May’s consumer and producer prices; April’s wholesale sales and JOLTS

Major reports released during the past week included the May Consumer Price Index, the May Producer Price Index, the May Import-Export Price Index, and the Job Openings and Labor Turnover Survey (JOLTS) for April, all from the Bureau of Labor Statistics; and the April report on Wholesale Trade, Sales and Inventories from the Census Bureau… this week also saw the release of the Mortgage Monitor for April (pdf) from Black Knight Financial Services, which indicated that 6.45% of mortgages were delinquent in April, up from 3.39% delinquent in March, and up from the 3.47% delinquency rate of April 2019, and that 0.40% of mortgages remained in the foreclosure process in April, down from 0.42% of all mortgages in March and down from 0.50% a year ago….the graph below from the Mortgage Monitor shows the mortgage delinquency rate by property value; it seems noteworthy that the delinquency rate for mortgages under $100,000 is more than three times that of mortgages of over $1 million:

June 8 2020 April Mortgage Monitor delinquency rate by property value

Consumer Prices Fell 0.1% in May on Lower Prices for Gasoline, Clothing, & Car Insurance

The consumer price index fell 0.1% in May, as lower prices for energy, clothing, lodging, and transportation services were only partly offset by higher prices for food, rent, and medical services…the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that seasonally adjusted prices fell by 0.1% in May, after falling by 0.8% in April and 0.4% in March, rising by 0.1% in February, by 0.1% in January, by 0.2% in December, 0.2% in November, 0.2% in October, 0.1% in September, 0.1% in August and rising by 0.3% last July…the unadjusted CPI-U index, which was set with prices of the 1982 to 1984 period equal to 100, actually inched up from 256.389 in April to 256.394 in May, which left it statistically 0.1179% higher than the 256.092 index reading of May of last year, which is reported as a 0.1% year over year increase, down from the 0.3% year over year increase reported a month ago….with lower prices for energy mostly offset by higher prices for food, seasonally adjusted core prices, which exclude food and energy, also fell by 0.1% for the month, as the unadjusted core price index fell from 266.089 to 265.799, which left the core index 1.222% ahead of its year ago reading of 262.590, which is reported as a 1.2% year over year increase, down from the 1.4% year over year increase that was reported for April…

The volatile seasonally adjusted energy price index fell 1.8% in May, after falling 10.1% in April, 5.8% in March, 2.0% in February and 0.7% in January, but 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% last July, and is now 18.9% lower than in May a year ago…the price index for energy commodities was 3.5% lower in May, while the index for energy services was 0.5% lower, after rising 0.1% in April….the energy commodity index was down 3.5% due to a 3.5% decrease in the price of gasoline, the largest component, and a 6.3% decrease in the index for fuel oil, while prices for other energy commodities, including propane, kerosene, and firewood, were on average 1.0% higher…within energy services, the price index for utility gas service rose 0.8% after rising 0.2% in April but is still 0.3% lower than it was a year ago, while the electricity price index fell 0.8% after rising 0.1% in April….energy commodities are now averaging 33.2% lower than their year ago levels, with gasoline prices averaging 33.8% lower than they were a year ago, while the energy services price index is down 0.2% from last May, as electricity prices are also 0.2% lower than a year ago…

The seasonally adjusted food price index rose 0.7% in May, after rising 1.5% in April, 0.3% in March, 0.4% February, 0.2% January, 0.2% December, 0.1% in November, 0.2% October, 0.2% September, but being unchanged last June, July & August, as the price index for food purchased for use at home was 1.0% higher in May, after a 2.6% jump in April, while the index for food bought to eat away from home was 0.4% higher, as average prices at fast food outlets were 0.6% higher while prices at full service restaurants rose 0.2% and food prices at employee sites and schools were on average 0.2% higher…

