Written by rjs, MarketWatch 666
August’s consumer prices and producer prices; July’s wholesale trade and JOLTS
Major reports released this past week included the August Consumer Price Index, the August Producer Price Index, and the Job Openings and Labor Turnover Survey (JOLTS) report for July, all from the Bureau of Labor Statistics, and the Wholesale Trade, Sales and Inventories report for July from the Census Bureau.
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This week also saw the Consumer Credit Report for July from the Fed, which indicated that overall consumer credit, a measure of non-real estate debt, expanded by a seasonally adjusted $12.3 billion in July, or at a 3.6% annual rate, as non-revolving credit expanded at a 4.8% rate to $3,144.2 billion while revolving credit outstanding contracted at a 0.4% rate to $994.7 billion.
This week’s major privately issued report was the Mortgage Monitor for July (pdf) from Black Knight Financial Services, which reported that 6.91% of mortgages were delinquent in July, down from the 7.59% that were delinquent in June, but well up from the 3.64% delinquency rate of July of 2019, and that a record low 0.36% of mortgages remained in the foreclosure process in July, same percentage as in June, but down from the 0.49% that were in foreclosure a year ago.
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Consumer Prices Rose 0.4% in August on Higher Prices for Gasoline, Used Cars, Clothing, & Appliances
The consumer price index rose 0.4% in August, as higher prices for gasoline, used vehicles, appliances, clothing, and vehicle rentals were only partly offset by lower prices for groceries and utilities …the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that seasonally adjusted prices rose by 0.4% in August, after rising by 0.6% in July and 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, and rising by 0.1% last August…the unadjusted CPI-U index, which was set with prices of the 1982 to 1984 period equal to 100, rose from 259.101 in July to 259.918 in August, which left it statistically 1.3096% higher than the 256.558 index reading of August of last year, which is reported as a 1.3% year over year increase, up from the 1.0% 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 0.4% for the month, as the unadjusted core price index rose from 267.703 to 268.756, which left the core index 1.7364% ahead of its year ago reading of 264.169, which is reported as a 1.7% year over year increase, up from the 1.6% the year over year increase that was reported for July…
The volatile seasonally adjusted energy price index rose 0.9% in August, after rising 2.5% in July, 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 9.0% lower than in August a year ago…the price index for energy commodities was 2.0% higher in August, while the index for energy services was 0.2% lower, after being unchanged in July….the energy commodity index was up 2.0% due to a 2.0% increase in the price of gasoline, the largest component, and a 3.9% increase in the index for fuel oil, while prices for other energy commodities, including propane, kerosene, and firewood, were on average 0.7% lower…within energy services, the price index for utility gas service fell 0.2% after falling 1.0% in July and is now 0.5% lower than it was a year ago, while the electricity price index fell 0.2% after rising 0.3% in July….energy commodities are still averaging 16.7% lower than their year ago levels, with gasoline prices averaging 16.8% lower than they were a year ago, while the energy services price index is now down 0.1% from last August, as electricity prices are also 0.1% lower than a year ago…
The seasonally adjusted food price index rose 0.1% in August, after falling 0.4% in July, 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 0.1% lower in August, after falling 1.1% in July, while the index for food bought to eat away from home was 0.3% higher, as average prices at fast food outlets were 0.4% higher and prices at full service restaurants rose 0.1%, while this month’s 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 0.2% lower even though average bread prices rose 0.5%, because the price index for fresh cakes and cupcakes fell 2.2%, the price index for frozen and refrigerated bakery products, pies, tarts, and turnovers fell 1.7%, and the price index for breakfast cereal fell 2.0%….at the same time, the price index for the meats, poultry, fish, and eggs group was 1.7% lower as the price index for beef and veal fell 4.4%, egg prices fell 3.0%, and the price index for pork was 2.0% lower… on the other hand, the seasonally adjusted index for dairy products was 1.5% higher, as milk prices rose 3.6% and the index for cheese and related products was 2.6% higher…in addition, the fruits and vegetables index was 0.2% higher as the price index for fresh fruits rose 1.4%, the price index for dried beans, peas, and lentils rose 1.9%, and the price index for frozen fruits and vegetables rose 0.7%…meanwhile, the beverages price index was 0.1% higher as the price index for tea and beverage materials other than coffee rose 1.3%….lastly, the price index for the ‘other foods at home’ category was 0.5% higher, as the price index for sugar and sweets rose 0.9%, prices for peanut butter rose 1.0%, the price index for olives, pickles, relishes rose 2.2% and the price index for prepared salads 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 August, the price index for uncooked beef roasts has risen 12.1%, the price index for beef and veal other than those cuts listed separately rose 10.0%, the price index for pork other than chops, ham and bacon is up 14.7%, the price index for poultry other than chicken is 11.3% higher, and the price index for dried beans, peas, and lentils is up 10.3% over the year, while only apples, bananas and instant coffee prices have declined over the past year…
Among the seasonally adjusted core components of the CPI, which rose by 0.4% in August, after rising by 0.6% in July and 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 1.0% higher in August, while the more heavily weighted composite for all services less energy services was 0.2% higher….
