oil prices end at a 24 week high on geopolitical threats to supply

US oil prices rose every day this week and ended at a new five month high ​o​n ​threats to supply from increasing hostilities in eastern Europe and the Mideast….after rising 3.2% to a 5 month high of $83.17 a barrel last week on stronger than expected US economic data and ​on expectations that OPEC would leave its production cuts in place, the contract price for the benchmark US light sweet crude for May delivery rallied almost 2% early Monday on expectations of increas​ed oil demand following the release of supportive economic news from the U.S. and China, but reversed part of those early gains to settle 54 cent higher at $83.71 a barrel as traders figured that stronger US manufacturing data would reduce the chances of a meaningful Fed rate cut​…oil prices continued on their upward trend on Tuesday amid a new wave of attacks on Russian and Ukrainian energy facilities, and escalating tensions in the Middle East, and settled $1.44 cents higher at a new 5 month high of $85.15 a barrel after Iran vowed to take revenge on Israel for an airstrike that killed two top generals at the Iranian embassy compound in Damascus, raising the specter of a broader war…oil prices edged higher early Wednesday after OPEC+ ministers affirmed the current supply cuts would continue and after the American Petroleum Institute reported across the board draws from oil & product supplies, then pulled back after the EIA reported a surprise crude inventory build, but still settled the session 28 cents higher at another 5 month high of $85.43 a barrel as trader concerns about supply disruptions due to conflict in the Middle East offset the bearish jump in U.S. crude oil inventories…oil prices fell on the EIA’s report of sluggish US fuel demand in early Asian trading Thursday, then moved mostly sideways for much of the US session as they slipped back below the $85 level as caution over US jobs data and interest rates weighed against OPEC’s output cuts and geopolitical tensions, but rallied late in the afternoon session to close $1.16 higher at another 5 month high of $86.59 a barrel on news that Israeli embassies across the U.S. had been placed on high alert due to increasing threats of an Iranian attack on Israeli diplomats….oil prices surged more than $1 a barrel in overseas markets on Friday as traders watched for a possible direct military conflict between Israel and Iran that could further tighten supplies, but pared those early gains to settle up 32 cents at a 24 week high of $86.91 a barrel as better than expected ​US jobs ​d​ata w​as bullish for oil demand but potentially bearish for interest rate cuts by the Fed later this year, and thus finished 4.5% higher on the week…

natural gas prices rose for the 2nd time in three weeks, or for the first time in four weeks, depending on whether one counts a switch to quoting a higher priced contract as a rise in prices, as Reuters and most of the media does, or not, as we would favor…after falling 2.7% to $1.763 per mmBTU while natural gas quotes were 6.3% higher on the switch from the April contract last week, the contract price for natural gas for May delivery opened nearly six cents higher on Monday and rose all morning, as analysts pointed to lower production as the impetus for the ​e​arly rally, but slipped in afternoon trading to settle 7.4 cents higher at a three-week high of $1.837 per mmBTU, as gas well output dropped and forecasts were lifted for demand next week…but natural gas prices opened 5 cents lower on Tuesday, knocked back down overnight by weakening LNG exports and weak heating demand, and fell to the day’s low of $1.778 within minutes, before mounting a steady advance to settle 2.5 cents higher at another three week high of $1.862 per mmBTU, as producers continued to cut output, even as price gains were limited by lowered forecasts for demand this week…while natural gas prices opened 3 cents higher on Wednesday, prices soon backed off, as declines in production could no longer buoy a market with such saturated storage levels, and ​May natural gas settled 2.1 cents lower at $1.841 per mmBTU as the reported decline in output was less than traders had been expecting…the May contract then traded sideways near $1.835 leading up ​t​o the weekly storage report release on Thursday, then moved lower as the report hit the wire, as updated forecasts for reduced heating demand in the coming weeks added to the market’s existing bearish sentiment, and settled 6.7 cents lower at $1.774 per mmBTU, after the EIA’s storage report confirmed lofty supply levels…natural gas prices clawed back some of their losses in early trading Friday, as traders continued to mull a mix of restrained production, mild weather and plump inventories, but a serious rally could not be sustained and gas settled 1.1 cents higher at $1.785 per mmBTU, but still managed to eke out a 1.2% gain on the week…

The EIA’s natural gas storage report for the week ending March 29th indicated that the amount of working natural gas held in underground storage fell by 37 billion cubic feet to 2,259 billion cubic feet by the end of the week, which left our natural gas supplies 422 billion cubic feet, or 23.0% above the 1837 billion cubic feet that were in storage on March 29th of last year, and 633 billion cubic feet, or 38.9% more than the five-year average of 1,626 billion cubic feet of natural gas that were typically in working storage as of the 29th of March over the most recent five years…the 37 billion cubic foot withdrawal from US natural gas working storage for the cited week was less than the 41 billion cubic foot withdrawal that the market was expecting, while it was more than the 29 billion cubic feet that were pulled from natural gas storage during the corresponding third week of March 2023, and was quite a bit more than the average 1 billion cubic foot withdrawal from natural gas storage that has been typical for the same last week of March over the past 5 years…

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending March 29th indicated that ​after small decreases in our oil exports​ and ​in our refinery throughput, we again had surplus oil to add to our stored commercial crude supplies for 8th time in ten weeks and for the 16th time in the past 24 weeks, as even the oil supplies that the EIA could not account for we​re little changed….Our imports of crude oil fell by an average of 85,000 barrels per day to an average of 6,618,000 barrels per day, after rising by an average of 424,000 barrels per day over the prior week, while our exports of crude oil fell by 159,000 barrels per day to average 4,022,000 barrels per day, which when used to offset our imports, meant that the net of our trade in oil worked out to a net import average of 2,596,000 barrels of oil per day during the week ending March 29th, 74,000 more barrels per day than the net of our imports minus our exports during the prior week. At the same time, transfers to our oil supply from Alaskan gas liquids, from natural gasoline, from condensate, and from unfinished oils averaged 384,000 barrels per day, while during the same week, production of crude from US wells was unchanged at 13,100,000 barrels per day. Hence our daily supply of oil from the net of our international trade in oil, from transfers, and from domestic well production appears to have averaged a rounded total of 16,080,000 barrels per day during the March 29th reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,897,000 barrels of crude per day during the week ending March 29th, an average of 35,000 fewer barrels per day than the amount of oil that our refineries reported they were processing during the prior week, while over the same period the EIA’s surveys indicated that a rounded average of 543,000 barrels of oil per day were being added to the supplies of oil stored in the US… So, based on that reported & estimated data, the crude oil figures provided by the EIA for the week ending March 29th appear to indicate that our total working supply of oil from net imports, from transfers, and from oilfield production was 360,000 barrels per day less than what what was added to storage plus our oil refineries reported they used during the week…To account for that difference between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a +360,000] barrel per day figure onto line 16 of the weekly U.S. Petroleum Balance Sheet, in order to make the reported data for the supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there was an error or omission of that magnitude in the week’s oil supply & demand figures that we have just transcribed…Even so, since most oil traders react to these weekly EIA reports as if they were accurate, and since these weekly figures therefore often drive oil pricing, and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it’s published, and just as it’s watched & believed to be reasonably reliable by most everyone in the industry…(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….(note there is also an aging twitter thread from an EIA administrator addressing these ongoing weekly errors, and what they had hoped to do about it)

This week’s average 543,000 barrel per day increase in our overall crude oil inventories came as an average of 459,000 barrels per day were being added to our commercially available stocks of crude oil, while an average of 84,000 barrels per day were being added to our Strategic Petroleum Reserve, the seventeenth SPR increase in twenty-four weeks, following nearly continuous withdrawals over the prior 39 months… Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to 2,272,000 barrels per day last week, which was 0.9% more than the 6,214,000 barrel per day average that we were importing over the same four-week period last year. This week’s crude oil production was reported to be unchanged at 13,100,000 barrels per day because the EIA’s rounded estimate of the output from wells in the lower 48 states was unchanged at 12,700,000 barrels per day, while Alaska’s oil production was also unchanged at 432,000 barrels per day and added the same 400,000 barrels per day to the EIA’s rounded national total as it did last week…US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure matches that of our pre-pandemic production peak, and is also 35.1% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021.

US oil refineries were operating at 88.6% of their capacity while processing those 15,897,000 barrels of crude per day during the week ending March 29th, down from their 88.7% utilization rate of a week earlier, but ​a nearly normal operating rate for late March, after ​refineries recover​e​d from damage caused by the arctic cold that penetrated to the Gulf Coast in mid January… the 15,897,000 barrels of oil per day that were refined this week were 1.8% more than the 15,615,000 barrels of crude that were being processed daily during week ending March 31st of 2023, and 0.3% more than the 15,849,000 barrels that were being refined during the prepandemic week ending March 29th, 2019, when our refinery utilization rate was at a below normal 86.4%..

Even with the decrease in the amount of oil being refined this week, gasoline output from our refineries was quite a bit higher, increasing by 767,000 barrels per day to 9,980,000 barrels per day during the week ending March 29th, after our refineries’ gasoline output had decreased by 435,000 barrels per day during the prior week. This week’s gasoline production was 1.3% more than the 9,851,000 barrels of gasoline that were being produced daily over week ending March 31st of last year, and 1.7% more than the gasoline production of 9,813,000 barrels per day during the prepandemic week ending March 29th, 2019….on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 208,000 barrels per day to 4,606,000 barrels per day, after our distillates output had increased by 124,000 barrels per day during the prior week. Even after six production increases in the past 7 weeks, our distillates output was 2.8% less than the 4,740,000 barrels of distillates that were being produced daily during the week ending March 31st of 2023, and 5.4% less than the 4,870,000 barrels of distillates that were being produced daily during the week ending March 29th, 2019…

Even with this week’s increase in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the eighth time in nine weeks, decreasing by 4,256,000 barrels to 227,816,000 barrels during the week ending March 29th, after our gasoline inventories had increased by 1,299,000 barrels during the prior week. Our gasoline supplies fell this week because the amount of gasoline supplied to US users jumped by 521,000 barrels per day to 9,236,000 barrels per day, and because our exports of gasoline rose by 77,000 barrels per day to 863,000 barrels per day, and because our imports of gasoline fell by 34,000 barrels per day to 488,000 barrels per day.…​B​ut even after thirty-two gasoline inventory withdrawals over the past fifty-two weeks, our gasoline supplies were still 2.4% above last March 31st’s gasoline inventories of 222,575,000 barrels, but ​were about 3% below the five year average of our gasoline supplies for this time of the year…

With this week’s decrease in our distillates production, our supplies of distillate fuels fell for 8th time in ten weeks, following eight consecutive prior increases, decreasing by 1,268,000 barrels to 116,069,000 barrels over the week ending March 29th, after our distillates supplies had decreased by 1,185,000 barrels during the prior week. Our distillates supplies fell again this week even though the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 533,000 barrels per day to 3,495,000 barrels per day, because our exports of distillates rose by 276,000 barrels per day to 1,396,000 barrels per day, and because our imports of distillates fell by 61,000 barrels per day to 104,000 barrels per day…Even with 30 inventory decreases over the past fifty-two weeks, our distillates supplies at the end of the week were 2.7% above the 113,051,000 barrels of distillates that we had in storage on March 31st of 2023, but were about 7% below the five year average of our distillates inventories for this time of the year…

Finally, after supply and demand metrics for US oil were little changed this​ past week, our commercial supplies of crude oil in storage rose for the 17th time in twenty-six weeks and for the 24th time in the past year, increasing by 3,210,000 barrels over the week, from 448,207,000 barrels on March 22nd to 451,417,000 barrels on March 29th, after our commercial crude supplies had increased by 3,165,000 barrels over the prior week… With this week’s increase, our commercial crude oil inventories remained about 2% below the most recent five-year average of commercial oil supplies for this time of year, but were roughly 33% above the average of our available crude oil stocks as of the last weekend of March over the 5 years at the beginning of the past decade, with the big difference between those comparisons arising because it wasn’t until early 2015 that our oil inventories had first topped 400 million barrels. After our commercial crude oil inventories had jumped to record highs during the Covid lockdowns of the Spring of 2020, then jumped again after February 2021’s winter storm Uri froze off US Gulf Coast refining, but then fell in the wake of the Ukraine war, only to jump again following the Christmas 2022 refinery freeze offs, our commercial crude supplies as of this March 29th were still 3.9% less than the 469,952,000 barrels of oil left in commercial storage on March 31st of 2023, but 9.5% more than the 412,371,000 barrels of oil that we still had in storage on April 1st of 2022, while still 9.4% less than the 498,313,000 barrels of oil we had in commercial storage on April 2nd of 2021, after refinery damage from winter storm Uri left even more crude oil remaining after 2020’s pandemic precautions had left a lot of oil unused…

This Week’s Rig Count

In lieu of a detailed report on the rig count, we are again just including a screenshot of the rig count summary from Baker Hughes…note that since last week’s rig count was released a day early, ahead of the Good Friday holiday, this week’s report thus covers ​8 days…in the table below, the first column shows the active rig count as of April 5th, the second column shows the change in the number of working rigs between last week’s count (March 28th) and this week’s (April 5th) count, the third column shows last week’s March 28th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting period a year ago, which in this week’s case was the 7th of April, 2023…

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3rd estimate 4th quarter GDP; February’s income and outlays, durable goods, and new home sales

The key reports released this week were the 3rd estimate of 4th quarter GDP and the February report on Personal Income and Spending from the Bureau of Economic Analysis….in addition, the week also saw the advance report on durable goods for February and the February report on new home sales, both from the Census bureau, and the Chicago Fed National Activity Index (CFNAI) for February, a weighted composite index of 85 different economic metrics, which rose to +0.05 in February from –0.54 in January.…despite that February increase, the more widely watched 3 month average of the CFNAI decreased to –0.18 in February from –0.11 in January, which indicates that national economic activity has been below the historical trend over recent months, as would any negative reading…

this week also saw the last three regional Fed manufacturing surveys for March…the Richmond Fed Survey of Manufacturing Activity, covering an area that includes Virginia, Maryland, the Carolinas, the District of Columbia and West Virginia, reported its broadest composite index fell from −5 in February to −11 in March, indicating that a larger plurality of that region’s manufactures saw deteriorating conditions than a month earlier….meanwhile, the Kansas City Fed manufacturing survey for March, covering western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico, reported its broadest composite index came in at -7 in March, down from -4 in February, but up slightly from -9 in January, but also indicating that a larger plurality of that region’s manufactures saw deteriorating conditions than a month earlier……at the same time, the Dallas Fed Texas Manufacturing Outlook Survey, covering Texas and adjacent counties in northwest Louisiana and southeast New Mexico, reported their general business activity composite index fell to -14.4 from last month’s –11.3, thus also indicating a more widespread deterioration of the Texas area economy than in February…

the week’s major private release was the widely watched Case-Shiller Home Price Index for January from S&P Case-Shiller, which indicated that home prices during November, December and January averaged 6.0% higher nationally than prices for the same homes that sold during the same 3 month period a year earlier, which was up from the 5.5% year over year increase that was reported a month ago for the months of October, November and December…note that Case-Shiller seasonally adjusts its indices, so the monthly change in the index doesn’t necessarily represent the actual monthly change in prices for homes..

4th Quarter GDP Grew at a 3.4% Rate, Revised from 3.2%, as PCE Services and Fixed investment were Revised Higher

The Third Estimate of our 4th Quarter GDP from the Bureau of Economic Analysis indicated that our real output of goods and services grew at a 3.4% rate in the quarter, revised from the 3.2% growth rate reported in the second estimate last month, as upward revisions to personal consumption expenditures for services and to fixed investment more than offset downward revisions to inventories and exports…in current dollars, our fourth quarter GDP grew at a 5.12% annual rate, increasing from what would work out to be a $27,610.1 billion a year rate in the 3rd quarter to a $27,957.0 annual rate in the 4th quarter, with the headline 3.4% annualized rate of increase in real output arrived at after weighted annualized inflation adjustments averaging 1.6%, known in aggregate as the GDP deflator, were computed from the price changes of each of the GDP components and applied to their current dollar change…

Remember that the GDP press release reports all quarter over quarter percentage changes at an annual rate, which means that they’re expressed as a change a bit over 4 times of that what actually occurred over the 3 month period, and that the prefix “real” is used to indicate that each change has been adjusted for inflation using price changes chained from 2017, and then that all percentage changes in this report are calculated from those 2017 dollar figures, which would be better thought of as a quantity indexes than as any reality based dollar amounts….for our purposes, all the data that we’ll use in reporting the changes here comes directly from the pdf for the 3rd estimate of 4th quarter GDP, which can be accessed directly on the BEA’s GDP landing page, which also includes links to the tables on Excel and other technical notes about this release…specifically, we reference table 1, which shows the real percentage change in each of the GDP components annually and quarterly since the 1st quarter of 2020; table 2, which shows the contribution of each of the components to the GDP figures for those quarters and years; table 3, which shows both the current dollar value and inflation adjusted value of each of the GDP components; and table 4, which shows the change in the price indexes for each of the components…the pdf for the 4th quarter second estimate, which this estimate revises, is here…

Growth of real personal consumption expenditures (PCE), the largest component of GDP, was revised from a growth rate of 3.0% to an overall 3.3% growth rate in this 3rd estimate…that growth rate figure was arrived at by deflating components of the 5.12% growth rate in the dollar amount of consumer spending with components of the PCE price index, which indicated inflation of goods and services bought by individuals increased at a 1.8% annual rate in the 4th quarter, which was unrevised from the PCE inflation rate reported a month ago….

Real consumption of durable goods grew at a 3.2% annual rate, statistically unrevised from growth rate shown in the advance report, and added 0.25 percentage points to GDP, as real consumption of recreational goods and vehicles grew at an 7.5% rate and accounted for more than 80% of the durable goods growth, and also offset a small decrease in real consumption of automobiles….at the same time, real consumption of nondurable goods by individuals grew at a 2.9% annual rate, revised from the 3.3% growth rate reported in the 2nd estimate, and added 0.41 percentage points to the 4th quarter’s economic growth rate, as growth in real consumption of groceries, clothing and footwear, and other non-durable goods contributed, offsetting a small decrease in real consumption of gasoline…..meanwhile, consumption of services grew at a 3.4% annual rate, revised from the 2.8% growth rate reported last month, and added 1.55 percentage points to the final GDP tally, as real health care services grew at a 7.8% rate and accounted for more than half of the 4th quarter services growth…

Meanwhile, seasonally adjusted real gross private domestic investment grew at a 0.7% annual rate in the 4th quarter, revised down from the 0.9% growth estimate reported last month, as real private fixed investment grew at a 3.5% rate, revised up from the 2.5% growth rate reported in the second estimate, but inventory growth shrunk more than was previously estimated… Real investment in non-residential structures are now shown to have grown at a 10.9% rate, revised up from the 7.5% growth rate previously reported, while real investment in equipment shrunk at 1.1% rate, revised up from the 1.7% contraction rate shown a month ago…meanwhile, the quarter’s investment in intellectual property products was revised up from a 3.3% growth rate to a 3.4% rate, while at the same time real residential investment was shown to be growing at a 2.8% annual rate, down a bit from the 2.9% growth rate shown in the previous report….after those revisions, the increase in investment in non-residential structures added 0.32 percentage points to the 4th quarter’s growth rate, while the decrease in investment in equipment subtracted 0.05 percentage points from the quarter’s growth rate, and growth in investment in intellectual property added 0.23 percentage points to the growth rate of 4th quarter GDP, while the increase in residential investment added 0.11 percentage points to the growth rate of GDP…..for an easy to read table as to what’s included in each of those GDP investment categories, see the NIPA Handbook, Chapter 6, page 3….

At the same time, growth in real private inventories was revised from the previously reported $66.3 billion in inflation adjusted growth to show that inventories grew at an inflation adjusted $54.9 billion rate…since that came after inventories had grown at an inflation adjusted $77.8 billion rate in the 3rd quarter, the change in real inventory growth from the 3rd to the 4th quarter was revised from a rounded $11.4 billion negative change to a $22.9 billion negative change, and hence subtracted 0.47 percentage points from the 4th quarter’s growth rate, revised from the 0.27 percentage point subtraction from GDP due inventory growth shrinkage reported in the second estimate…. however, since lower growth of inventories indicates that less of the goods produced during the quarter were left in a warehouse or sitting on the shelf, their decrease at a $22.9 billion rate indicates that real final sales of GDP were actually greater by that amount, and hence real final sales of GDP grew at a 3.9% rate in the 4th quarter, revised from the real final sales 3.5% growth rate shown in the second estimate, and above the real final sales growth rate of 3.6% in the 3rd quarter, when higher inventory growth was a major factor the quarter’s overall 4.9% GDP growth rate…

The previously reported increase in real exports was revised lower with this estimate, while the previously reported increase in real imports was revised lower by somewhat less, and as a result our net trade improvement was a smaller addition to GDP growth than previously reported…our real exports grew at a 5.1% rate, revised from the 6.4% rate reported in the second estimate, and since exports are added to GDP because they are part of our production that was not consumed or added to investment in our country and hence not captured by another GDP metric, that increase in 4th quarter exports added 0.55 percentage points to the 4th quarter’s GDP growth rate, revised from the 0.69 percentage point addition to GDP due to higher exports shown in the 2nd estimate….meanwhile, the previously reported 2.7% increase in our real imports was revised to a 2.2% increase, and since imports are subtracted from GDP because they represent either consumption or investment that was added to another GDP component that shouldn’t have been because it was not produced domestically, their increase subtracted 0.30 percentage points from 4th quarter GDP, revised from the 0.37 percentage point subtraction shown last month… thus, our improving trade imbalance added a net 0.25 percentage points to 4th quarter GDP, revised from the 0.32 percentage point addition that had been indicated by the second estimate..

