Written by rjs, MarketWatch 666
July’s producer prices, June’s wholesale inventories & JOLTS
Agency issued reports released this past week included the July Producer Price Index and the Job Openings and Labor Turnover Survey (JOLTS) for June, both from the Bureau of Labor Statistics, and the June report on Wholesale Trade, Sales and Inventories from the Census Bureau.
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In addition, the Fed released the Consumer Credit Report for June, which indicated that overall consumer credit, a measure of non-real estate debt, expanded by a seasonally adjusted $14.4 billion, or at a 4.2% annual rate, as non-revolving credit expanded at a 5.8% rate to $3,030.6 billion while revolving credit outstanding contracted at a 0.1% rate to $1,071.5 billion.
Privately issued reports included the July Non-Manufacturing Report On Business from the Institute of Supply Management, which saw the NMI (non-manufacturing index) fall to 53.7% in July, from 55.1% in June, indicating a smaller plurality of service industry purchasing managers reported expansion in various facets of their business in July than in June, and the Mortgage Monitor for June (pdf) from Black Knight Financial Services, which indicated that 3.73% of mortgages were delinquent in June, up from 3.36% delinquent in May, but down from the 3.74% delinquency rate in May 2018, and that 0.49% of mortgages remained in the foreclosure process in June, up from 0.49% of all mortgages in May but down from 0.56% a year ago…June’s near 11% jump in mortgage delinquencies was one of the top five such single-month increases in the past decade and one of the top 15 among records going back to 2000.
See also:
- June 2019 Headline Consumer Credit Rate Year-over-Year of Growth Slowed
- Weekly Economic Release Summary: Consumer Credit Slowing And It Says Little About The Economy
- July 2019 ISM and Markit Services Show Weak Growth
- June 2019 CoreLogic Home Prices Increase At the Lowest Pace Since 2011
Producer Price Index Rose 0.2% July, Largely On Higher Energy Prices
The seasonally adjusted Producer Price Index (PPI) for final demand rose 0.2% in July, as prices for finished wholesale goods increased 0.4%, while margins of final services providers decreased by 0.1%…that followed a June report that indicated the PPI rose 0.1%, as prices for finished wholesale goods decreased 0.4%, while margins of final services providers increased by 0.4%, a May report that indicated the PPI was also 0.1% higher, as prices for finished wholesale goods averaged 0.2% lower while average margins of final services providers rose 0.3%, a revised April report that now has the PPI 0.3% higher, with prices for finished wholesale goods and average margins of final services providers both 0.3% higher, and a revised March report that showed the PPI had increased by 0.4%, with prices for finished wholesale goods up 1.0% and margins of final services providers now up 0.1%….on an unadjusted basis, producer prices are 1.7% higher than a year ago, same as had been indicated by last month’s report…meanwhile, the core producer price index, which excludes food, energy and trade services, was down 0.1% for the month, and is now only 1.7% higher than in June a year ago, down from the 2.1% YoY increase shown in June…
As noted, the price index for final demand for goods, aka ‘finished goods’, was 0.4% higher in July, after being 0.4% lower in June, 0.2% lower in May, 0.3% higher in April, 1.0% higher in March, 0.3% higher in February, 0.6% lower in January, 0.6% lower in December, 0.5% lower in November, 0.8% higher in October, and 0.1% lower in September of 2018….the finished goods index rose in July because the price index for wholesale energy was 2.3% higher, after falling by 3.1% in June and by 1.0% in May, after rising by a revised 2.2% in April and a revised 5.2% in March, while the price index for wholesale foods rose 0.2% in July after rising 0.6% in June, and while the index for final demand for core wholesale goods (excluding food and energy) rose 0.5 after being unchanged for three months in a row….wholesale energy prices were higher on a 5.2% increase in wholesale prices for gasoline, a 7.9% jump in wholesale prices for diesel fuel, and 8.0% higher wholesale prices for home heating oil, while the wholesale food price index rose on a 6.2% increase in the wholesale price index for grains, a 3.0% increase in wholesale prices for fish and shellfish, and a 1.8% increase in wholesale prices for beef and veal….among wholesale core goods, the wholesale price index for office and store machines and equipment rose 12.7% , wholesale prices for mining machinery and equipment rose 1.6%, and wholesale prices for cigarettes rose 0.8%..
