at the same time, the fruits and vegetables index was 0.3% lower on a 1.2% decrease in the price index for fresh vegetables and a 1.7% decrease in the price index frozen vegetables…in addition, the beverages index was 0.4% lower, as prices for roast coffee fell 2.1% and carbonated drink prices were 1.1% lower….lastly, the index for the ‘other foods at home’ category was down 0.3%, as the price index for candy and chewing gum fell 1.7%, the index for fats and oils including peanut butter but not including butter and margarine fell 1.6%, the index for frozen and freeze dried prepared foods 1.2% and the snack food price index fell 1.2%, while prices for prepared salads averaged 3.8% 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, none of the food line items have seen a price change greater than 10% over the past year…

Among the seasonally adjusted core components of the CPI, which rose by 0.1% December after rising by 0.2% November, 0.2% October, 0.1% in September, 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 unchanged in December, 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 December’s retail sales for inflation in national accounts data, the price index for household furnishings and supplies was 0.3% lower, as the price index for living room, kitchen, and dining room furniture fell 1.0% and the index for laundry appliances fell 3.1% while the index for window coverings rose 5.6%….on the other hand, the apparel price index was 0.4% higher as a 3.2% increase in the price index for girl’s apparel and a 2.1% increase in the price index for women’s dresses more than offset a 6.5% decrease in the price index for men’s suits, sport coats, and outerwear… meanwhile, the price index for transportation commodities other than fuel was 0.2% lower even as prices for new cars and trucks rose 0.1% because prices for used cars and trucks fell 0.8% and tire prices fell 0.2%, while the price index for motor oil, coolant, and fluids rose 5.4%…at the same time, prices for medical care commodities averaged 1.5% higher because prescription drugs prices rose 2.1%…however, the recreational commodities index was 0.6% lower on a 2.0% decrease in TV prices, an 0.8% decrease in the price index for sporting goods, a 3.3% decrease in the price index for photographic equipment, and a 1.3% decrease in price index for newspapers and magazines….in addition, the education and communication commodities index was 1.2% lower on a 1.6% decrease in the price index for computers, peripherals, and smart home assistant devices and a 2.4% decrease in the price index for telephone hardware, calculators, and other consumer information items…lastly, a separate price index for alcoholic beverages was 0.1% higher, while the price index for ‘other goods’ was 0.5% lower on a 0.6% decrease in the index for hair, dental, shaving, and miscellaneous personal care products and a 1.9% decrease in the price index for cosmetics, perfume, bath, nail preparations and implements…

Within core services, the price index for shelter rose 0.2% as rents rose 0.2%, homeowner’s equivalent rent rose 0.2%, while prices for lodging away from home at hotels and motels fell 2.0%, while at the same time the shelter sub-index for water, sewers and trash collection rose 0.2%, and household operation costs were on average 0.1% higher….in addition, the price index for medical care services was 0.4% higher, as the index for hospital services rose 0.3% and health insurance rose 1.4%….on the other hand, the transportation services price index was was 0.3% lower as the price index for car and truck rental fell 1.3%, airline fares fell 1.4% and the index for other intercity transportation fell 2.5%….meanwhile, the recreation services price index rose 0.5% as prices for cable and satellite television services rose 1.1%, veterinarian services rose 0.6% and the index for admission to sporting events rose 1.5%…at the same time, the index for education and communication services was 0.2% higher as the index for child care and nursery school rose 0.3%, the index for delivery services rose 1.1%, and prices for internet services and electronic information provision rose 0.4%….lastly, the index for other personal services was up 0.4% as the price index for funeral expense rose 0.6% and the index for tax return preparation and other accounting fees was 1.9% higher…

Among core line items, prices for televisions, which now average 20.5% cheaper than a year ago, the price index for telephone hardware, calculators, and other consumer information items, which is down by 14.6% since last December, and the price index for computer software and accessories, which is down 11.2% 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 20.4% over the past year, the price index for infants’ furniture, which has increased 22.0% year over year, and intercity bus-fare, which has increased by 19.7% since last December, are the only line items to have increased by a double digit magnitude over that span….