Finally, there were also upward revisions to government consumption and investment in this 3rd estimate, as the overall government sector grew at a 4.6% rate, revised from the 4.2% growth rate show a month ago….real federal government consumption and investment was seen to have grown at a 2.4% rate from the 4th quarter in this estimate, revised up from the 2.3% growth rate reported in the advance estimate, as real federal outlays for defense grew at a 0.5% rate, revised from the 0.4% growth rate shown previously, and added 0.02 percentage points to 4th quarter GDP, while all other federal consumption and investment grew at a 4.8% rate, revised from the 4.7% growth rate shown previously, and added 0.14 more percentage points to 4th quarter GDP growth….meanwhile, real state and local consumption and investment was revised from growing at a 5.4% rate in the second estimate to growing at a 6.0% rate in this estimate, as state and local investment spending grew at a 22.2% rate and added 0.42 percentage points to 4th quarter GDP, while state and local consumption spending grew at a 2.5% rate and added 0.22 percentage points to GDP….note that government outlays for social insurance are not included in this government GDP component; rather, they are included within personal consumption expenditures only when such funds are spent on goods or services, thus indicating there had been an increase in the output of those goods or services…

Personal Income Rose 0.3% in February, Personal Spending Rose 0.8%, Savings Rate Fell to 3.6%, PCE Price Index Rose 0.3%

The February report on Personal Income and Outlays from the Bureau of Economic Analysis gives us nearly half the data that will go into 1st quarter GDP, since it gives us 2 months of data on our personal consumption expenditures (PCE), which accounts for nearly 70% of GDP, and the PCE price index, the inflation gauge the Fed targets, and which is used to adjust that personal spending data for inflation to give us the relative change in the output of goods and services that our spending indicated….this report also provides us with the nation’s personal income data, disposable personal income, which is income after taxes, and our monthly savings rate…however, because this report feeds into GDP and other national accounts data, the change reported for each of those metrics are not the current monthly change; rather, they’re seasonally adjusted amounts at an annual rate, ie, they tell us how much income and spending would increase in a year if February’s adjusted income and spending were extrapolated over an entire year….

Hence, when the opening line of the press release for this report tell us “Personal income increased $66.5 billion (0.3 percent at a monthly rate) in February“, they mean that the annualized figure for US personal income in February, $23,694.3 billion, was a rounded $66.5 billion, or nearly 0.3% greater than the annualized personal income figure of $23,627.9 for January; the actual change in personal income from January to February is not provided…similarly, annualized disposable personal income, which is income after taxes, rose by more than 0.2%, from an annual rate of an annual rate of $20,658.9 billion in January to an annual rate of $20,709.3 billion in February…the components of the monthly increase in personal income, which can be seen in the Full Release & Tables (PDF) for this release, are also annualized figures…in February, the main contributors to the net $66.5 billion annualized increase in personal income were a $92.0 billion annual rate of increase in income from wages and salaries, and a $39.2 billion annualized increase in government social benefits to individuals, which were partly offset by a $77.7 billion annualized decrease in interest and dividend income…

For the personal consumption expenditures (PCE) that will be included in 1st quarter GDP, the BEA reports that they increased at a $145.5 billion annual rate, or by almost 0.8 percent, rising from an annual rate of $19,043.6 billion in January to an annual rate of $19,189.0 in February, after the January PCE rate was revised down from the originally reported $19,054.2 annually…the current dollar increase in February spending resulted from a $111.8 billion annualized increase to $12,973.1 billion in annualized in spending for services, and a $33.7 billion increase to $6,216.0 billion in spending for goods….total personal outlays for February, which includes interest payments and personal transfer payments in addition to PCE, rose by an annualized $149.9 billion to $19,963.5 billion annually, which left total personal savings, which is disposable personal income less total outlays, at a $745.7 billion annual rate in February, down from the revised $845.3 billion in annualized personal savings in January… as a result, the personal savings rate, which is personal savings as a percentage of disposable personal income, fell to 3.6% in February from January’s savings rate of 4.1%, and was the lowest personal savings rate since December 2022…

Before personal consumption expenditures are used in the 1st quarter GDP computation, they are first adjusted for inflation to give us the real change in consumption, and hence the real change in goods and services that were produced for that consumption…the BEA does that by computing a price index for personal consumption expenditures, which is a chained price index based on 2017 prices = 100, which is included in Table 5 in the pdf for this report….that PCE price index rose from 121.906 in January to 122.312 in February, a month over month inflation rate that’s statistically 0.33304%, which BEA reports as an increase of 0.3 percent, following the PCE price index increase of 0.4% that they reported for January…then, applying that 0.33304% inflation adjustment to the nominal increase in February PCE shows that real PCE rose by 0.42904% in February, which the BEA reports as a 0.4% increase…notice that when those PCE price indexes are applied to a given month’s annualized PCE in current dollars, it gives us that month’s annualized real PCE in chained 2017 dollars, which are the means that the BEA uses to compare one month’s or one quarter’s real goods and services produced to that of another….that result is shown in table 4 of the PDF, where we see that February’s chained dollar consumption total works out to 15,621.6 billion annually, 0.42953% less than January’s 15,688.7 billion, or a change that’s statistically equivalent to the real PCE decrease we just computed from the index values…

Finally, to estimate the impact of the change in PCE on the change in GDP, we have to compare real PCE from January and February to the the real PCE of the 3 months of the fourth quarter….while this report shows PCE for all those months on a monthly basis, the BEA also provides the annualized chained dollar PCE on a quarterly basis in table 3 of the pdf for the 4th quarter GDP report, where we find that the annualized real PCE for the 3 months of the 4th quarter was represented by 15,586.7 billion in chained 2017 dollars…then, by averaging the annualized chained 2017 dollar PCE figures for January and February, 14,382.9 billion and 14,367.2 billion, we get an equivalent annualized PCE for the two months of the 1st quarter that we have the data for so far….when we compare that 1st quarter 2017 dollar PCE average of 15,655.15 to the 4th quarter chained dollar PCE of 15,586.7, we find that 1st quarter real PCE has grown at a 1.77% annual rate for the two months of the 1st quarter that are included in this report (note the math to get that annual rate: (((15,688.7 + 15,621.6) / 2) / 15,586.7) ^ 4 = 1.01768231.…2 months growth at that rate means that if March real PCE does not improve from the average of January and February, growth in PCE would still add 1.22 percentage points to the growth rate of the 1st quarter…

February Durable Goods: New Orders Up 1.4%, Shipments Up 1.2%, Inventories Up 0.3%

The Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders for February (pdf) from the Census Bureau reported that the value of the widely watched new orders for manufactured durable goods increased by $3.7 billion or by 1.4 percent to $277.9 billion in February, the first increase since November, after the value of January’s new orders was revised from the $276.7 billion reported last month to $274.2 billion, now a 6.9% decrease from December’s new orders, revised from the 6.1% decrease reported a month ago…even with January’s big decrease, however, year to date new orders were still 1.8% higher than those of the first two months of 2022…

The volatile monthly new orders for transportation equipment led February’s new orders increase, as the value of new transportation equipment orders rose $2.9 billion or 3.3 percent to $90.4 billion, on an 24.6% increase to $15,200 million in the value of new orders for commercial aircraft, and a 9.8% increase to $4,646 million in the value of new orders for defense aircraft, while the value of new orders for motor vehicles and parts also rose 1.8% to $61,742 million…excluding orders for transportation equipment, the value of other new orders was still 0.5% higher, while excluding just new orders for defense equipment, new orders rose 2.2%….meanwhile, new orders for nondefense capital goods less aircraft, a proxy for equipment investment, were up by $547 million or 0.7% to $73,872 million…

Over the same period, the seasonally adjusted value of February’s shipments of durable goods, which will ultimately be included as inputs into various components of 1st quarter GDP after adjusting for changes in prices, also rose for the first time since November, increasing by $3.5 billion or 1.2 percent to $282.7 billion, after the value of January’s shipments was revised from $279.0 billion to $279.2 billion, now down 0.8% from December, rather than the 0.9% decrease reported a month ago….higher shipments of transportation equipment drove the February shipments increase, rising by $3.4 billion or 4.0 percent to $89.8 billion, on a 1.5% increase in the value of shipments of motor vehicles and parts, and a 22.8% increase in the value of shipments of commercial aircraft….on the other hand, the value of shipments of nondefense capital goods less aircraft fell by 0.4% to $75,336 million, after January’s capital goods shipments were revised up from $73,720 million to $74,723 million, now an 0.8% increase from December…

Meanwhile, the value of seasonally adjusted inventories of durable goods, also a major GDP contributor, rose by $1.7 billion or 0.3 percent to $528.7 billion, the seventh consecutive increase, after the value of January inventories was revised from $527.6 billion to $527.0 billion, now up just 0.1% from December….the value of inventories of transportation equipment rose $1.2 billion or 0.7 percent to $170.2 billion, on 0.6% higher inventories of commercial aircraft and 0.7% higher inventories of motor vehicles and parts..

Finally, the value of unfilled orders for manufactured durable goods, which are probably a better measure of industry conditions than the widely watched but often very volatile new orders, rose for the eleventh time in 12 months, increasing by a statistically insignificant $0.1 billion to $1,392.9 billion, following a statistically insignificant January decrease to $1,392,8 billion, which was revised from the previously reported 0.2% increase to $1,395.5 billion….a $0.6 billion or a 0.1 percent increase to $898.1 billion in unfilled orders for transportation equipment was the reason for the February increase, while unfilled orders excluding transportation equipment orders were down 0.1% to $495.3 billion…the unfilled order book for durable goods is still 8.9% above the level of last February, with unfilled orders for transportation equipment 15.1% above their year ago level, mostly due to a 22.3% increase in the backlog of orders for commercial aircraft…

February New Home Sales Little Changed, Average Sales Price 7.3% Lower than January

The Census report on New Residential Sales for February (pdf) estimated that new single family homes were selling at a seasonally adjusted pace of 662,000 home sales per year during the month, which was 0.3 percent (±16.2 percent)* below the revised January annual sales rate of 664,000 new home sales, but was 5.9 percent (±14.3 percent)* above the estimated annual rate that new homes were selling at in February of last year….the asterisks indicate that based on their small sampling, Census could not be certain whether February’s new home sales rose or fell from January, or even from February of last year, with the figures in parenthesis representing the 90% confidence range for the reported data in this report, which has the largest margin of error and is subject to the largest revisions of any census construction series….with this report; sales of new single family homes in January were revised from the annual rate of 661,000 reported last month to an annual rate of 664,000, while new home sales in December, initially reported at an annual rate of 664,000 and revised up to a 651,000 rate last month, were revised to a 652,000 a year rate with this report, and November’s annualized new home sales rate, initially reported at an annual rate of 580,000 and revised from a 615,000 rate to a 607,000 a year rate last month, were revised up to a 609,000 annual rate with this release…

The annual rates of sales reported here are seasonally adjusted after extrapolation from the estimates of canvassing Census field reps, which indicated that approximately 60,000 new single family homes sold in February, up from the estimated 57,000 new homes that sold in January and up from the 49,000 that sold in December, and also up from the 58,000 new homes sold in February a year ago…the raw figures from Census field agents further estimated that the median sales price of new houses sold in February was $400,500, down 3.5% from the median sale price of $414,900 in January, and down from the median sales price of $433,300 in February a year ago, while the average February new home sales price was $485,000, down 7.3% from the $523,400 average sales price in January, and down from the average sales price of $499,100 in February a year ago….a seasonally adjusted estimate of 463,000 new single family houses remained for sale at the end of February, which represents a 8.4 month supply at the February sales rate, up from the revised 8.3 months months of new home supply in January….for graphs and additional commentary on this report, see the following posts by Bill McBride at Calculated Risk: New Home Sales at 662,000 Annual Rate in February and New Home Sales at 662,000 Annual Rate in February; Median New Home Price is Down 19% from the Peak, which in turn links to his in-depth real estate newsletter article on this report…

  

(the above is the synopsis that accompanied my regular sunday morning news 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 of which are picked from the aforementioned GGO posts, contact me…)

oil at a 5 month high; April natural gas contract settled at a 45 month low with natural gas supplies 41% above 5 year norm

US oil prices rose for the fourth time in five weeks and ended at a 5 month high on stronger than expected US economic data and expectations that OPEC would leave its production cuts in place….after rising less than 0.1% to $80.63 a barrel as week as an early rally on bullish Chinese data following attacks on Russian refineries was reversed by the threat of a ceasefire in Gaza, the contract price for the benchmark US light sweet crude for May delivery moved higher in Asian trading early Monday, as oil routes remained under threat amid ongoing attacks on Russian oil refineries, then traded higher in New York following a 14-0 vote by the United Nations Security Council passing a resolution calling for a ceasefire in Gaza, and settled $1.32 higher at $81.95 a barrel after the Russian government ordered oil producers to cut their output…oil prices traded in a narrow range Tuesday, as traders weighed the bearish effect of the decline in Russian refinery demand against the bullish effect from the cut in Russia’s oil exports, and settled 33 cents lower at $81.62 a barrel as traders assessed the impact of the wars in Eastern Europe and the Middle East on the supply picture…oil prices extended those losses in overnight trading after the American Petroleum Institute reported a surprise and significantly large crude build and a notable increase in stocks at the Cushing Hub, then continued to trade lower on Wednesday amid signs that OPEC+ appeared unlikely to change its output policy at its meeting next week, and settled 27 cents lower at $81.35 a barrel, as the US dollar strengthened and EIA data showed a surprise jump in both crude and gasoline stocks….oil prices rose by more than $1 a barrel in Asian trading early Thursday, as traders anticipated tighter supplies as OPEC+ producer cartel was widely expected to continue its current production cuts, then added another​ one percent​ gain to that rally in New York trading to settle $1.82 higher at a 5 month high of $83.17 a barrel after the ​US Bureau of Economic Analysis said that the U.S. economy grew 0.2% faster than previously estimated, on upward revisions to ​4th quarter consumer spending and nonresidential fixed investment, leaving oil prices 3.2% higher on the week, 6.3% higher for the month, and 16.1% higher over the first quarter of 2024..

meanwhile, natural gas price quotes finished higher this week on a switch to the higher priced May contract, even as both contracts that were traded as the front month ended lower…after inching up 0.2% to $1.659 per mmBTU last week on a bit of chilly weather, despite the first addition to natural gas inventories of the year, the contract price for natural gas for April delivery opened four cents lower on Monday morning, on ample storage levels and forecasts for weak heating demand, then hovered near the $1.640 level for much of the day before settling 4.4 cents lower at a three-week low of $1.615 per mmBTU, on lowered demand forecasts for this week, a glut of gas in storage​, and expectations that gas flows to LNG export plants would remain low…after volatile trading between $1.461 and $1.647​ on its last day of trading Tuesday, the April gas contract finished 4.0 cents, or 2.5% lower at a three and a half year low of $1.575 per mmBTU on mild forecasts, while the more actively traded May contract for natural gas traded sideways near $1.785 throughout the day and settled a tenth of a cent lower at $1.788 per mmBTU as May gas traders positioned ahead of the storage report on Thursday…with markets now quoting the contract price of natural gas for May delivery, that contract opened 4 cents lower on Wednesday and retreated to trade near $1.720 for most of the day, as weak fundamentals and a drop in weekly LNG export volume provided bearish pressure, before settling 7.0 cents lower at $1.718 per mmBTU amid a plethora of bearish fundamentals, most notably abundant supply met by a shortage of demand…natural gas prices opened two cents higher ahead of the storage report on Thursday, but to slipped back ​to an intraday low of $1.718 minutes after the report, before staging a steady advance to settle 4.5 cents higher at $1.763 per mmBTU, as traders considered the implications of ​the larger-than-anticipated storage withdrawal… while natural gas price quotes ended 6.3% higher on the week, the contract price of May gas, which had ended the prior week at $1.812 per mmBTU, finished 2.7% lower..

The EIA’s natural gas storage report for the week ending March 22nd indicated that the amount of working natural gas held in underground storage fell by 36 billion cubic feet to 2,296 billion cubic feet by the end of the week, which left our natural gas supplies 430 billion cubic feet, or 23.0% above the 1866 billion cubic feet that were in storage on March 22nd of last year, and 669 billion cubic feet, or 41.1% more than the five-year average of 1,627 billion cubic feet of natural gas that were typically in working storage as of the 22nd of March over the most recent five years…the 36 billion cubic foot withdrawal from US natural gas working storage for the cited week was more than the 31 billion cubic foot withdrawal that was the consensus estimate from S&P Global Commodity Insights’ weekly gas storage survey, while it was quite a bit less than the 55 billion cubic feet that were pulled from natural gas storage during the corresponding third week of March 2023, but was more than the average 27 billion cubic feet withdrawal from natural gas storage that has been typical for the same last winter week over the past 5 years…

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending March 22nd indicated that after an increase in our oil imports and a drop in our oil exports, we had surplus oil to add to our stored commercial crude supplies for 7th time in nine weeks and for the 15th time in the past 23 weeks, despite a decrease in oil supplies that the EIA could not account for….Our imports of crude oil rose by an average of 424,000 barrels per day to an average of 6,702,000 barrels per day, after rising by an average of 787,000 barrels per day over the prior week, while our exports of crude oil fell by 700,000 barrels per day to average 4,181,000 barrels per day, which when used to offset our imports, meant that the net of our trade in oil worked out to a net import average of 2,521,000 barrels of oil per day during the week ending March 22nd, 1,124,000 more barrels per day than the net of our imports minus our exports during the prior week. At the same time, transfers to our oil supply from Alaskan gas liquids, from natural gasoline, from condensate, and from unfinished oils averaged 382,000 barrels per day, while during the same week, production of crude from US wells was unchanged at 13,100,000 barrels per day. Hence our daily supply of oil from the net of our international trade in oil, from transfers, and from domestic well production appears to have averaged a rounded total of 16,003,000 barrels per day during the March 22nd reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,932,000 barrels of crude per day during the week ending March 22nd, an average of 127,000 more barrels per day than the amount of oil that our refineries reported they were processing during the prior week, while over the same period the EIA’s surveys indicated that a rounded average of 558,000 barrels of oil per day were being added to the supplies of oil stored in the US… So, based on that reported & estimated data, the crude oil figures provided by the EIA for the week ending March 22nd appear to indicate that our total working supply of oil from net imports, from transfers, and from oilfield production was 488,000 barrels per day less than what what was added to storage plus our oil refineries reported they used during the week…To account for that difference between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a +488,000] barrel per day figure onto line 16 of the weekly U.S. Petroleum Balance Sheet, in order to make the reported data for the supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there was an error or omission of that magnitude in the week’s oil supply & demand figures that we have just transcribed… ​Despite that, since most oil traders react to these weekly EIA reports as if they were accurate, and since these weekly figures therefore often drive oil pricing, and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it’s published, and just as it’s watched & believed to be reasonably reliable by most everyone in the industry…(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….(note there is also an aging twitter thread from an EIA administrator addressing these ongoing weekly errors, and what they had hoped to do about it)

This week’s average 558,000 barrel per day increase in our overall crude oil inventories came as an average of 452,000 barrels per day were being added to our commercially available stocks of crude oil, while an average of 106,000 barrels per day were being added to our Strategic Petroleum Reserve, the sixteenth SPR increase in twenty-three weeks, following nearly continuous withdrawals over the prior 39 months… Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to 6,419,000 barrels per day last week, which was 1.1% more than the 6,350,000 barrel per day average that we were importing over the same four-week period last year. This week’s crude oil production was reported to be unchanged at 13,100,000 barrels per day because the EIA’s rounded estimate of the output from wells in the lower 48 states was unchanged at 12,700,000 barrels per day, while Alaska’s oil production was 9,000 barrels per day lower at 432,000 barrels per day, but still added the same 400,000 barrels per day to the EIA’s rounded national total as it did last week…US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure matches that of our pre-pandemic production peak, and is also 35.1% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021.

US oil refineries were operating at 88.7% of their capacity while processing those 15,932,000 barrels of crude per day during the week ending March 22nd, up from their 87.8% utilization rate of a week earlier, and finally approaching a normal operating rate for mid March, after recovering from damage caused by the arctic cold that penetrated to the Gulf Coast in mid January… the 15,932,000 barrels of oil per day that were refined this week were 0.8% more than the 15,813,000 barrels of crude that were being processed daily during week ending March 24th of 2023, and 0.6% more than the 15,831,000 barrels that were being refined during the prepandemic week ending March 22nd, 2019, when our refinery utilization rate was at a below normal 86.6%..

