January’s consumer prices, retail sales & industrial production: December’s business inventories and JOLTS

Major reports released this week included the January Consumer Price Index and the January Import-Export Price Index from the Bureau of Labor Statistics, the Retail Sales Report for January and the Business Sales and Inventories Report for December from the Census Bureau, the January report on Industrial Production and Capacity Utilization from the Fed, and the Job Openings and Labor Turnover Survey (JOLTS) report for December, also from the BLS…

Consumer Prices Rose 0.1% in January on Higher Prices for Rent, Clothing, & Health Insurance

The consumer price index rose 0.1% in January, as higher prices for food services, shelter, clothing and utilities were only partly offset by lower prices for gasoline, used cars and drugs…the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that seasonally adjusted prices rose by 0.1% in January, after rising by 0.2% in December, 0.2% in November, 0.2% in October, 0.1% in September, 0.1% in August and rising 0.3% in July…the unadjusted CPI-U index, which was set with prices of the 1982 to 1984 period equal to 100, rose from 256.974 in December to 257.971 in January, which left it statistically 2.4866% higher than the 251.712 index reading of January of last year, which is reported as a 2.5% year over year increase, up from 2.3% a month ago….with lower prices for energy a major drag on the overall index increase, seasonally adjusted core prices, which exclude food and energy, rose by 0.2% for the month, as the unadjusted core price index rose from 264.935 to 266.004, which left the core index 2.2612% ahead of its year ago reading of 260.122, which is reported as a 2.3% year over year increase, same as was reported for December…the seasonal adjusted component of this month’s release incorporates revisions to indices from 2015 through 2019 based on newly revised seasonal factors..

The volatile seasonally adjusted energy price index fell 0.7% in January, after rising 1.6% in December, 0.8% in November and by 1.7% in October, but after falling 0.8% in September, falling 1.4% in August and rising 0.9% in July, and is now 6.2% higher than in January a year ago…the price index for energy commodities was 1.6% lower in January, while the index for energy services was 0.6% higher, after falling 0.3% in December….the energy commodity index was down 1.6% due to a 1.6% decrease in the price of gasoline, the largest component, and a 0.4% decrease in the index for fuel oil, while prices for other energy commodities, including propane, kerosene, and firewood, were on average 3.0% lower…within energy services, the price index for utility gas service rose 1.0% after falling 0.5% in December but is still 3.2% lower than it was a year ago, while the electricity price index rose 0.6% after falling 0.5% in December….energy commodities are still averaging 12.1% higher than their year ago levels, with gasoline prices averaging 12.8% higher than they were a year ago, while the energy services price index is still 0.4% lower than last January, even as electricity prices are now 0.5% higher than a year ago…

The seasonally adjusted food price index rose 0.2% January, after rising 0.2% December, 0.1% in November, 0.2% October, 0.2% September, but being unchanged in June, July & August, 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 0.4% higher, as prices at fast food outlets rose 0.4% and prices at full service restaurants rose 0.4% while food prices at employee sites and schools were on average 0.1% higher…