Retail Sales Rose 0.3% in December after Prior Months Were Revised Lower

Seasonally adjusted retail sales increased in December after retail sales for October and November were revised lower…the Advance Retail Sales Report for December (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $529.6 billion during the month, which was 0.3 percent (±0.4%)* higher than November’s revised sales of $527.8 billion, and was 5.8 percent (±0.7 percent) above the adjusted sales in December of last year…November’s seasonally adjusted sales were revised a bit lower, from $528.0 billion to $527.8 billion, while October’s sales were revised 0.1% lower, from $527.0 billion to $526.4 billion; as a result, the October to November change was revised up from an increase of 0.2 percent (±0.4%) to an increase of 0.3 percent (±0.2%), and the year over year increase for the 4th quarter came in at 4.1%…..estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated actual sales rose 11.1%, from $597,347 million in November to $537,635 million in December, while they were up 6.0% from the $563,497 million of sales in December a year ago, so we can see how the large seasonal adjustment to holiday sales brought the headline sales increase down from the big holiday sales increase that one would normally expect in December…

Since it’s the end of the quarter and the end of the year for retail sales, we’ll include the entire table from this report showing retail sales by business type, including the quarter over quarter data…again, to explain what this table shows, the first double column below shows us the seasonally adjusted percentage change in sales for each kind of business from the November revised figure to this month’s December “advance” figure in the first sub-column, and then the year over year percentage sales change since last December in the 2nd column; the second double column pair below gives us the revision of the November advance estimates (now called “preliminary”) as of this report, with the new October to November percentage change under “Oct 2019 r” (revised) and the November 2018 to November 2019 percentage change as revised in the 2nd column of that pair (for your reference, the table of from advance estimate of November sales, before this month’s revisions, is here)…. then, the third pair of columns shows the percentage change of the most recent 3 months of this year’s sales (October, November and December) from the preceding three months of the 3rd quarter (July, August and September) and then from the same three months (October, November and December) of a year earlier….that first column of the last pair thus gives us a snapshot comparison of 3rd quarter sales to fourth quarter sales, which is useful in estimating the impact of retail sales on 4th quarter GDP, once those sales are adjusted for inflation….

December 2020 retail sales table

To compute December’s real personal consumption of goods data for national accounts from this December retail sales report, the BEA will use the corresponding price changes from the December consumer price index, which we reviewed above…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 December retail sales excluding the 2.8% price-related increase in sales at gas stations were up by 0.1%….then, subtracting the figures representing the 0.4% increase in grocery & beverage sales and the 0.2% increase in food services sales from that total, we find that core retail sales were up by less than half of 0.1% for the month…since the CPI report showed that the composite price index for all goods less food and energy goods was unchanged in December, we can thus approximate that real retail sales excluding food and energy will on average be close to our nominal core retail sales, or show an increase of less than half of 0.1%, which would be rounded to 0%…however, the actual adjustment 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 clothing stores were 1.6% higher in December, the apparel price index was 0.4% higher, which would mean that real sales of clothing only rose around 1.2%.…on the other hand, while sales at furniture stores were up 0.1%, the price index for household furnishings and supplies decreased by 0.3%, which would suggest that real sales at furniture stores rose by roughly 0.4%…similarly, while nominal sales at sporting goods, hobby, music and book stores rose 0.9%, the price index for recreational commodities fell 0.6%, so we can figure real sales of recreational goods were up roughly 1.5%…

In addition to figuring those core retail sales, to make a complete estimate of real December PCE, we’ll need to adjust food and energy retail sales for their price changes separately, just as the BEA will do.…the CPI report showed that the food price index was 0.2% higher in December, 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… hence, with nominal sales at food and beverage stores 0.4% higher, real sales of food and beverages would only be around 0.3% higher in light of the 0.1% higher prices…likewise, the 0.2% increase in nominal sales at bars and restaurants, once adjusted for 0.3% higher prices, suggests that real sales at bars and restaurants fell about 0.1%…meanwhile, while sales at gas stations were up 2.8%, there was also a 2.8% increase in the retail price of gasoline, which would suggest real sales of gasoline were close to unchanged, with the caveat that gasoline stations do sell more than gasoline, and we haven’t accounted for those other sales…..by averaging those estimated real sales figures with a sales appropriate weighting, and excluding food services, we can estimate that the income and outlays report for December will show that real personal consumption of goods rose by almost 0.1% for the month, after rising by 0.5% in November, but after falling by a revised 0.3% in October…at the same time, the 0.1% decrease in real sales at bars and restaurants will have a slightly negative December’s real personal consumption of services…