In the food at home categories, the price index for cereals and bakery products was 0.2% lower as average bread prices fell 1.8%, prices for fresh biscuits, rolls, muffins fell 0.7%, and the price index for cakes, cupcakes, and cookies fell 0.9% on a 3.1% drop in cookie prices…on the other hand, the price index for the meats, poultry, fish, and eggs group was 3.7% higher even though egg prices fell 4.8%, as the price index for beef and veal rose 10.8%, and the price index for pork was 2.7% higher… meanwhile, the seasonally adjusted index for dairy products was 1.0% higher, even as milk prices fell 0.4%, as prices for ice cream & related products rose 2.5% and the index for other dairy products rose 1.9%…in addition, the fruits and vegetables index was 0.5% higher as the price index for fresh vegetables rose 1.3% and the price index for frozen fruits and vegetables rose 2.8%…at the same time, the beverages index was unchanged as the price index for carbonated drinks fell 0.9% while the price index for noncarbonated juices and drinks rose 0.4%….lastly, the index for the ‘other foods at home’ category was also unchanged, as the price index for sugar and sugar substitutes rose 1.2% while soup prices fell 3.3% and the price index for snacks fell 1.2%…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 May, the price index for beef and veal is now 18.2% higher, the price of pork chops are up 14.0%, the price index for the index for pork roasts, steaks, and ribs has risen 13.1%, and the price of eggs, which is up 13.5%, are the only food items with a price change greater than 10% over the past year…

Among the seasonally adjusted core components of the CPI, which fell by 0.1% in May, after falling by 0.4% in April and by 0.1% in March, rising by 0.2% in February, 0.2% in January, 0.1% December, 0.2% November, 0.1% October, 0.2% in September, 0.2% in August, and by 0.3% last July, the composite price index of all goods less food and energy goods was 0.2% lower in May, while the more heavily weighted composite for all services less energy services was unchanged….among the goods components, which will be used by the Bureau of Economic Analysis to adjust May’s retail sales for inflation in national accounts data, the price index for household furnishings and supplies was 0.6% higher, as the price index for living room, kitchen, and dining room furniture rose 1.3% and the index for bedroom furniture rose 0.8%, while the price index for window coverings fell 2.4%….at the same time, the apparel price index was 2.3% lower on a 4.1% decrease in the price index for men’s suits, sport coats, and outerwear, a 9.7% decrease in the price index for women’s dresses, and a 5.3% decrease in the price index for women’s underwear, nightwear, swimwear, and accessories…on the other hand, the price index for transportation commodities other than fuel was 0.1% jigher as prices for new cars rose 0.3%, prices for used cars and trucks fell 0.4%, tire prices rose 1.2%, and the price index for vehicle parts and equipment other than tires rose 1.5%….meanwhile, prices for medical care commodities were also 0.1% higher, even as prescription drugs prices fell 0.2%, because non-prescription drugs prices rose 0.4% and the price index for peronal medical equipment rose 1.5%…at the same time, the recreational commodities index was unchanged as a 0.9% decrease in TV prices, a 1.2% decrease in prices for recorded music and music subscriptions and a 1.9% drop in prices for photographic equipment were offset by a 1.6% increase in prices for recreational books, a 0.6% increase in the price index for toys, games, hobbies and playground equipment, a 0.6% increase in the price index for sporting goods, and a 2.0% increase in the price index for sewing machines, fabric and supplies…on the other hand, the education and communication commodities index was 0.1% lower on a 0.1% decrease in the price index for college textbooks and a 0.8% decrease in the price index for computers, peripherals, and smart home assistants…lastly, a separate price index for alcoholic beverages was 0.8% higher, while the price index for ‘other goods’ was 0.3% lower on a 0.8% decrease in the index for cosmetics, perfume, bath, nail preparations and implements and a 2.3% decrease in the index for infants’ equipment..

Within core services, the price index for shelter was 0.2% higher as rents rose 0.3% and homeowner’s equivalent rent rose 0.3% while prices for lodging away from home at hotels and motels fell 1.8%, while at the same time the shelter sub-index for water, sewers and trash collection rose 0.2%, and other household operation costs were on average 0.1% lower on a 2.4% drop in moving, storage, freight expense….meanwhile, the price index for medical care services was 0.6% higher, as the price index for dental services rose 1.1%, the price index for physicians’ services rose 0.7% and the price of health insurance rose 1.1%… on the other hand, the transportation services price index was 3.6% lower as the price index for car and truck rental fell 3.5%, airline fares fell 4.9% and vehicle insurance costs fell 8.9%….however, the recreation services price index rose 1.3% as the index for cable and satellite television service rose 0.5% and the index for admission to to movies, theaters, and concerts rose 2.2%…at the same time, the index for education and communication services was 0.1% higher as elementary and high school  tuition and fees rose 0.5% and postage rose 0.3%….lastly, the index for other personal services was also up 0.1% as the price index for funeral services rose 0.2%, and the index for tax return preparation and other accounting fees was 0.3% higher…