In the food at home categories, the price index for cereals and bakery products was 0.4% lower as average bread prices fell 0.8%, prices for breakfast cereals fell 1.0%, the index for fresh biscuits, rolls, muffins fell 1.1%, and the index for crackers and cracker products prices fell 3.1%…at the same time, the price index for the meats, poultry, fish, and eggs group was unchanged, as ham prices rose 1.9%, hot dog prices rose 4.8% and the fish and seafood price index rose 0.7%, while egg prices fell 1.4% and chicken prices fell 1.7%…meanwhile, the seasonally adjusted index for dairy products was 0.2% higher, as average prices for fresh whole milk rose 1.8% while the index for cheese & related products fell 0.2%…in addition, the fruits and vegetables index was 0.1% higher as a 2.0% increase in the price index for fresh vegetables was only partly offset by a 1.4% decrease in the price index fresh fruits…at the same time, the beverages index was 0.4% higher as the price index for juices and nonalcoholic drinks rose 0.6%….lastly, the index for the ‘other foods at home’ category was up 0.2%, as the price index for candy and chewing gum rose 2.4%, the index for fats and oils rose 1.2%, the index for frozen and freeze dried prepared foods rose 0.7%, while prices for baby food averaged 1.2% lower….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 January, 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 0.2% in January after rising by 0.1% December, 0.2% November, 0.1% October, 0.2% in September, 0.2% in August, and by 0.3% in July, the composite price index of all goods less food and energy goods was unchanged in January, 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 January’s retail sales for inflation in national accounts data, the price index for household furnishings and supplies was 0.1% lower, as the price index for laundry appliances fell 1.6% while the index for window and floor coverings rose 4.4%….on the other hand, the apparel price index was 0.7% higher on a 2.3% increase in the price index for men’s apparel, a 1.8% increase in the price index for girl’s apparel, and a 1.3% increase in the price index for footwear… however, the price index for transportation commodities other than fuel was 0.4% lower even as prices for new cars and trucks were unchanged because prices for used cars and trucks fell 1.2% and tire prices fell 0.2%, while the price index for motor oil, coolant, and fluids fell 3.0%…at the same time, prices for medical care commodities averaged 0.6% lower because prescription drugs prices fell 0.4%, non-prescription drugs prices fell 1.3% and the medical equipment price index fell 0.8%…however, the recreational commodities index was 0.1% higher despite a 1.7% decrease in TV prices due to a 0.6% increase in the price index for sporting goods, a 2.4% increase in the price index for photographic equipment and supplies, and a 2.4% increase in price index for newspapers and magazines…on the other hand, the education and communication commodities index was 1.2% lower on a 1.2% decrease in the price index for computer software and accessories, a 1.4% decrease in the price index for telephone hardware, calculators, and other consumer information items, and a 2.7% decrease in the price index for college textbooks…lastly, a separate price index for alcoholic beverages was 0.3% higher, while the price index for ‘other goods’ was 0.5% higher on a 16.1% increase in the index for infants equipment…

Within core services, the price index for shelter rose 0.4% as rents rose 0.4%, homeowner’s equivalent rent rose 0.4%, and prices for lodging away from home at hotels and motels rose 0.2%, 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 0.3% higher, as the price index for hospital services rose 0.8% and health insurance rose 1.7%…at the same time, the transportation services price index was was 0.3% higher as the price index for car and truck rental rose 1.2%, airline fares rose 0.7% and motor vehicle registration and license fees rose 0.4%…..meanwhile, the recreation services price index also rose 0.3% as prices for cable and satellite television services rose 0.7%, veterinarian services rose 0.3% and the index for admission to sporting events rose 0.4%….in addition, the index for education and communication services was 0.4% higher as college tuition and fees rose 0.5%, postage rose 0.8%, and prices for internet services and electronic information provision rose 0.7%….lastly, the index for other personal services was up 0.6% as the price index for haircuts and other personal care services rose 0.7%, legal fees rose 0.7%, and the index for tax return preparation and other accounting fees was 2.0% higher…

Among core line items, prices for televisions, which are now averaging 20.8% cheaper than a year ago, the price index for telephone hardware, calculators, and other consumer information items, which is down by 14.0% since last January, the rental of video discs and other media, which has fallen 12.6% from a year ago, the price index for women’s outerwear, which has fallen by 12.1% in the past year, and the price index for computer software and accessories, which is down 10.7% 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 20.5% over the past year, and the price index for infants’ furniture, which has increased 10.2% year over year, are the only line items to have increased by a double digit magnitude over that span….