Even with the increase in the amount of oil being refined this week, gasoline output from our refineries was somewhat lower, decreasing by 435,000 barrels per day to 9,213,000 barrels per day during the week ending March 22nd, after our refineries’ gasoline output had decreased by 263,000 barrels per day during the prior week. This week’s gasoline production was 8.2% less than the 10,038,000 barrels of gasoline that were being produced daily over week ending March 24th of last year, and 4.6% less than the gasoline production of 9,657,000 barrels per day during the prepandemic week ending March 22nd, 2019….on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 124,000 barrels per day to 4,814,000 barrels per day, after our distillates output had increased by 128,000 barrels per day during the prior week. After six straight ​solid production increases, our distillates output was 3.9% more than the 4,633,000 barrels of distillates that were being produced daily during the week ending March 24th of 2023, but ​it was still 2.3% less than the 4,925,000 barrels of distillates that were being produced daily during the week ending March 22nd, 2019…

Even with this week’s decrease in our gasoline production, our supplies of gasoline in storage at the end of the week rose for the first time in eight weeks, following five prior increases, increasing by 1,299,000 barrels to 232,072,000 barrels during the week ending March 22nd, after our gasoline inventories had decreased by 3,310,000 barrels during the prior week. Our gasoline supplies rose this week because the amount of gasoline supplied to US users fell by 94,000 barrels per day to 8,715,000 barrels per day, and because our exports of gasoline fell by 247,000 barrels per day to 786,000 barrels per day, and because our imports of gasoline rose by 26,000 barrels per day to 522,000 barrels per day.…After thirty-two gasoline inventory withdrawals over the past fifty-two weeks, our gasoline supplies were still 2.4% above last March 24th’s gasoline inventories of 226,694,000 barrels, but about 1% below the five year average of our gasoline supplies for this time of the year…

Even with this week’s increase in our distillates production, our supplies of distillate fuels fell for 7th time in nine weeks, following eight consecutive prior increases, decreasing by 1,185,000 barrels to 117,337,000 barrels over the week ending March 15th, after our distillates supplies had increased by 624,000 barrels during the prior week. Our distillates supplies fell this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 242,000 barrels per day to 4,028,000 barrels per day, and because our exports of distillates rose by 135,000 barrels per day to 1,120,000 barrels per day, while our imports of distillates fell by 5,000 barrels per day to 165,000 barrels per day…Even with 30 inventory decreases over the past fifty-two weeks, our distillates supplies at the end of the week were 0.6% above the 116,683,000 barrels of distillates that we had in storage on March 24th of 2023, but about 6% below the five year average of our distillates inventories for this time of the year…

Finally, after this week’s increase in our oil imports and decrease in our oil exports, our commercial supplies of crude oil in storage rose for the 16th time in twenty-six weeks and for the 23rd time in the past year, increasing by 3,165,000 barrels over the week, from 445,042,000 barrels on March 15th to 448,207,000 barrels on March 22nd, after our commercial crude supplies had decreased by 1,952,000 barrels over the prior week… With this week’s increase, our commercial crude oil inventories rose to about 2% below the most recent five-year average of commercial oil supplies for this time of year, but were still about 32% above the average of our available crude oil stocks as of the fourth weekend of March over the 5 years at the beginning of the past decade, with the big difference between those comparisons arising because it wasn’t until early 2015 that our oil inventories had first topped 400 million barrels. After our commercial crude oil inventories had jumped to record highs during the Covid lockdowns of the Spring of 2020, then jumped again after February 2021’s winter storm Uri froze off US Gulf Coast refining, but then fell in the wake of the Ukraine war, only to jump again following the Christmas 2022 refinery freeze offs, our commercial crude supplies as of this March 22nd were still 5.4% less than the 473,691,000 barrels of oil left in commercial storage on March 24th of 2023, but 5.4% more than the 409,950,000 barrels of oil that we still had in storage on March 25th of 2022, while still 10.7% less than the 501,835,000 barrels of oil we had in commercial storage on March 26th of 2021, after refinery damage from winter storm Uri left even more crude oil remaining after 2020’s pandemic precautions had left a lot of oil unused…

This Week’s Rig Count

In lieu of a detailed report on the rig count, we are again just including a screenshot of the rig count summary from Baker Hughes…note that this week’s rig count was released a day early, ahead of the Good Friday holiday, and hence only covers 6 days…in the table below, the first column shows the active rig count as of March 28th, the second column shows the change in the number of working rigs between last week’s count (March 22nd) and this week’s (March 28th) count, the third column shows last week’s March 22nd active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting period a year ago, which in this week’s case was the 31st of March, 2023…

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February’s new housing construction and existing home sales

There were just two widely watched housing reports released last week: the February report on New Residential Construction, from the Census bureau, and the Existing Home Sales Report for February from the National Association of Realtors (NAR)….the week also saw the release of the Regional and State Employment and Unemployment Report for February from the Bureau of Labor Statistics, a report which breaks down the two employment surveys from the monthly national jobs report by state and region (Note: you might recall that January’s state and regional report was released last week; it had been delayed in order to compile the annual revisions, and this February report puts the report back on its normal release schedule)….while the text of this report provides a useful summary of the state and regional data, the serious statistical aggregation can be found in the tables linked at the end of the report, where one can find the civilian labor force data and the change in payrolls by industry for each of the 50 states, the District of Columbia, Puerto Rico, and the Virgin Islands…

This week also saw the release of another regional Fed manufacturing survey for March: the Philadelphia Fed Manufacturing Survey, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest diffusion index of manufacturing conditions ticked down to +3.2 in March from +5.6 in February, just the fifth positive index reading since May 2022, indicating that a small plurality of that region’s manufacturing firms are seeing increased activity again this month…

Housing Starts and Building Permits Reported Higher in February

The February report on New Residential Construction (pdf) from the Census Bureau estimated that new housing units were being started at a seasonally adjusted annual rate of 1,521,000 in February, which was 10.7 percent (±14.2 percent)* above the revised January estimated annual rate of 1,374,000 starts, and was 5.9 percent (±10.0 percent)* above the rate that housing units were being started in February of 2023…the asterisks indicate that the Census does not have sufficient data to determine whether housing starts actually rose or fell during the month, or even from those of a year ago, with the figures in parenthesis the most likely range of the change indicated; in other words, February’s housing starts could have been down by 3.5% or up by as much as 24.9% from those of January, with revisions of a greater magnitude in either direction still possible…in this report, the annual rate for January housing starts was revised from the 1,331,000 reported last month to 1,374,000, while December starts, which were first reported at a 1,460,000 annual rate, were revised from last month’s initial revised figure of 1,562,000 annually up to a 1,566,000 annual rate with this report….

The annual rates of housing 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 108,100 housing units were started in February, up from the 97,400 units that were started in January but down from the 108,900 units that were started in December….of those housing units started in February, an estimated 79,200 were single family homes and 27,800 were units in structures with more than 5 units, up from the revised 69,700 single family starts in January. and up from the 26,500 units started in structures with more than 5 units in January…(NB: those figures don’t add up because there were 1100 housing units started in structures with 2 to 4 units in February, down from 1200 in January, a figure usually small enough that it is typically ignored..

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….for February, Census estimated new building permits for housing units were being issued at a seasonally adjusted annual rate of 1,518,000, which was 1.9 percent above the revised January rate of 1,489,000 permits, and was 2.4 percent above the rate of building permit issuance in February a year earlier…

Again, these annualized estimates for new permits reported here were extrapolated from the unadjusted estimates collected monthly by canvassing census agents, which showed permits for roughly 118,300 housing units were issued in February, up from the revised estimate of 114,800 new permits issued in January….of those permits issued in February, 79,300 were permits for single family homes and 35,100 were permits for units in structures of more than 5 units, up from the 75,900 single family permits in January, but down from January’s 35,100 permits for units in structures of more than 5 units…

For graphs and commentary on this report, see the following posts by Bill McBride at Calculated Risk: Housing Starts increased to 1.521 Million Annual Rate in February and Single Family Starts Up 35% Year-over-year in February; Multi-Family Starts Down Sharply, which in turn links to his real estate newsletter post with the same title…

Existing Home Sales Rose 9.5% in February; Prices 5.7% Higher than a Year Ago

The National Association of Realtors (NAR) reported that existing home sales increased by 9.5% from January to February on a seasonally adjusted basis, the largest jump in a year, projecting that 4.38 million existing homes would sell over an entire year if the February home sales pace were extrapolated over that year, a pace that was still 3.3% below the annual sales rate projected for February of last year….the January home sales pace was unrevised from the 4.00 million annual sales rate reported a month ago with this report….the NAR also reported that the median sales price for all existing-home types was $384,500 in February, which was 5.7% higher than in February a year earlier, and which they report is “the eighth consecutive month of year-over-year price gains.“, even though it’s the first month over month price increase in those eight months…..the NAR press release, which is titled “Existing-Home Sales Vaulted 9.5% in February, Largest Monthly Increase in a Year“, is in easy to read plain English, so if you’re interested in further details on housing inventories, cash sales, distressed sales, first time home buyers, etc., you can easily find them in that press release…as sales of existing properties do not add to our national output, neither these home sales nor the prices for which these homes sell are included in GDP, except insofar as real estate, local government and banking services are rendered during the selling process…

Since this report is entirely seasonally adjusted and at a not very informative annual rate, we usually look at the raw data overview (pdf) to see what actually happened with home sales during the month…this unadjusted data indicates that roughly 271,000 homes sold in February, up 15.8% from the revised 234,000 homes that sold in January, and 0.7% more than the 269,000 homes that sold in February of last year….that same pdf indicates that the median home selling price for all housing types rose by 1.6%, from a revised $378,600 in January to $384,500 in February, and that it was up 5.7% from $363,600 in February of last year, while it was down 6.2% from $410,100 in June of 2023, with prices falling in the Northeast in February, while increasing modestly elsewhere….for both seasonally adjusted and unadjusted graphs and additional commentary on this report, see the following two posts from Bill McBride at Calculated Risk: NAR: Existing-Home Sales Increased to 4.38 million in February and NAR: Existing-Home Sales Increased to 4.38 million SAAR in February; Median Prices Down 7.1 From Peak (NSA), which links to his in depth newsletter article with more details on this report..

  

(the above is the synopsis that accompanied my regular sunday morning news 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 of which are picked from the aforementioned GGO posts, contact me…)

oil prices hit 20 week high; first natural gas storage injection of 2024 puts inventories at highest mid-March level on record

oil prices hit twenty week high; first 2024 injection of natural gas into storage puts inventories far above any mid-March level on record; natural gas supplies now seem likely to exceed storage capacity later this year; DUC well backlog at 5.2 months even as completions increase…

US oil prices finished virtually unchanged after hitting a 20 week high ​m​id week as an early rally on bullish Chinese data following attacks on Russian refineries was reversed by the threat of a ceasefire in Gaza…after rising 3.9% to a four month high of $81.04 a barrel last week on bullish demand outlooks from the three major forecasting agencies, falling US oil inventories, and intensifying Ukrainian attacks against Russian oil refineries, the contract price for the benchmark US light sweet crude for April delivery continued higher early Monday, supported by ​weekend news of Ukraine’s attacks on Russian energy infrastructure, ​i​ncjuding new fires at two refineries, then rallied solidly after Chinese data showed their exports of refined fuels had plummeted by double-digits from a year ago during January and February, suggesting a rebound in domestic fuel demand from their transportation and heavy industry sectors, and settled $1.68 or more than 2% higher at a new 4 month high of $82.72 a barrel as macro-economic data from China came in a​bove expectations, Iraq reduced its oil exports to absorb ​i​ts oversupply from prior months, and Ukrainian attacks on Russian refineries reduced the amount of distilled products output from Russia…oil prices rallied sharply higher for the second consecutive session on Tuesday as the market remained supported by the Ukrainian attacks against major Russian refineries, and settled 75 cents higher near a five month high at $83.47 a barrel as oil options had their least bearish tilt in months and key timespreads suggested traders were pricing in a tighter market….oil traded lower in overseas markets early Wednesday on a stronger US dollar and mixed inventory data from the American Petroleum Institute, then retreated further in the New York session as traders awaited the Fed’s interest rate policy announcement and took profits ahead of the April contract’s expiration at the close​, and settled $1.79 lower at $81.68 a barrel as trading in that April oil contract expired, while the more actively traded oil contract for the benchmark US light sweet crude for May delivery settled $1.46 lower at $81.27 barrel…with markets now quoting the contract price for May oil, prices on that contract moved higher in overnight trading as the U.S. dollar weakened after Fed officials reaffirmed they s​aw three interest rate cuts ​coming later this year, ​but then moved lower early Thursday on reports of a UN draft resolution calling for a ceasefire in Gaza and as another round of profit-taking kicked in, and settled down 20 cents on the day at $81.27 a barrel pressured by weaker U.S. gasoline demand and the UN draft resolution calling for a ceasefire in Gaza…oil prices moved lower on Gazan ceasefire talks in Asian trading Friday, then fell 44 cents to $80.63 a barrel in the US session as the war in Europe and a shrinking U.S. rig count cushioned the drop, to leave oil prices less than 0.5% lower on the week, while the contract price for the US benchmark oil for May, which had closed the prior week at $80.58 a barrel, finished less than 0.1% higher..

meanwhile, natural gas prices inched higher for the first time in three weeks on a bit of chilly weather, despite the first addition to natural gas inventories of the year…after falling 8.3% to $1.655 per mmBTU last week on the smallest withdrawal of gas from storage of the winter and ​on ongoing weak demand for heating, the contract price for natural gas for April delivery opened seven cents above Friday’s ​last price on Monday​ morning on supportive weather forecasts for the coming week, but backed off after the opening rally to settle 4.8 cents higher at $1.703 per mmBTU on colder forecasts and lower output due to lower prices…natural gas prices opened 4 cents higher on Tuesday, as short-term forecasts calling for increased demand and production cuts continued to provide support, and prices settled 4.1 cents higher at $1.744 per mmBTU as bulls fed on near-term weather forecasts that would support a bump in demand and a pullback in the widening of natural gas storage surpluses….however, the April contract opened lower on Wednesday and slid 4.5 cents or more than 2% to settle at $1.699 per mmBTU on forecasts for less demand over the next two weeks than had been expected​, and ​on news of a demand-destroying, extended outage of two liquefaction trains at Freeport LNG’s export plant in Texas….natural gas prices opened lower again on Thursday, knocked down overnight by softening forecasts and the expectation of a historically unseasonal storage injection​, and settled 1.6 cents lower at $1.683 per mmBTU after the EIA reported a small injection into inventories for the week ended March 15….natural gas prices extended ​those losses into the week’s last session as a storage glut and a trimming of demand forecasts kept the pressure on the contract, which settled 2.4 cents lower on the day at $1.659 per mmBTU, but was still up 0.2% on the week​…

The EIA’s natural gas storage report for the week ending March 15th indicated that the amount of working natural gas held in underground storage in the US increased for the first time this year, rising by 7 billion cubic feet to 2,332 billion cubic feet by the end of the week, which left our natural gas supplies 411 billion cubic feet, or 21.4% above the 1,921 billion cubic feet that were in storage on March 15th of last year, 678 billion cubic feet, or 41.0% more than the five-year average of 1,654 billion cubic feet of natural gas that were typically in working storage as of the 15th of March over the most recent five years, and the highest late winter inventory level for any March 15th in 30 years of EIA records…the 7 billion cubic foot injection into US natural gas working storage for the cited week was more than the 4 billion cubic foot injection into storage forecast by a Reuters survey of analysts, and it contrasts dramatically with the 68 billion cubic feet that were pulled from natural gas storage during the corresponding second week of March 2023, and also with the average 42 billion cubic feet withdrawal from natural gas storage that has been typical for the same late winter week over the past 5 years…

with the first injection of natural gas into storage for this year, we’ll include a copy of the natural gas storage graph that the EIA includes with this ​weekly report…in the graph below, the blue line tracks the amount of natural gas that we had in storage each week over the past two years, the dark grey line shows the prior 5 year average of the amount of natural gas in storage for any given date over the two years shown, while the grey shaded area across the graph encompasses all the storage levels recorded over the prior five year for each date that is covered on the chart…

as you can see by following the blue line, our natural gas inventories were not only below average, but at the lower bound of the five year average thru most of 2022, despite an explosion at the Freeport Texas liquefaction facility ​that shut that plant down for the 2nd half of that year, but then moved to above average when February 2023 turned warmer​ and demand for heating waned, and subsequently stayed above average ​since as US production stayed high in the face of modest demand…a​t the ​right end of ​the graph, the blue line represents the unusual storage trajectory for this winter, which has seen​ well above normal temperatures and hence below normal demand except for ​t​hat couple weeks in mid-January…as a result​, the blue line​ representing gas in storage has moved well above the normal range, and this week even turned higher about three weeks before normal…the storage levels represented over the last three weeks, ie, since the last week of February, are highest on record for each date, and have tracked at roughly double the 30 year average for dates in March…our underground storage capacity is roughly 4,000 billion cubic feet, so our current storage ​level of over 2,300 billion cubic feet means we enter the summer with only 1,700 billion cubic feet of ​empty space left, when a normal summer usually results in a build of ​between 2,000 and 2,400​ billion cubic feet…hence, it now seems likely that we’ll run out of storage space for natural gas before the ​storage injection season ​winds down this Fall..

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending March 15th indicated that after a big jump in our oil exports, we needed to pull oil out of our stored commercial crude supplies for 2nd time in eight weeks and for the 8th time in the past 22 weeks, even after a sizable increase in oil supplies that the EIA could not account for….Our imports of crude oil rose by an average of 787,000 barrels per day to an average of 6,278,000 barrels per day, after falling by an average of 1,730,000 barrels per day to a fifty week low over the prior week, while our exports of crude oil jumped by 1,734,000 barrels per day to average 4,881,000 barrels per day, which ​h​en used to offset imports meant that the net of our trade in oil worked out to a net import average of 1,397,000 barrels of oil per day during the week ending March 15th, 947,000 fewer barrels per day than the net of our imports minus our exports during the prior week. At the same time, transfers to our oil supply from Alaskan gas liquids, from natural gasoline, from condensate, and from unfinished oils averaged 386,000 barrels per day, while during the same week, production of crude from US wells was unchanged at 13,100,000 barrels per day. Hence our daily supply of oil from the net of our international trade in oil, from transfers, and from domestic well production appears to have averaged a rounded total of 14,883,000 barrels per day during the March 15th reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,785,000 barrels of crude per day during the week ending March 15th, an average of 127,000 more barrels per day than the amount of oil that our refineries reported they were processing during the prior week, while over the same period the EIA’s surveys indicated that a rounded average of 172,000 barrels of oil per day were being pulled out of the supplies of oil stored in the US… So, based on that reported & estimated data, the crude oil figures provided by the EIA for the week ending March 15th appear to indicate that our total working supply of oil from storage, from net imports, from transfers, and from oilfield production was 730,000 barrels per day less than what our oil refineries reported they used during the week…To account for that difference between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a +730,000] barrel per day figure onto line 16 of the weekly U.S. Petroleum Balance Sheet, in order to make the reported data for the supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there was an error or omission of that size in the week’s oil supply & demand figures that we have just transcribed….Moreover, since 305,000 barrels of oil demand per day could not be accounted for in last week’s EIA data, that means there was a 1,035,000 barrel per day difference between this week’s oil balance sheet error and the EIA’s crude oil balance sheet error from a week ago, and hence the changes to supply and demand from that week to this one that are indicated by this week’s report are off by that much, and therefore ​meaningless… ​B​ut despite that, since most oil traders react to these weekly EIA reports as if they were accurate, and since these weekly figures therefore often drive oil pricing (as is obvious to anyone who watches oil prices), and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it’s published, and just as it’s watched & believed to be reasonably reliable by most everyone in the industry…(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….(note there is also an aging twitter thread from an EIA administrator addressing these ongoing weekly errors, and what they had hoped to do about it)

This week’s average 172,000 barrel per day decrease in our overall crude oil inventories came as an average of 279,000 barrels per day were being pulled out of our commercially available stocks of crude oil, while an average of 107,000 barrels per day were being added to our Strategic Petroleum Reserve, the fifteenth SPR increase in twenty-two weeks, following nearly continuous withdrawals over the prior 39 months… Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to 6,334,000 barrels per day last week, which was still 2.0% more than the 6,217,000 barrel per day average that we were importing over the same four-week period last year. This week’s crude oil production was reported to be unchanged at 13,100,000 barrels per day because the EIA’s rounded estimate of the output from wells in the lower 48 states was unchanged at 12,700,000 barrels per day, while Alaska’s oil production was 9,000 barrels per day higher at 441,000 barrels per day, but still added the same 400,000 barrels per day to the EIA’s rounded national total as it did last week…US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure matches that of our pre-pandemic production peak, and is also 35.1% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021.

US oil refineries were operating at 87.8% of their capacity while processing those 15,785,000 barrels of crude per day during the week ending March 15th, up from their 86.8% utilization rate of a week earlier, but still on the low side of the normal operating range for mid March, as refinery operations ​slowly recover from damage caused by the arctic cold that penetrated to the Gulf Coast in mid January… the 15,785,000 barrels per day of oil that were refined this week were 2.7% more than the 15,376,000 barrels of crude that were being processed daily during week ending March 17th of 2023 (after even worse refinery-freeze-off damage following Christmas 2022’s winter storm Elliot), but 2.6% less than the 16,198,000 barrels that were being refined during the prepandemic week ending March 15th, 2019, when our refinery utilization rate was at a closer to normal 88.9%..