Among core line items, prices for televisions, which are now averaging 15.6% cheaper than a year ago, the price index for telephone hardware, calculators, and other consumer information items, which is down by 12.5% since last May, the the price index for rental of video discs and other media, which has fallen 14.8% from a year ago, the price index for women’s dresses, which has fallen by 26.2% in the past year, the price index for women’s outerwear, which has fallen by 15.7% from a year ago, the price index for women’s suits and separates, which is down 10.4% year over year, the price index for men’s suits, sport coats, and outerwear, which has fallen by 15.8% in the past year, the price index for infants’ and toddlers’ apparel, which has fallen by 11.4% in the past year, prices for car and truck rental, which are down 19.2% in a year’s time, vehicle insurance, which has fallen 14.3% since last year, airline fares, which are now down by 28.8% since last May, and the price index for computer software and accessories, which is down 10.5% 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 19.7% over the past year, and the price index for window coverings, which has risen 11.1% from a year ago, are the only line items to have increased by a double digit magnitude over that span….  

Producer Prices Rose 0.4% in May on Higher Energy and Food Prices

The seasonally adjusted Producer Price Index (PPI) for final demand rose 0.4% in May, as prices for finished wholesale goods averaged 1.6% higher, while margins of final service providers averaged 0.2% lower…that followed an April report wherein the PPI fell 1.3%, the largest drop in the history of the index, as prices for finished wholesale goods averaged 3.3% lower, and average margins of final services providers decreased by 0.2%, a March report that had the PPI down 0.2%, as prices for finished wholesale goods averaged 1.0% lower, while average margins of final services providers increased by 0.2%, a now revised February report that showed the PPI had fallen 0.4%, with prices for finished wholesale goods averaging 0.9% lower, while average margins of final services providers fell by 0.2%, and a re-revised January report that indicates the PPI had risen 0.3%, as prices for finished wholesale goods had been on average 0.3% higher, while margins of final services providers also increased by 0.3%…on an unadjusted basis, producer prices are still 0.8% lower than a year ago,  up from the 1.2% year over year decrease indicated by last month’s report, while, the core producer price index, which excludes food, energy and trade services, rose by 0.1% for the month, and is now 0.4% lower than in May a year ago, down from the 0.3% year over year decrease shown in April…

As noted, the price index for final demand for goods, aka ‘finished goods’, was 1.6% higher in May, after being 3.3% lower in April, 1.0% lower in March, 0.9% lower in February, 0.3% higher in January, 0.2% higher in December, 0.3% higher in November, 0.5% higher in October, 0.2% lower in September, 0.3% lower in August, 0.3% higher in July, 0.5% lower in June, and 0.2% lower in May of last year….the finished goods index rose 1.6% in May because the price index for wholesale energy goods was 4.5% higher, after falling by 19.0% in April, 6.7% in March, 3.6% in February but after rising by 0.2% in January, and because the price index for wholesale foods rose 6.0%, after falling 0.5% in April, being unchanged in March, falling 1.6% in February, and being unchanged in January, while the index for final demand for core wholesale goods (excluding food and energy) was unchanged, after falling 0.4% in April, rising 0.2% in March and being unchanged in February…wholesale energy prices were higher due to 43.9% jump in wholesale prices for gasoline and a 54.0% increase in wholesale prices for liquefied petroleum gas, even as wholesale prices for home heating oil fell 34.6%, while the wholesale food price index rose 6.0% on a 69.1% jump in wholesale prices for beef and veal and an 11.4% increase in the wholesale price index for fresh fruits and melons….among wholesale core goods, the wholesale price index for industrial chemicals fell 4.3% and the wholesale price index for office and store machines and equipment fell 1.2%, while wholesale prices for iron & steel scrap rose 11.3% and the wholesale price index for light motor trucks rose 1.2%%..