Industrial Production Fell 0.3% in December Due to Warm Weather, After October’s & November’s Output Were Revised Higher

The Fed’s G17 release on Industrial production and Capacity Utilization indicated that industrial production fell by a seasonally adjusted 0.3% in December after rising by a revised 0.8% in November, but after falling by a revised 0.5% in October, which together meant that industrial production fell at a 0.5% annual rate in the 4th quarter, after rising by a revised 1.2% rate in the 3rd quarter….the industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, fell to 109.4 in December from 109.8 in November, which was revised from the 109.7 reported last month, while at the same time the index for October was revised from 108.5 to 108.9, now a 0.5% increase from September, rather than the 0.9% decrease previously reported…the IP index for September was revised lower from 109.5 to 109.4, while the index for August was revised higher, from 109.9 to 110.0…year over year industrial production is now down 1.0%, down from the 0.8% year over year decrease reported a month ago….

The manufacturing index, which accounts for more than 75% of the total IP index, rose 0.2% to 105.0 in December, after the November index was revised from 104.9 to 104.8, but is still 1.3% lower than it was a year ago….meanwhile, the mining index, which includes oil and gas well drilling, rose from 132.6 in November to 134.4 in December, after the November mining index was revised up from 132.3, which lifted the mining index to a level 1.4% higher than it was a year earlier…finally, the seasonally adjusted utility index, which often fluctuates due to above or below normal temperatures, fell by 5.6% in our warm December, from 107.6 to 101.6, after the November utility index was revised from 106.6 to 107.6, now 1.0% higher than October…since December 2018 was also depressed in a warmer than normal month, the utility index is still only 1.9% lower than it was a year ago…

This report also includes capacity utilization data, which is expressed as the percentage of our plant and equipment that was in use during the month, and which indicated that seasonally adjusted capacity utilization for total industry fell to 77.0% in December from 77.4% in November, which was revised from the 77.3% reported last month…capacity utilization of NAICS durable goods production facilities fell from a downwardly revised 75.5% in November to 75.2% in December, while capacity utilization for non-durables producers rose from a downwardly revised 75.7% to 76.1%…capacity utilization for the mining sector rose to 89.6% in December from 88.8% in November, which was originally reported as 88.6%, while utilities were operating at 73.5% of capacity during December, down from 78.0% of capacity during November, which was previously reported at 77.3%…for more details on capacity utilization by type of manufacturer, see Table 7: Capacity Utilization: Manufacturing, Mining, and Utilities, which shows the historical capacity utilization figures for a dozen types of durable goods manufacturers, 8 classifications of non-durable manufacturers, mining, utilities, and capacity utilization for a handful of other special categories….

Producer Price Index Up 0.1% in November On Higher Energy Prices

The seasonally adjusted Producer Price Index (PPI) for final demand rose 0.1 in December, as average prices for finished wholesale goods rose 0.3% while margins of final services providers were on average unchanged…that followed a November report that the PPI was unchanged, as prices for finished wholesale goods had risen 0.3% while margins of final services providers fell 0.3%, an October report that had the PPI 0.4% higher, with prices for finished wholesale goods 0.7% higher and margins of final services providers up by 0.3%, a revised September report that showed producer prices fell 0.3%, with prices for finished wholesale goods 0.4% lower while margins of final services providers decreased by 0.3%, and a revised August report that showed the PPI rose 0.2%, even prices for finished wholesale goods fell by 0.3%, because the more heavily weighted margins of final services providers increased by 0.3%….on an unadjusted basis, producer prices are now 1.3% higher than a year ago, up from the 1.1% year over year increase indicated by last month’s report, which had been the lowest annual price increase since the year ended October 2016…meanwhile, the core producer price index, which excludes food, energy and trade services, also rose by 0.1% for the month, and is now 1.5% higher than in December a year ago, up from the 1.3% YoY increase shown in November…