Even with the increase in the amount of oil being refined this week, gasoline output from our refineries was somewhat lower, decreasing by 263,000 barrels per day to 9,648,000 barrels per day during the week ending March 15th, after our refineries’ gasoline output had increased by 285,000 barrels per day during the prior week. This week’s gasoline production was still 1.5% more than the 9,503,000 barrels of gasoline that were being produced daily over week ending March 3rd of last year, but 2.8% less than the gasoline production of 9,925,000 barrels per day during the prepandemic week ending March 15th, 2019….on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 128,000 barrels per day to 4,690,000 barrels per day, after our distillates output had increased by 217,000 barrels per day during the prior week. After five straight production increases, our distillates output was 4.2% more than the 4,503,000 barrels of distillates that were being produced daily during the week ending March 17th of 2023, but ​still 4.7% less than the 4,923,000 barrels of distillates that were being produced daily during the week ending March 15th, 2019…

With this week’s decrease in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the seventh consecutive week, following five prior increases, decreasing by 3,310,000 barrels to 230,773,000 barrels during the week ending March 15th, after our gasoline inventories had decreased by 5,662,000 barrels during the prior week. Our gasoline supplies fell by less this week because the amount of gasoline supplied to US users fell by 235,000 barrels per day to 8,809,000 barrels per day, ​while our exports of gasoline rose by 34,000 barrels per day to 1,033,000 barrels per day, and while our imports of gasoline fell by 138,000 barrels per day to 496,000 barrels per day.…After thirty-three gasoline inventory withdrawals over the past fifty-two weeks, our gasoline supplies were still 0.5% above than last March 17th’s gasoline inventories of 229,598,000 barrels, but about 2% below the five year average of our gasoline supplies for this time of the year…

With this week’s increase in our distillates production, our supplies of distillate fuels rose for 2nd time in eight weeks, following eight consecutive prior increases, increasing by 624,000 barrels to 118,522,000 barrels over the week ending March 15th, after our distillates supplies had increased by 888,000 barrels during the prior week. Our distillates supplies rose by less this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 411,000 barrels per day to 3,786,000 barrels per day, while our exports of distillates fell by 246,000 barrels per day to 985,000 barrels per day and while our imports of distillates fell by 1,000 barrels per day to 170,000 barrels per day…Even with 29 inventory decreases over the past fifty-two weeks, our distillates supplies at the end of the week were 1.8% above the 116,402,000 barrels of distillates that we had in storage on March 17th of 2023, but about 5% below the five year average of our distillates inventories for this time of the year…

Finally, after this week’s big increase in our oil exports, our commercial supplies of crude oil in storage fell for the 11th time in twenty-six weeks and for the 30th time in the past year, decreasing by 1,952,000 barrels over the week, from 446,994,000 barrels on March 8th to 445,042,000 barrels on March 15th, after our commercial crude supplies had decreased by 1,536,000 barrels over the prior week… With this week’s decrease, our commercial crude oil inventories remained about 3% below the most recent five-year average of commercial oil supplies for this time of year, but were still 31.9% above the average of our available crude oil stocks as of the third weekend of March over the 5 years at the beginning of the past decade, with the big difference between those comparisons arising because it wasn’t until early 2015 that our oil inventories had first topped 400 million barrels. After our commercial crude oil inventories had jumped to record highs during the Covid lockdowns of the Spring of 2020, then jumped again after February 2021’s winter storm Uri froze off US Gulf Coast refining, but then fell in the wake of the Ukraine war, only to jump again following the Christmas 2022 refinery freeze offs, our commercial crude supplies as of this March 15th were still 7.5% less than the 481,180,000 barrels of oil left in commercial storage on March 17th of 2023, but 7.7% more than the 413,399,000 barrels of oil that we still had in storage on March 18th of 2022, while still 11.5% less than the 502,711,000 barrels of oil we had in commercial storage on March 19th of 2021, after refinery damage from winter storm Uri ​l​eft even more ​crude oil remaining after 2020’s pandemic precautions had left a lot of oil unused…

This Week’s Rig Count

In lieu of a detailed report on the rig count, we are again just including a screenshot of the rig count summary from Baker Hughes…in the table below, the first column shows the active rig count as of March 22nd, the second column shows the change in the number of working rigs between last week’s count (March 15th) and this week’s (March 22nd) count, the third column shows last week’s March 15th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting period a year ago, which in this week’s case was the 24th of March, 2023…

DUC well report for February

Monday of ​t​he past week saw the release of the EIA’s Drilling Productivity Report for March, which included the EIA’s February data on drilled but uncompleted (DUC) oil and gas wells in the 7 most productive shale regions (click tab 3)….that data showed a decrease in uncompleted wells nationally for the 42nd time out of the past 45 months, ​even as both drilling of new wells and completions of drilled wells increased in February for the first time in 16 months. but remained well below the average pre-pandemic levels….for the 7 sedimentary regions covered by this report, the total count of DUC wells decreased by 3 wells, falling from a revised 4,486 DUC wells in January to 4,483 DUC wells in February, which was also 17.5% fewer DUCs than the 5,435 wells that had been drilled but remained uncompleted as of the end of February of a year ago…this month’s DUC decrease occurred as 862 wells were drilled in the seven regions that this report covers (representing 87% of all U.S. onshore drilling operations) during February, up by 7 from the 855 wells that were drilled in January, while 865 wells were completed and brought into production by fracking them, up from the 846 well completions seen in January, but down from the 906 completions seen during February of last year….at the February completion rate, the 4,483 drilled but uncompleted wells remaining at the end of the month represents a 5.2 month backlog of wells that have been drilled but are not yet fracked, up from the 5.1 month DUC well backlog of a month ago, and up from the eight year low of 4.6 months of January 2023, on a completion rate that is still more than 20% below 2019’s pre-pandemic average…

the drilled but uncompleted well count in the Appalachian region, which includes the Utica shale, was up by 11 from a month earlier, rising from 794 DUC wells at the end of January to 805 DUC wells at the end of January, as 83 new wells were drilled into the Marcellus and Utica shales during the month, while 72 of the already drilled wells in the region were fracked..

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February’s consumer and producer prices, retail sales, & industrial production; January’s business inventories

Major monthly reports released over the past week included the February Consumer Price Index, the February Producer Price Index and the February Import-Export Price Index, all from the Bureau of Labor Statistics (BLS), the Retail Sales report for February and the conjoined Business Sales and Inventories for January from the Census Bureau, and the February report on Industrial Production and Capacity Utilization from the Fed….in addition, the week also saw the release of the Regional and State Employment and Unemployment Report for January from the BLS, a report which breaks down the two employment surveys from the monthly national jobs report by state and region, later than usual due to the annual revisions….while the text of that report provides a useful summary of this data, the serious statistical aggregation can be found in the tables linked at the end of the report, where one can find the civilian labor force data and the change in payrolls by industry for each of the 50 states, the District of Columbia, Puerto Rico, and the Virgin Islands…

This week also saw the release of the first regional Fed manufacturing surveys for March: the Empire State Manufacturing Survey from the New York Fed, which covers all of New York state, one NYC suburban county in Connecticut, Puerto Rico and northern New Jersey, reported their headline general business conditions index fell from –2.4 in February to -20.9 in March, the fifth consecutive negative reading, suggesting that the ongoing contraction of First District manufacturing was much more widespread than a month earlier…

CPI Rose 0.4% in February on Higher Rent, Energy, and Transportation Services

The consumer price index was 0.4% higher in February, as higher prices for rent, fuel, utilities, car insurance, used vehicles, transportation services, clothing, and internet services were just partly offset by lower prices for new cars, furniture and appliances, and medical care services…the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that the weighted average of seasonally adjusted prices of consumer goods and services was 0.4% higher in February, after being 0.3% higher in January, 0.2% higher in December, 0.2% higher in November, 0.1% higher in October, 0.4% higher in September, after rising by 0.5% in August, by 0.2% in July, by 0.2% in June, by 0.1% in May, by 0.4% in April, by 0.1% in March, and by 0.4% in February of last year….

The unadjusted CPI-U index, which was originally set to have prices of the 1982 to 1984 period equal to 100, rose from 308.417 in January to 310.326 in February which left it statistically 3.15317% higher than the index reading of 300.840 for February of last year, which is reported as a 3.2% year over year increase, up from the 3.1% year over year increase reported for January, with such widely cited year over year figures often telling us more about last year’s CPI changes than this years…with higher fuel prices offset by flat prices for food, seasonally adjusted core prices, which exclude food and energy, were also up by 0.4% for the month, as the unadjusted core price index rose from 313.623 to 315.419, which left the core index 3.7525% ahead of its year ago reading of 304.011, which is reported as a 3.8% year over year increase, down from the 3.9% year over year core price increase that was reported in January, and well below the 6.6% annual increase reported for September 2022, which had been the largest annual increase in core prices in forty years..

The volatile seasonally adjusted energy price index rose 2.3% in February, after falling by 0.9% in January, by 0.2% in December, by 1.6% in November and by 2.1% in October, but after rising by 1.2% in September, rising by 4.4% in August, and being unchanged in July, and is still 4.6% lower than in January of a year ago….the price index for energy commodities was 3.6% higher in February, while the price index for energy services was 0.8% higher, after it had risen by 1.4% in January….the energy commodity index was up 3.6% on a 3.8% increase in the price of gasoline and and a 1.1% increase in the price of fuel oil, while prices for other energy commodities, including propane, kerosene, and firewood, were on average 0.5% higher…within energy services, the price index for utility gas service rose 2.3% in February after rising 2.0% in January, but is still 8.8% lower than it was a year ago, while the electricity price index rose 0.8% in February after rising 1.2% in January… energy commodities are still averaging 4.2% lower than their year ago levels, with gasoline prices averaging 1.9% lower than they were a year ago, but the energy services price index is now up 0.5% from last February, as electricity prices are averaging 3.6% higher than a year ago…

Meanwhile, the seasonally adjusted food price index was unchanged in February, after being 0.4% higher in January, 0.2% higher in December, 0.2% higher in November, 0.3% higher in October, 0.2% higher in September, 0.2% higher in August, and 0.2% higher in July, as the price index for food purchased for use at home was unchanged, after being 0.4% higher in January, 0.1% higher in December, unchanged in November, and 0.3% higher in October, while the price index for food bought to eat away from home was 0.1% higher, as average prices at fast food outlets rose 0.1%, average prices at full service restaurants also rose 0.1%, and food prices at employee sites and schools averaged 0.2% higher….

In the food at home categories, the price index for cereals and bakery products was 0.5% higher, even as bread prices fell 0.5%, as the price index for breakfast cereal rose 2.0%, the price index for cookies rose 2.1%, the price index for frozen and refrigerated bakery products, pies, tarts, turnovers rose 1.8% and the price index for fresh cakes and cupcakes was 1.0% higher…at the same time, the price index for the meats, poultry, fish, and eggs food group was 0.1% higher, as the price index for beef and veal rose 0.5%, the price index for ham rose 1.2%, and egg prices were 5.8% higher….on the other hand, the seasonally adjusted price index for dairy products was 0.6% lower, as average milk prices fell 0.2%, the price index for cheese and related products fell 1.1% and the price index for ice cream and related products was 0.9% lower….at the same time, the fruits and vegetables price index was 0.2% lower, as the price index for fresh fruits fell 1.5% and canned fruit prices averaged 0.8% lower….in addition, the beverages price index also 0.2% lower, as the price index for carbonated drinks fell 0.2%, the price index for noncarbonated juices and drinks was 0.5% lower, and the price index for coffee was 1.2% lower….lastly, the price index for the ‘other foods at home’ category was unchanged, as the price index for sugar and and sweets rose 0.9%, the price index for salad dressing rose 1.1%, and the price index for olives, pickles, and relishes rose 1.0%, but the price index for margarine fell 2.2%, the price index for snacks fell 0.7%, and the price index for frozen and freeze dried prepared foods was 1.0% lower…

Among the seasonally adjusted core components of the CPI, which rose by 0.4% in February, after rising by 0.4% in January, by 0.3% in December, by 0.3% in November, by 0.2% in October, by 0.3% in September, by 0.2% in August, and by 0.2% in July, the composite price index of all goods less food and energy goods was 0.1% higher in February, while the more heavily weighted composite for all services less energy services was 0.5% higher….

Among the goods components of the core price index, which will be used by the Bureau of Economic Analysis to adjust October’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 tools, hardware and supplies fell 0.6%, the price index for furniture and bedding fell 0.7%, and the major appliance index was 1.3% lower….on the other hand, the apparel price index was 0.6% higher on a 2.6% increase in the price index for women’s dresses, a 6.8% increase in the price index for girls’ apparel, a 2.9% increase in the price index for boys’ and girls’ footwear, and a 5.1% increase in the price index for infants’ and toddlers’ apparel…. meanwhile, the price index for transportation commodities other than fuel was 0.1% higher even as average prices for new vehicles was 0.1% lower, as the price index for used cars and trucks was 0.5% higher, and the price index for vehicle parts and equipment other than tires was also 0.5% higher… in addition, the price index for medical care commodities was also 0.1% higher even as prescription drug prices fell 0.1%, as nonprescription drug prices rose 0.6%, and the price index for medical equipment and supplies was 0.2% higher…on the other hand, the recreational commodities index was 0.2% lower, as the price index for video equipment other than televisions fell 1.1%, the price index for toys fell 0.9%, the price index for pet food fell 0.9%, the price index for sporting goods including bicycles fell 1.0%, and the price index for recreational books was 3.7% lower…however, the education and communication commodities index was 0.2% higher on a 0.7% increase in the price index for computers, peripherals, and smart home assistants, and a 3.6% increase in the price index for computer software and accessories …lastly, a separate price index just for alcoholic beverages was unchanged, while the price index for ‘other goods’ was 0.7% higher on a 1.8% increase in the price index for cosmetics, perfume, bath, nail preparations and implements and a 0.9% increase in the price index for cigarettes…

Within core services, the price index for shelter was 0.4% higher, as rents rose 0.5%, homeowner’s equivalent rent was 0.4% higher, prices for lodging away from home at hotels and motels was 0.1% higher and the price index for water, sewers and trash collection was 0.5% higher….however, the price index for medical care services was 0.1% lower, as the price index for physicians’ services fell 0.2%, the price index for outpatient hospital services fell 0.4%, and the price index for inpatient hospital services was also 0.4% lower….on the other hand, the transportation services price index was 1.4% higher, as the price index for car and truck rental rose 3.8%, the price index for airline fares rose 3.6%, the price index for vehicle maintenance and servicing rose 0.6%, and the price index for motor vehicle insurance rose was 0.9% higher…moreover, the recreation services price index was 0.5% higher, as the price index for pet services rose 1.0%, the price index for fees the price index for admission to sporting events rose 1.9%, and the price index for admission to movies, theaters, and concerts was 0.8% higher…at the same time, the price index for education and communication services was also 0.5% higher, as the price index for postage rose 2.3%, the price index for residential telephone services rose 1.2%, and the price index for internet services and electronic information providers was 1.3% higher…lastly, the index for other personal services fell 0.6%, even as the price index for financial services rose 1.7%, as the price index for miscellaneous personal services was 1.3% lower..

Retail Sales rose 0.6% in February After January’s Sales were Revised 0.5% Lower

Seasonally adjusted retail sales increased 0.6% in February after retail sales for January were revised 0.5% lower…the Advance Retail Sales Report for February (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $700.7 billion during the month, which was 0.6 percent (±0.5%) higher than January’s revised sales of $696.7 billion, and 1.5 percent (±0.7 percent) above the adjusted sales in February of last year…January’s seasonally adjusted sales were revised down more than 0.5%, from $700.3 billion to $696.7 billion, while December’s sales were revised 0.3% lower, from $706.2 billion to $704.1 billion; as a result, the December 2023 to January 2024 percent change was revised from down 0.8 percent (±0.5 percent) to down 1.1 percent (±0.4 percent)…..the downward revision to December sales would indicate that nominal 4th quarter personal consumption expenditures will be revised lower at about a $8.4 billion annual rate, which would lower 4th quarter GDP by roughly 0.16 percentage points…estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated sales were up 0.9%, from $637,809 million in January to $643,391 million in February, and that they were up 2.3% from the $629,035 million of sales in February of a year ago..

Included below is the table of the monthly and yearly percentage changes in retail sales by business type taken from the February 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 January revised figure to this month’s February “advance” report in the first sub-column, and then the year over year percentage sales change since last February is in the 2nd column…the second double column pair below gives us the revision of the January advance estimates (now called “preliminary”) as of this report, with the new December to January percentage change under “Dec 2023 (r)” (revised) and the January 2023 to January 2024 percentage change as revised in the last column shown…for your reference, our copy of the table of last month’s advance estimate of January sales, before this month’s revisions, is here…

To estimate February’s real personal consumption of goods data for national accounts from this February retail sales report, the BEA will initially use the corresponding price changes from the February 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 the above table, we can see that February retail sales excluding the 0.9% increase in sales at gas stations were also up by 0.6%….then, subtracting the figures representing the 0.1% increase in grocery & beverage store sales and the 0.4% increase in food services sales from that total, we find that nominal core retail sales were up by more than 0.6% for the month…since the CPI report showed that the composite price index for all goods less food and energy goods was 0.1% higher in February, we can thus figure that real retail sales excluding food and energy will on average be up by more than 0.5%…..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 auto and parts dealers were up 1.6%, the price index for transportation commodities other than fuel was was 0.1% higher, which would suggest that real sales at auto and parts dealers were up by 1.5%…similarly, while nominal sales at clothing stores were 0.5% lower in February, the apparel price index was 0.6% higher, which means that real sales of clothing actually fell around 1.1%, because the 0.5% fewer dollars spent bought 0.6% fewer clothes per dollar..

In addition to figuring the real change in those core retail sales, we should also adjust food and energy retail sales for their price changes separately, as the BEA will do…the February CPI report showed that the food price index was unchanged, with the index for food purchased for use at home unchanged, while prices for food bought to eat away from home (other than at employee sites and schools) were 0.1% higher… thus, as nominal sales at food and beverage stores were up 0.1%, real sales of food and beverages would be also be 0.1% higher in light of flat prices…meanwhile, the 0.4% increase in nominal sales at bars and restaurants, once adjusted for 0.1% higher prices, suggests that real sales at bars and restaurants rose about 0.3% during the month….on the other hand, while sales at gas stations were up 0.9%, there was a 3.8% increase in the retail price of gasoline during the month, which would suggest that real sales of gasoline were down on the order of 2.8%, with a caveat that gasoline stations do sell more than gasoline, and we haven’t accounted for those other sales, or their prices….averaging real sales that we have thus estimated back together, but leaving out real restaurant and bar sales, we can then estimate that the income and outlays report for February would show that real personal consumption of goods rose by nearly 0.3% in February*, after falling by a revised 1.4% in January, after rising by a revised 0.6% in December, and rising 0.4% in November, unrevised…at the same time, the 0.3% increase in real sales at bars and restaurants would slightly boost the growth rate of February’s real personal consumption of services..…*NB: leaving our sales gasoline decrease out of that computation, since it’s most certainly incorrect, would leave real PCE goods up by more than 0.5% for the month, which is probably closer to what it will be…

Industrial Production Rose 0.1% in February After January Revised 0.4% Lower

The Fed’s February report on Industrial production and Capacity Utilization indicated that industrial production was 0.1% higher in February, after falling by a revised 0.5% in January, and after falling by a revised 0.3% in December, which left our industrial output 0.2% lower than in February a year ago….the industrial production index, with the benchmark set for average 2017 production to equal to 100.0, came in at 102.3 in February, after the January index was revised from the 102.6 reported last month to 102.2, the December index was revised but unchanged at 102.7, the November index was revised from the 102.7 reported last month to 103.0, the October index was revised from 102.4 to 102.6, and the September index was revised from 103.2 to 103.3…

The manufacturing index, which accounts for more than 77% of the total IP index, rose by 0.8%, from 98.4 in January to 99.2 in February, after the manufacturing index for January was revised down from 98.6 to 98.4, the manufacturing index for December index was revised up from 99.1 to 99.5, the manufacturing index for November index was revised up from 99.1 to 99.4, and the manufacturing index for October index was revised up from 98.7 to 98.8, leaving the manufacturing index 0.7% below its year ago level….meanwhile, the mining index, which includes oil and gas well drilling, rose 2.2% in a partial recovery from January’s well freeze-offs, from 116.6 in January to 119.2 in February, after the January index was revised down from 117.3, which still left the mining index 1.4% above where it was a year earlier… finally, the utility index, which often fluctuates due to above or below normal temperatures, fell by 7.5% during our record warm February weather, from 98.8 to 93.3, after our colder than normal January’s utility index was revised from 98.7 to 98.8, now up 7.4% from December….with last February’s temperatures also well above normal, the utility index is 0.7% higher 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 was unchanged at 78.3% in February, after capacity utilization for January was revised down from the 78.5% reported last month …capacity utilization of NAICS durable goods production facilities rose from a downwardly revised 74.4% in January rate to 75.1 in February, while capacity utilization for non-durables producers rose to 78.9 from a downwardly revised 79.0% in January.…capacity utilization for the mining sector rose to 93.8% in February from 91.7% in January, which was originally reported as 92.2%, while utilities were operating at 67.8% of capacity during February, down from their revised 73.5% of capacity during January, which was previously reported at 74.2%…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 Prices Rose 0.6% in February on Higher Food, Energy, & Transportation Services

