Written by rjs, MarketWatch 666
June’s consumer prices, retail sales, industrial production and new housing construction; May’s business inventories.
Major reports that were released this week included the June Consumer Price Index from the Bureau of Labor Statistics, the Retail Sales Report for June, the Business Sales and Inventories Report for May, and the June report on New Residential Construction, all from the Census Bureau, and the June report on Industrial Production and Capacity Utilization from the Fed.
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This week also saw the release of the the June Import-Export Price Index from the BLS, as well as the Regional and State Employment and Unemployment Report for June, a report which breaks down the two employment surveys from the monthly national jobs report by state and region….while the text of this report provides a useful summary of this data, the serious statistics 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 two Fed regional manufacturing reports for July: the Empire State Manufacturing Survey from the New York Fed, which covers New York state, southwestern Connecticut, and northern New Jersey, reported their headline general business conditions index rose from -0.2 in June to +17.2 in July, suggesting a return to brisk growth among First District manufacturers, while the Philadelphia Fed Manufacturing Survey, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest diffusion index of manufacturing conditions fell from +27.5 in June to +24.1 in July, but still suggesting a robust recovery of that region’s manufacturing….we should, however, caution against reading too much into these indexes after a widespread lockdown, where some factories were closed entirely, because just turning on a light switch for some of those manufacturers would represent an increase in their activity.
See also:
- June 2020 Import Year-over-Year Inflation Now -3.8%
- 11 July 2020 Initial Unemployment Claims 1,300,000 This Week
- June 2020 Job Cuts Over 1,200,000 – Highest On Record.
- July 2020 Empire State Manufacturing Index Significantly Improves
- July 2020 Philly Fed Manufacturing Survey Index Marginally Declined
Consumer Prices Rose 0.6% in June on Higher Prices for Gasoline, Food, Clothing, & Car Insurance
The consumer price index rose 0.6% in June, as higher prices for food, clothing, energy, and transportation services were only partly offset by lower prices for communication and for used cars and trucks…the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that seasonally adjusted prices rose by 0.6% in June, after falling by 0.1% in May, by 0.8% in April and by 0.4% in March, but after rising by 0.1% in February, by 0.1% in January, by 0.2% in December, 0.2% in November, 0.2% in October, 0.1% in September, 0.1% in August and rising by 0.3% last July…the unadjusted CPI-U index, which was set with prices of the 1982 to 1984 period equal to 100, rose from 256.394 in May to 257.797 in June, which left it statistically 0.6457% higher than the 256.143 index reading of June of last year, which is reported as a 0.6% year over year increase, up from the 0.1% year over year increase reported a month ago….with higher prices for food and energy major causes of the June CPI jump, seasonally adjusted core prices, which exclude food and energy, rose by 0.2% for the month, as the unadjusted core price index rose from 265.799 to 266.302, which left the core index 1.187% ahead of its year ago reading of 263.177, which is reported as a 1.2% year over year increase, same as the year over year increase that was reported for May…
The volatile seasonally adjusted energy price index rose 5.1% in June, after falling 1.8% in May, 10.1% in April, 5.8% in March, 2.0% in February and 0.7% in January, but after rising 1.6% in December, 0.8% in November and by 1.7% in October, but after falling 0.8% in September, falling 1.4% in August and rising 0.9% last July, and is still 12.1% lower than in June a year ago…the price index for energy commodities was 11.7% higher in June, while the index for energy services was 0.2% lower, after fallling 0.5% in May….the energy commodity index was up 11.7% due to a 12.0% increase in the price of gasoline, the largest component, and a 10.2% increase in the index for fuel oil, while prices for other energy commodities, including propane, kerosene, and firewood, were on average 2.4% higher…within energy services, the price index for utility gas service was unchanged after rising 0.8% in May but is still 0.2% lower than it was a year ago, while the electricity price index fell 0.3% after falling 0.8% in May….energy commodities are still averaging 23.2% lower than their year ago levels, with gasoline prices averaging 23.4% lower than they were a year ago, while the energy services price index is up 0.1% from last June, as electricity prices are 0.1% higher than a year ago…