As noted, the price index for final demand for goods, aka ‘finished goods’, was 0.3% higher in December, after being 0.3% higher in November, 0.7% higher in October, 0.4% lower in September, 0.3% 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, and 0.6% lower in December of 2018….the finished goods index rose 0.3% in November because the wholesale price index for energy goods was 1.5% higher, after rising by 0.6 in November and 2.8% in October, after falling by a revised 2.8% in September and by a revised 1.4% in August, while the price index for wholesale foods fell 0.2% in December after rising 1.1% in November, 1.3% in October and 0.3% in September, and while the index for final demand for core wholesale goods (excluding food and energy) was 0.1% higher after rising 0.2% in November….wholesale energy prices were higher due to a 3.7% increase in wholesale prices for gasoline, a 7.7% increase in wholesale prices for home heating oil, and a 6.4% increase in wholesale prices for diesel fuel, while the wholesale food price index fell on a 7.0% decrease in the wholesale price index for beef and veal, a 7.1% decrease in the wholesale price index for fresh and dry vegetables, and a 10.4% decrease in the wholesale price of eggs for fresh use….among wholesale core goods, wholesale prices for iron and steel scrap rose 11.3% and wholesale prices for agricultural machinery and equipment rose 1.3%..

At the same time, the index for final demand for services was unchanged in December, after falling by 0.3% in November, rising by 0.3% in October, falling by a revised 0.3% in September, and rising by 0.3% in August, as the index for final demand for trade services fell 0.3%, the index for final demand for transportation and warehousing services rose 2.7%, and the core index for final demand for services less trade, transportation, and warehousing services was 0.1% lower….among trade services, seasonally adjusted margins for sporting goods and boat retailers fell 4.3%, margins for apparel, jewelry, footwear, and accessories retailers fell 3.7%, and margins for fuel & lubricants retailers fell 4.3%, while margins for book retailers rose 3.8% … among transportation and warehousing services, margins for airline passenger services rose 8.6%…among the components of the core final demand for services index, margins for portfolio management rose 1.9%, and margins for consumer loans (partial) rose 1.8%, while margins for arrangement of cruises and tours fell 3.9%…

This report also showed the price index for intermediate processed goods rose 0.1% in December, after rising 0.2% in November, 0.4% in October. but after falling by a revised 0.2% in September and a revised 0.5% in August….the price index for intermediate energy goods rose 1.0%, as refinery prices for gasoline rose 3.7% and refinery prices for No. 2 diesel fuel rose 6.4%…at the same time, prices for intermediate processed foods and feeds rose 0.1%, as the producer price index for processed poultry rose 2.0% while the index for meats fell 1.7%… meanwhile, the core price index for intermediate processed goods less food and energy fell 0.2% as the producer price index for steel mill products fell 1.8% and producer prices for synthetic rubber decreased 1.6%, while the index for building paper and board rose 5.4%… prices for intermediate processed goods are still 1.7% lower than in December a year ago, the eighth 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 rose 1.8% in December, after rising 3.9% in November and by 1.0% in October, but after falling by a revised 1.6% in September and by a revised 1.7% in August….that was as the December price index for crude energy goods rose 0.4% as crude oil prices rose 3.4% while unprocessed natural gas prices fell 4.6%, while the price index for unprocessed foodstuffs and feedstuffs rose 2.3% on a 10.0% increase in producer prices for slaughter chickens, a 3.4% increase in producer prices for slaughter hogs and a 8.8% increase in producer prices for alfalfa hay….at the same time, the index for core raw materials other than food and energy materials rose 3.0%, as prices for unprocessed iron and steel scrap rose 11.3% and prices for nonferrous metal ores rose 4.5%…this raw materials index is still 7.3% lower than a year ago, as the year over year change on this index remained negative all year…

