Written by rjs, MarketWatch 666
June’s producer prices, May’s wholesale inventories, and JOLTS
Major reports released this past week included the June Producer Price Index, and the Job Openings and Labor Turnover Survey (JOLTS) for May, both of which came from the Bureau of Labor Statistics, and the May report on Wholesale Trade, Sales and Inventories from the Census Bureau.
Please share this article – Go to very top of page, right hand side, for social media buttons.
The week also saw the Consumer Credit Report for May from the Fed, which indicated that overall consumer borrowing outstanding shrunk by a seasonally adjusted $18.2 billion, or at a 5.3% annual rate, as non-revolving credit expanded at a 2.3% rate to $3,117.3 billion while revolving credit outstanding shrunk at a 28.6% rate to $995.6 billion…that’s the 3rd consecutive big drop in revolving credit outstanding, and we’ll include a graph showing that:
The above graph was copied from the Zero Hedge coverage of the May Consumer Credit Report, and it shows the month over month change in aggregate US revolving credit in billions of dollars going back to the turn of the century, with months where there was an increase shown as green vertical bars pointing up from the zero line, and the months where there was a decrease in revolving credit shown as a red vertical bar pointing down from the zero line…Zero Hedge suggests that consumers are withdrawing savings to pay down their credit cards, but the sheer size of this three month drawdown suggests that consumers are using their stimulus checks to pay off old debts, which obviously would not have the economic stimulating impact the lawmakers who passed that stimulus had intended…
Privately issued reports released this week included the June 2020 Non-Manufacturing Report On Business from the Institute for Supply Management, which saw the NMI (non-manufacturing index) rise to 57.1%, up from 45.4% in May, and up from 41.8% in April, indicating a significant plurality of service industry purchasing managers reported growth in various facets of their business in June…this week also saw the release of the Mortgage Monitor for May (pdf) from Black Knight Financial Services, which indicated that 7.76% of mortgages were delinquent in April, up from the 6.45% that were delinquent in April, and up from the 3.36% delinquency rate of May 2019, and that a record low 0.38% of mortgages remained in the foreclosure process in May, down from 0.40% of all mortgages in April and down from 0.49% a year ago.
See also:
- May 2020 Headline Consumer Credit Again Contracts
- June 2020 ISM and Markit Services Surveys Again Improve
- July 2020 Economic Forecast – The Recession Is Likely Over But A Strange Recovery Is Beginning
- June 2020 Monthly Budget Review: Deficit $2 Trillion More Than Last Year’s Deficit To Date
- 07 July 2020 New York Fed Weekly Economic Index (WEI): Index Declined and Remains At Recession Levels
- Average Gasoline Prices for Week Ending 06 July 2020 Down $0.56 From A Year Ago
Record Hiring, Record Drop in Firings in May: Job Openings and Job Quitting Both Rise
The Job Openings and Labor Turnover Survey (JOLTS) report for May from the Bureau of Labor Statistics estimated that seasonally adjusted job openings rose by 401,000, from 4,996,000 in April to 5,397,000 in May, after April’s job openings were revised 50,000 lower, from 5,046,000,000 to 4.996,000…May jobs openings were still 26.1% lower than the 7,300,000 job openings reported in May a year ago, while the job openings ratio expressed as a percentage of those employed rose from 3.7% in April to 3.9% in May, while it was down from 4.6% in May a year ago…the greatest percentage increase in May job openings was in the construction sector, where openings rose by 118,000 to 365,000, while job openings in the information sector fell by 55,000 to 77,000 (see table 1 for more details)…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 May, seasonally adjusted new hires totaled a series high 6,487,000, up by a record 2,440,000 from the revised 4,047,000 who were hired or rehired in April, as the hiring rate as a percentage of all employed rose from 3.1% to 4.9%, which was also up from the hiring rate of 3.8% in May a year earlier (details of hiring by industry since January are in table 2) … note that most of the May increase in hiring represents those who were laid off in March or April, as this release reports those who are called back as a rehiring….meanwhile, total separations fell by a record by 5,830,000, from 9,975,000 in April to 4,145,000 in May, while the separations rate as a percentage of the employed fell from 7.6% in April to 3.1% in May, which was also down from the separations rate of 3.7% in May a year ago (see table 3)…subtracting the 4,145,000 total separations from the total hires of 6,487,000 would imply an increase of 2,342,000 jobs in May, somewhat short of the revised payroll job increase of 2,699,000 for May reported by the June establishment survey last week, with at least some of that difference likely due to the difference in the date of the surveys, which is at month end for this report but is during the week of the 12th for the employment situation……
Breaking down the seasonally adjusted job separations, the BLS reports that 2,067,000 of us voluntarily quit their jobs in May, up by 190,000 from the revised 1,877,000 who quit their jobs in April, while the quits rate, widely watched as an indicator of worker confidence, rose from 1.4% to 1.6% of total employment, while it was still down from 2.3% a year earlier (see details in table 4)….in addition to those who quit, another 1,796,000 were either laid off, fired or otherwise discharged in May, down by 5,912,000 from the revised 7,708,000 who were discharged in April, as the discharges rate fell from 5.9% to 1.4% of all those who were employed during the month, but was still up from the 1.2% discharges rate of a year earlier….meanwhile, other separations, which includes retirements and deaths, were at 282,000 in May, down from 390,000 in April, for an ‘other separations’ rate of 0.2%, down from 0.3% in April but the same as in May of a year ago….both seasonally adjusted and unadjusted details by industry and by region on hires and job separations, and on job quits and discharges can be accessed using the links to tables at the bottom of the press release.