Retail Sales Rose 0.3% in January after November and December were Revised Lower

Seasonally adjusted retail sales increased 0.3% in January after retail sales for November and December were revised lower…the Advance Retail Sales Report for January (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $529.8 billion during the month, which was up 0.3 percent (±0.4%)* from December’s revised sales of $528.4 billion and 4.4 percent (±0.7 percent) above the adjusted sales in January of last year….December’s seasonally adjusted sales were revised down 0.2%, from $529.6 billion to $528.4 billion, while November’s sales were also revised lower, from $527.8 billion to $527.5 billion; as a result, the November to December change was revised from up 0.3 percent (±0.4 percent)* to up 0.2 percent (±0.2 percent)*…..the revisions to November and December sales would indicate that 4th quarter personal consumption expenditures were lower at a rate of around $6 billion annually, which would thereby reduce 4th quarter GDP by around 0.11 percentage points….estimated unadjusted retail sales, extrapolated from surveys of a small sampling of retailers, indicated sales actually fell 19.4%, from $595,536 million in December to $480,162 million in January, while they were 4.6% higher than the $459,143 million of sales in January a year ago, so we can see how a large seasonal adjustment to holiday and post holiday sales brought the headline sales into line, compared to the big sales decrease that would normally be expected in January…

Included below is the table of the monthly and yearly percentage changes in retail sales by business type taken from the January Census Marts pdf….the first pair of columns below gives us the seasonally adjusted percentage change in sales for each kind of business from the revised December figure to this month’s January “advance” report in the first sub-column, and then the year over year percentage sales change since last January in the 2nd column…the second double column pair below gives us the revision of the December advance estimates (now called “preliminary”) as of this report, with the new November to December percentage change under “Nov 2019 r” (revised) and the December 2018 to December 2019 percentage change as revised in the last column shown…for your reference, the table of last month’s advance estimate of December sales, before this month’s revisions, is here

January 2020 retail sales table

To compute January’s real personal consumption of goods data for national accounts from this January retail sales report, the BEA will use the corresponding price changes from the January consumer price index, which we reviewed earlier…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 the above table, we can see that January retail sales excluding the 0.5% price-related decrease in sales at gas station were up by 0.4%…..then, subtracting the figures representing the 0.2% increase in grocery & beverage store sales and the 1.2% increase in food services sales from that total, we find that core retail sales were up a bit more than 0.2% for the month…since the CPI report showed that the composite price index for all goods less food and energy goods was unchanged in January, 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 0.2%…..however, the actual adjustment in national accounts data 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 furniture stores were up 0.6%, the price index for household furnishings and supplies decreased by 0.1%, which would suggest that real sales at furniture stores rose by roughly 0.7%…similarly, while nominal sales at sporting goods, hobby, music and book stores rose 0.1%, the price index for recreational commodities fell 0.1%, so we can figure real sales of recreational goods were up by roughly 0.2%….on the other hand, while nominal sales at clothing stores were 3.1% lower in January, the apparel price index was 0.7% higher, which means that real sales of clothing probably fell around 3.8%…

In addition to figuring those core retail sales, we should adjust food and energy retail sales for their price changes separately…the January CPI report showed that the food price index was 0.2% higher, with the index for food purchased for use at home 0.1% higher, while prices for food bought to eat away from home were 0.4% higher… thus, while nominal sales at food and beverage stores were 0.2% higher, real sales of food and beverages would be roughly 0.1% higher in light of the 0.1% higher prices…meanwhile, the 1.2% increase in nominal sales at bars and restaurants, once adjusted for 0.4% higher prices, suggests that real sales at bars and restaurants rose about 0.8% during the month….in addition, while sales at gas stations were down 0.5%, there was a 1.6% decrease in the retail price of gasoline during the month, which would suggest that real sales of gasoline were up on the order of 1.1%, with the caveat that gasoline stations do sell more than gasoline, and we haven’t accounted for those other sales….averaging real sales that we have thus estimated together, we can then estimate that the income and outlays report for January will show that real personal consumption of goods rose by about 0.2% in January, after falling by a revised 0.1% in December, but rising by a revised 0.3% in November…at the same time, the 0.8% increase in real sales at bars and restaurants would boost January’s real personal consumption of services by more than 0.1%…