The seasonally adjusted Producer Price Index (PPI) for final demand rose 0.6% in February, as the price index for finished wholesale goods rose 1.2% and the price index for final demand for services was 0.3% higher…that followed a 0.3% PPI increase in January, when the price index for finished wholesale goods fell 0.1%, while the price index for final demand for services was 0.5% higher; a 0.1% PPI decrease in December, when the index for prices of wholesale goods was 0.2% lower, while the price index for final demand for services was unchanged; an unchanged PPI reading in November, when the average of prices for wholesale goods was 0.2% lower, while the price index for final demand for services was 0.2% higher; a 0.3% PPI decrease in October, when the weighted average of prices for wholesale goods was 1.2% lower while the price index for final demand for services was 0.1% higher, and an unrevised 0.2% increase in September, when the weighted average of prices for wholesale goods was 0.9% higher and the price index for final demand for services was 0.1% lower….on an unadjusted basis, producer prices are 1.6% higher than a year ago, while the core producer price index, which excludes food, energy and trade services, was up 0.4% for the month, and is still 2.8% higher than it was a year ago…

As noted, the producer price index for final demand for goods was 1.2% higher in February, after being 0.1% lower in January, 0.1% lower in December, 0.2% lower in November, 1.3% lower in October. 0.9% higher in September, 1.7% higher in August, and 0.2% higher in July, and is now up 0.3% from a year ago….the final demand goods price index was up 1.2% in January as the price index for wholesale energy goods was 4.4% higher, after it had fallen 1.1% in January, after falling 0.8% in December, 2.0% in November, and falling 6.4% in October, while the price index for wholesale foods was 1.0% higher, after falling 0.3% in January, being unchanged in December but after rising 0.7% in November, while the index for final demand for core wholesale goods (excluding food and energy) was 0.3% higher, after being 0.3% higher in January…

Wholesale energy prices were up 4.4% in February on a 6.8% increase in wholesale prices for gasoline, a 15.9% increase in wholesale prices for diesel fuel, and a 3.9% increase in wholesale prices for liquefied petroleum gas, while the final demand food price index was 1.0% higher on a 4.9% increase in the wholesale price index for beef and veal, an 8.9% increase in the wholesale price index for fresh and dry vegetables, a 1.1% increase in the wholesale price index for dairy products, and a 55.0% increase in the wholesale price index for eggs for fresh use….among core wholesale goods, the wholesale price index for industrial chemicals rose 1.9%, the wholesale price index for pumps, compressors, and equipment increased 1.0%, the wholesale price index for cosmetics and other toiletries rose 0.9%, and wholesale price index for cigarettes was 2.6% higher…

Meanwhile, the price index for final demand for services was 0.3% higher in February, after being 0.5% higher in January, being unchanged in December, 0.2% higher in November, 0.1% higher in October, but 0.1% lower in September, 0.2% higher in August, and 0.8% higher in July, and is now 2.3% higher than a year ago…the price index for final demand for trade services fell 0.3%, but the price index for final demand for transportation and warehousing services rose 0.9%, and the core index for final demand for services less trade, transportation, and warehousing services was 0.5% higher….

Among trade services, seasonally adjusted margins for computer hardware, software, and supplies retailers fell 8.5%, margins for automobile retailers fell 3.5%, margins for sporting goods and boat retailers fell 3.1%, and margins for chemicals and allied products wholesalers fell 6.4%, but margins for major household appliances retailers rose 6.6%….among transportation and warehousing services, average margins for airline passenger services rose 2.4% and margins for courier, messenger, and U.S. postal services rose 1.3%….among the components of the core final demand for services index, the price index for consumer loans (partial) rose 3.4%, the price index for traveler accommodation services rose 3.8%, the price index for dental care rose 1.9%, and the price index for health and medical insurance increased 1.4%…

This report also showed the price index for intermediate processed goods was 0.2% lower in February, after being 0.1% lower in January, 0.4% lower in December, 0.7% lower in November and 1.0% lower in October, but after rising 0.5% in September and by 2.0% in August….the price index for intermediate energy goods rose 6.2% in February as refinery prices for gasoline rose 6.8%, refinery prices for diesel fuel rose 15.9%, refinery prices for jet fuel rose 11.5%, the price index for commercial electric power rose 2.4%, and the price index for natural gas to electric utilities rose 7.2%… at the same time, the price index for intermediate processed foods and feeds rose 0.3%, as the producer price index for meats rose 2.2%, the producer price index for refined sugar and byproducts rose 9.1%, and the producer price index for dairy products rose 1.1%….in addition, the core price index for intermediate processed goods less food and energy goods was 0.5% higher, as the producer price index for plastic resins and materials rose 1.7%, the producer price index for steel mill products rose 2.9%, the producer price index for ball and roller bearings rose 3.6%, and the producer price index for primary nonferrous metals rose 3.6%, while the producer price index for softwood lumber fell 3.0%….average prices for intermediate processed goods are still 1.8% lower than in February 2023, the twelfth consecutive year over year decrease, and are thus way down from their 26.6% year over year increase of November 2021, which had been a 46 year high…

Meanwhile, the price index for intermediate unprocessed goods rose 1.2% in February, after rising 1.4% in January, falling 4.2% in December, 2.1% in November and by 1.6% in October, after rising 2.9% in September, 2.1% in August and 2.5% in July….that was as the February price index for crude energy goods rose 3.6%, as crude oil prices rose 7.5%, while unprocessed natural gas prices fell 7.2%, and coal prices were 0.6% lower…in addition, the price index for unprocessed foodstuffs and feedstuffs was 0.8% higher, on a 35.6% increase in producer prices for slaughter hogs, a 2.0% increase in producer prices for slaughter chickens, a 1.6% increase in producer prices for slaughter cattle, and an 8.9% increase in producer prices for oilseeds…on the other hand, the index for core raw materials other than food and energy materials was 1.7% lower on a 4.4% decrease in the price index for iron and steel scrap, a 0.9% decrease in the price index for iron ores, and a 1.0% decrease in the price index for nonferrous metal ores….this raw materials price index is still 8.3% lower than a year ago, the thirteenth negative print after twenty-seven consecutive year over year increases, which came after the annual change on this index had been negative from the beginning of 2019 through October of 2020…

Lastly, the price index for services for intermediate demand was 0.1% higher in February, after being 0.7% higher in January, 0.4% higher in December, and 0.5% higher in November, but after being unchanged in October, 0.3% higher in September, 0.1% lower in August, and 0.7% higher in July….the price index for intermediate trade services fell 0.5%, as margins for intermediate chemicals and allied products wholesalers fell 6.4%, margins for intermediate paper and plastics products wholesalers fell 3.5%, and margins for metals, minerals, and ores wholesalers fell 2.9%….on the other hand, the index for transportation and warehousing services for intermediate demand was 1.1% higher, as the intermediate price index for the U.S. Postal Service rose 3.2%, the intermediate price index for arrangement of freight and cargo rose 7.1%, the intermediate price index for transportation of passengers rose 2.4%, and the intermediate price index for water transportation of freight was 1.7% higher…at the same time, the core price index for intermediate services other than trade, transportation, and warehousing services was 0.1% higher, as the intermediate price index for radio advertising time sales rose 7.7%, the intermediate price index for investment banking rose 3.3%, the intermediate price index for business loans rose 2.9%, and the intermediate price index for traveler accommodation services rose 3.8%…over the 12 months ended in February, the year over year price index for services for intermediate demand is still 3.2% higher than it was a year ago, the forty-first consecutive annual increase in this index change after it briefly turned negative year over year at the onset of the pandemic, from April to August of 2020, even as it is still much lower than the record 9.5% year over year increase indicated for July 2021…

January’s Business Sales Down 1.3%, Business Inventories Unchanged

After the release of the February retail sales report, the Census Bureau released the composite Manufacturing and Trade, Inventories and Sales report for January (pdf), which incorporates the revised January retail data from that February report and the earlier published January 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 “$1,833.3 billion, down 1.3 percent (±0.2 percent) from December 2023 and was down 1.2 percent (±0.4 percent) from January 2023“…note that total December sales were concurrently revised up from the originally reported $1,863.6 billion to $1,856.7 billion, now unchanged from November, revised from a 0.4% increase…. manufacturer’s sales fell 1.0% in January, and retail trade sales, which exclude restaurant & bar sales from the revised January retail sales reported earlier, fell 1.1%, while wholesale sales fell 1.7%…

meanwhile, total manufacturer’s and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted “$2,555.0 billion, virtually unchanged (±0.1 percent)* from December 2023, but were up 0.4 percent (±0.5 percent)* from January 2023″....at the same time, the value of end of December inventories was revised from the $2,556.0 billion reported last month to $2,554.8 billion, now up 0.3% from November… seasonally adjusted inventories of manufacturers were estimated to be 0.1% lower than in December, while inventories of retailers were 0.4% higher, while inventories of wholesalers were estimated to be valued 0.4% lower than in December…

For GDP purposes, all these inventories, including retail, will be adjusted for inflation with appropriate component price indices of the producer price index for January, which indicated finished goods prices were 0.1% lower…last week, we looked at real factory inventories with producer price adjustments for goods at various stages of production, and judged the decrease in those inventories would first subtract the 4th quarter increase, and then also subtract the first quarter decrease, from the growth rate of first quarter GDP…also last week, we found that the reverse of January’s real wholesale inventories from the 4th would also reverse that 4th quarter increase and also subtract January’s small decrease from 1st quarter GDP….since the nominal value of retail inventories for January has now been shown to be 0.4% higher, real retail inventories for the month, after the 0.1% finished goods price adjustment, thus would have thus increased by 0.5% from December, after a fourth quarter that saw real retail inventories up sharply…therefore, what is so far a modest real retail inventory increase in the 1st quarter would thus have a modest negative impact on 1st quarter GDP, amounting to the difference between the first quarter increase and the 4th quarter increase…

  

(the above is the synopsis that accompanied my regular sunday morning news 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 of which are picked from the aforementioned GGO posts, contact me…)

oil prices at a 4 month high, US natural gas supplies at a seasonal record high; oil imports at a 50 week low

US oil prices rose for a second week in three and finished this week at a four month high on bullish demand outlooks from ​the three major forecasting agencies, falling US oil inventories, and intensifying Ukrainian attacks against Russian oil refineries….after falling 2.5% to $78.01 a barrel last week on soft U.S. economic data and weak demand from China, the contract price for the benchmark US light sweet crude for April delivery fell more than 1% in overseas trading early Monday, as worries diminished about potential disruptions to supply due to conflicts in the Middle East, then traded lower in New York as uncertainty around the timing of U.S. interest rate cuts weighed on the market, but recovered to settle just 8 cents lower at $77.93 a barrel as traders awaited the release of key US inflation data the next day…oil prices moved higher overnight in Asia, as tensions in the Middle East continued to spur concerns, then swung between gains and losses ​during the US session as stubborn U.S. inflation whipsawed wider markets and clouded the outlook for when the Fed might start to cut interest rates, and settled 37 cents lower at $77.56 a barrel despite OPEC and EIA forecasts that oil market fundamentals would continue to strengthen in the second quarter, reflecting production cuts by OPEC+ and robust demand growth in North America and the Asia-Pacific…oil prices surged higher Wednesday morning after a Ukrainian drone struck one of Russia’s biggest refineries and the American Petroleum Institute’s overnight report signaled shrinking US crude stockpiles, then rallied over 2% following a supportive EIA inventory report and a second day of Ukrainian drone attacks on Russian refining facilities, and settled $2.16 or 2.8% higher at $79.72 a barrel on ​the surprise withdrawal ​f​rom U.S. crude inventories, a bigger-than-expected drop in U.S. gasoline supplies​, and fears of potential supply disruptions after the Ukrainian attacks on Russian refineries…oil prices extended their gains on Thursday after the International Energy Agency raised its demand growth forecast and lowered its supply projection for this year and settled $1.54 higher at a four month high of $81.26 a barrel, as the revised IEA outlook signaled a tighter oil market and an oil shortage rather than a surplus…oil prices softened early Friday, as the US dollar headed toward its largest ​weekly gain since mid-January, making oil more expensive for ​u​sers of foreign currencies, and settled 22 cents lower at $81.04 a barrel, but still ended 3.9% higher for the week, buoyed by the drop in U.S. crude inventories and the stronger demand forecast from the International Energy Agency.

On the other hand, natural gas prices fell for the third time in four weeks on the smallest withdrawal of gas from storage of the winter and ongoing weak demand….after falling 4.2% to $1.805 per mmBTU last week on bearish weather forecasts and a building glut of gas in storage, the contract price for natural gas for April delivery opened four cents below Friday’s last price on Monday, as bearish sentiment tied to mild forecasts continued to reign supreme and settled 4.6 cents lower at $1.759 per mmBTU as the possibility that an early season storage build would be reported later in the week outweighed cooler weather trends into late March….however, the April gas contract price opened four cents higher on Tuesday, after another major producer, CNX Resources Corp, announced that they would be cutting back production, after EQT had made a similar announcement last week, but turned south during morning trading and settled 4.5 cents lower at $1.714 per mmBTU, after the U.S. Energy Information Administration (EIA) slashed its projected 2024 average Henry Hub natural gas spot price by 14% versus its month-earlier forecast, after noting record lows for the benchmark in February…natural gas prices opened 5 cents lower on Wednesday and shrugged off news of production cuts and impending short-term winter conditions ​through an uneventful day of trading, and settled 5.6 cents lower at $1.658 per mmBTU, as the benchmark Henry Hub Louisiana spot price fell 27.5 cents to average $1.240, its lowest price level since Hurricane Ike in 2008…natural gas prices were unchanged at the open on Thursday, but jumped on the release of the natural gas storage report, which came in on the high side of expectations, and settled 8.3 cents higher at $1.741 per mmBTU supported by the weekly storage report that slightly beat estimates and signs that the Freeport LNG export terminal might be preparing to restart its third train…natural gas futures held onto those gains in early trading Friday, as traders anticipated a bump in export demand, but turned lower in late trading on forecasts for mild​er weather to settle down 8.6 cents at $1.655 per mmBTU on the day, and thus finish ​8.3% lower for the week…

The EIA’s natural gas storage report for the week ending March 8th indicated that the amount of working natural gas held in underground storage in the US decreased by 9 billion cubic feet to 2,​325 billion cubic feet by the end of the week, which left our natural gas supplies 336 billion cubic feet, or 16.9% above the 1,989 billion cubic feet that were in storage on March 8th of last year, 629 billion cubic feet, or 37.1% more than the five-year average of 1,696 billion cubic feet of natural gas that were typically in working storage as of the 8th of March over the most recent five years, and the highest late winter inventory level for any March 8th in 30 years of EIA records…the 9 billion cubic foot withdrawal from US natural gas working storage for the cited week was more than the 3 billion cubic foot withdrawal from supplies forecast by a Reuters survey of analysts, but was far less than the 65 billion cubic feet that were pulled from natural gas storage during the corresponding first week of March 2023, and also far less than the average 87 billion cubic feet withdrawal from natural gas storage that has been typical for the same late winter week over the past 5 years…

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending March 8th indicated that after another pickup in our oil refining and big drop in our oil imports, we needed to pull oil out of our stored commercial crude supplies for first time in seven weeks and for the 7th time in the past 21 weeks, even as demand for oil that the EIA could not account for decreased….Our imports of crude oil fell by an average of 1,730,000 barrels per day to a fifty week low average 5,491,000 barrels per day, after rising by an average of 837,000 barrels per day over the prior week, while our exports of crude oil fell by 1,490,000 barrels per day to average 3,147,000 barrels per day, which combined meant that the net of our trade in oil worked out to a net import average of 2,344,000 barrels of oil per day during the week ending March 8th, 240,000 fewer barrels per day than the net of our imports minus our exports during the prior week. At the same time, transfers to our oil supply from Alaskan gas liquids, from natural gasoline, from condensate, and from unfinished oils averaged 384,000 barrels per day, while during the same week, production of crude from US wells was 100,000 barrels per day lower at 13,100,000 barrels per day. Hence our daily supply of oil from the net of our international trade in oil, from transfers, and from domestic well production appears to have averaged a rounded total of 15,828,000 barrels per day during the March 8th reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,658,000 barrels of crude per day during the week ending March 8th, an average of 390,000 more barrels per day than the amount of oil that our refineries reported they were processing during the prior week, while over the same period the EIA’s surveys indicated that a rounded average of 134,000 barrels of oil per day were being pulled out of the supplies of oil stored in the US… So, based on that reported & estimated data, the crude oil figures provided by the EIA for the week ending March 8th appear to indicate that our total working supply of oil from storage, from net imports, from transfers, and from oilfield production was 305,000 barrels per day more than what our oil refineries reported they used during the week…To account for that difference between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a [-305,000] barrel per day figure onto line 16 of the weekly U.S. Petroleum Balance Sheet, in order to make the reported data for the supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there was an error or omission of that size in the week’s oil supply & demand figures that we have just transcribed…. Despite that, since most oil traders react to these weekly EIA reports as if they were accurate, and since these weekly figures therefore often drive oil pricing (as is obvious to anyone who watches oil prices), and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it’s published, and just as it’s watched & believed to be reasonably reliable by most everyone in the industry…(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….(note there is also an aging twitter thread from an EIA administrator addressing these ongoing weekly errors, and what they had hoped to do about it)

This week’s average 134,000 barrel per day decrease in our overall crude oil inventories came as an average of 219,000 barrels per day were being pulled out of our commercially available stocks of crude oil, while an average of 85,000 barrels per day were being added to our Strategic Petroleum Reserve, the fourteenth SPR increase in twenty-one weeks. following nearly continuous withdrawals over the prior 39 months… Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to 6,438,000 barrels per day last week, which was still 2.9% more than the 6,255,000 barrel per day average that we were importing over the same four-week period last year. This week’s crude oil production was reported to be 100,000 barrels per day lower at 13,100,000 barrels per day because the EIA’s rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day lower at 12,700,000 barrels per day, while Alaska’s oil production was 4,000 barrels per day lower at 432,000 barrels per day, but still added the same 400,000 barrels per day to the EIA’s rounded national total as it did last week…US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure matche​s that of our pre-pandemic production peak, but was still 35.1% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021.

US oil refineries were operating at 86.8% of their capacity while processing those 15,658,000 barrels of crude per day during the week ending March 8th, up from the 59 week low 80.6% utilization rate of three weeks earlier, but still a bit below the normal operating range for early March, as refinery operations recover from damage ​c​aused by the arctic cold that penetrated to the Gulf Coast in mid January… the 15,658,000 barrels per day of oil that were refined this week were 1.7% more than the 15,398,000 barrels of crude that were being processed daily during week ending March 10th of 2023 (after ​a​n even worse refinery-freeze-off following Christmas 2022’s winter storm Elliot), but 2.3% less than the 16,020,000 barrels that were being refined during the prepandemic week ending March 8th, 2019, when our refinery utilization rate was at a closer to normal 87.6%..