Lastly, the price index for services for intermediate demand rose 0.4 percent in November after falling 0.1 percent in November, 0.2 percent in October, and a revised 0.1 percent in September, while rising a revised 0.4% in August…the price index for intermediate trade services was 0.3% higher, as margins for intermediate machinery and equipment parts and supplies wholesalers rose 2.8%, margins for metals, minerals, and ores wholesalers rose 1.9%, and margins for intermediate building materials, paint, and hardware wholesalers rose 1.8%, while margins for chemicals and allied products wholesalers fell 4.2%…at the same time, the index for transportation and warehousing services for intermediate demand was 1.2% higher, as the price index for intermediate transportation of passengers (partial) rose 8.5% and the index for arrangement of freight and cargo rose 4.0%…in addition, the core price index for intermediate services less trade, transportation, and warehousing rose 0.2%, as the intermediate price index for “internet advertising space sales, excluding Internet ads sold by print publishers” rose 6.0% and the price index for television advertising time sales rose 4.0%, while the index for intermediate traveler accommodation services fell 3.0%…over the 12 months ended in October, the year over year price index for services for intermediate demand, which has never turned negative on an annual basis, is now 1.8% higher than it was a year ago, up from 1.4% in November and from 1.6% in October…

November Business Sales Up 0.7% Business Inventories Down 0.2%

After the release of the December retail sales report, the Census Bureau released the composite Manufacturing and Trade, Inventories and Sales report for November (pdf), which incorporates the revised November retail data from that December report and the earlier published November 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 $1,465.7 billion in November, up 0.7 percent (±0.2%) from October’s revised sales, and up 1.0 percent (±0.4%) from November sales of a year earlier…note that total October sales were concurrently revised from the previously reported $1,456.0 billion to $1,454.9 billion, now down 0.2% from September….manufacturer’s sales rose 0.3% to $502,166 million in November; retail trade sales, which exclude restaurant & bar sales from the revised November retail sales reported earlier, rose 0.4% to $462,883 million, and wholesale sales rose 1.5% to $500,651 million..

Meanwhile, total manufacturer’s and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $2,037.4 billion at the end of November, down 0.2 percent (±0.1 percent) from October, but 2.8 percent (±0.5 percent) higher than in November a year earlier…at the same time, the value of end of October inventories was revised from the $2,042.8 billion reported a month ago to $2,041.2 billion, now just a 0.1% increase from September…. seasonally adjusted inventories of manufacturers were estimated to be valued at $700,989 million, up 0.1% from October, while inventories of retailers were valued at $661,499 million, 0.7% lower than in October, and inventories of wholesalers were estimated to be valued at $674,943 million at the end of November, 0.1% lower than in October…

For GDP purposes, all inventories, including retail, will be adjusted for inflation with appropriate component price indices of the producer price index for November, which was up 0.3% for finished goods, including an increase of 0.2% ex food & energy…last week, we looked at real factory inventories with price adjustments for goods at various stages of production, and judged the negative change in those inventories would have a substantial negative impact on 4th quarter GDP growth…also last week, we found that real wholesale inventories were at least 0.4% lower for the month, following a 0.6% real decrease in October, and that they would also subtract substantially from 4th quarter GDP growth….since nominal retail inventories for November have now been shown to 0.7% lower, real retail inventories for the month, considering the 0.3% finished goods price adjustment, would have thus decreased by 1.0% from October, after a real 0.6% decrease in that month…since the third quarter saw total inventories increase at an inflation adjusted $80 billion annual rate, these real inventory decreases we now have indicated for the 4th quarter would necessarily subtract that amount, plus the amount of the real 4th quarter decrease, from the growth of 4th quarter GDP…