The seasonally adjusted food price index rose 0.6% in June, after rising 0.7% in May, 1.5% in April, 0.3% in March, 0.4% February, 0.2% January, 0.2% December, 0.1% in November, 0.2% October, 0.2% September, but after being unchanged last June, July & August, as the price index for food purchased for use at home was 0.7% higher in June, after rising 1.0 in May, while the index for food bought to eat away from home was 0.5% higher, as average prices at fast food outlets were 0.5% higher and prices at full service restaurants rose 0.9%, but food prices at employee sites and schools were on average 5.6% lower…
In the food at home categories, the price index for cereals and bakery products was 0.4% higher even though average bread prices fell 0.5%, because the price index for fresh cakes and cupcakes rose 3.5%, the price index for flour and prepared flour mixes rose 2.1%, and the price index for breakfast cereal rose 1.1%….at the same time, the price index for the meats, poultry, fish, and eggs group was 2.0% higher even though egg prices fell 2.4%, as the price index for beef and veal rose 4.8% and the price index for pork was 3.3% higher… on the other hand, the seasonally adjusted index for dairy products was 0.4% lower, as milk prices fell 0.6%, and as the index for dairy products other than cheese and ice cream fell 1.3%…meanwhile, the fruits and vegetables index was 0.4% higher as the price index for fresh vegetables rose 1.3% and the price index for canned fruits and vegetables rose 1.2%…in addition, the beverages index was 0.7% higher as the price index for carbonated drinks rose 2.2% and the price index for coffee rose 1.8%….lastly, the index for the ‘other foods at home’ category was 0.2 higher, as the price index for “other’ fats and oils including peanut butter rose 1.2%, soup prices rose 0.6% and the price index for snacks rose 2.1%…the itemized list for price changes of over 100 separate food items is included at the beginning of Table 2 for this release, which also gives us a line item breakdown for prices of more than 200 CPI items overall…since last June, the price index for beef and veal has risen 25.1%, led by a 26.4% increase in ground beef prices, the price index for pork has risen 11.8% as pork chops are up 23.9%, the price of eggs is up 12.1%, and potato prices have risen 13.3%, while only apple prices have fallen by more than 1% over the past year…
Among the seasonally adjusted core components of the CPI, which rose by 0.2% in June, after falling by by 0.1% in May, by 0.4% in April and by 0.1% in March, but after rising by 0.2% in February, 0.2% in January, 0.1% December, 0.2% November, 0.1% October, 0.2% in September, 0.2% in August, and by 0.3% last July, the composite price index of all goods less food and energy goods was 0.2% higher in June, while the more heavily weighted composite for all services less energy services was 0.3% higher….
Among the goods components, which will be used by the Bureau of Economic Analysis to adjust June’s retail sales for inflation in national accounts data, the price index for household furnishings and supplies was 0.6% higher, as the price index for window and floor coverings and other linens rose 2.1% and the index for bedroom furniture rose 1.6%, while the price index for appliances rose 1.7%….at the same time, the apparel price index was 1.7% higher on a 4.7% increase in the price index for men’s suits, sport coats, and outerwear, a 3.3% increase in the price index for boy’s apparel, a 6.5% increase in the price index for infants’ and toddlers’ apparel, and a 2.2% increase in the price index for women’s underwear, nightwear, swimwear, and accessories…on the other hand, the price index for transportation commodities other than fuel was 0.5% lower even though prices for new cars rose 0.4% because prices for used cars and trucks fell 1.2%, tire prices fell 1.1%, and the price index for motor oil, coolant, and fluids fell 0.6%….meanwhile, prices for medical care commodities were 0.2% higher, as prescription drugs prices rose 0.1% and non-prescription drugs prices fell 0.1% but the seasonal adjustment boosted that to a 0.2% incease…however, the recreational commodities index was 0.1% lower on a 1.9% decrease in TV prices, a 1.0% decrease in the price index for pets and pet products and a 4.6% drop in prices for sewing machines, fabric and supplies, which offset a 2.0% increase in prices for recreational books and a 2.3% increase in the price index for sports vehicles including bicycles…at the same time, the education and communication commodities index was 0.6% lower on a 0.7% decrease in the price index for educational books and supplies, a 2.3% decrease in the price index for computer software and accessories, and a 3.2 decrease in the price index for telephone hardware, calculators, and other consumer information items…lastly, a separate price index for alcoholic beverages was 0.2% higher, and the price index for ‘other goods’ was 0.3% higher on a 1.2% increase in prices for cigarettes and a 3.6% increase in the price index for infants’ equipment..