With the increase in the amount of oil being refined this week, gasoline output from our refineries was also higher, increasing by 285,000 barrels per day to 9,911,000 barrels per day during the week ending March 8th, after our refineries’ gasoline output had increased by 207,000 barrels per day during the prior week. This week’s gasoline production was 8.8% more than the 9,111,000 barrels of gasoline that were being produced daily over week ending March 3rd of last year, but 0.6% less than the gasoline production of 9,974,000 barrels per day during the prepandemic week ending March 8th, 2019….at the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 217,000 barrels per day to 4,562,000 barrels per day, after our distillates output had increased by 56,000 barrels per day during the prior week. After four straight increases, our distillates output was 3.0% more than the 4,428,000 barrels of distillates that were being produced daily during the week ending March 10th of 2023, but 6.1% less than the 4,856,000 barrels of distillates that were being produced daily during the week ending March 8th, 2019…

Even with this week’s increase in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the sixth consecutive week, following five prior increases, decreasing by 5,662,000 barrels to 234,083,000 barrels during the week ending March 8th, the biggest draw since November 3rd, after our gasoline inventories had decreased by 4,460,000 barrels during the prior week. Our gasoline supplies fell by more this week because the amount of gasoline supplied to US users rose by 31,000 barrels per day to 9,044,000 barrels per day, and because our exports of gasoline rose by 217,000 barrels per day to 999,000 barrels per day, and even though our imports of gasoline rose by 46,000 barrels per day to 634,000 barrels per day.…After thirty-two gasoline inventory withdrawals over the past fifty-two weeks, our gasoline supplies were 0.8% below than last March 10th’s gasoline inventories of 238,058,000 barrels, and about 3% below the five year average of our gasoline supplies for this time of the year…

With this week’s increase in our distillates production, our supplies of distillate fuels rose for first time in seven weeks, following eight consecutive​ prior increases, increasing by 888,000 barrels to 117,898,000 barrels over the week ending March 8th, after our distillates supplies had decreased by 4,013,000 barrels during the prior week. Our distillates supplies rose this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 699,000 barrels per day to 4,074,000 barrels per day, while our imports of distillates fell by 24,000 barrels per day to 171,000 barrels per day, and while our exports of distillates rose by 176,000 barrels per day to 1,231,000 barrels per day …With 29 inventory decreases over the past fifty-one weeks, our distillates supplies at the end of the week were 1.5% below the 119,715,000 barrels of distillates that we had in storage on March 10th of 2023, and about 7% below the five year average of our distillates inventories for this time of the year…

Finally, after a big drop in our oil imports and an increase in our oil refining, our commercial supplies of crude oil in storage fell for the 11th time in twenty-six weeks and for the 29th time in the past year, decreasing by 1,536,000 barrels over the week, from 448,530,000 barrels on March 1st to 446,994,000 barrels on March 8th, after our commercial crude supplies had increased by 1,376,000 barrels over the prior week… With this week’s decrease, our commercial crude oil inventories slipped to about 3% below the most recent five-year average of commercial oil supplies for this time of year, but were still more than 33% above the average of our available crude oil stocks as of the first weekend of March over the 5 years at the beginning of the past decade, with the big difference between those comparisons arising because it wasn’t until early 2015 that our oil inventories had first topped 400 million barrels. After our commercial crude oil inventories had jumped to record highs during the Covid lockdowns of the Spring of 2020, then jumped again after February 2021’s winter storm Uri froze off US Gulf Coast refining, but then fell in the wake of the Ukraine war, only to jump again following the Christmas 2022 refinery freeze offs, our commercial crude supplies as of this March 8th were still 6.9% less than the 480,063,000 barrels of oil left in commercial storage on March 10th of 2023, but 7.5% more than the 415,907,000 barrels of oil that we still had in storage on March 11th of 2022, while still 10.7% less than the 500,799,000 barrels of oil we had in commercial storage on March 12th of 2021, after ​refinery damage from winter storm Uri added to the glut of oil remaining after 2020’s pandemic precautions had left a lot of oil unused…

This Week’s Rig Count

In lieu of a detailed report on the rig count, we are again just including a screenshot of the rig count summary from Baker Hughes…in the table below, the first column shows the active rig count as of March 15th, the second column shows the change in the number of working rigs between last week’s count (March 8th) and this week’s (March 15th) count, the third column shows last week’s March 8th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting period a year ago, which in this week’s case was the 17th of March, 2023…

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February’s jobs report; January’s trade deficit, factory inventories, wholesale sales, and JOLTS

Last week’s major releases included both major monthly jobs reports: the Employment Situation Summary for February and the Job Openings and Labor Turnover Survey (JOLTS) report for January, both from the Bureau of Labor Statistics, and three reports that will provide source data for 1st quarter GDP: the Commerce Dept’s report on our International Trade for January, the Full Report on Manufacturers’ Shipments, Inventories and Orders for January, and the January report on Wholesale Trade, Sales and Inventories, both from the Census Bureau….in addition, the Fed released the Consumer Credit Report for January, which showed that overall consumer credit, a measure of non-real estate debt, grew by a seasonally adjusted $19.5 billion, or at a 4.7% annual rate, as non-revolving credit expanded at a 3.6% annual rate to $3,711.7 billion, while revolving credit outstanding grew at an 7.6% rate to $1,327.5 billion…

The week’s privately issued reports included the ADP Employment Report for February and the Mortgage Monitor for January from ICE Black Knight Financial Services, which indicated that 3.38% of all mortgages were delinquent in January, down from 3.57% in December, but unchanged from the 3.38% of mortgages that were delinquent in January of 2023, and that 0.41% of all mortgages were in the foreclosure process, up from the 0.40% that were in foreclosure in December, but down from the 0.45% of mortgages that were in foreclosure a year earlier, and the February 2024 Services Report On Business from the Institute for Supply Management (ISM), who reported their Services Index fell to 52.6%, down from 53.4% in January, still indicating a small plurality of service industry purchasing managers reported expansion in various facets of their business in February…

Employers Added 275,000 Jobs in February, Unemployment Rate Rose to 3.9%

The Employment Situation Summary for February indicated that employers added somewhat more payroll jobs than were expected after sharp downward revisions to jobs added in prior months, while the unemployment rate rose 0.2% due to actual job losses, largely among women, minorities, and teenagers…estimates extrapolated from the seasonally adjusted establishment survey projected that employers added 275,000 jobs in February, after the previously estimated payroll job increase for January was revised down by 124,000, from 353,000 to 229,000, while the payroll jobs increase for December was revised down by 43,000, from a increase of 333,000 jobs to an increase of 290,000 jobs…hence, those revisions mean that this report represents a total of just 108,000 more seasonally adjusted payroll jobs than the report of a month ago…..the unadjusted data shows that there were actually 1,141,000 more payroll jobs extant in February than in January, but the typical seasonal job increases in sectors such as professional & business services, leisure and hospitality and public and private education were leveled off in the report by the seasonal adjustments…

Seasonally adjusted job increases in February were spread through the private goods producing and service sectors and in government, while 4,000 jobs were lost in the manufacturing sector due to the seasonal adjustment….since the BLS summary of the job changes by sector is clear and as detailed as our usual synopsis from the tables, we’ll again just quote from that summary here:

• Total nonfarm payroll employment rose by 275,000 in February, above the average monthly gain of 230,000 over the prior 12 months. In February, job gains occurred in health care, in government, in food services and drinking places, in social assistance, and in transportation and warehousing. (See table B-1.)
• Health care added 67,000 jobs in February, above the average monthly gain of 58,000 over the prior 12 months. In February, job growth continued in ambulatory health care services (+28,000), hospitals (+28,000), and nursing and residential care facilities (+11,000). 
• Government employment rose by 52,000 in February, about the same as the prior 12-month average gain (+53,000). Over the month, employment continued to trend up in local government, excluding education (+26,000) and federal government (+9,000).
• Employment in food services and drinking places increased by 42,000 in February, after changing little over the prior 3 months.
• Social assistance added 24,000 jobs in February, about the same as the prior 12-month average gain of 23,000. Over the month, job growth continued in individual and family services (+19,000).
• Employment in transportation and warehousing rose by 20,000 in February. Couriers and messengers added 17,000 jobs, after losing 70,000 jobs over the prior 3 months. In February, job growth also occurred in air transportation (+4,000), while warehousing and storage lost 7,000 jobs. Employment in the transportation and warehousing industry is down by 144,000 since reaching a peak in July 2022.   
• In February, employment continued to trend up in construction (+23,000), in line with the average monthly gain of 18,000 over the prior 12 months. Over the month, heavy and civil engineering construction added 13,000 jobs.
• Retail trade employment changed little in February (+19,000) and has shown little net change over the year. Over the month, job gains in general merchandise retailers (+17,000); health and personal care retailers (+6,000); and automotive parts, accessories, and tire retailers (+5,000) were partially offset by job losses in building material and garden equipment and supplies dealers (-6,000) and electronics and appliance retailers (-2,000).   
• Employment showed little change over the month in other major industries, including mining, quarrying, and oil and gas extraction; manufacturing; wholesale trade; information; financial activities; professional and business services; and other services.

The establishment survey also showed that average hourly pay for all employees rose by 5 cents an hour to $34.57 an hour in February, after it had increased by a downwardly revised 18 cents an hour in January; at the same time, the average hourly earnings of production and nonsupervisory employees increased by 7 cents an hour to $29.71 an hour…employers also reported that the average workweek for all private payroll employees increased by one-tenth of an hour to 34.3 hours in February, while hours for production and non-supervisory personnel increased by 0.3 hour to 33.8 hours, after the non-supervisory workweek had decreased by 0.3 hours in January…in addition, the manufacturing workweek increased by 0.1 hour to 39.9 hours, while average factory overtime was up 0.2 hours to 3.0 hours…

Meanwhile, the February household survey indicated that the seasonally adjusted extrapolation of those who reported being employed fell by an estimated 184,000 to 160,968,000, while the similarly estimated number of those considered unemployed rose by 334,000 to 6,458,000, which together meant there was a rounded 150,000 increase in the total labor force…since the working age population had grown by 171,000 over the same period, that meant the number of employment aged individuals who were not in the labor force rose by a rounded 20,000 to 100,285,000….with the increase of those in the labor force in line with the increase of the civilian noninstitutional population, the labor force participation rate was unchanged at 62.5%….meanwhile, the decrease in number employed as a percentage of the increase in the population was large enough to lower the employment to population ratio, which we could think of as an employment rate, from 60.2% in February to 60.1% in February …likewise, the increase in the number unemployed was large enough increase the unemployment rate from 3.7% in January to 3.9% in February, the highest since January 2022….meanwhile, the number who reported they were involuntarily working part time fell by 46,000 to 4,376,000 in February, which partly offset the increase in the unemployed and left the alternative measure of unemployment, U-6, which includes those “employed part time for economic reasons”, at 7.3% in February, up just 0.1% from 7.2% in January…

Like most reports from the Bureau of Labor Statistics, the employment situation press release itself is easy to read and understand, so you can get more details on these two reports from there…note that almost every paragraph in that release points to one or more of the tables that are linked to on the bottom of the release, and those tables are also on a separate html page here that you can open it alongside the press release to access the data while avoiding the need to scroll up and down the page..

Hiring, Layoffs, and Job Quitting Fell in January, Job Opening were Little Changed

The Job Openings and Labor Turnover Survey (JOLTS) report for January from the Bureau of Labor Statistics estimated that seasonally adjusted job openings decreased by 26,000, from 8,889,000 in December to 8,863,000 in January, after December’s job openings were revised 137,000 lower, from 9,026,000 to 8,889,000, with that revision incorporating an annual revision of 2023’s job openings and labor turnover data, tables for which are included in the release…January’s jobs openings were also 15.0% lower than the revised 10,425,000 job openings reported for January a year ago, as the job opening ratio expressed as a percentage of the employed was unchanged from the 5.3% now indicated for December, but was down from the 6.3% rate of January a year ago….a 170,000 decrease to 540,000 in job openings in retail was the largest decrease, while job openings in nondurable goods manufacturing increased by 82,000 to 261,000 (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 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 January, seasonally adjusted new hires totaled 5,687,000, down by 100,000 from the revised 5,787,000 who were hired or rehired in December, as the hiring rate as a percentage of all employed fell from 3.7% in December to 3.6% in January, and it was also down from the 4.1% hiring rate in January a year earlier (details of hiring by sector since September are in table 2)….meanwhile, total separations fell by 78,000, from 5,419,000 in December to 5,341,000 in January, as the separations rate as a percentage of the employed was unchanged at 3.4%, but was still down from the separations rate of 3.9% in January a year ago (see table 3)…subtracting the 5,341,000 total separations from the total hires of 5,687,000 would imply an increase of 346,000 jobs in January, more than the revised payroll job increase of 229,000 for January reported in the February establishment survey, and just outside the expected +/-115,000 margin of error for these reports….

Breaking down the seasonally adjusted job separations, the BLS finds that 3,385,000 of us voluntarily quit our jobs in January, down by 54,000 from the revised 3.439,000 who quit their jobs in December, while the quits rate, widely watched as an indicator of worker confidence, fell from 2.2% to 2.1% of total employment, and it also down from the 2.5% quits rate of a year earlier (see details in table 4)….in addition to those who quit, another 1,572,000 were either laid off, fired or otherwise discharged in January, down by 35,000 from the 1,607,000 who were discharged in December, as the discharges rate remained at 1.0% of all those who were employed during the month, which was also down from the discharges rate of 1.2% a year earlier….meanwhile, ‘other separations’, which includes retirements and deaths, were at 384,000 in January, up by 11,000 from 373,000 in December, for an ‘other separations rate’ of 0.2%, the same as in December and as in January 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…

US Trade Deficit Rose 5.1% in January on Higher Imports of Capital Goods

Our trade deficit rose 5.1% in January, as both the value of our exports and the value of our imports increased, but our imports increased by quite a bit more…the Commerce Dept report on our international trade in goods and services for January indicated that our seasonally adjusted goods and services trade deficit rose by a rounded $3.3 billion to a rounded $67.4 billion in January, from a December deficit that was revised up from $62.2 billion to $64.2 billion, while trade deficit figures for all the months of 2023 were revised as well, the net of which was to leave the annual trade deficit at $779.8 billion in 2023, down from the $951.2 billion deficit in 2022 (annual details are here)….

The value of our exports rose by a rounded $0.3 billion to $257.2 billion in January, on a $0.2 billion increase to $171.8 billion in our exports of goods, and an increase of $0.2 billion to $85.4 billion in our exports of services, while our imports rose by $3.6 billion to $324.6 billion on a $3.1 billion increase to $263.4 billion in our imports of goods and a $0.5 billion increase to $61.3 billion in our imports of services…prices of our exports averaged 0.8% higher in January, which means the increase in the nominal value of our exports for the month was price related, and that our real exports likely fell on the order of 0.7%, while import prices also averaged 0.8% higher, meaning that most of increase in imports was also price related, and that real imports probably only rose about 0.3%..

The increase in our January exports of goods resulted from greater exports of automotive products, consumer goods, and capital goods, which were mostly offset by lower exports of industrial supplies and materials…referencing the Full Release and Tables for January (pdf), in Exhibit 7 we find that our exports of automotive vehicles, parts and engines rose by $1,401 million to $15,125 million on a $725 million increase in our exports of passenger cars and a $494 million increase in our exports of automotive parts other than engines, chassis, and tires, and that our exports of consumer goods increased by $620 million to $21,599 million, led by a $382 million increase in our exports of jewelry…in addition, our exports of capital goods rose by $557 million to $51,502 million led by a $382 million increase in our exports of civilian aircraft engines, and despite a $947 million decrease in our exports of civilian aircraft….mostly offsetting our increased exports in those end use categories, our exports of industrial supplies and materials fell by $1660 million to $61,261 million as a $1,371 million decrease in our exports of crude oil and a $573 million decrease in our exports of fuel oil was partly offset by a $1,029 million increase in our exports of nonmonetary gold, and our exports of foods, feeds and beverages fell by $236 million to $13,663 million despite a $570 million increase in our exports of soybeans, while our exports of other goods not categorized by end use fell by $450 million to $7,189 million….

Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our January goods imports and shows that the January increase in our imports was due to increased imports of capital goods and automotive products, which were partly offset by lower imports of industrial supplies and materials and of consumer goods….our imports of capital goods rose by $3,096 million to $74,998 million on a $768 million increase in our imports of computer accessories, a $607 million increase in our imports of computers, a $572 million increase in our imports of semiconductors, and a $328 million increase in our imports of industrial machinery not listed separately, and our imports of automotive vehicles, parts and engines rose by $1,963 million to $40,880 million on a $1,095 million increase in our imports of passenger cars and a $1,000 million increase in our imports of trucks, buses, and special purpose vehicles…at the same time, our imports of foods, feeds, and beverages rose by $94 million to $16,984 million, and our imports of other goods not categorized by end use rose by $101 million to $10,311 million….partly offsetting the increased imports in those end use categories, our imports of industrial supplies and materials fell by $1,318 million $54,948 million as a $1,901 decrease in our imports of crude oil and a $335 million decrease in our imports of nonmonetary gold were partly offset by a $667 million increase in our imports of organic chemicals and a $550 million increase in our imports of copper, and our imports of consumer goods decreased by $1108 million to $62,152 million as a $1,060 decrease in our imports of cell phones and a $317 million decrease in our imports of gem diamonds were partly offset by a $342 million increase in our imports of imports of toys, games, and sporting goods and a $308 million increase in our imports of artwork and other collectibles…

The Press Release for this month’s report summarizes Exhibit 19 in the full pdf, which gives us surplus and deficit details on our goods trade with selected countries…

  

The January figures show surpluses, in billions of dollars, with South and Central America ($4.2), Netherlands ($4.1), Hong Kong ($2.2), Australia ($1.6), United Kingdom ($1.4), Belgium ($1.1), Singapore ($0.4), Brazil ($0.2), and Saudi Arabia ($0.2). Deficits were recorded, in billions of dollars, with China ($22.9), European Union ($18.1), Mexico ($12.7), Vietnam ($8.5), Japan ($7.3), Germany ($6.3), Ireland ($6.0), Canada ($5.7), South Korea ($5.5), Taiwan ($4.8), Italy ($3.8), India ($3.7), Malaysia ($2.1), Switzerland ($1.5), France ($1.4), and Israel ($0.4).

    
• The deficit with Japan increased $2.1 billion to $7.3 billion in January. Exports increased $0.1 billion to $6.2 billion and imports increased $2.2 billion to $13.5 billion.
• The deficit with Taiwan increased $1.4 billion to $4.8 billion in January. Exports decreased $0.2 billion to $3.3 billion and imports increased $1.2 billion to $8.1 billion.
• The deficit with Vietnam decreased $1.5 billion to $8.5 billion in January. Exports increased less than $0.1 billion to $0.9 billion and imports decreased $1.5 billion to $9.4 billion.

  

To estimate the impact of January’s trade on eventual 1st quarter GDP growth figures, we use exhibit 10 in the pdf for this report, which gives us monthly goods trade figures by end use category and in total, already adjusted for inflation in chained 2017 dollars, the same inflation adjustment that’s used by the BEA to compute trade figures for GDP, with the only difference being that the amounts given here are not annualized…from that table, we can figure that the 4th quarter’s real exports of goods averaged 143,572.7 million monthly in chained 2017 dollars, while inflation adjusted January goods exports were at 145,030 million in that same 2017 dollar quantity index representation… figuring the annualized change between those two figures, we find that January’s real exports of goods are thus rising at a 4.12% annual rate from those of the 4th quarter, or at a pace that would add about 0.30 percentage points to 1st quarter GDP growth if continued at the same pace through February and March…in a similar manner, we find that our 4th quarter real imports of goods averaged 227,978.3 million monthly in chained 2017 dollars, while inflation adjusted goods imports in January were at 231,026 million in 2017 dollars….that would indicate that so far in the 1st quarter, we have seen our real imports of goods increase at a 5.46% annual rate from those of the 4th quarter…since an increase in imports would subtract from GDP because it would represent the portion of consumption or investment that occurred during the quarter that was not produced domestically, an increase at a 5.46% rate would subtract roughly 0.59 percentage points from 1st quarter GDP….hence, if our January trade in goods deficit is maintained at the same level throughout the rest of the 1st quarter, the deterioration in our balance of trade in goods would subtract about 0.29 percentage points from the growth rate of our 1st quarter GDP….

Note that while we have not computed the impact of the change in international trade in services here, we’d note that our exports of services rose by less than $0.2 billion in January, while our imports of services rose by $0.5 billion, so the impact of the month’s services trade on GDP appears to be negative…however, both our exports and imports of services were about $1 billion higher in January than the 4th quarter averages, and since we have no appropriate price indexes we could apply, we can’t say for sure…

Factory Shipments Fell 1.0% in January, Factory Inventories were 0.1% Lower

The Full Report on Manufacturers’ Shipments, Inventories, & Orders (pdf) for January from the Census Bureau reported that the seasonally adjusted value of new orders for manufactured goods decreased by a rounded $21.5 billion or 3.6 percent to $569.7 billion in January, following a decrease of $1.9 billion or 0.3% to $591.2 billion in December, which was revised from an increase of $1.2 billion or 0.2 percent to $594.3 billion that was reported for December a month ago….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 for their revised updates to the January advance report on durable goods, which was released last week….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 January, down three of the last four months, decreased $21.5 billion or 3.6 percent to $569.7 billion, the U.S. Census Bureau reported today. This followed a 0.3 percent December decrease. Shipments, down four of the last five months, decreased $5.7 billion or 1.0 percent to $572.3 billion. This followed a 0.5 percent December decrease. Unfilled orders, up thirteen of the last fourteen months, increased $2.1 billion or 0.2 percent to $1,395.1 billion. This followed a 1.3 percent December increase. The unfilled orders-to-shipments ratio was 7.18, up from 7.10 in December. Inventories, down two consecutive months, decreased $0.8 billion or 0.1 percent to $855.8 billion. This followed a virtually unchanged December decrease. The inventories-to-shipments ratio was 1.50, up from 1.48 in December.

  

• New Orders for manufactured durable goods in January, down three of the last four months, decreased $18.1 billion or 6.2 percent to $276.3 billion, down from the previously published 6.1 percent decrease. This followed a 0.3 percent December decrease. Transportation equipment, also down three of the last four months, led the decrease, $17.4 billion or 16.2 percent to $89.8 billion. New orders for manufactured nondurable goods decreased $3.3 billion or 1.1 percent to $293.4 billion.

  

• Shipments of manufactured durable goods in January, down four of the last five months, decreased $2.4 billion or 0.9 percent to $278.9 billion, unchanged from the previously published decrease. This followed a 0.6 percent December decrease. Transportation equipment, also down four of the last five months, drove the decrease, $2.9 billion or 3.2 percent to $86.3 billion. Shipments of manufactured nondurable goods, down four consecutive months, decreased $3.3 billion or 1.1 percent to $293.4 billion. This followed a 0.3 percent December decrease. Petroleum and coal products, also down four consecutive months, led the decrease, $2.5 billion or 3.8 percent to $63.1 billion.