Job Openings Much Lower In November; Hiring & Quitting Rise, Layoffs Fall

The Job Openings and Labor Turnover Survey (JOLTS) report for November from the Bureau of Labor Statistics estimated that seasonally adjusted job openings decreased by 561,000, from 7,361,000 in October to 6,800,000 in November, after October job openings were revised 96,000 higher, from 7,267,000 to 7,361,000…November’s jobs openings were thus 10.8% lower than the 7,626,000 job openings reported in November a year ago, as the job openings ratio expressed as a percentage of the employed fell to 4.3% in November from 4.6% October, and was also down from 4.8% in November a year ago….the largest percentage decrease in November openings appears to be a 112,000 job opening decrease to 214,000 openings in the construction sector, while the health care and social assistance sector saw job openings increase by 47,000 to 1,180,000 (see table 1 for more job openings 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 November, seasonally adjusted new hires totaled 5,821,000, up by 39,000 from the revised 5,782,000 who were hired or rehired in October, as the hiring rate as a percentage of all employed remained at 3.8% in November, while it was still down from 3.9% in November a year ago (details on hiring by region and by sector since July are in table 2)….meanwhile, total separations fell by 4,000, from 5,652,000 in October to 5,648,000 in November, as the separations rate as a percentage of the employed remained at 3.7%, same it was in November a year ago (see table 3)…subtracting the 5,648,000 total separations from the total hires of 5,821,000 would imply an increase of 173,000 jobs in November, somewhat less than the revised payroll job increase of 256,000 for November reported in the December 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 3,536,000 of us voluntarily quit our jobs in November, up by 39,000 from the revised 3,479,000 who quit their jobs in October, while the quits rate, widely watched as an indicator of worker confidence, remained unchanged at 2.3% of total employment, also the same as it was a year earlier (see job quitting details in table 4)….in addition to those who quit, another 1,749,000 were either laid off, fired or otherwise discharged in November, down by 46,000 from the revised 1,795,000 who were discharged in October, as the discharges rate fell from 1.2% to 1.1% of total employment, which was also down from the discharges rate of 1.3% in November a year ago….meanwhile, other separations, which includes retirements and deaths, were at 363,000 in November, up from 360,000 in October, for an ‘other separations rate’ of 0.2%, which was the same rate as in October and as in November 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 easily using the links to tables at the bottom of the press release

Housing Starts at a 13 Year High in December, New Permits Down

the December report on New Residential Construction (pdf) from the Census Bureau estimated that the number of new housing units started in December was at a seasonally adjusted annual rate of 1,608,000, a 13 year high, which was 16.9 percent (±12.8 percent) above the revised November estimated annual rate of 1,375,000 housing units started, and was 40.8 percent (±20.5 percent) above last December’s annual rate of 1,142,000 housing starts…the figures in parenthesis are the most likely range of the change indicated; in other words, December housing starts could have been up by 4.1% or by as much as 29.7% more those of last December, with revisions of a greater magnitude in either direction possible…in this report, the annual rate for November housing starts was revised from the 1,365,000 reported last month to 1,375,000, while October starts, which were first reported at a 1,314,000 annual rate, were revised from last month’s initial revised figure of 1,323,000 annually to a 1,340,000 annual rate with this report….

those annual rates of starts reported here were extrapolated from a survey of a small percentage of US building permit offices visited by canvassing Census field agents, which estimated that 108,500 housing units were started in December, up from the 103,100 units that were started in November, unusual in that construction usually slows during the winter months…of those housing units started in December, an estimated 68,600 were single family homes and 38,700 were units in structures with more than 5 units, down from the revised 68,700 single family starts in November, but up from the 32,700 units started in structures with more than 5 units in November…

the monthly data on new building permits, with a smaller margin of error, are probably a better monthly indicator of new housing construction trends than the volatile and often revised housing starts data….in December, Census estimated new building permits for housing units were being issued at a seasonally adjusted annual rate of 1,416,000, which was 3.9 percent (±1.6 percent) below the revised November rate of 1,474,000 permits, but was 8.8 percent (±1.1 percent) above the rate of building permit issuance in December a year earlier…the annual rate for housing permits issued in November was revised down from the originally reported 1,482,000 but was still the highest since May 2007….again, these annual estimates for new permits reported here were extrapolated from the unadjusted estimates collected monthly by canvassing census agents, which showed permits for roughly 107,300 housing units were issued in December, down from the revised estimate of 107,500 new permits issued in November…the December permits included 62,400 permits for single family homes, down from 63,800 single family permits issued in November, and 41,700 permits for housing units in apartment buildings with 5 or more units, up from 40,800 such multifamily permits a month earlier… for more graphs and commentary on this report, see the following two posts by Bill McBride at Calculated Risk: Housing Starts increased to 1.608 Million Annual Rate in December and Comments on December Housing Starts

 

(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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