Written by rjs, MarketWatch 666
July’s consumer and producer prices, retail sales, industrial production, June’s business inventories, and JOLTS
Major economic reports released this past week were the Job Openings and Labor Turnover Survey (JOLTS) for June, the July Consumer Price Index, the July Producer Price Index, and the July Import-Export Price Index, all from the Bureau of Labor Statistics, the Retail Sales Report for July and the Business Sales and Inventories report for June, both from the Census bureau, and the July report on Industrial Production and Capacity Utilization from the Fed.
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In addition, a Fed release from last Friday that i neglected to mention last week was the Consumer Credit Report for June, which indicated that overall consumer credit, a measure of non-real estate debt, expanded by a seasonally adjusted $9.0 billion, or at a 2.6% annual rate, as non-revolving credit expanded at a 4.3% rate to $3,132.5 billion while revolving credit outstanding contracted at a 2.8% rate to $992.4 billion…for the second quarter as a whole, consumer credit shrunk at a seasonally adjusted annual rate of 6-3/4 percent, as revolving credit shrunk at an annual rate of 31-3/4 percent, while non-revolving credit increased at an annual rate of 2 percent.
See Also:
- June 2020 Headline Consumer Credit Continues To Slow
- 08 August 2020 New York Fed Weekly Economic Index (WEI): Index Declined But Remains On A Recovery Trend
- June 2020 Headline Personal Income Declined, Expenditures Improved
- Third Quarter 2020 Survey of Professional Forecasters Predict Higher Growth in the Current Quarter, Followed by Recovery
- 08 August 2020 Initial Unemployment Claims Decline To 963,000 This Week
Consumer Prices Rose 0.6% in July on Higher Prices for Gasoline, Clothing, Cars, & Car Insurance
The consumer price index rose 0.6% in July, as higher prices for clothing, gasoline, new and used vehicles, and transportation services were only partly offset by lower prices for groceries …the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that seasonally adjusted prices rose by 0.6% in July, after rising by 0.6% in June, falling by 0.1% in May, falling 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 257.797 in June to 259.101 in July, which left it statistically 0.9861% higher than the 256.143 index reading of June of last year, which is reported as a 1.0% year over year increase, up from the 0.6% year over year increase reported a month ago….with higher prices for energy offset by lower prices for groceries, seasonally adjusted core prices, which exclude food and energy, also rose by 0.6% for the month, as the unadjusted core price index rose from 266.302 to 267.703, which left the core index 1.5696% ahead of its year ago reading of 263.566, which is reported as a 1.6% year over year increase, up from the 1.2% the year over year increase that was reported for June.
The volatile seasonally adjusted energy price index rose 2.5% in July, after rising 5.1% in June, falling by 1.8% in May, by 10.1% in April, 5.8% in March, 2.0% in February and by 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 5.3% higher in July, while the index for energy services was unchanged, after falling 0.2% in June….the energy commodity index was up 5.3% due to a 5.6% increase in the price of gasoline, the largest component, and a 4.3% increase in the index for fuel oil, while prices for other energy commodities, including propane, kerosene, and firewood, were on average 0.4% higher…within energy services, the price index for utility gas service fell 1.0% after being unchanged in June and is now 0.3% lower than it was a year ago, while the electricity price index rose 0.3% after falling 0.3% in June….energy commodities are still averaging 20.2% lower than their year ago levels, with gasoline prices averaging 20.3% lower than they were a year ago, while the energy services price index is now down 0.1% from last July, as electricity prices are also 0.1% lower than a year ago.
The seasonally adjusted food price index fell 0.4% in July, after rising 0.6% in June, 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 1.1% lower in June, after rising 0.7% in June, while the index for food bought to eat away from home was 0.5% higher, as average prices at fast food outlets were 0.6% higher and prices at full service restaurants rose 0.4%, while data for food prices at employee sites and schools is missing.