  

• Unfilled orders for manufactured durable goods in January, up thirteen of the last fourteen months, increased $2.1 billion or 0.2 percent to $1,395.1 billion, unchanged from the previously published increase. This followed a 1.3 percent December increase. Transportation equipment, also up thirteen of the last fourteen months, drove the increase, $3.4 billion or 0.4 percent to $899.7 billion.

  

• Inventories of manufactured durable goods in January, up six consecutive months, increased $1.1 billion or 0.2 percent to $527.4 billion, unchanged from the previously published increase. This followed a 0.2 percent December increase. Transportation equipment, also up six consecutive months, drove the increase, $1.2 billion or 0.7 percent to $169.0 billion. Inventories of manufactured nondurable goods, down four consecutive months, decreased $1.9 billion or 0.6 percent to $328.4 billion. This followed a 0.4 percent December decrease. Petroleum and coal products, also down four consecutive months, led the decrease, $1.2 billion or 2.5 percent to $47.2 billion. By stage of fabrication, January materials and supplies increased 0.2 percent in durable goods and decreased 0.8 percent in nondurable goods. Work in process increased 0.3 percent in durable goods and 0.7 percent in nondurable goods. Finished goods were virtually unchanged in durable goods and decreased 0.9 percent in nondurable goods.

To gauge the effect of January’s nominal factory inventories on 1st quarter GDP, they must first be adjusted for changes in price with appropriate components of the producer price index…by stage of fabrication, the value of finished goods inventories decreased 0.4% to $245,697 million; the value of work in process inventories was 0.4% higher at $228,023 million, and materials and supplies inventories were valued at $313,002 million, 0.2% less than December…meanwhile, the producer price index for January indicated that prices for finished goods decreased 0.2%, that prices for intermediate processed goods were also 0.2% lower, but that prices for unprocessed goods were on average 0.1% higher….assuming similar valuations for like inventories, that would suggest that January’s real finished goods inventories were about 0.6% smaller December’s, that real inventories of intermediate processed goods were about 0.2% greater, and that real raw material inventory inventories were around 0.3% smaller…given that, it appears that total real factory inventories were down on the order of 0.2%…since there was a modest increase in real factory inventories in the 4th quarter, any 1st quarter decrease in real factory inventories would first subtract that 4th quarter increase and then also the first quarter decrease from the growth rate of first quarter GDP…

January Wholesale Sales Down 1.5%, Wholesale Inventories Down 0.3%

The January report on Wholesale Trade, Sales and Inventories(pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at $657.2 billion, down 1.7 percent (±0.4 percent) from the revised December level and were down 1.5 percent (±0.9 percent) from the revised January 2023 level.”… the December preliminary estimate was revised down to $668.3 billion from the $670.9 billion sales reported last month, which meant “The November 2023 to December 2023 percent change was revised from the preliminary estimate of up 0.7 percent (±0.5 percent) to up 0.3 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 additional goods in a warehouse represent goods that were produced even if they weren’t sold, and this January report estimated that wholesale inventories were valued at $895.1 billion at month end, a decrease of 0.3 percent (±0.2 percent) from the revised December level and 2.5 percent (±1.1 percent) lower than January a year ago…the December preliminary inventory estimate was concurrently revised upward from $897.2 billion to $897.4 billion, still up 0.4% from November…

In national accounts data, January’s wholesale inventories will be adjusted with components of the producer price index for January to determine their real change…with notable exceptions such as farm products, chemicals and petroleum & its products, we’ve estimated that wholesale inventories appear to be roughly 70% finished goods…with the January producer price index for finished goods down by 0.2%, the producer price indexes for intermediate goods also 0.2% lower, but with prices for unprocessed goods on average 0.1% higher, it appears that January’s real wholesale inventories will be down by around a tenth of a percent…since real wholesale inventories were up modestly the 4th quarter, January’s wholesale inventories real decrease will reverse that 4th quarter increase and also subtract January’s small decrease from 1st quarter GDP….

  

(the above is the synopsis that accompanied my regular sunday morning news 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 of which are picked from the aforementioned GGO posts, contact me…)

March natural gas supplies at a record high; biggest distillates draw in 10 months; biggest fuel supply drop since last March

US oil prices fell for the second ​w​eek in three on soft U.S. economic data​ and weak demand from China….after rising 4.5% to a four month high of $79.97 a barrel last week on increasing conflict in the Middle East and on expectations that OPEC would extend its first quarter production cuts till the end of the year, the contract price for the benchmark US light sweet crude for April delivery slipped in quite active overseas trading on Monday, as traders took profits after OPEC and its allies agreed to extend their voluntary output cuts through mid-year, then sold off to a low of $78.56 in afternoon trading as the U.S. said a temporary ceasefire in Gaza was ​needed for a hostage deal and called on Hamas to accept the terms currently on the table, before settling $1.23 lower for the day at $78.74 a barrel…oil prices slipped for a second day in overseas trading on Tuesday as traders were underwhelmed by China’s commitments to get its economy back on track and boost demand, and settled 59 cents lower at $78.15 a barrel in New York following a pair of U.S. macroeconomic reports showing the economy might have slowed more than previously thought, spurring bets on an earlier start to a rate-cutting cycle by the Federal Reserve…oil prices rose in overseas trading Wednesday after Saudi Arabia unexpectedly increased prices of its flagship Arab Light crude for April for customers in Asia, then extended those gains in New York after the EIA reported large draws from US gasoline and distillate supplies​,​ and settled 98 cents higher at $79.13 a barrel as the domestic fuel consumption rebound suggested driving and commercial demand was picking up momentum heading into spring…but oil prices slipped in Asia on Thursday as China’s crude import data for the January-February period painted a ​u​ncertain picture, then turned mixed as traders weighed expectations that U.S. interest rate cuts could be delayed against supportive Chinese trade data and increased tensions in the Middle East after the first fatal attack on Red Sea shipping, and settled 20 cents lower at $79.03 a barrel as traders balanced weaker-than-expected U.S. economic data against dovish comments from Fed Chairman Powell….oil prices eased early Friday as a brief outage on North America’s Keystone pipeline failed to shake prices out of what was set to be the smallest weekly range in years, then deepened their losses after a mixed U.S. employment report showed that stronger-than-expected job growth in February was accompanied by softer wage gains and a rising unemployment rate, and settled down 92 cents at $78.01 for the session, thus ending 2.5% lower for the week…

Meanwhile, natural gas prices also fell for the second time in three weeks on bearish weather forecasts and a building glut of gas in storage.. after rising 8.0% to $1.885 per mmBTU last week on a larger than expected withdrawal of gas from storage and lower production, the contract price for natural gas for April delivery opened 14 cents higher on Monday, as top U.S. natural gas producer EQT announced production cuts that would last a month​, but pulled back late in the session to settle 8.1 cents higher at $1.916 per mmBTU as several producers cut output after prices collapsed to a 3-1/2-year low in recent weeks…natural gas prices were little changed while trading in a narrow band most of Tuesday, briefly rallying above the $2. level after the Golden Pass Pipeline updated federal regulators on its progress, and settled 4.1 cents higher at $1.957 per mmBTU as traders continued to weigh the ongoing EQT production cutbacks against healthy storage levels and weak demand….natural gas prices opened slightly higher Wednesday​, but retreated throughout the session as modest changes to weather forecasts overnight provided a bearish influence​, a​s the contract settled 2.8 cents lower at $1.929 per mmBTU…natural gas traded sideways near $1.910 leading up to the weekly storage publication on Thursday, ​b​ut tumbled thereafter, with storage levels high and above the five-year average, and settled 11.1 cents or 6% lower at 1.818 pe​r mmBTU on a much smaller-than-usual withdrawal from storage​, as gas flowing to LNG export plants remained low due to an ongoing outage at Freeport LNG’s plant in Texas… natural gas prices fell another 1.3 cents to settle at $1.805 per mmBTU on Friday, as warmer-than-normal weather slowed heating demand while inventories stayed high and thus ended ​4.2% lower for the week

The EIA’s natural gas storage report for the week ending March 1st indicated that the amount of working natural gas held in underground storage in the US decreased by 40 billion cubic feet to 2,544 billion cubic feet by the end of the week, which left our natural gas supplies 280 billion cubic feet, or 13.6% above the 2,054 billion cubic feet that were in storage on March 1st of last year, 551 billion cubic feet, or 30.9% more than the five-year average of 1,783 billion cubic feet of natural gas that were typically in working storage as of the 1st of March over the most recent five years​, and at the highest level at any time in any March in 30 years of EIA records…the 40 billion cubic foot withdrawal from US natural gas working storage for the cited week was in line with the withdrawal from supplies forecast by a Reuters survey of analysts, but was less than the 72 billion cubic feet that were pulled from natural gas storage during the corresponding last week of February 2023, and less than ​half of the average 93 billion cubic feet withdrawal from natural gas storage that has been typical for the same winter week over the past 5 years…

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending March 1st indicated that as a pickup in our oil refining was more than offset by an increase in our oil imports, we again had surplus oil to add to our stored commercial crude supplies for the sixth consecutive week, and for the 14th time in the past 20 weeks, despite a jump in demand for oil that the EIA could not account for….Our imports of crude oil rose by an average of 837,000 barrels per day to average 7,222,000 barrels per day, after falling by an average of 269,000 barrels per day over the prior week, while our exports of crude oil fell by 91,000 barrels per day to average 4,637,000 barrels per day, which combined meant that the net of our trade in oil worked out to a net import average of 2,585,000 barrels of oil per day during the week ending March 1st, 928,000 more barrels per day than the net of our imports minus our exports during the prior week. At the same time, transfers to our oil supply from Alaskan gas liquids, from natural gasoline, from condensate, and from unfinished oils averaged 469,000 barrels per day, while during the same week, production of crude from US wells was 100,000 barrels per day lower at 13,200,000 barrels per day. Hence our daily supply of oil from the net of our international trade in oil, from transfers, and from domestic well production appears to have averaged a rounded total of 16,254,000 barrels per day during the March 1st reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,268,000 barrels of crude per day during the week ending March 1st, an average of 595,000 more barrels per day than the amount of oil that our refineries reported they were processing during the prior week, while over the same period the EIA’s surveys indicated that a rounded average of 296,000 barrels of oil per day were being added to the supplies of oil stored in the US… So, based on that reported & estimated data, the crude oil figures provided by the EIA for the week ending March 1st appear to indicate that our total working supply of oil from net imports, from transfers, and from oilfield production was 689,000 barrels per day more than what was added to storage plus our oil refineries reported they used during the week…To account for that difference between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a [-689,000] barrel per day figure onto line 16 of the weekly U.S. Petroleum Balance Sheet, in order to make the reported data for the supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there was an error or omission of that size in the week’s oil supply & demand figures that we have just transcribed…Moreover, since 52,000 barrels per day of demand for oil could not be accounted for in last week’s EIA data, that means there was a 637,000 barrel per day difference between this week’s oil balance sheet error and the EIA’s crude oil balance sheet error from a week ago, and hence the changes to supply and demand from that week to this one that are indicated by this week’s report are off by that much, and therefore useless… However, since most oil traders react to these weekly EIA reports as if they were accurate, and since these weekly figures therefore often drive oil pricing (as is obvious to anyone who watches oil prices), and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it’s published, and just as it’s watched & believed to be reasonably reliable by most everyone in the industry…(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….(note there is also an aging twitter thread from an EIA administrator addressing these ongoing weekly errors, and what they had hoped to do about it)

This week’s average 296,000 barrel per day increase in our overall crude oil inventories came as ​an average ​of 195,000 barrels per day were being added to our commercially available stocks of crude oil, while ​an average ​of 101,000 barrels per day were being added to our Strategic Petroleum Reserve, the thirteenth SPR increase in twenty weeks. following nearly continuous withdrawals over the prior 39 months… Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to 6,682,000 barrels per day last week, which was 6.8% more than the 6,259,000 barrel per day average that we were importing over the same four-week period last year. This week’s crude oil production was reported to be 100,000 barrels per day lower at 13,200,000 barrels per day because the EIA’s rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day lower at 12,800,000 barrels per day, while Alaska’s oil production was 3,000 barrels per day higher at 436,000 barrels per day, but still added the same 400,000 barrels per day to the EIA’s rounded national total as it did last week…US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was still 0.8% above that of our pre-pandemic production peak, and 36.1% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021.

US oil refineries were operating at 84.9% of their capacity while processing those 15,268,000 barrels of crude per day during the week ending March 1st, up from the 59 week low 80.6% utilization rate of two weeks earlier, but still below the normal​ operating range for early March, following a drop in refinery operations due in part to damage from the arctic cold that penetrated to the Gulf Coast in mid January… the 15,268,000 barrels per day of oil that were refined this week were 2.0% more than the 14,967,000 barrels of crude that were being processed daily during week ending March 3rd of 2023 (after the even worse refinery-freeze-offs following Christmas 2022’s winter storm Elliot), but 4.5% less than the 15,990,000 barrels that were being refined during the prepandemic week ending March 1st, 2019, when our refinery utilization rate was at a c​loser to normal 87.5%..

With the increase in the amount of oil being refined this week, gasoline output from our refineries was also higher, increasing by 207,000 barrels per day to 9,626,000 barrels per day during the week ending March 1st, after our refineries’ gasoline output had increased by 390,000 barrels per day during the prior week. This week’s gasoline production was 0.7% more than the 9,557,000 barrels of gasoline that were being produced daily over week ending March ​3rd of last year, but 2.3% less than the gasoline production of 9,852,000 barrels per day during the prepandemic week ending March 1st, 2019….at the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 56,000 barrels per day to 4,345,000 barrels per day, after our distillates output had increased by 118,000 barrels per day during the prior week. But even with those increases, our distillates output was 4.5% less than the 4,525,000 barrels of distillates that were being produced daily during the week ending March 3rd of 2023, and 11.7% less than the 4,919,000 barrels of distillates that were being produced daily during the week ending March 1st, 2019…

Even with this week’s increase in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the fifth consecutive week, following five consecutive increases, decreasing by 4,460,000 barrels to 239,745,000 barrels during the week ending March 1st, the biggest dr​a​w since November​ 3rd, after our gasoline inventories had decreased by 2,832,000 barrels during the prior week. Our gasoline supplies fell by more this week because the amount of gasoline supplied to US users rose by ​546,000 barrels per day to ​9,013,000 barrels per day, and even though our imports of gasoline rose by 208,000 barrels per day to 588,000 barrels per day, while our exports of gasoline rose by 30,000 barrels per day to 782,000 barrels per day…But even after thirty-two gasoline inventory withdrawals over the past fifty-two weeks, our gasoline supplies were still 0.7% above than last March 3rd’s gasoline inventories of 238,058,000 barrels, while still about 2% below the five year average of our gasoline supplies for this time of the year…

Even with this week’s increase in our distillates production, our supplies of distillate fuels fell for the sixth consecutive week, following eight consecutive increases, decreasing by ​4​,013,000 barrels to 117,010,000 barrels over the week ending March 1st, ​the biggest draw in 10 months, after our distillates supplies had decreased by ​5​10,000 barrels during the prior week. Our distillates supplies fell by ​m​ore this week because the amount of distillates supplied to US markets, an indicator of our domestic demand,​ rose by 538,000 barrels per day to 4,074,000 barrels per day, and because our imports of distillates fell by 133,000 barrels per day to 112,000 barrels per day​, while our exports of distillates fell by 112,000 barrels per day to 937,000 barrels per day …With 29 inventory decreases over the past fifty weeks, our distillates supplies at the end of the week were 0.8% below the 122,114,000 barrels of distillates that we had in storage on March 3rd of 2023, and about 8% below the five year average of our distillates inventories for this time of the year…

Finally, as an increase in our oil imports more than covered the increase in our oil refining, our commercial supplies of crude oil in storage rose for the 16th time in twenty-six weeks and for the 24th time in the past year, increasing by 1,376,000 barrels over the week, from 447,163,000 barrels on February 23rd to 448,530,000 barrels on March 1st, after our commercial crude supplies had increased by 4,199,000 barrels over the prior week… With this week’s modest increase, our commercial crude oil inventories remained about 1% below the most recent five-year average of commercial oil supplies for this time of year, but were still more than 35% above the average of our available crude oil stocks as of the first weekend of March over the 5 years at the beginning of the past decade, with the big difference between those comparisons arising because it wasn’t until early 2015 that our oil inventories had first topped 400 million barrels. After our commercial crude oil inventories had jumped to record highs during the Covid lockdowns of the Spring of 2020, then jumped again after February 2021’s winter storm Uri froze off US Gulf Coast refining, but then fell in the wake of the Ukraine war, only to jump again following the Christmas 2022 refinery freeze offs, our commercial crude supplies as of this March 1st were still 6.3% less than the 478,513,000 barrels of oil left in commercial storage on March 3rd of 2023, but 9.0% more than the 411,562,000 barrels of oil that we still had in storage on March 4th of 2022, while still 10.0% less than the 498,403,000 barrels of oil we had in commercial storage on March 5th of 2021, after winter storm Uri added to the glut of oil remaining after 2020’s pandemic precautions had left a lot of oil unused…

This Week’s Rig Count

In lieu of a detailed report on the rig count, we are again just including a screenshot of the rig count summary from Baker Hughes…in the table below, the first column shows the active rig count as of March 8th, the second column shows the change in the number of working rigs between last week’s count (March 1st) and this week’s (March 8th) count, the third column shows last week’s March 1st active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting period a year ago, which in this week’s case was the 10th of March 1st, 2023…

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4th quarter GDP revision; January’s income and outlays, construction spending, durable goods, and new home sales

The key economic reports released during the past week were the 2nd estimate of 4th quarter GDP and the January report on Personal Income and Spending, both from the Bureau of Economic Analysis; other widely watched releases included the January report on Construction Spending, the Advance Report on Durable Goods Manufacturers’ Shipments Inventories and Orders for January, and the January report on new home sales, all from the Census Bureau…In addition, this week also saw the release the last three regional Fed manufacturing surveys for February: the Kansas City Fed manufacturing survey for February, covering western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico, reported its broadest composite index rose to -4 in February, up from -9 in January but down from -1 in December, indicating that a smaller plurality of that region’s manufactures saw deteriorating conditions in February than a month earlier; the Richmond Fed Survey of Manufacturing Activity, covering an area that includes Virginia, Maryland, the Carolinas, the District of Columbia and West Virginia, reported its broadest composite index rose from −15 in January to -5 in February, similarly indicating that a smaller plurality of that region’s manufactures saw deteriorating condition than a month ago, while the Dallas Fed Texas Manufacturing Outlook Survey, covering Texas and adjacent counties in northwest Louisiana and southeast New Mexico, reported their general business activity composite index rose to -11.3, from last month’s -27.4, also indicating a less widespread deterioration of the Texas area economy than in January…

The week’s privately issued reports included the light vehicle sales report for February from Wards Automotive, which estimated that vehicles sold at a 15.81 million annual rate in February, up from the revised 15.00 million annual rate in January, and up from the 14.89 million annual sales rate in February a year ago, and the Case-Shiller Home Price Index for December from S&P Case-Shiller, which reported that home prices nationally during October, November and December averaged 5.5% higher than prices for the same homes that sold during the same 3 month period a year earlier, an increase which was up from the 5.1% year over year increase that they reported a month ago for the months of September, October and November, and the widely followed manufacturing purchasing manager’s survey from the Institute for Supply Management (ISM): the February Manufacturing Report On Business indicated that the manufacturing PMI (Purchasing Managers Index) fell to 47.8% in February, down from 49.1% in January, which suggests a larger plurality of purchasing managers now see worse conditions among manufacturing firms nationally..

4th Quarter GDP Grew at a 3.2% Rate, Revised from 3.3% in the Advance Estimate

The Second Estimate of our 4th Quarter GDP from the Bureau of Economic Analysis indicated that our real output of goods and services grew at a 3.2% rate in the quarter, revised from the 3.3% growth rate reported in the advance estimate last month, as personal consumption expenditures for goods and inventories grew less than was previously reported while imports grew more, more than offsetting upward revisions to personal consumption expenditures for services, fixed investment, and government…In current dollars, our fourth quarter GDP grew at a 4.93% annual rate, increasing from what would work out to be a $27,610.1 billion a year rate in the 3rd quarter to a $27,944.6 annual rate in the 4th quarter, with the headline 3.2% annualized rate of increase in real output arrived at after annualized inflation adjustments averaging 1.6%, known in aggregate as the GDP deflator, were computed from the price changes of the GDP components and applied to their current dollar change….that composite GDP deflator was revised from 1.5% in the advance estimate to 1.6% with this estimate and hence changes in prices accounted for the downward revision to GDP growth; current dollar GDP was actually revised up a bit from the advance estimate..