Among the goods components, which will be used by the Bureau of Economic Analysis to adjust August’s retail sales for inflation in national accounts data, the price index for household furnishings and supplies was 1.0% higher, as the price index for major appliances rose 4.8% on a 5.6% increase in prices for laundry equipment, the price index for window coverings rose 3.7%, and the price index for dishes and flatware increased by 2.9%….at the same time, the apparel price index was 0.6% higher on a 5.1% increase in the price index for men’s pants and shorts, a 4.9% increase in the price index for women’s dresses, a 2.0% increase in the price index for girls’s apparel, and a 2.0% increase in the price index for women’s footwear…in addition, the price index for transportation commodities other than fuel was 2.1% higher even as new car prices were unchanged as prices for used cars and trucks rose 5.4% and tire prices rose 0.5%….however, prices for medical care commodities were 0.1% lower, as prescription drugs prices fell 0.2% and the price index for medical equipment and supplies fell 1.2%…on the other hand, the recreational commodities index was 1.1% higher on a 4.2% increase in the price index for video equipment other than TVs, a 15.0% increase in the price index for sewing machines, fabric and supplies, a 2.2% increase in the price index for recorded music and music subscriptions, and a 1.9% increase in the price index for pets, pet supplies, accessories…at the same time, the education and communication commodities index was 0.5% higher on a 1.0% increase in the price index for computers, peripherals, and smart home assistants and a 0.8% increase in the price index for educational books and supplies…lastly, a separate price index for alcoholic beverages was 0.3% higher, while the price index for ‘other goods’ was down 0.2% on a 3.9% drop in the price index for stationery, stationery supplies, gift wrap..
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 1.1%, while at the same time the shelter sub-index for water, sewers and trash collection rose 0.6%, and other household operation costs were on average 0.5% higher on a 2.6% increase in moving, storage, freight expense….meanwhile, the price index for medical care services was 0.1% higher, as the price index for care of invalids and elderly at home rose 1.1% and the price of health insurance rose 0.9%… at the same time, the transportation services price index was unchanged as the price index for car and truck rental rose 4.0%, airline fares rose 1.2% and vehicle insurance costs rose 0.5%, while intercity bus fares fell 1.5% and the index for intracity mass transit fell 10.3%…meanwhile, the recreation services price index rose 0.5% as the index for admissions to movies, theaters, and concerts rose 1.5%, the index for veterinarian services rose 0.5% and the index for also rose 0.5%….in addition, the index for education and communication services was 0.1% higher as the price index for wireless telephone services rose 0.8% and the index for delivery services rose 0.3%…lastly, the index for other personal services was unchanged as the price index for haircuts and other personal care services fell 0.3% while the index for apparel services other than laundry and dry cleaning was 0.4% higher…
Among core line items, prices for televisions, which are still averaging 12.5% cheaper than a year ago, the price index for telephone hardware, calculators, and other consumer information items, which is down by 14.9% since last August, the price index for men’s suits, sport coats, and outerwear, which has fallen 17.1% from a year ago, the price index for women’s dresses, which has fallen by 17.0% in the past year, the price index for women’s outerwear, which has fallen by 12.5% from a year ago, the price index for women’s suits and separates, which has fallen by 11.6% in the past year, the price index for lodging away from home including hotels and motels, which has fallen by 13.1% in the past year, the price index for Intracity mass transit, which has fallen by 11.8% in the past year, and airline fares, which are now down by 23.2% since last August, have all seen prices drop by more than 10% over the past year, while the cost of health insurance, which is still up by 17.4% over the past year, the price index for laundry equipment, which has risen 13.7% from a year ago, and the price index for infants’ equipment, which is up 10.9% from last August, are the only line items to have increased by a double digit magnitude over that span.