Within core services, the price index for shelter was 0.1% higher as rents rose 0.1% and homeowner’s equivalent rent rose 0.1% while prices for lodging away from home at hotels and motels rose 1.4%, while at the same time the shelter sub-index for water, sewers and trash collection rose 0.2%, and other household operation costs were on average 0.4% higher on a 1.1% increase in moving, storage, freight expense….meanwhile, the price index for medical care services was 0.5% higher, as the price index for hospital services rose 0.4%, the price index for physicians’ services rose 0.5% and the price of health insurance rose 1.0%… at the same time, the transportation services price index was 2.1% higher as the price index for car and truck rental rose 17.5%, airline fares rose 2.6% and vehicle insurance costs rose 5.1%….on the other hand, the recreation services price index fell 0.9% as the index for other recreation services fell 1.8% on a 3.5% drop in the price index for club memberships for shopping clubs, fraternal, or other organizations, and participant sports fees…in addition, the index for education and communication services was 0.1% lower as elementary and high school tuition and fees fell 0.2% and the index for internet services and electronic information providers fell 0.5%….lastly, the index for other personal services was up by 0.5% as the price index for haircuts and other personal care services rose 1.1%, and the index for legal fees was 0.3% higher…
Among core line items, prices for televisions, which are now averaging 15.4% cheaper than a year ago, the price index for telephone hardware, calculators, and other consumer information items, which is down by 14.4% since last June, the price index for rental of video discs and other media, which has fallen 14.3% from a year ago, the price index for women’s dresses, which has fallen by 25.8% in the past year, the price index for women’s outerwear, which has fallen by 17.6% from a year ago, the price index for men’s suits, sport coats, and outerwear, which has fallen by 11.0% in the past year, the price index for sewing machines, fabric and supplies, which is down 11.3% year over year, the price index for lodging away from home including hotels and motels, which has fallen by 16.0% in the past year, prices for car and truck rental, which are down 19.2% in a year’s time, motor vehicle insurance, which has fallen 10.1% since last year, airline fares, which are now down by 27.2% since last June, and the price index for computer software and accessories, which is down 14.9% year over year, have all seen prices drop by more than 10% over the past year, while the cost of health insurance, which is now up by 19.4% over the past year, and the price index for infants’ equipment, which has risen 11.3% from a year ago, are the only line items to have increased by a double digit magnitude over that span.
See also:
June Retail Sales Up 7.5% After May Sales Revised 0.5% Higher
Seasonally adjusted retail sales rose 7.5% in June after retail sales for April and May were revised higher….the Advance Retail Sales Report for May (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $524.3 billion during the month, which was a increase of 7.5 percent (±0.5%) from May’s revised sales of $487.7 billion, and 1.1 percent (±0.7 percent) above the adjusted sales of June of last year…May’s seasonally adjusted sales were revised from the $485.5 billion reported last month to $487.7 billion, while April’s adjusted sales were also revised higher, from $412.6 billion to $412.766 billion, and hence the change from April to May was revised to an increase of 18.2% from the 17.7% increase reported a month ago….estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated sales actually rose 4.5% in June, from $507,477 million in May to $530,442 million in June, while they were up 2.3% from the $518,273 million of sales in June a year ago…
Included below is the table of the monthly and yearly percentage changes in sales by business type taken from the Census retail sales pdf….the first pair of columns below gives us the seasonally adjusted percentage change in sales for each type of retail business from May to June and the year over year percentage change for those businesses since last June; the second pair of columns gives us the revised figures for May’s report, with April to May and the May 2019 to May 2020 change shown; for your reference, our copy of this table as it appeared in the May report, before this month’s revisions, is here….lastly, the third pair of columns shows the percentage change of the recent 3 months of sales (April, May and June) from the preceding three months (January, February and March) and from the same three months of a year ago….
The figures shown in that fifth column above, ie, comparing sales of April, May and June to those of January, February and March, give us a quick sense of how the change in retail sales will impact the change in 2nd quarter GDP….as you can see, even though June’s sales were above those of a year ago, nominal retail sales for the three months of the second quarter were down 7.5% from the first three months of this year…that’s a decrease at a 26.8% annual rate, even before the recent month sales are adjusted for inflation, putting us well on our way to the largest quarterly GDP percentage drop on record…
To compute June’s real personal consumption of goods data for national accounts from this June retail sales report, the BEA will use the corresponding price changes from the June consumer price index, which we reviewed earlier…we would normally make an attempt to estimate that figure by using the broad composite price index of all goods less food and energy goods to adjust the majority of June’s retail sales increases for inflation, but given the wide range of changes in each of the types of sales in this month’s report, our shortcut method would be prone to introduce more inaccuracies than tolerable in our estimation, so we’ll forego that effort this month…to get a more accurate estimation of the change in June’s personal consumption of goods, we would need to adjust each of the types of sales shown above by the change in the related price index…for instance, while nominal sales at clothing stores rose 105.1% in June, the apparel price index was 1.7% higher at the same time, which means that the increased cash outlay bought less clothing in June, and hence real sales of clothing for national accounts purposes “only” rose by 101.7%….also note that the 15.3% increase in sales at gas stations was largely driven by the 12.0% increase in the price of gasoline, and as we can see on the third line on the above table, June retail sales excluding that jump in sales at gas stations were up by 7.0%….