Remember that the news release for the second estimate GDP reports all quarter over quarter percentage changes at an annual rate, which means that they’re expressed as a change that’s roughly 4 times of that what actually occurred over the 3 month period, and that the prefix “real” is used to indicate that each change has been adjusted for inflation using price changes chained from 2012, and then that all percentage changes in this report are calculated from those 2012 dollar figures, which would be better thought of as a quantity indexes than as any reality based dollar amounts….for our purposes, the data that we’ll use in reporting the changes here comes directly from the full pdf for the 2nd estimate of 4th quarter GDP, which can be accessed directly on the BEA’s GDP landing page, which also provides links to the source data, the tables on Excel and other technical notes…specifically, we reference table 1, which shows the real percentage change in each of the GDP components annually and quarterly since the 1st quarter of 2020, table 2, which shows the contribution of each of the components to the GDP figures for those quarters and years; table 3, which shows both the current dollar value and inflation adjusted value of each of the GDP components over the last 5 quarters; and table 4, which shows the change in the price indexes for each of the components…the pdf for the 4th quarter advance estimate, which this estimate revises, is here…

Growth of real personal consumption expenditures (PCE), the largest component of GDP, was revised from a 2.8% growth rate to an overall 3.0% growth rate in this 2nd estimate…that aggregate growth rate figure is the reult of deflating the 4.84% growth rate in the dollar amount of consumer spending with the PCE price index, which indicated consumer inflation grew at a 1.8% annual rate in the 4th quarter, which was revised from the 1.7% PCE inflation rate reported a month ago….after revised inflation adjustments, real consumption of durable goods grew at a 3.2% annual rate, revised from the 4.6% growth rate shown in the advance report, and added 0.25 percentage points to GDP, as real growth at an 7.3% rate in consumption of recreational goods and vehicles accounted for more than 80% of the durable goods growth, and offset a small decrease in real consumption of automobiles….in addition, real consumption of nondurable goods by individuals grew at an 3.3% annual rate, revised from the 3.4% growth rate reported in the 1st estimate, and added 0.47 percentage points to the 4th quarter’s economic growth rate, as growth in real consumption of groceries, clothing and footwear, gasoline, and other non-durable goods all contributed…at the same time, consumption of services grew at a 2.8% annual rate, revised from the 2.4% growth rate reported last month, and added 1.36 percentage points to the final GDP tally, as a 6.0% growth rate in real health care services accounted for more than half of the 4th quarter services growth…

Meanwhile, seasonally adjusted real gross private domestic investment grew at a 0.9% annual rate in the 4th quarter, revised down from the original 2.1% growth estimate reported last month, as real private fixed investment grew at a 2.5% rate, revised up from the 1.7% growth rate reported in the advance estimate, while inventory growth turned negative, after being a small positive in the first estimate…real investment in non-residential structures now indicates growth at a 7.5% rate, revised up from the 3.2% growth rate previously reported, while real investment in equipment shrunk at 1.7% rate, reversed down from the 1.0% growth rate shown a month ago….meanwhile the quarter’s investment in intellectual property products was revised to indicate growth at a 3.3% rate, up from the 2.1% growth rate previously reported, while at the same time real residential investment was shown to be growing at a 2.9% annual rate, more than double the 1.1% growth rate shown in the previous report….after those revisions, the increase in investment in non-residential structures added 0.23 percentage points to the 4th quarter’s growth rate, while the decrease in investment in equipment subtracted 0.08 percentage points from the quarter’s growth rate, while growth in investment in intellectual property added 0.18 percentage points to the growth rate of 4th quarter GDP, and the increase in residential investment added 0.11 percentage points to the growth of GDP…..for an easy to read table as to what’s included in each of those GDP investment categories, see the NIPA Handbook, Chapter 6, page 3…..

At the same time, growth in real private inventories was revised from the originally reported $82.7 billion in inflation adjusted growth to show that inventories grew at an inflation adjusted $66.3 billion rate…since that came after inventories had grown at an inflation adjusted $77.8 billion rate in the 3rd quarter, the change in real inventory growth from the 3rd to the 4th quarter was revised from a rounded $5.0 billion positive change to an $11.4 billion negative change, and hence subtracted 0.27 percentage points from the 4th quarter’s growth rate, revised from the 0.07 percentage point addition to GDP from inventory growth reported in the advance estimate….however, since negative growth of inventories indicates that less of the goods produced during the quarter were left in a warehouse or sitting on the shelf, their decrease at a $11.4 billion rate meant that real final sales of GDP were actually greater by that amount, and hence real final sales of GDP grew at a 3.5% rate in the 4th quarter, revised from the real final sales 3.2% growth rate shown in the advance estimate, and barely down from the real final sales growth rate of 3.6% in the 3rd quarter, when higher inventory growth was a major factor the quarter’s 4.9% GDP growth rate……

The previously reported increase in real exports was revised a bit higher with this estimate, while the previously reported increase in real imports was revised higher by somewhat more, and as a result our net trade was a smaller addition to GDP growth than previously reported…our real exports grew at a 6.4% rate, revised from the 6.3% rate reported in the first estimate, and since exports are added to GDP because they are part of our production that was not consumed or added to investment in our country, their growth added 0.69 percentage points to the 4th quarter’s growth rate, up from the 0.68 percentage point addition shown in the previous report….meanwhile, our real imports increased at a 2.7% rate, revised from the advance estimate’s 1.9% figure, and since imports are subtracted from GDP because they represent either consumption or investment added to an other GDP component that shouldn’t have been because it was not produced here, their increase subtracted 0.37 percentage points from 3rd quarter GDP, revised from the 0.25 percentage point subtraction shown last month….thus, our improving trade imbalance added a net 0.32 percentage points to 4th quarter GDP, revised from the 0.43 percentage point addition that had been indicated by the advance estimate..

Finally, there was also an upward revision to real government consumption and investment in this 2nd estimate, as the growth rate for the entire government sector was revised from a 3.3% rate to a 4.2% rate…however, real federal government consumption and investment was seen to have grown at a 3.2% rate from the 3rd quarter in this estimate, revised down from the 2.5% growth rate reported in the advance estimate, as real federal outlays for defense grew at a 0.4% rate, revised from the 0.9% growth rate shown previously, and added 0.02 percentage points to 4th quarter GDP, while all other federal consumption and investment grew at a 4.7% rate, revised from the 4.8% growth rate shown previously, and added 0.13 more percentage points to 4th quarter GDP growth….note that government outlays for social insurance are not included in this GDP component; rather, they are included within personal consumption expenditures only when such funds are spent on goods or services, indicating an increase in the output of those goods or services….meanwhile, real state and local consumption and investment grew at a 5.4% rate in the quarter, which was revised up from the 3.7% growth rate reported in the 1st estimate, and added 0.58 percentage points to the growth of 4th quarter GDP, as a real increase in state and local investment at a 19.1% annual rate accounted for 0.36 percentage points of that addition to GDP….

Personal Income Rose 1.0% in January, Personal Income Taxes Rose 6.0%, Personal Spending Rose 0.2%, PCE Price Index Rose 0.3%

The January report on Personal Income and Outlays from the Bureau of Economic Analysis includes the month’s data for our personal consumption expenditures (PCE), which accounts for more than 70% of the month’s GDP, and with it the PCE price index, the inflation gauge the Fed targets, and which is used to adjust that personal spending data for inflation to give us the relative change in the output of goods and services that our spending indicated…in addition, this release reports our personal income data, disposable personal income, which is income after taxes, and our monthly savings rate…however, because this report feeds in to GDP and other national accounts data, the change reported for each of those metrics is not the current monthly change; rather, they’re reporting seasonally adjusted amounts expressed at an annual rate, ie, they tell us how much income and spending would change over a year if January’s change in seasonally adjusted income and spending were extrapolated over an entire year…however, the percentage changes are computed monthly, from one month’s annualized figure to the next, and in this case of this month’s report they give us the percentage change in each annualized metric from December to January..

Hence, when the opening line of the news release for this report tell us “Personal income increased $233.7 billion (1.0 percent at a monthly rate) in January..“, they mean that the annualized figure for seasonally adjusted personal income in January, $23,615.4 billion, was $233.7 billion higher, or nearly 1.0% higher than the annualized personal income figure of $23,381.7 billion extrapolated for December; the actual, unadjusted monthly change in personal income from December to January is not even given…at the same time, annualized disposable personal income, which is income after taxes, rose by more than 0.3%, from an annual rate of $20,589.2 billion in December to an annual rate of $20,656.7 billion in January…the monthly contributors to the change in personal income, which can be viewed in detail in the Full Release & Tables (PDF) for this release, are also annualized…in January, the primary contributors to the seasonally adjusted $233.7 billion annual rate of increase in personal income were an annualized $92.2 billion increase in government social benefits to persons, which included a $47.7 billion annualized increase in social security benefits, an annualized $78.7 billion increase in interest and dividend income, and an annualized $43.4 billion increase in wages and salaries…meanwhile, annualized disposable personal income was only up 0.3% due to a $166.2 billion annualized increase in personal income taxes…

For the January personal consumption expenditures (PCE) that will be included in 1st quarter GDP, BEA reports that they increased at an annual rate of $43.9 billion, or by more than 0.2%, from a $19,010.3 billion annual rate in December to a $19,054.2 billion annual rate in January; at the same time, the December PCE figure was revised up from the originally reported $19,001.7 billion annual rate, while November PCE was revised up from $18,867.8 billion to $18,883.6 billion, revisions that were already incorporated into this week’s 4th quarter GDP estimate (this report, although usually released a business day later than the GDP release, is computed concurrently)….total personal outlays, which includes interest payments and personal transfer payments in addition to PCE, rose by an annualized $54.3 billion to a $19,877.4 billion annual rate in January, which left total personal savings, which is disposable personal income less total outlays, at a $779.3 billion annual rate in January, up from the revised $766.0 billion in annualized personal savings in December… as a result, the personal saving rate, which is personal savings as a percentage of disposable personal income, rose to 3.8% in January, up from the December savings rate of 2.7%, and well above the 3.3% savings rate for 2022..

As you know, before January’s personal consumption expenditures can be used in the 1st quarter GDP computation, they must first be adjusted for inflation to give us the real change in consumption, and hence the real change in goods and services that were produced for that consumption….that’s done with the price index for personal consumption expenditures, which is shown in Table 5 in the pdf for this report, which is a chained price index based on 2017 prices = 100….that PCE price index rose from 121.451 in December to 121.870 in January, giving us a month over month PCE inflation rate of 0.344995, which BEA rounds down to a 0.3% increase in reporting it in the text and tables here….then, applying that 0.344995% inflation adjustment to the increase in January PCE shows that real PCE fell by 0.1137% in January, which the BEA reports as a 0.1% decrease….note that when those PCE price indexes are applied to a given month’s annualized PCE in current dollars, it gives us that month’s annualized real PCE in those same chained 2017 dollars, which are the means that the BEA uses to compare one month’s or one quarter’s real goods and services produced to that of another….that result is shown in table 7 of the PDF, where we see that January’s chained dollar consumption total works out to $15,635.0 billion annually, 0.1131% less than December’s $15,652.7 billion, statistically the equivalent of the real PCE increase we just computed…

However, to estimate the impact of the change in January PCE on the change in GDP, the change from December doesn’t help us much, since GDP is reported on a quarterly basis…thus we have to compare January’s real PCE to the the real PCE of the 3 months of the fourth quarter….while this report shows PCE for all those amounts monthly, the BEA also provides the quarterly annualized chained dollar PCE for those three months in table 3 of the pdf for the 4th quarter GDP report, where we find that the annualized real PCE for the 4th quarter was represented by 15,574.9 billion in chained 2017 dollars)….when we compare January’s real PCE representation of 15,635.0 billion to the 4th quarter real PCE figure of 15,574.9 billion, we find that real PCE is growing at a 1.55% annual rate so far in the 1st quarter….that’s a rate that means that even if January’s real PCE does not improve during February and March, growth in PCE would still add 1.07 percentage points to the growth rate of 1st quarter GDP…

Construction Spending Fell 0.2% in January after December and November Spending Were Revised Higher

The Census Bureau’s report on January construction spending (pdf) estimated that January’s seasonally adjusted construction spending would work out to $2,102.4 billion annually if extrapolated over an entire year, which was 0.2 percent (±0.8 percent)* below the revised annualized estimate of $2,105.8 billion for construction spending in December, but 11.7 percent (±1.5 percent) above the estimated annualized level of construction spending of January last year…the December spending estimate was revised from the $2,096.0 billion annual rate figure published a month ago to $2,105.8 billion, while November’s annualized construction spending was revised from $2,078.3 billion to $2,082.9 billion…since those figures are already annualized, the combined upward revisions of $14.4 billion to November and December construction spending figures would be averaged over the 3 months of the 4th quarter and therefore raise the quarter’s annualized construction spending by about $4.8 billion across the GDP components it is source data for, and would thus conservatively imply an upward revision of about 0.05 or 0.06 percentage points to fourth quarter GDP when the third estimate is released at the end of March, assuming there are no major changes to or imbalances in the previously applied inflation adjustments…

A further breakdown of the different subsets of construction spending is provided in a Census summary, which precedes the detailed spreadsheets:

  
• Private Construction Spending on private construction was at a seasonally adjusted annual rate of $1,623.4 billion, 0.1 percent (±0.7 percent)* above the revised December estimate of $1,622.3 billion. Residential construction was at a seasonally adjusted annual rate of $900.8 billion in January, 0.2 percent (±1.3 percent)* above the revised December estimate of $899.1 billion. Nonresidential construction was at a seasonally adjusted annual rate of $722.6 billion in January, 0.1 percent (±0.7 percent)* below the revised December estimate of $723.2 billion.

  

• Public Construction In January, the estimated seasonally adjusted annual rate of public construction spending was $479.0 billion, 0.9 percent (±1.5 percent)* below the revised December estimate of $483.5 billion. Educational construction was at a seasonally adjusted annual rate of $101.5 billion, 0.7 percent (±3.1 percent)* below the revised December estimate of $102.3 billion. Highway construction was at a seasonally adjusted annual rate of $150.1 billion, 2.1 percent (±3.6 percent)* below the revised December estimate of $153.3 billion.

As you can tell from that summary, construction spending would input into 3 subcomponents of GDP; investment in private non-residential structures, investment in residential structures, and into government investment outlays, for both state and local and Federal governments…however, getting an accurate read on the impact of January’s construction spending reported in this release on 1st quarter GDP is difficult because all figures given here are in nominal dollars and as you know, data used to compute the change in GDP must be adjusted for changes in price…moreover, there are multiple price indexes for different types of construction listed in the National Income and Product Accounts Handbook, Chapter 6 (pdf), so in lieu of trying to adjust for all of those types of construction separately, we’ve opted to just use the producer price index for final demand construction as an inexact shortcut to make the needed price adjustment and come up with an estimate… that index showed that aggregate construction costs were up 0.3% in January, after they had risen by 0.1% in December but had fallen by 0.1% in November…

On that basis, we can estimate that January construction costs were roughly 0.4% more than those of November, and about 0.3% more than October, and of course, 0.3% more than December…we’ll then use those percent increases to inflate the lower priced spending figures for each of the 4th quarter months and compare them to January, which is arithmetically the same as deflating January construction spending, for purposes of comparison.…this report gives annualized construction spending in millions of current dollars for the 4th quarter months as $2,105,791 in December, $2,082,923 in November, and $2,058,903 in October….thus to compare January’s annualized construction spending of $2,102,434 million to our ‘inflation adjusted’ figures of the fourth quarter, our calculation is: (2,102,434 / ((( 2,105,791 * 1.003) + (2,082,923 * 1.004) + (2,058,903 *1.003)) / 3) = 1.00619918, hence indicating that adjusted for inflation, construction spending in January was up 0.62% vis a vis that of the 4th quarter, or up at a 2.50% annual rate….to then figure the potential effect of that estimated change on GDP, we take the difference between the 4th quarter “inflation adjusted” spending average and January’s inflation adjusted basis as a fraction of inflation adjusted 4th quarter GDP, and find that January construction spending is rising at a rate that would add about 0.26 percentage points to 1st quarter GDP, if in the unlikely event we see no further change in real construction over the next two months..

January Durable Goods: New Orders Fell 6.1%, Shipments Fell 0.9%, Inventories Rose 0.2%

The Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders for January (pdf) from the Census Bureau reported that the value of the widely watched new orders for manufactured durable goods fell for the 3rd time in four months, decreasing by $18.0 billion or 6.1 percent to $276.7 billion in January, after the value of December’s new orders was revised from the $295.6 billion reported last month to $294.7 billion, now indicated to be 0.3% less than November’s new orders, revised from the insignificant increase previously reported….

The volatile monthly new orders for transportation equipment drove the January new orders decrease, as new transportation equipment orders fell $17.4 billion or 16.2 percent to $89.8 billion, on a 58.9% decrease to $13,732 million in the value of new orders for commercial aircraft, even as the value of new orders for defense aircraft rose 2.6% to $4,351 million…. excluding orders for transportation equipment, other new orders fell 0.3%, while excluding just new orders for defense equipment, new orders fell 7.3%….at the same time, new orders for nondefense capital goods less aircraft, a proxy for equipment investment, rose $98 million or about 0.1% to $73,720 million…

Meanwhile, the seasonally adjusted value of January shipments of durable goods, which will be included as inputs into various components of 1st quarter GDP after adjusting for changes in prices, decreased in value by $2.4 billion or 0.9 percent to $279.0 billion, the fourth decrease in five months, after the value of December shipments was revised from from $282.2 billion to $281.461 billion, now down 0.6% from November….a decrease in the value of shipments of transportation equipment was responsible for the January shipments decrease, as they fell $2.9 billion or 3.3 percent to $86.3 billion, due to a 23.0% decrease in shipments of commercial aircraft…however, excluding shipments of transportation equipment, other shipments rose 0.3%, and the value of shipments of nondefense capital goods less aircraft rose 0.8% to $74,772 million, after the value of December’s shipments of capital goods was revised from $74,160 million to $74,158 million, still 0.1% higher than in November…

At the same time, the value of seasonally adjusted inventories of durable goods, also a major GDP contributor, rose for the sixth consecutive month, increasing by $1.2 billion or 0.2 percent to $527.6 billion, after the value of December’s inventories was revised from $527.0 billion to $526.5 billion, now up 0.3% from November….higher valued inventories of transportation equipment was responsible for the January increase, rising $1.3 billion or 0.8 percent to $169.0 billion, while the value of inventories other than transportation equipment was statistically unchanged at $358.6 billion…

Finally, unfilled orders for manufactured durable goods, which are probably a better measure of industry conditions than the widely watched but quite volatile monthly new orders, rose for the thirteenth of the last fourteen months, increasing by $2.4 billion or 0.2 percent to $1,395.5 billion…that increase followed a 1.3% increase to $1,393,054 million in December, which was previously reported as a 1.3% increase to $1,393.4 billion…a $3.5 billion or 0.4 percent increase to $899.8 billion in the value of unfilled orders for transportation equipment was responsible for the January unfilled orders increase, while the value of unfilled orders other than those for transportation equipment orders was 0.2% lower at $495,606 million…the unfilled order book for durable goods is still 9.1% above the level of last January, with unfilled orders for transportation equipment 15.3% above their year ago level, led by a 22.0% increase in the backlog of orders for commercial aircraft…

NB: for those who are interested in seeing graphs relating to this release, FRED at the St Louis Fed offers graphs of 445 different durable goods data sets…to change what is displayed on any graph, (ie, dollars, percent, etc) click the edit button and then click the edit line 1 tab and make your selection from the units menu…to change the displayed line graph into a bar graph, click the edit button and then click the format tab…

New Home Sales Reported Higher in January After 3 Prior Months Revised Lower

The Census report on New Residential Sales for January (pdf) estimated that new single family homes were selling at a seasonally adjusted pace of 661,000 homes annually in January, which 1.5 percent (±19.9 percent)* above the revised December annual sales rate of 651,000, and 1.8 percent (±19.4 percent)* above the estimated 649,000 annual rate that new single family homes were selling at in January of last year….the asterisks indicate that based on their small sampling, Census could not be certain whether January new home sales rose or fell from those of December, or even from those of a year ago, with the figures in parenthesis representing the 90% confidence range for reported data in this report, which has the largest margin of error and is subject to the largest revisions of any census construction series….with this report; sales of new single family homes in December were revised from the annual rate of 664,000 reported a month ago to an annual rate of 651,000, while new home sales in November, initially reported at an annual rate of 580,000 and revised up to a 615,000 rate with the last report, were revised lower to a 607,000 a year rate with this report, and while October’s new home sales rate, initially reported at an annual rate of 679,000 and revised from a 672,000 to a 676,000 a year rate last month, were revised to a 670,000 rate with this release..

The annual rates of sales reported here are seasonally adjusted after extrapolation from the estimates of canvassing Census field reps, which indicated that approximately 57,000 new single family homes sold in January, up from the estimated 49,000 new homes that sold in December and the 47,000 that sold in November….the raw numbers from Census field agents further estimated that the median sales price of new houses sold in January was $427,500, down from the median sale price of $465,600 in December and down from the median sales price of $430,500 in January a year ago, while the average January new home sales price was at $420,700, up 1.8% from the $ 413,100 average sales price in December, but down 2.6% from the average sales price of $432,100 in January a year ago….a seasonally adjusted estimate of 456,000 new single family houses remained for sale at the end of January, which represents a 8.3 month supply at the January sales rate, same as the revised 8.3 months of new home supply now indicated for December….for graphs and additional commentary on this report, see the following two posts by Bill McBride at Calculated Risk: New Home Sales at 661,000 Annual Rate in January and New Home Sales at 661,000 Annual Rate in January; Median New Home Price is Down 15% from the Peak, which in turn links to his real estate newsletter post on this report…

(the above is the synopsis that accompanied my regular sunday morning news 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 of which are picked from the aforementioned GGO posts, contact me…)