In the food at home categories, the price index for cereals and bakery products was 0.4% lower even though average bread prices rose 0.6%, because the price index for fresh cakes and cupcakes fell 1.5%, the price index for flour and prepared flour mixes fell 1.4%, and the price index for breakfast cereal fell 1.8%….at the same time, the price index for the meats, poultry, fish, and eggs group was 3.8% lower as the price index for beef and veal fell 8.2%, egg prices fell 4.0%, and the price index for pork was 3.2% lower… in addition, the seasonally adjusted index for dairy products was 0.8% lower, even as milk prices rose 0.2%, because the index for cheese and related products fell 1.6%…on the other hand, the fruits and vegetables index was 0.1% higher as the price index for fresh fruits rose 0.2% and the price index for canned fruits rose 1.2%…meanwhile, the beverages price index was 0.5% lower as the price index for noncarbonated juices and drinks fell 0.5% and the price index for coffee fell 1.4%….lastly, the price index for the ‘other foods at home’ category was 0.2%lower, as the price index for sugar and sweets fell 0.9%, prices for peanut butter fell 2.4%, the price index for salt and other seasonings and spices fell 0.8% and the price index for baby food fell 1.7%…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 14.2%, led by a 15.0% increase in ground beef prices, the price index for pork chops has risen 12.2%, the price index for pork other than chops, ham and bacon is up 13.7%, the price of frankfurters is up 15.7%, and the price index for poultry other than chicken is 10.9% higher, while only fresh fruit prices have declined over the past year.
Among the seasonally adjusted core components of the CPI, which rose by 0.6% in July, after rising by 0.2% in June, falling 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 0.7% higher in July, while the more heavily weighted composite for all services less energy services was 0.6% higher.
Among the goods components, which will be used by the Bureau of Economic Analysis to adjust July’s retail sales for inflation in national accounts data, the price index for household furnishings and supplies was 0.5% higher, as the price index for major appliances rose 3.0% on a 10.9% increase in prices for laundry equipment, the index for household paper products rose 3.7%, and the index for household cleaning products increased by 1.8%….at the same time, the apparel price index was 1.1% higher on a 4.6% increase in the price index for women’s outerwear, a 4.1% increase in the price index for women’s dresses, a 5.8% increase in the price index for boy’s apparel, and a 2.6% increase in the price index for women’s footwear…in addition, the price index for transportation commodities other than fuel was 1.4% higher as prices for new cars rose 0.8%, prices for used cars and trucks rose 2.3%, tire prices rose 0.7%, and the price index for motor oil, coolant, and fluids rose 1.2%….meanwhile, prices for medical care commodities were unchanged, as prescription drugs prices fell 0.2% while the price index for medical equipment and supplies rose 0.3%…however, the recreational commodities index was 0.5% higher on a 2.4% increase in the price index for sports vehicles including bicycles, a 5.6% increase in the price index for sewing machines, fabric and supplies, a 1.4% increase in the price index for music instruments and accessories, and a 1.0% increase in prices for photographic equipment…on the other hand, the education and communication commodities index was 0.5% lower on a 1.0% decrease in the price index for computers, peripherals, and smart home assistants and a 0.5% decrease in the price index for telephone hardware, calculators, and other consumer information items…lastly, a separate price index for alcoholic beverages was 0.3% lower, while the price index for ‘other goods’ was unchanged as a 0.9% increase in prices for cigarettes was offset by a 4.4% decrease in the price index for miscellaneous personal goods.
Within core services, the price index for shelter was 0.2% higher as rents rose 0.2% and homeowner’s equivalent rent rose 0.2% while prices for lodging away from home at hotels and motels rose 1.2%, while at the same time the shelter sub-index for water, sewers and trash collection rose 0.4%, and other household operation costs were on average 0.3% higher on a 2.3% increase in moving, storage, freight expense….meanwhile, the price index for medical care services was 0.5% higher, as the price index for physicians services rose 0.7%, the price index for dental services rose 0.6% and the price of health insurance rose 1.1%… at the same time, the transportation services price index was 3.6% higher as the price index for car and truck rental rose 4.0%, airline fares rose 5.4% and vehicle insurance costs rose 9.3%….on the other hand, the recreation services price index fell 1.2% as the index for other recreation services fell 3.2% on a 4.7% drop in the price index for club memberships for shopping clubs, fraternal, or other organizations, and participant sports fees and a 4.2% decrease in the price index for admission to movies, theaters, and concerts….however, the index for education and communication services was 1.3% higher as the price index for wireless telephone services rose 3.6% and the index for delivery services rose 1.4%….lastly, the index for other personal services was up by 0.6% as the price index for haircuts and other personal care services rose 1.5%.