At the same time, the index for final demand for services fell 0.1% in July, after rising 0.4% in June, 0.3% in May, a revised 0.3% in April, and a revised 0.1% in March, as the index for final demand for trade services rose 0.2% in July and the index for final demand for transportation and warehousing services also rose 0.2%, while the core index for final demand for services less trade, transportation, and warehousing services was 0.3% lower…. among trade services, seasonally adjusted margins for auto parts and tire retailers rose 6.2%, margins for major household appliance retailers rose 6.1%, margins for flooring and floor coverings retailers rose 3.0%, and margins for machinery and vehicle wholesalers rose 3.0%, while margins for fuels and lubricants retailers fell 9.9%… among transportation and warehousing services, margins for air transportation of freight rose 0.9% and margins for airline passenger services rose 1.5%…among the components of the core final demand for services index, margins for guestroom rentals fell 4.3% while margins for traveler accommodation services fell 3.6%..
This report also showed the price index for intermediate processed goods rose 0.2% in July, after falling 1.1% in June and 0.2% in May, after being unchanged in April (revised), and rising a revised 0.6% in March….the price index for intermediate energy goods rose 2.2%, as refinery prices for gasoline rose 5.2% and refinery prices for diesel fuel rose 7.9%, while prices for natural gas sold to electric utilities fell 5.1%…however, prices for intermediate processed foods and feeds fell 0.1%, as the producer price index for prepared animal feeds fell 1.6% and producer prices for processed poultry fell 0.7%… in addition, the core price index for intermediate processed goods less food and energy fell 0.2% as producer prices for steel mill products decreased 2.6% and producer prices for hardwood lumber fell 2.4%… prices for intermediate processed goods are now 2.0% lower than in June a year ago, the third consecutive year over year decrease following 29 months of year over year increases, which had been preceded by 16 months of negative year over year comparisons, as intermediate goods prices fell every month from July 2015 through March 2016….
Meanwhile, the price index for intermediate unprocessed goods rose 1.6 in July, after falling 3.3% in June, falling 5.1% in May, rising a revised 3.1% in April, but after falling a revised 0.4% in March (which had been reported as a 2.3% price increase as recently as two months ago)….that was as the July price index for crude energy goods rose 2.8% as crude oil prices rose 10.9%, while the price index for unprocessed foodstuffs and feedstuffs fell 0.2% as a 16.1% decrease in producer prices for slaughter hogs and a 7.6% decrease in producer prices for alfalfa hay were partially offset by a 10.3% increase in producer prices for corn….at the same time, the index for core raw materials other than food and energy materials rose 1.9%, as wastepaper prices rose 6.3% and prices for nonferrous metal ores rose 5.5%…this raw materials index is still 10.4% lower than a year ago, as the year over year change on this index has been negative all year…
Lastly, the price index for services for intermediate demand fell 0.2% in July, after rising 0.2% in June, being unchanged in May, rising a revised 0.2% in April, a revised 0.5% in March, being unchanged in February, rising 0.2% in January, and rising 0.1% in December and in November…the price index for intermediate trade services was 0.8% lower, as margins for intermediate paper and plastic product wholesalers fell 6.1% and margins for intermediate machinery and equipment parts and supplies wholesalers fell 2.2%…on the other hand, the index for transportation and warehousing services for intermediate demand rose 0.3%, as the intermediate index for courier, messenger, and U.S. postal services rose 0.8% and the price index for pipeline transportation of petroleum products rose 3.6%…meanwhile, the core price index for intermediate services less trade, transportation, and warehousing fell 0.1%, as the index for business loans (partial) fell 3.7% and the intermediate index for traveler accommodation services fell 3.6% while the price index for waste collection rose 3.5%….over the 12 months ended in June, the year over year price index for services for intermediate demand, which has never turned negative on an annual basis, is still 2.0% higher than it was a year ago.