Industrial Production Fell 0.3% in January on Warm Weather

The Fed’s G17 release on Industrial production and Capacity Utilization indicated that industrial production fell by 0.3% in January after falling by a revised 0.4% in December, which left it 0.8% lower than a year ago…the industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, fell to 109.2 in January from 109.5 in December, after the December index was revised from 109.4 to 109.5, the November index was revised from the 109.8 reported last month to 110.0, the October index was revised from 108.9 to 109.0, the September index was revised from 109.4 to 109.5, and the August index was revised from 110.0 to 109.9….as a result of this month’s revisions, industrial production grew 0.7% in August, rather than 0.8% as previously reported, shrunk 0.3% in September, rather than the 0.5% downturn previously reported, shrunk 0.4% in October, revised from down 0.5%, and grew 0.9% in November, revised from the 0.8% growth previously reported, while industrial production fell 0.4% in December rather than the 0.3% drop that was previously reported…

The manufacturing index, which accounts for around 77% of the total IP index, fell 0.1% in January, from 105.0 to 104.9, after the November index was revised from 104.8 to 104.9, and the October index was revised from 103.8 to 103.9, while the December manufacturing index remained at 105.0 and the September index remained at 104.5…the January decrease in manufacturing included a 0.5% drop in durable goods output, mostly due falling aerospace and machinery output; factory output excluding aircraft and parts was up 0.3%…meanwhile, the mining index, which includes oil and gas well drilling, rose from 134.6 in December to 136.2 in January after the December index was revised up from 134.4, which lifted the mining index to 3.1% above where it was a year earlier…finally, the utility index, which often fluctuates due to above or below normal temperatures, fell 4.0% in January, from 102.0 to 98.0, after the December utility index was revised from 101.6 to 102.0 and the November utility index was revised from 107.6 to 108.7…even though last year’s heating requirements for December and January were below normal and drove the utility index lower at that time, this year’s temperatures were further above normal and hence the utility index is now 6.2% 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 76.8% in January from 77.1% in December, which was revised from the 77.0% that was reported last month …capacity utilization of NAICS durable goods production facilities fell from an unrevised 75.2% in December to 74.7% in January, while capacity utilization for non-durables producers rose from an upwardly revised 76.2% to 76.4%…capacity utilization for the mining sector rose to 90.7% in January from 89.8% in December, which was originally reported as 89.6%, while utilities were operating at 70.6% of capacity during January, down from their 73.8% of capacity during December, which was previously reported at 73.5%…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….

December Business Sales Down 0.1%, Business Inventories Up 0.1%

After the release of the January retail sales report, the Census Bureau released the composite Manufacturing and Trade, Inventories and Sales report for December (pdf), which incorporates the revised December retail data from that January report and the earlier published December wholesale and factory data to give us a complete picture of the business contribution to the economy for that month….according to the Census Bureau, total manufacturer’s and trade sales were estimated to be valued at a seasonally adjusted $1,461.0 billion in December, down 0.1 percent (±0.2 percent)* from November’s revised sales, but up 1.7 percent (±0.4 percent) from December sales of a year earlier…note that total November sales were concurrently revised down from the originally reported $1,465.7 billion to $1,462,043 million, now up just 0.5% from October, rather than +0.7%….manufacturer’s sales rose 0.5% to $504,082 million in December; retail trade sales, which exclude restaurant & bar sales from the revised December retail sales reported earlier, were statistically unchanged at $462,598 million, while wholesale sales fell 0.7% to $501,682 million…

Meanwhile, total manufacturer’s and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $2040.0 billion at the end of December, up 0.1 percent (±0.1 percent)* from November, and 2.2 percent (±0.4 percent) higher than in December a year earlier…at the same time, the value of end of November inventories was revised from the $2,037.4 billion reported last month to $2,038.1 billion, still down 0.2% from October….seasonally adjusted inventories of manufacturers were estimated to be valued at $704,869 million in December, 0.5% more than in November,statistically unchanged from November, while inventories of retailers were valued at $660,663 million, statistically unchanged from November,  and inventories of wholesalers were estimated to be valued at $674,477 million at the end of December, 0.2% lower than in November…