See also:
- May 2020 Headline JOLTS Job Openings Rate Improved But Remains In Contraction
- 04 July 2020 Initial Unemployment Claims 1,314,000 This Week
- May 2020 Conference Board Employment Index Improves But Remains Deep In Contraction
Producer Prices Fell 0.2% in June on Lower Margins for Wholesalers and Retailers
The seasonally adjusted Producer Price Index (PPI) for final demand fell 0.2% in June, even as prices for finished wholesale goods averaged 0.2% higher, because the more heavily weighted margins of final service providers averaged 0.3% lower…that followed a May report that had the PPI 0.4% higher, as prices for finished wholesale goods averaged 1.6% higher, while margins of final service providers averaged 0.2% lower, an April report wherein the PPI fell 1.3%, the largest drop in the history of the index, as prices for finished wholesale goods averaged 3.3% lower, and average margins of final services providers decreased by 0.2%, a revised March report that now has the PPI down 0.1%, with prices for finished wholesale goods averaging 1.0% lower, while average margins of final services providers increased by 0.3%, and a re-revised February report that showed the PPI had fallen 0.5%, with prices for finished wholesale goods averaging 0.9% lower, while average margins of final services providers fell by 0.3%…on an unadjusted basis, producer prices are still 0.8% lower than a year ago, same as the year over year decrease indicated by last month’s report, while, the core producer price index, which excludes food, energy and trade services, rose by 0.3% for the month, and is now just 0.1% lower than in May a year ago, up from the 0.4% year over year decrease shown in May…
As noted, the price index for final demand for goods, aka ‘finished goods’, was 0.2% higher in May, after being 1.6% higher in May, 3.3% lower in April, 1.0% lower in March, 0.9% lower in February, 0.3% higher in January, 0.2% higher in December, 0.3% higher in November, 0.5% higher in October, 0.2% lower in September, 0.3% lower in August, 0.3% higher in July, and 0.5% lower in June of last year….the finished goods index rose 0.2% in May because the price index for wholesale energy goods was 7.7% higher, after rising by 4.5% in May, but after falling by 19.0% in April, 6.7% in March, and 3.6% in February, while the price index for wholesale foods fell 5.2%, after rising 6.0% in May, falling 0.5% in April, being unchanged in March, and falling 1.6% in February, and while the index for final demand for core wholesale goods (excluding food and energy) was 0.1% higher, after being unchanged in May…wholesale energy prices were higher due to a 26.3% increase in wholesale prices for gasoline, a 53.3% increase in wholesale prices for home heating oil, a 28.0% increase in wholesale prices for No.2 diesel fuel and a 21.6% increase in wholesale prices for liquefied petroleum gas, while the wholesale food price index fell 5.2% on a 44.5% decrease in the wholesale price index for beef and veal, a 15.2% decrease in the wholesale price index for pork, and an 12.7% decrease in the wholesale price of eggs for fresh use….among wholesale core goods, the wholesale price index for industrial chemicals rose 4.1%, the wholesale price index for household appliances rose 0.8%, and the wholesale price index for household furniture rose 0.4%…
At the same time, the index for final demand for services fell 0.3% in June, after falling 0.2% in May, 0.2% in April, rising a revised 0.3% in March, and falling a revised 0.3% in February, as the index for final demand for trade services fell 1.8%, the 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 0.3% higher… among trade services, seasonally adjusted margins for fuels and lubricants retailers fell 9.4%, margins for machinery and vehicle wholesalers fell 7.4%, margins for apparel, jewelry, footwear, and accessories retailers fell 7.1%, and margins for TV, video, and photographic equipment and supplies retailers fell 6.0%, while margins for automobile retailers rose 12.2% … among transportation and warehousing services, margins for airline passenger services rose 4.8% and margins for courier, messenger, and U.S. postal services rose 0.5%…among the components of the core final demand for services index, margins for passenger car rental rose 12.0%, margins for food and beverages services for immediate consumption (partial) rose 1.9%, and margins for hospital inpatient care rose 0.8%, while margis for arrangement of cruises and tours fell 26.0%, margins for deposit services fell 4.2%, and margins for dental care fell 3.7% …