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Job Openings Lower in June; Hiring, Layoffs, and Job Quitting Also Down
The Job Openings and Labor Turnover Survey (JOLTS) report for June from the Bureau of Labor Statistics estimated that seasonally adjusted job openings fell by 36,000, from 7,384,000 in May to 7,348,000 in June, after May job openings were revised higher, from 7,323,000 to 7,384,000…June jobs openings were also 0.6% lower than the 7,393,000 job openings reported in June a year ago, as the job opening ratio expressed as a percentage of the employed fell from 4.7 in May to 4.6% in June, and was also down from the 4.7% rate in June of a year ago…the greatest drop in June job openings was in bars and restaurants, where openings fell by 81,000 to 835,000, while job openings in retail rose by 73,000 to 888,000 (see table 1 for details on other categories of job openings)…like most BLS releases, the press release for 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 June, seasonally adjusted new hires totaled 5,702,000, down by 58,000 from the revised 5,760,000 who were hired or rehired in May, as the hiring rate as a percentage of all employed was unchanged at 3.8%, while it remained lower than the 3.9% hiring rate in June a year earlier (details of hiring by industry since January are in table 2)….meanwhile, total separations decreased by 76,000, from 5,557,000 in May to 5,481,000 in June, as the separations rate as a percentage of the employed fell from 3.7% to 3.6%, which was also down from the 3.7% separations rate of June a year ago (see table 3)…subtracting the 5,481,000 total separations from the total hires of 5,702,000 would imply an increase of 221,000 jobs in June, somewhat more than the revised payroll job increase of 193,000 for June reported by the July establishment survey last week, but still within the expected +/-115,000 margin of error in these incomplete samplings…
Breaking down the seasonally adjusted job separations, the BLS finds that 3,433,000 of us voluntarily quit their jobs in June, down from the revised 3,478,000 who quit their jobs in May, while the ‘quits rate’, widely watched as an indicator of worker confidence, remained unchanged at 2.3% of total employment, same as the quits rate of a year earlier (see details in table 4)….in addition to those who quit, another 1,702,000 were either laid off, fired or otherwise discharged in June, down by 71,000 from the revised 1,773,000 who were discharged in May, as the discharges rate fell from 1.2% to 1.1% of all those who were employed during the month, which was also down from the discharges rate of 1.2% a year earlier (see table 5)…meanwhile, other separations, which includes retirements and deaths, were at 345,000 in June, up from 303,000 in May, for an ‘other separations rate’ of 0.2%, same as in May and as in June 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 easily accessed using the links to tables at the bottom of the press release.
See also:
- June 2019 Headline JOLTS Job Openings Rate Continues To Predict Lower Employment Growth
- July 2019 Conference Board Employment Index Improved
June Wholesale Sales Down 0.3% After May Sales Revised 0.7% Lower; Inventories Virtually Unchanged
The June report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at $498.5 billion, down 0.3 percent (+/-0.4%)* from the revised May level, and down 0.2 percent (±1.1 percent)* from wholesale sales of June 2018… the May preliminary estimate was revised down $3.6 billion or 0.7% to $499.8 billion from the $503.4 billion sales reported last month, which is now 0.6% less than April’s sales, rather than a 0.1% increase…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 on the shelf or in intermediate storage represent goods that were produced but not sold, and this June report estimated that wholesale inventories were valued at a seasonally adjusted $678.7 billion at month end, virtually unchanged (+/-0.2%)* from the revised May level but 7.6 percent (±1.1 percent) higher than in June a year ago, with the May preliminary estimate revised higher, from $678.1 billion to $678.4 billion at the same time, still a 0.4% increase from April.
In the advance report on 2nd quarter GDP of two weeks ago, wholesale inventories were estimated based on the sketchy Advance Report on Wholesale and Retail Inventories which was released the day before the GDP release…that report estimated that our seasonally adjusted wholesale inventories were valued at $680.02 billion at the end of June, up from $678.39 billion in May….that’s $1.35 billion more than the $678.67 billion that this report shows, which would imply that the quarterly change in 2nd quarter inventories was overestimated at roughly a $5.4 billion annual rate…assuming there’s no revision in the inflation adjustment to those inventories, that would mean that the growth rate of 2nd quarter GDP was overestimated by more than 0.10 percentage points, just based on what this report shows.
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