Among core line items, prices for televisions, which are still averaging 13.8% cheaper than a year ago, the price index for telephone hardware, calculators, and other consumer information items, which is down by 14.1% since last July, the price index for men’s suits, sport coats, and outerwear, which has fallen 12.8% from a year ago, the price index for women’s dresses, which has fallen by 23.1% in the past year, the price index for women’s outerwear, which has fallen by 15.3% from a year ago, the price index for men’s shirts and sweaters, which has fallen by 10.8% in the past year, the price index for lodging away from home including hotels and motels, which has fallen by 15.3% in the past year, and airline fares, which are now down by 23.7% since last July, have all seen prices drop by more than 10% over the past year, while the cost of health insurance, which is still up by 18.7% over the past year, and the price index for household paper products, which has risen 10.7% from a year ago, are the only line items to have increased by a double digit magnitude over that span.
See Also:
- July 2020 CPI: Year-over-Year Inflation Rate Grows to 1.0%
- Average Gasoline Prices for Week Ending 10 August 2020 Down $0.45 From A Year Ago
July Retail Sales Rose 1.2% After May and June Sales were Revised Higher
Seasonally adjusted retail sales were 1.2% higher in July after retail sales for May and June were revised higher….the Advance Retail Sales Report for July (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $536.0 billion during the month, which was 1.2 percent (± 0.5 percent) higher than June’s revised sales of $529.4 billion and 2.7 percent (±0.7 percent) above the adjusted sales in July of last year…June’s seasonally adjusted sales were revised from the $524.3 billion reported last month to $529.4 billion, while May sales were revised from $487.7 billion to $488.2 billion, and as a result the June increase was revised from 7.5% to 8.4%….estimated unadjusted sales, extrapolated from a survey of a small sampling of retailers, indicated sales actually rose 3.0%, from $536,142 million in June to $552,472 million in July, while they were up 3.8% from the $532,103 million of sales in July a year ago…combined, the revisions to May and June indicate that the 2nd quarter’s adjusted sales were roughly $5.6 billion higher than previously reported, which would add about $22.5 billion to the BEA’s calculation of 2nd quarter personal consumption expenditures at an annual rate before the inflation adjustment, which should be enough to boost 2nd quarter GDP by roughly 0.24 percentage points when the 2nd estimate is published at the end of the month.
Included below we have the table of the monthly and yearly percentage changes in retail sales by business type taken from the July Census pdf….the first double column below gives us the seasonally adjusted percentage change in sales for each type of retail business from June to July in the first sub-column, and then the year over year percentage change for those businesses since last July in the 2nd column; the second pair of columns gives us the revision of last month’s June advance monthly estimates (now called “preliminary”) as revised in this report, likewise for each business type, with the May to June change under “May 2020 (r)evised” and the revised June 2019 to June 2020 percentage change in the last column shown…for your reference, our copy of the table of last month’s advance June sale estimates, before this month’s revision, is here.