Last week we estimated that 4th quarter GDP was overestimated by around 0.08 percentage points based on what the wholesale inventory report showed, but that 4th quarter GDP was underestimated by around by about 0.05 or 0.06 percentage points based on what the factory inventories report showed….in the advance report on 4th quarter GDP of two weeks ago, retail 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 retail inventories were valued at $661,219 billion at the end of December, up but statistically unchanged from a revised $661,154 billion in November….that’s $0.556 billion more than the $660,663 billion for the end of the quarter that this report shows, which would mean that the quarterly change in 4th quarter retail inventories were overestimated at roughly a $2.2 billion annual rate, or by an amount that would add around 0.04 percentage points too much to GDP…combined with our previous figures on factory and wholesale inventories, then, this report would suggest that the growth rate of 4th quarter GDP should be revised downwards by around 0.06 or 0.07 percentage points when the 2nd estimate is released at the end of February…

Job Openings and Quitting Down In December; Hiring and Layoffs Up

The Job Openings and Labor Turnover Survey (JOLTS) report for December from the Bureau of Labor Statistics estimated that seasonally adjusted job openings decreased by 364,000, from 6,787,000 in November to 6,423 ,000 in December, after November job openings were revised 13,000 lower, from 6,800,000 to 6,787,000….December’s jobs openings were also 14.1% lower than the 7,479,000 job openings reported in December a year ago, and the fewest since December 2017, as the job opening ratio expressed as a percentage of the employed at 4.0% was down from the 4.3% logged in November, and down from 4.7% in December a year ago…the trade, transportation, and utilities sector, with an 88,000 job opening decrease to 233,000, saw the largest percentage decrease, while the construction sector saw job openings increase by 22,000 to 239,000 (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 to at the end of the release…

Since job openings have now fallen substantially over the past two months, we’ll include a graph so you can see what that looks like…as you can see, job openings are now down 15.8% from their November 2018 peak, and appear to have made a major turn….in the 20 year history of this metric, there were only two prior periods that saw jobs opening fall by that magnitude, and both were co-incident with recessions…

December 2020 job openings

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 December, seasonally adjusted new hires totaled 5,907,000, up by 80,000 from the revised 5,827,000 who were hired or rehired in November, as the hiring rate as a percentage of all employed rose from 3.8% in November to 3.9% in December, and was also up from 3.8% in December a year earlier (details of hiring by sector since March are in table 2)….meanwhile, total separations rose by 21,000, from 5,709,000 in November to 5,730,000 in December, as the separations rate as a percentage of the employed rose was unchanged at 3.7%, while it was up from 3.6% in December a year ago (see table 3)…subtracting the 5,730,000 total separations from the total hires of 5,907,000 would imply an increase of 177,000 jobs in December, more than the revised payroll job increase of 147,000 for December reported in the January establishment survey of last week, but well within the expected +/-115,000 margin of error in these incomplete labor market samplings

Breaking down the seasonally adjusted job separations, the BLS finds that 3,488,000 of us voluntarily quit our jobs in December, down by 80,000 from the revised 3,568,000 who quit their jobs in November, while the quits rate, widely watched as an indicator of worker confidence, remained at 2.3% of total employment, the same at it was a year earlier (see details in table 4)….in addition to those who quit, another 1,895,000 were either laid off, fired or otherwise discharged in December, up by 127,000 from the revised 1,768,000 who were discharged in November, as the discharges rate also remained unchanged at 1.2% of all those who were employed during the month, which was the same as the discharges rate of 1.2% a year earlier….meanwhile, other separations, which includes retirements and deaths, were at 347,000 in December, down from 373,000 in November, for an ‘other separations rate’ of 0.2%, the same rate as in November and the same as in December 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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