This report also showed the price index for intermediate processed goods rose 0.9% in June, after rising 0.1% in May, but after falling 3.7% in April, 1.1% in March, 0.9% in February and 0.2% in January….the price index for intermediate energy goods rose 7.2%, as refinery prices for gasoline rose 26.3%, producer prices for liquefied petroleum gas rose 21.6%, while refinery prices for residual fuels rose 90.4%, refinery prices for jet fuel rose 47.0% and refinery prices for No. 2 diesel fuel rose 28.0%…meanwhile, prices for intermediate processed foods and feeds fell 5.5%, as the producer price index for meats fell 27.7% and the index for processed poultry fell 1.5%…at the same time, the core price index for intermediate processed goods less food and energy rose 0.5% as the producer price index for basic organic chemicals rose 5.2% and the producer price index for softwood lumber increased 12.9%… prices for intermediate processed goods are still 5.0% lower than in June a year ago, the 14th 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 3.1% in June, after rising 8.9% in May, but after falling 13.7% in April, a revised 8.4% in March, a revised 6.6% in February and 1.1% in January….that was as the June price index for crude energy goods rose 16.8% as crude oil prices rose 71.9% even as unprocessed natural gas prices fell 18.4%, while the price index for unprocessed foodstuffs and feedstuffs fell 5.6% on a 39.8% decrease in producer prices for slaughter barrows and gilts, a 7.9% decrease in producer prices for slaughter chickens, and a 13.0% decrease in producer prices for raw milk…at the same time, the index for core raw materials other than food and energy materials rose 1.1%, as prices for copper base scrap rose 10.3%, the price index for nonferrous metal ores increased 2.1%, and the price of aluminum base scrap rose 1.5%….this raw materials index is still 14.6% lower than a year ago, as the year over year change on this index remained negative all last year…
Lastly, the price index for services for intermediate demand rose 0.2% in June, after falling 0.4% in May, 1.6% in April, being unchanged in March, falling a revised 0.2% in February…the price index for intermediate trade services was 0.5% lower, as margins for metals, minerals, and ores wholesalers fell 4.5%, margins for food wholesalers fell 1.2%, and margins for intermediate machinery and equipment parts and supplies wholesalers fell 0.8%…meanwhile, the index for transportation and warehousing services for intermediate demand was 0.2% lower, as the intermediate price index for arrangement of freight and cargo fell 2.5%, the price index for warehousing, storage, and related services fell 1.9%, and the price index for water transportation of freight fell 0.7%…at the same time, the core price index for intermediate services less trade, transportation, and warehousing was 0.4% higher, as the intermediate price index for gross rents for retail properties rose 14.8%, the intermediate price index for passenger car rental rose 12.0%, and the price index for radio advertising time sales rose 4.1%…over the 12 months ended in May, the year over year price index for services for intermediate demand is now 1.5% lower than it was a year ago, after turning negative year over year in April for the first time in the history of this index.
See also:
May Wholesale Sales Up 5.4%, Wholesale Inventories Down 1.2%
The May report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at $419.1 billion in May, up 5.4 percent (+/-0.7%) from the revised April level, but down 16.2 percent (plus/minus 0.7 percent) from the value of wholesale sales in May 2019… the April preliminary estimate of wholesale sales was revised from the $395.4 billion reported a month ago to $397.7 billion, which meant the March to April percent change was revised from the preliminary estimate of down 16.9 percent (plus/minus 0.5 percent) to down 16.4 percent (plus/minus 0.5 percent) …as an intermediate activity, wholesale sales are not included in GDP except insofar as they are a trade service, since the traded goods themselves do not represent an increase in the output of the goods produced or finally sold….
On the other hand, the monthly change in private inventories is a major factor in GDP, as any goods left on the shelf or in intermediate storage represent goods that were produced but not sold, and this May report estimated that wholesale inventories were valued at a seasonally adjusted $642.5 billion at month end, a decrease of 1.2 percent (+/-0.2%) from the revised April level and 4.2 percent (plus/minus 0.9 percent) lower than in May a year ago, with the April preliminary inventory estimate revised from $650.4 billion to $650.0 billion at the same time, now a 0.2% increase from March…
For national accounts purposes, May wholesale inventories will be adjusted for price changes by category with the appropriate components of the May producer price index, which indicated a 1.6% increase in prices for finished goods, a 0.1% increase in prices for intermediate goods, and a 8.9% increase in prices for unprocessed goods….with most of wholesale inventories finished goods, there will be a real decrease on the order of 2.8% in May wholesale inventories, following a real wholesale inventory increase on the order of 4% we had figured for April…however, any real increase in 2nd quarter inventories on the heels of the $37.6 billion annualized decrease in real wholesale inventories that was indicated by the key source data and assumptions (xls) for the third estimate of 1st quarter GDP will have a substantial positive impact on the growth rate of 2nd quarter GDP.
See also:
.
include(“/home/aleta/public_html/files/ad_openx.htm”); ?>