To compute July’s real personal consumption of goods data for national accounts from this July retail sales report, the BEA will use the corresponding price changes from the July consumer price index, which we just reviewed….to estimate what they will find, we’ll first pull out the usually volatile sales of gasoline from the other totals…from the third line on the above table, we can see that July retail sales excluding the 6.2% jump in sales at gas stations were up by 0.9%….then, subtracting the figures representing the 0.2% increase in grocery & beverage sales and the 5.0% increase in food services sales from that total, we find that core retail sales were up by somewhat less than 0.5% for the month…since the July CPI report showed that the the composite price index of all goods less food and energy goods was 0.7% higher in July, we can thus figure that real retail sales excluding food and energy, or real core PCE, will show an decrease of about 0.2% for the month…however, the actual adjustment in national accounts 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 motor vehicle & parts dealers were down 1.2%, the July price index for transportation commodities other than fuel was 1.4% higher, which would suggest that real sales at auto & parts dealers were 2.6% lower once price increases are taken into account… similarly, while nominal sales at clothing stores were 6.2% higher in July, the apparel price index was 1.1% higher, which means that real sales of clothing only rose around 5.0%.
In addition to figuring those core retail sales, to make a complete estimate of real July PCE, we’ll need to adjust food and energy retail sales for their price changes separately, just as the BEA will do…the July CPI report showed that the food price index was 0.4% lower, as the price index for food purchased for use at home fell 1.1% while the index for food bought away from home was 0.5% higher…thus, while nominal sales at food and beverage stores were 0.2% higher, real sales of food and beverages would have been around 1.3% higher in light of the 1.1% decrease in prices…meanwhile, the 5.0% increase in nominal sales at bars and restaurants, once adjusted for 0.5% higher prices, suggests that real sales at bars and restaurants actually rose around 4.5% during the month…at the same time, while sales at gas stations were up 6.2%, there was concurrently a 5.6% increase in the price of gasoline during the month, which would suggest that real sales of gasoline were only on the order of 0.6% higher, with a caveat that gasoline stations sell more than gasoline, and we haven’t accounted for those other sales…by averaging those estimated real sales figures with a sales appropriate weighting, and excluding food services, we’d estimate that the income and outlays report for July will show that real personal consumption of goods were close to unchanged in July, after rising by a revised 6.7% in June and after rising by a revised 14.2% in May, but after falling by 12.5% in April, 0.7% in March, and 0.4% in February…at the same time, the 4.5% increase in real sales at bars and restaurants should have a noticable positive impact on July’s real personal consumption of services.
We want to caution that the shortcut method that we’ve used here to make these estimates is likely prone to more inaccuracies than usual, given the unbalanced and wide range of changes in each of the types of sales in this month’s report, but we opted to go ahead with it anyhow for illustrative purposes…another reason for caution with this rebound in retail sales is that not all of it will make it to the bottom line of GDP…for instance, if a substantial portion of July’s auto sales 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 electronics, appliance and clothing store sales came from imported goods, the corresponding imports of electronics, appliances and clothing will subtract from GDP by the same amount that the increased sales of those goods added to it….the only increases in retail sales that add to GDP without an offset are those that indicate 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…moreoever, since Covid 19 is a services recession, personal consumption of services, which accounts for 47% of each month’s GDP, will be much more important in tracking the trajectory of the economy…..for that, we’d have to know if health care services, transportation services, recreation services, education services and food services and accommodations have increased or not over the month, and then vis-a-vis the last quarter… indications are that they have not.
See Also:
Industrial Production Rose 3.0% in July After May and June Were Revised Lower
The Fed’s G17 release on Industrial production and Capacity Utilization for July indicated that industrial production rose by 3.0% in July after rising by a revised 5.7% in June and a revised 0.9% in May…however, after revisions, industrial production is still down 8.2% from a year ago, and 8.4 percent below its pre-pandemic February level….the industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, rose to 100.2 in July from 97.2 in June, which was revised from the 97.5 reported for June a month ago…at the same time, the May reading for the IP index was revised down from 92.5 to 92.0, while the March reading for the index was revised up from 104.5 to 104.6….