Another reason to be cautious about reading too much into the rebound in retail sales is that not all of it will make it to the bottom line of GDP…for instance, if the increase in auto sales largely came out of inventories of vehicles that were not sold in March and April, the corresponding reduction of inventories will subtract from GDP by the same amount that the increased sales added to it…similarly, if the increased furniture, TVs and clothing sales in May and June came from imported goods, the corresponding imports of furniture, TVs and clothing will subtract from GDP by the same amount that the increased sales of those goods added to it….the only way that increased retail sales adds to GDP without an offset is if it indicates an increase in the amount of goods produced for those sales domestically; in general, goods in that catagory would include in the increased sales of groceries, gasoline, and building materials…much more important to the ultimate trajectory of GDP will be personal consumption of services, which accounts for 47% of each month’s GDP….here we’d have to know if health care services, transportation services, recreation services and food services and accommodations have increased over the month; indications are they were not; some hospitals were still restricting elective procedures, jet fuel demand was still down by around 60%, no baseball was being played in June, restaurant traffic was still down by a quarter and hotel occupancy was still down by more than a third.
See also:
- Retail Sales Again Improves in July 2020
- Average Gasoline Prices for Week Ending 13 July 2020 Down $0.58 From A Year Ago
Industrial Production Rose 5.4% in June, But Was Still Down 10.8% from a Year Ago
The Fed’s G17 release on Industrial production and Capacity Utilization for June reported that seasonally adjusted industrial production rose 5.4% in June after rising by 1.4% in May but after falling by a revised 12.7% in April, and is now down by 10.8% from a year ago, after falling at a 42.6% annual rate in the 2nd quarter, largest quarterly decrease since the industrial retrenchment after World War II…to the extent that this report plays into GDP, that 2nd quarter decrease suggests a net subtraction from GDP of that magnitude across the components that this report covers…the industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, rose from 92.5 in May to 97.5 in June, after the May reading for the IP index was revised down from 92.6 to 92.5, the April index was revised from 91.3 to 109.2, the March reading was revised up from 104.4 to 104.5, and the February index was revised down from 109.4 to 109.3…
The manufacturing index, which accounts for around 77% of the total IP index, increased by 7.2% in June, from 87.0 in May to 93.3 in June, driven by a 105.0% increase in output of motor vehicles and parts, as the auto industry continued to reopen after the April lockdown…the May manufacturing index was revised from the 87.2 published last month to 87.0, the April manufacturing index was revised from 84.0 to 83.8, the March index was revised from 99.4 to 99.6, and the February manufacturing index was revised from 105.0 to 104.9, while the manufacturing index was down 11.2% from a year ago….meanwhile, the mining index, which includes oil and gas well drilling, decreased for the 6th consecutive month, falling from 114.4 in May to 111.0 in June, after the May index was revised up from the originally reported 114.3, which still leaves it 16.9% lower than it was a year ago….finally, the seasonally adjusted utility index, which often fluctuates due to above or below normal temperatures, rose 4.2% to 101.5 June, after the May index was revised up from 96.8 to 97.4, which leaves the utility index 0.6% above its year earlier reading…
This report also includes capacity utilization figures, which are expressed as the percentage of our plant and equipment that was in use during the month…seasonally adjusted capacity utilization for total industry rose to 68.6% in June from 65.1% in May, after capacity utilization for May was revised up from the 64.8% reported a month ago….capacity utilization for all manufacturing industries rose from 62.3% to 66.9%, after manufacturing utilization for May was revised up from 62.2%, as capacity utilization by NAICS durable goods production facilities rose from 57.6% in May to 64.3% in June, while capacity utilization for NAICS non-durable producers rose from 68.2% to 70.6%….but capacity utilization for the mining sector fell to 75.0% in June, from 77.0% in May, which was originally reported as 75.4%, while utilities were operating at 72.3% of capacity during June, up from a revised 69.5% May, which was originally published as 69.1%…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.