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Producer Prices rose 0.3% in August on Higher Trade Margins, Higher Prices for Core Goods and Services
The seasonally adjusted Producer Price Index (PPI) for final demand rose 0.3% in August, as prices for finished wholesale goods averaged 0.1% higher while margins of final service providers averaged 0.5% higher…that followed a July report that had the PPI 0.6% higher, as prices for finished wholesale goods averaged 0.8% higher while margins of final service providers averaged 0.5% higher, 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 now revised May report that has the PPI 0.8% higher, as prices for finished wholesale goods averaged 1.8% higher, while margins of final service providers averaged 0.3% higher, and a re-revised April report wherein the PPI now fell 1.3%, as prices for finished wholesale goods averaged 3.0% lower, while average margins of final services providers decreased by 0.4%….on an unadjusted basis, producer prices are still 0.2% lower than a year ago, up from the 0.4% 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 0.3% higher than in August a year ago, up from the 0.1% year over year increase shown in July…
As noted, the price index for final demand for goods, aka ‘finished goods’, was 0.1% higher in August, after being 0.8% higher in July, 0.2% higher in June, 1.8% higher in May, 3.0% 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, and 0.3% lower in August of last year….the finished goods index rose 0.1% in August even as the price index for wholesale energy goods was 0.1% lower, after it had risen by 5.3% in July, by 7.7% in June and 6.3% in May, but after it had fallen by 18.2% in April, 9.1% in March, and 3.9% in February, while the price index for wholesale foods fell 0.4%, after falling 0.5% in July, 5.2% in June, rising 6.1% in May, and falling a revised 0.5% in April, while the index for final demand for core wholesale goods (excluding food and energy) was 0.3% higher, after being 0.3% higher in July….wholesale energy prices averaged lower due to a 1.4% decrease in wholesale prices for gasoline and a 38.1% decrease in wholesale prices for home heating oil, while wholesale prices for No.2 diesel fuel rose 6.1%, while the wholesale food price index fell 0.4% on a 9.9% decrease in wholesale prices fro fresh eggs, a 4.2% decrease in the wholesale price index for fresh fruits and melons, and a 3.7% decrease in the wholesale price index for grains….among wholesale core goods, the wholesale price index for plastic resins and materials rose 4.0%, the wholesale price index for mobile homes rose 1.8%, and the wholesale price index for jewelry, platinum and karat gold rose 4.2%…
At the same time, the index for final demand for services rose 0.5% in August, after rising 0.5% in July, falling 0.3% in June, rising a revised 0.3% in May, and falling a revised 0.4% in April, as the index for final demand for trade services rose 1.2%, the index for final demand for transportation and warehousing services rose 0.2%, 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 automobile retailers rose 10.6%, margins for TV, video, and photographic equipment and supplies retailers rose 4.7%, margins for hardware, building materials, and supplies retailers rose 6.8%, margins for RVs, trailers, and campers retailers rose 23.8%, and margins for machinery and vehicle wholesalers rose 1.7%… among transportation and warehousing services, margins for airline passenger services fell 3.3% while margins for truck transportation of freight rose 1.6%…among the components of the core final demand for services index, the index for securities brokerage, dealing, investment advice, and related services rose 5.0%, the index for portfolio management rose 2.4%, margins for arrangement of cruises and tours rose 36.2%, and margins for passenger car rental rose 2.8%, while margins for arrangement of vehicle rentals and lodging fell 6.0%…
This report also showed the price index for intermediate processed goods rose 0.6% in August, after rising 1.5% in July, 0.9% in June, and a revised 0.4% in May, but after falling a revised 3.6% in April and 1.5% in March….the price index for intermediate energy goods rose 1.7%, as producer prices for natural gas sold to electric utilities rose 11.4%, producer prices for liquefied petroleum gas rose 7.0%, refinery prices for residual fuels rose 10.2%, and refinery prices for No. 2 diesel fuel rose 6.1%…meanwhile, prices for intermediate processed foods and feeds fell 0.5%, as the producer price index for dairy products fell 0.4% and the producer price index for prepared animal feeds fell 0.4%…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 10.6%, the producer price index for softwood lumber increased 14.9%, the producer price index for building paper and board rose 10.0%, and the producer price index for copper and brass mill shapes rose 3.2%…prices for intermediate processed goods are still 2.6% lower than in August a year ago, the 16th 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 7.0% in August, after falling 0.7% in July, rising 3.1% in June and a revised 9.6% in May, but after falling a revised 12.6% in April and 8.5% in March….that was as the August price index for crude energy goods rose 11.7% as crude oil prices rose 11.4% and unprocessed natural gas prices rose 22.8%, while the price index for unprocessed foodstuffs and feedstuffs rose 7.0% on a 16.7% increase in producer prices for raw milk, a 24.7% increase in producer prices for slaughter hogs, and a 10.4% increase in producer prices for slaughter cattle…at the same time, the index for core raw materials other than food and energy materials rose 1.7%, as prices for copper base scrap rose 9.0%, the price index for nonferrous metal ores increased 6.5%, and the price of aluminum base scrap rose 3.1%….however, this raw materials index is still 9.0% 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 August, after rising 0.7% in July, 0.2% in June, falling revised 0.4% in May, and falling a revised 1.7% in April…the price index for intermediate trade services was 1.2% higher, as margins for intermediate hardware, building material, and supplies retailers rose 6.8% and margins for intermediate metals, minerals, and ores wholesalers rose 5.3%…meanwhile, the index for transportation and warehousing services for intermediate demand was 0.1% lower, as the intermediate price index for arrangement of freight and cargo fell 9.6% and the intermediate price index for transportation of passengers (partial) fell 3.2%…at the same time, the core price index for intermediate services less trade, transportation, and warehousing was 0.9% higher, as the price index for internet advertising space sales (excluding Internet ads sold by print publishers) rose 9.8%, the intermediate price index for securities brokerage, dealing, investment advice, and related services rose 5.0%, and the price index for radio advertising time sales also rose 5.0%…over the 12 months ended in August, the year over year price index for services for intermediate demand is still 0.6% 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.