The manufacturing index, which accounts for around 77% of the total IP index, increased by 3.4% to 96.5 in July, after June’s manufacturing index was revised from 93.3 to 93.4, April & May’s manufacturing index were unrevised at 83.8 and 87.0 respectively, while the March manufacturing index was revised from 99.6 to 99.7…nonetheless, the manufacturing index is still down 7.7% from a year ago, having fallen 8.0% since February….meanwhile, the mining index, which includes oil and gas well drilling, rose 0.8%, from 107.6 in June to 108.5 in July, which was still 17.0% lower than it was a year ago, after the June index was revise down from 111.0….finally, the utility index, which often fluctuates due to above or below normal temperatures, rose 3.3% to 105.9 in July, after the June utility index was revised from 101.5 to 102.5 and the May index was revised from 97.4 to 100.4…with a similarly hot July in 2019, the utility index is only 0.6% above its year ago reading of 105.3..
This report also provides capacity utilization figures, which are 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 rose from 68.5% in June to 70.6% in July, after capacity utilization for June was revised from 68.6% to 68.5%, and after capacity utilization for May was revised from 65.1% to 64.8%…capacity utilization by NAICS durable goods production facilities rose from 64.5% in June to 68.1% in July, while capacity utilization for non-durables producers rose from 70.5% to 71.5% at the same time….meanwhile, capacity utilization for the mining sector rose to 73.5% in July from 72.7% in June, which was originally reported as 75.0%, while utilities were operating at 75.2% of capacity during July, up from their 73.0% of capacity during June, a figure that was originally reported at 72.3%..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.
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Producer Prices rose 0.6% in July on Higher Energy Prices and Higher Margins for Wholesalers and Retailers
The seasonally adjusted Producer Price Index (PPI) for final demand rose 0.6% in July, the largest increase since October 2018, as prices for finished wholesale goods averaged 0.8% higher while margins of final service providers averaged 0.5% higher….that followed a June report that had the PPI 0.2% lower, 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, 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, a revised April report wherein the PPI now fell 0.9%, as prices for finished wholesale goods averaged 2.8% lower, while average margins of final services providers were unchanged, and a re-revised March report that now has the PPI down 0.4%, with prices for finished wholesale goods averaging 1.5% lower, while average margins of final services providers increased by 0.1%….on an unadjusted basis, producer prices are still 0.4% lower than a year ago, up from the 0.8% 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 0.1% higher than in July a year ago, up from the 0.1% year over year decrease shown in June.
As noted, the price index for final demand for goods, aka ‘finished goods’, was 0.8% higher in July, after being 0.2% higher in June, 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, and 0.3% higher in July of last year….the finished goods index rose 0.8% in July because the price index for wholesale energy goods was 5.3% higher, after rising by 7.7% in June and 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 0.5%, after falling 5.2% in June, rising 6.0% in May, and falling a revised 0.4% in April and by a revised 0.1% in March, and while the index for final demand for core wholesale goods (excluding food and energy) was 0.3% higher, after being 0.1% higher in June….wholesale energy prices were higher due to a 10.1% increase in wholesale prices for gasoline, a 56.1% increase in wholesale prices for home heating oil, and a 31.3% increase in wholesale prices for No.2 diesel fuel, while the wholesale food price index fell 0.5% on a 7.4% decrease in the wholesale price index for beef and veal, a 6.5% decrease in the wholesale price index for fresh and dry vegetables, and a 3.5% decrease in the wholesale price index for pork….among wholesale core goods, the wholesale price index for industrial chemicals rose 2.9%, the wholesale price index for cigarettes rose 2.4%, and the wholesale price index for jewelry, platinum and karat gold rose 2.9%.
At the same time, the index for final demand for services rose 0.5% in July, after falling 0.3% in June, 0.2% in May, and a revised 0.3% in April, after being unchanged in March, as the index for final demand for trade services rose 0.8%, the index for final demand for transportation and warehousing services fell 0.8%, and the core index for final demand for services less trade, transportation, and warehousing services was 0.4% higher… among trade services, seasonally adjusted margins for automobile retailers rose 20.5%, margins for TV, video, and photographic equipment and supplies retailers rose 16.4%, margins for hardware, building materials, and supplies retailers rose 5.8%, margins for furniture retailers rose 5.5%, and margins for machinery and vehicle wholesalers rose 4.9%… among transportation and warehousing services, margins for airline passenger services fell 7.0% while margins for air transportation of freight rose 4.9%…among the components of the core final demand for services index, the index for portfolio management rose 7.8%, margins for sales and subscriptions of periodicals and newspapers rose 5.5%, margins for arrangement of vehicle rentals and lodging rose 5.5%, the index for legal services rose 1.9%, and margins for dental care rose 1.1%.