At the same time, the index for final demand for services fell 0.2% in May, after falling 0.2% in April, rising 0.2% in March, falling a revised 0.2% in February, and rising by a revised 0.3% in January, as the index for final demand for trade services fell 0.8%, the index for final demand for transportation and warehousing services rose 1.5%, and the core index for final demand for services less trade, transportation, and warehousing services was unchanged… among trade services, seasonally adjusted margins for fuels and lubricants retailers fell 13.1%, margins for automobile retailers fell 10.2%, and margins for TV, video, and photographic equipment and supplies retailers fell 9.0%, while margins for RVs, trailers, and campers retailers rose 11.2% … among transportation and warehousing services, margins for airline passenger services rose 12.2% and margins for air transportation of freight rose 1.4% …among the components of the core final demand for services index, margins for arrangement of cruises and tours fell 18.2%, and margins for securities brokerage, dealing, investment advice, and related services fell 10.0%, while margins for dental care rose 6.5%, margins for arrangement of vehicle rentals and lodging rose 5.3%, and margins for passenger car rental rose 4.8%…

This report also showed the price index for intermediate processed goods rose 0.1% in May, after falling 3.7% in April, 1.1% in March, 0.9% in February and 0.2% in January….the price index for intermediate energy goods rose 0.1%, as refinery prices for gasoline rose 43.9% and producer prices for liquefied petroleum gas rose 54.0%, while refinery prices for residual fuels fell 38.9%, refinery prices for jet fuel fell 12.6% and refinery prices for No. 2 diesel fuel fell 16.2%…meanwhile, prices for intermediate processed foods and feeds rose 6.4%, as the producer price index for meats rose 40.4% and the index for processed fruits and vegetables rose 1.4%…at the same time, the core price index for intermediate processed goods less food and energy fell 0.6% as the producer price index for basic organic chemicals fell 5.2% and the producer price index for steel mill products decreased 3.1%… prices for intermediate processed goods are still 6.8% lower than in May a year ago, the 13th 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 8.9% in May, after falling 13.7% in April, 8.0% in March, a revised 7.2% in February and a revised 1.1% in January….that was as the May price index for crude energy goods rose 26.5% as crude oil prices rose 41.6% and as unprocessed natural gas prices rose 36.5%, while the price index for unprocessed foodstuffs and feedstuffs rose 4.5% on a 64.9% increase in producer prices for slaughter chickens and a 41.6% increase in producer prices for slaughter hogs…at the same time, the index for core raw materials other than food and energy materials rose 0.6%, as prices for wastepaper fell rose 18.3%, the price index for unprocessed iron & steel scrap increased 11.3%, and the price of copper base scrap rose 3.3%….this raw materials index is still 19.4% lower than a year ago, as the year over year change on this index remained negative all last year…

Lastly, the price index for services for intermediate demand fell 0.4% in May, after falling 1.6% in April, 0.1% in March, a revised 0.2% in February, but rising a revised 0.2% in January…the price index for intermediate trade services was 0.6% higher, as margins for intermediate chemicals and allied products wholesalers rose 1.8% and margins for intermediate machinery and equipment parts and supplies wholesalers rose 1.7%…meanwhile, the index for transportation and warehousing services for intermediate demand was 0.5% higher, as the intermediate price index for transportation of passengers (partial) rose 12.2% and the price index for air transportation of freight rose 1.4%…at the same time, the core price index for intermediate services less trade, transportation, and warehousing was 0.9% lower, as the intermediate price index for securities brokerage, dealing, investment advice, and related services fell 10.0%, the intermediate price index for business loans (partial) fell 9.9%, and the price index for radio advertising time sales fell 25.9%…over the 12 months ended in May, the year over year price index for services for intermediate demand is now 1.6% lower than it was a year ago, after turning negative year over year in April for the first time in the history of this index…