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July Wholesale Sales Were Up 6.4%; Wholesale Inventories Were Down 0.3%
The July report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at $479.2 billion, up 6.4 percent (±0.5 percent) from the revised June level, but down 4.0 percent (±0.9 percent) from wholesale sales of July 2019… the June preliminary estimate was revised up $0.8 billion or 0.2% to $458.1 billion from the $457.3 billion sales reported last month, which is now 9.0% more than May’s sales, revised from the 8.8% increase reported last month…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 July report estimated that wholesale inventories were valued at a seasonally adjusted $632.3 billion at month end, down 0.3 percent (+/-0.2%) from the revised June level and 5.6 percent (±0.9 percent) lower than in June a year ago, with the June preliminary estimate revised from the $633.3 billion reported a month ago to $634.2 billion, now a 1.3% decrease from May….
That $0.9 billion upward revision to June wholesale inventories will increase 2nd quarter GDP by about 0.02 percentage points…meanwhile, July’s wholesale inventories, after an adjustment for price changes for each category of wholesale goods as indicated by the components of the July producer price index, appears to indicate a real wholesale inventory decrease on the order of 1.1% heading into the 3rd quarter….however, since the key source data and assumptions (xls) for the second estimate of 2nd quarter GDP indicates a real decrease of $49.5 billion in wholesale inventories on a NIPA basis, July’s real inventory decrease will fall well short of that drop and hence will result in a substantial boost to 3rd quarter GDP.
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Job Openings and Job Quitting were up in July, Hiring and Firing were Down
The Job Openings and Labor Turnover Survey (JOLTS) report for July from the Bureau of Labor Statistics estimated that seasonally adjusted job openings rose by 617,000, from 6,001,000 in June to 6,618,000 in July, after June’s job openings were revised 112,000 higher, from the 5,889,000 reported a month ago to 6,001,000 with this report…July’s jobs openings were still 8.5% lower than the 7,236,000 job openings reported for July a year ago, as the job opening ratio expressed as a percentage of the employed rose from 4.2% in June to 4.5% in July, but was down from 4.6% in July a year ago….the 172,000 job opening increase to 841,000 openings in the retail trade sector appears to be the largest percentage increase for this month, while the decrease from 725,000 to 663,000 bar and restaurant job openings looks to be the largest percentage decrease… (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 July, seasonally adjusted new hires totaled 5,787,000, down by 1,183,000 from the revised 6,970,000 who were hired or rehired in June, as the hiring rate as a percentage of all employed fell from 5.1% in June to 4.1% in July, while it was still up from 4.0% in July a year earlier (details of hiring by sector since March are in table 2)….meanwhile, total separations rose by 108,000, from 4,899,000 in June to 5,007,000 in July, while the separations rate as a percentage of the employed was unchanged at 3.6%, which was still down from the 3.8% separations rate in July a year ago (see table 3)…subtracting the 5,007,000 total separations from the total hires of 5,787,000 would imply an increase of just 780,000 jobs in July, far less than the revised payroll job increase of 1,734,000 for July reported by the August establishment survey last week….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 2,949,000 of us voluntarily quit our jobs in July, up by 345,000 from the revised 2,605,000 who quit their jobs in June, while the quits rate, widely watched as an indicator of worker confidence, rose to 2.1% of total employment, up from 1.9% in June but down from 2.4% in July a year earlier (see details in table 4)….in addition to those who quit, another 1,721,000 were either laid off, fired or otherwise discharged in July, down by 274,000 from the revised 1,995,000 who were discharged in June, as the discharges rate fell from 1.4% to 1.2% of all those who were employed during the month, which left it unchanged from the discharges rate of 1.2% a year earlier….meanwhile, other separations, which includes retirements and deaths, were at 337,000 in July, up from 300,000 in June, for an ‘other separations’ rate of 0.2%, which was the same rate as in June and as in July of last year….both seasonally adjusted and unadjusted details by industry and by region on hires and job separations, and on job quits and discharges can be accessed using the links to tables at the bottom of the press release.
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