This report also showed the price index for intermediate processed goods rose 1.5% in July, after rising 0.9% in June, 0.1% in May, but after falling a revised 3.3% in April and a revised 1.5% in March….the price index for intermediate energy goods rose 7.4%, as refinery prices for gasoline rose 10.1%, refinery prices for residual fuels rose 42.9%, refinery prices for jet fuel rose 15.1% and refinery prices for No. 2 diesel fuel rose 31.3%…meanwhile, prices for intermediate processed foods and feeds fell 0.7%, as the producer price index for meats fell 8.0% and the producer price index for fats and oils fell 0.8%…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 plywood rose 9.7%, the producer price index for softwood lumber increased 11.0%, and the producer price index for copper and brass mill shapes rose 7.3%…prices for intermediate processed goods are still 3.6% lower than in July a year ago, the 15th 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 fell 0.7% in July, after rising 3.1% in June and 8.9% in May, but after falling a revised 13.6% in April and a revised 8.5% in March….that was as the June price index for crude energy goods fell 7.4% as crude oil prices fell 13.6% and unprocessed natural gas prices fell 1.5%, while the price index for unprocessed foodstuffs and feedstuffs rose 4.3% on a 43.7% increase in producer prices for raw milk and a 6.7% increase in producer prices for corn…at the same time, the index for core raw materials other than food and energy materials rose 0.3%, as prices for copper base scrap rose 9.0%, the price index for nonferrous metal ores increased 5.3%, and the price of iron ores rose 3.1%….this raw materials index is now 16.3% lower than a year ago, as the year over year change on this index has been negative since the beginning of last year.
Lastly, the price index for services for intermediate demand rose 0.7% in July, after rising 0.2% in June, falling 0.4% in May, falling a revised 1.7% in April, and rising a revised 0.1% in March…the price index for intermediate trade services was 1.1% higher, as margins for intermediate hardware, building material, and supplies retailers rose 5.8%, margins for building materials, paint, and hardware wholesalers rose 1.9%, and margins for intermediate machinery and equipment parts and supplies wholesalers rose 2.1%…meanwhile, the index for transportation and warehousing services for intermediate demand was 0.4% lower, as the intermediate price index for arrangement of freight and cargo fell 5.0% and the intermediate price index for airline passenger services dropped 7.0%…at the same time, the core price index for intermediate services less trade, transportation, and warehousing was 0.8% higher, as the price index for television advertising time sales rose 6.6%, the intermediate price index for portfolio management rose 7.8%, and the price index for radio advertising time sales rose 3.9%…over the 12 months ended in May, the year over year price index for services for intermediate demand is still 1.0% 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:
- July 2020 Producer Price Final Demand Year-over-Year Growth Remains In Contraction
- July 2020 Import Year-over-Year Inflation Now -3.3%
June Business Sales Up 8.4%, Business Inventories Down 1.1%, Lower than Estimated by the BEA
Following the release of the July retail sales report, the Census Bureau released the composite Manufacturing and Trade Inventories and Sales report for June(pdf), which incorporates the revised June retail data from that July retail report and the earlier published 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 $1,394.0 billion in June, up 8.4 percent (±0.3) from May revised sales, but down 4.3 percent (±0.4 percent) from June sales of a year earlier…note that total May sales were revised from the originally reported $1,284.3 billion to $1,285.8 billion, now up 8.5% from April, rather than up 8.4% as had previously been reported….manufacturer’s adjusted sales were up 9.8% to $457,303 million in June, and retail trade sales, which exclude restaurant & bar sales from the revised June retail sales reported earlier, were up 6.8% to $479,451 million, while wholesale trade sales rose 8.8% to $457,264 million…