Job Openings, Hiring and Firing, and Job Quitting all way down in April

The Job Openings and Labor Turnover Survey (JOLTS) report for April from the Bureau of Labor Statistics estimated that seasonally adjusted job openings fell by by 965,000, from 6,011,000 in March to 5,046,000 job openings in April, after March job openings were revised 180,000 lower, from 6,191,000 to 6,011,000…April’s jobs openings were also 30.7% lower than the 7,284,000 job openings reported for April a year ago, as the job opening ratio expressed as a percentage of the employed fell from 3.8% in March to 3.7% in April, and it was down from 4.6% a year ago…the greatest percentage decrease in April job openings was in the leisure and hospitality sector, where openings fell by 210,000 to 454,000, while job openings in professional and business services fell by 309,000 to 883,000… (details on job openings by industry and region can be viewed in Table 1)…like most BLS releases, the press release for this report is easy to understand and also refers us to the associated table for the data cited, which are linked to 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 April, seasonally adjusted new hires totaled 3,524,000, down by 1,587,000 from the revised 5,111,000 who were hired or rehired in March, as the hiring rate as a percentage of all employed fell from 3.4% to 2.7%, which was also down from the 4.0% hiring rate in April a year earlier (details of hiring by industry since December are in table 2)….meanwhile, total separations also fell, by 4,755,000, from 14,643,000 in March to 9,888,000 in April, as the separations rate as a percentage of the employed fell from 9.7% in March to 7.5% in April, which was stiil way up from the separations rate of 3,8% in April a year ago (see table 3)…subtracting the total hires of 3,524,000 from the 9,888,000 total separations would imply an decrease of 6,364,000 jobs in April, quite a bit less than the revised payroll job increase of 20,687,000 for April reported by the May establishment survey last week, with only some of that difference likely due to the difference in the date of the surveys, which is at month end for this report but is during the week of the 12th for the employment situation….

Breaking down the seasonally adjusted job separations, the BLS finds that 1,786,000 of us voluntarily quit our jobs in April, down by 1,003,000 from the revised 2,789,000 who quit their jobs in March, while the quits rate, widely watched as an indicator of worker confidence, fell from 1.8% in March to 1.4% in April, which was also down from 2.3% a year earlier (see details in table 4)….in addition to those who quit, another 7,716,000 were either laid off, fired or otherwise discharged in April, down by 3,773,000 from the revised 11,489,000 who were discharged in March, as the discharges rate fell from 7.6% to 5.9% of all those who were employed during the month, which was still way up the 1.3% rate of a year earlier….meanwhile, other separations, which includes retirements and deaths, were at 386,000 in April, up from 366,000 in March, for an ‘other separations’ rate of 0.3%, up from 0.2% in March and from in April a year ago….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

April Wholesale Sales Down 16.9%, Wholesale Inventories Up 0.3%

The April report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at $395.4 billion, down 16.9 percent (+/-0.5%) from the revised March sales level, and down 20.7 percent (±0.7 percent) from wholesale sales of April 2019… the March preliminary sales estimate was revised from the $475.0 billion reported last month to $475,572 million, which meant the February to March percent change was revised from the preliminary estimate of a decrease of 5.2 percent (±0.5 percent) to a decrease of 5.1 percent (±0.5 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 any goods on the shelf or in intermediate storage represent goods that were produced but not sold, and this April report estimated that wholesale inventories were valued at a seasonally adjusted $650.4 billion at month end, an increase of 0.3 percent (+/-0.2%) from the revised March level but 2.8 percent (±0.9 percent) lower than in April a year ago, with the March preliminary estimate revised from $650.7 billion to $648.7 billion at the same time, now down 1.1% from February….

That $2.0 billion downward revision to March wholesale inventories will reduce 1st quarter GDP by 0.04 percentage points ..meanwhile, April wholesale inventories, after an adjustment for price changes for each category of wholesale goods as indicated by the components of the April producer price index, appears to indicate a real wholesale inventory increase on the order of 4% heading into the 2nd quarter, which, after the $30.4 billion decrease in real wholesale inventories that was indicated by the key source data and assumptions (xls) in the second estimate of 1st quarter GDP., will have a substantial positive impact on the growth rate of 2nd quarter GDP…

 

(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most picked from the aforementioned GGO posts, contact me…)    

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