See also:
New Housing Construction and Building Permits Rebound in June
The June 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 1,186,000 in June, which was 17.3 percent (±11.0 percent)* above the revised May estimated annual rate of 1,011,000 units started, but was 4.0 percent (±9.1 percent)* below last June’s pace of 1,235,000 housing starts a year…the asterisk indicates that the Census does not have sufficient data to determine whether housing starts actually rose or fell from a year ago, with the figure in parenthesis the most likely range of the change indicated; in other words, June’s housing starts could have been up by 5.1% or down by as much as 13.1% from those of a year ago, with revisions outside of that range eventually possible…in this report, the annual rate for May housing starts was revised from the 974,000 units reported last month to 1,011,000, while April starts, which were first reported at a 891,000 annual rate, were revised from a month ago but remained unchanged from the initial revised figure of 934,000 annually…
The annual rates of housing starts reported here were extrapolated from a survey of a small percentage of US building permit offices visited by Census field agents, which estimated that 112,200 housing units were started in June, up from the 92,800 units started in May but down from the 115,100 units started in June of a year ago…of those housing units started in June, an estimated 81,600 were single family homes and 30,200 were units in structures with more than 5 units, up from the revised 65,900 single family starts in May, and up from the the 26,200 units started in structures with more than 5 units in May…
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 broadly revised housing starts data…in June, Census estimated new building permits were being issued for a seasonally adjusted annual rate of 1,241,000 housing units, which was 2.1 percent (±1.2 percent) above the revised May rate of 1,216,000 permits, but was 2.5 percent (±1.7 percent) below the rate of building permit issuance in June a year earlier…the annual rate of housing permits issued in May was revised from the 1,220,000 reported last month to 1,216,000….
Again, these annual estimates for new permits reported here were extrapolated from the unadjusted estimates collected by canvassing census agents, which showed permits for 122,200 housing units were issued in June, up from the revised estimate of 104,400 new permits issued in May…the June permits included 83,600 permits for single family homes, up from 66,100 in May, and 34,800 permits for housing units in apartment buildings with 5 or more units, down from 35,100 such multifamily permits a month earlier… for graphs and commentary on this report, see the following two posts by Bill McBride at Calculated Risk: Housing Starts increased to 1.186 Million Annual Rate in June and Comments on June Housing Starts.
See also:
- June 2020 Residential Building Growth Continues To Improve
- May 2020 Pending Home Sales Record Comeback
Business Sales Up 8.4% in May, Business Inventories Down 2.3%
Following the release of the June retail sales report, the Census Bureau released the composite Manufacturing and Trade Inventories and Sales report for May(pdf), which incorporates the revised May retail data from that June report and the previously published wholesale and factory data for May 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 $1,284.3 billion in May, up 8.4 percent (±0.3 percent) from April’s revised sales, but down 11.8 percent (±0.3percent) from May sales of a year earlier…note that total April sales were revised from the originally reported $1,184.8 billion to $1,184.954 billion but the decrease from March remained unchanged at -14.4%… manufacturer’s sales were up 3.1% from April at $417,020 million in May, and retail trade sales, which exclude restaurant & bar sales from the revised May retail sales reported earlier, rose 17.1% to $448,201 million, while wholesale sales rose 5.4% to $419,097 million…
Meanwhile, total manufacturer’s and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $1,933.7 billion at the end of May, down 2.3 percent (±0.1%) from April, and 4.8 percent (±0.4 percent) lower than in May a year earlier…the value of end of April inventories were revised to $1,979.7 billion from the $1,981.2 billion reported last month, now a 1.4% decrease from March…seasonally adjusted inventories of manufacturers were estimated to be valued at $687,016 million, 0.2% more than in April, while inventories of retailers were valued at $604,180 million, 6.2% less than in April, and inventories of wholesalers were estimated to be valued at $642,541 million at the end of May, down 1.2% from April…
In national accounts reports, the various categories of business inventories will be adjusted for price changes using item appropriate price indexes from the producer price index….with the release of wholesale inventories data last week, we figured there would be a real decrease wholesale inventory 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, but that because 1st quarter GDP wholesale inventories were deeply negative, any positive 2nd quarter real inventories would have a substantial positive impact on the growth rate of 2nd quarter GDP….likewise, the inflation adjusted factory inventory data from the prior week indicated a real decrease, following a real increase in April, but again because first quarter factory inventories were negative, we felt 2nd quarter factory inventories would still have a notable positive impact on the growth rate of 2nd quarter GDP….however, with prices for finished goods on average 1.6% higher in May on top of the nominal 6.2% decrease in May’s retail inventories, this report suggests that real retail inventories have decreased at a rate near 7.7% in May, following a modest decrease of around 0.4% in April….since real retail inventories saw a substantial increase in the first quarter, albeit more than offset by decreases in factory and wholesale inventories, the real decreases in April and May retail inventories would thus have a substantial negative impact on 2nd quarter GDP, at least partly offsetting the positive impact of factory and wholesale inventories.
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