Meanwhile, total manufacturer’s and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $1,912.1 billion at the end of June, down 1.1 (±0.1 percent)* from May, and 5.8 percent (±0.4 percent) lower than in June a year earlier…the value of end of May inventories was revised down from the $1,933.737 billion reported last month to $1,933,282 billion, still down 2.3% from April…seasonally adjusted inventories of manufacturers were estimated to be valued at $687,406 million at the end of June, 0.6% higher than those at the end of May, inventories of retailers were valued at $579,948 million, 2.6% less than in May, while inventories of wholesalers were estimated to be valued at $625,300 million at the end of June, down 1.2% from May…
The Key source data and assumptions that accompanied the release of the advance estimate of 2nd quarter GDP indicates that the BEA had assumed that total seasonally adjusted June manufacturing and trade inventories (on a Census basis) would decrease by $20.5 billion from the previously published May figures…since this report shows that total June inventories decreased by $21.2 billion while May inventories were revised down by $0.4 billion at the same time, that means that the advance estimate of 2nd quarter GDP overestimated end of June inventories by $1.1 billion, or at an annual rate of about $4.5…assuming there is no major change relating to the inflation adjustment on those inventories, a revision to reflect these new figures would be enough to subtract about 0.07 percentage points from 2nd quarter GDP, when the 2nd estimate is released at the end of August.
See Also:
- June 2020 Business Inventories Decline Again
- June 2020 Headline Wholesale Sales and Inventories Remain In Contraction But Significantly Improved
Job Openings and Job Quitting Higher in June; Hiring Down, Layoffs Little Changed
The Job Openings and Labor Turnover Survey (JOLTS) report for June from the Bureau of Labor Statistics estimated that seasonally adjusted job openings rose by 518,000, from 5,371,000 in May to 5,889,000 in June, after May job openings were revised a bit lower, from 5,397,000 to 5,371,000…June jobs openings were still 18% lower than the 7,185,000 job openings reported in June a year ago, as the job opening ratio expressed as a percentage of the employed rose from 3.9 in May to 4.1% in June, but was down from the 4.5% rate in June of a year ago…the greatest jump in June job openings was in bars and restaurants, where openings rose by 198,000 to 718,000, while job openings in construction fell by 70,000 to 245,000 (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 6,696,000, down by 503,000 from the revised 7,199,000 who were hired or rehired in May, but still the second highest monthly number of hires on record, as the hiring rate as a percentage of all employed fell to 4.5% from a record high of 4.9% in May, while it was still much higher than the 3.8% hiring rate in June a year earlier (details of hiring by industry since January are in table 2)….meanwhile, total separations increased by 522,000, from 4,236,000 in May to 4,758,000 in June, as the separations rate as a percentage of the employed rose from 3.2% to 3.5%, which was still down from the 3.7% separations rate of June a year ago (see table 3)…subtracting the 4,758,000 total separations from the total hires of 6,696,000 would imply an increase of 1,938,000 jobs in June, quite a bit less than the revised payroll job increase of 4,791,000 for June reported by the July 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 finds that 2,598,000 of us voluntarily quit their jobs in June, up 521,000 from the revised 2,067,000 who quit their jobs in May, while the ‘quits rate’, widely watched as an indicator of worker confidence, rose from 1.6% to 1.9% of total employment, which was still far down from the 2.3% quits rate of a year earlier (see details in table 4)….in addition to those who quit, another 1,885,000 were either laid off, fired or otherwise discharged in June, down by 18,000 from the revised 1,903,000 who were discharged in May, as the discharges rate remained at 1.4% of all those who were employed during the month, which was still up from the discharges rate of 1.2% a year earlier (see table 5)…meanwhile, other separations, which includes retirements and deaths, were at 275,000 in June, up from 266,000 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:
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