Written by rjs, MarketWatch 666
November’s retail sales, industrial production, & new home construction; October’s business inventories
Major reports released this week included the the Retail Sales report for November and the Business Sales and Inventories report for October, both from the Census Bureau, the November report on Industrial Production and Capacity Utilization from the Fed, and the November report on New Residential Construction from the Census bureau.
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In addition, the Bureau of Labor Statistics released both the November Import-Export Price Index and the Regional and State Employment and Unemployment Summary for November, a report which breaks down the two employment surveys from the monthly national jobs report by state and region….while the text of that report provides a useful summary of this data, the serious statistical 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…
The week also saw the release of three regional Fed manufacturing surveys for December: the Empire State Manufacturing Survey from the New York Fed, which covers all of New York state, an adjacent county in Connecticut, Puerto Rico and northern New Jersey, reported their headline general business conditions index fell from +6.3 in November to +4.7 in December, suggesting fairly sluggish growth of First District manufacturing; the Philadelphia Fed Manufacturing Survey for December, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest diffusion index of manufacturing conditions decreased from a reading of +23.3 in November to +11.3 in December, indicating that growth of that region’s manufacturing was less widespread than a month ago; and the Kansas City Fed manufacturing survey for December, covering western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico, which reported its broadest composite index rose to +14 in December, up from readings of +11 in November and +13 in October, suggesting consistent moderate growth of that region’s manufacturing.
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Retail Sales Fell 1.1% in November after October Sales were Revised Lower
Seasonally adjusted retail sales decreased 1.1% in November after retail sales for October sales were revised 0.2% lower…the Advance Retail Sales Report for November (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $546.5 billion during the month, which was 1.1 percent (plus/minus 0.5 percent) lower than October’s revised sales of $552.5 billion but still 4.1 percent (plus/minus 0.7 percent) above the adjusted sales in November of last year. … October’s seasonally adjusted sales were revised down from $553.3 billion to $552.5 billion, while September’s sales were revised higher, from $551.9 billion to $552.8 billion; as a result, the September to October change was revised from up 0.3 percent (plus/minus 0.5%) to down 0.1 percent (plus/minus 0.2%), while the change in September’s sales was revised from an increase of 1.6% to an increase of 1.8%…assuming a similar inflation adjustment to the one used previously, the $0.9 billion upward revision to September’s sales should increase the previous estimate of the personal consumption expenditures contribution to 3rd quarter GDP by about 0.07 percentage points….unadjusted sales, extrapolated from surveys of a small sampling of retailers, were estimated to have fallen 1.3%, from $556,093 million in October to $548,824 million in November, while they were up 2.5% from the $535,352 million of sales in November a year ago…
Included below is the table of the monthly and yearly percentage changes in retail sales by business type taken from the November Census Marts pdf….the first pair of columns below gives us the seasonally adjusted percentage change in sales for each kind of business from the October revised figure to this month’s November “advance” report in the first sub-column, and then the year over year percentage sales change since last November in the 2nd column…the second double column pair below gives us the revision of the October advance estimates (now called “preliminary”) as of this report, with the new September to October percentage change under “Sep 2020 r” (revised) and the revised October 2019 to October 2020 percentage change in the last column shown…for your reference, the table of last month’s advance estimate of October sales, before this month’s revisions, is here. …
To compute November’s real personal consumption of goods data for national accounts from this November retail sales report, the BEA will use the corresponding price changes from the November consumer price index, which we reviewed last week…to estimate what they will find, we’ll first separate out the volatile sales of gasoline from the other totals…from the third line on this table, we can see that November retail sales excluding the 2.4% decrease in sales at gas station were down by 0.9%….then, subtracting the figures representing the 0.3% increase in grocery & beverage sales and the 0.3% decrease in food services sales from retail sales ex gas stations, we find that core retail sales were down by more than 1.0% for the month…since the CPI report showed that the composite price index for all goods less food and energy goods was 0.1% higher in November, we can thus approximate that real retail sales excluding food and energy will show an decrease of roughly 1.1%…however, the actual adjustment for each of the types of sales shown above will vary by the change in the related price index … for example, while sales at furniture stores were down 1.1%, the price index for household furnishings and supplies increased by 0.9%, which would suggest that real sales at furniture stores fell about 2.0% … .similarly, while nominal sales at clothing stores were 6.8% lower in November, the apparel price index was 0.9% higher, which would mean that real sales of clothing fell around 7.6% … on the other hand, while nominal sales at motor vehicle & parts dealers fell 1.7%, the price index for transportation commodities other than fuel was 0.6% lower, so we can figure real sales of motor vehicle & parts were down roughly 1.1%…
In addition to figuring those core retail sales, to make a complete estimate of real November PCE, we’ll need to adjust food and energy retail sales for their price changes separately, just as the BEA will do. … the CPI report showed that the food price index was 0.1% lower in November, with the index for food purchased for use at home 0.3% lower, while prices for food bought to eat away from home (excluding food prices at employee sites and schools) were 0.2% higher… hence, with nominal sales at food and beverage stores 1.6% higher, real sales of food and beverages would be roughly 1.9% higher in light of the 0.3% lower prices … on the other hand, the 4.0% decrease in nominal sales at bars and restaurants, once adjusted for 0.2% higher prices, suggests that real sales at bars and restaurants fell about 4.2%…meanwhile, while sales at gas stations were down 2.4%, there was a 0.4% increase in the retail price of gasoline, which would suggest real sales of gasoline were down on the order of 2.0%, with the caveat that gasoline stations do 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 can thus estimate that the income and outlays report for November will show that real personal consumption of goods fell by nearly 0.9% for the month, after rising by a revised 0.3% in October and rising by a revised 1.3% in September…at the same time, the 4.2% drop in real sales at bars and restaurants would reduce November’s real personal consumption of services by nearly 0.4%.
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Industrial Production Up 0.4% in November After Production of Prior Months Revised Higher
The Fed’s G17 release on Industrial production and Capacity Utilization reported that industrial production rose 0.4% in November after rising by a revised 0.9% in October, and after falling by a revised 0.1% in September….the total industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, rose to 104.0 in November from 103.6 in October, which was revised up from the 103.2 index reported last month…at the same time, the September index was revised up from 102.1 to 102.6, the August index was revised up from 102.5 to 102.7, the July index was revised up from 101.7 to 101.9, and the June index was revised up from 97.6 to 97.8….however, even after those revisions, industrial production is still 5.5% lower than a year ago, and 5.0% lower than its pre-pandemic high in February…
The manufacturing index, which accounts for more than 77% of the total IP index, rose 0.8%, from 100.3 in October to 101.1 in November, partly on a 5.3% increase in the output of motor vehicles and parts…at the same time, the manufacturing index for October was revised from 99.9 to 100.3, the manufacturing index for September was revised from 98.9 to 99.2, the manufacturing index for August was revised from 98.8 to 99.1, the manufacturing index for July was revised from 97.4 to 97.7 and the manufacturing index for June was revised from 93.5 to 93.8 … meanwhile, the mining index, which includes oil and gas well drilling, rose from 113.5 in October to 116.0 in November, after the October mining index was revised down from 114.2, which left the mining index 12.5% lower than it was a year earlier…finally, the utility index, which often fluctuates due to above or below normal temperatures, fell 4.3% in November, from a upwardly revised 104.4 in our cold October to 99.9 in our warm November, and is now 8.9% lower than it was a year earlier..
This report also includes capacity utilization data, which is 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 US industry rose to 73.3% in November from 73.0% in October, which was revised from the 72.8% reported last month …capacity utilization of NAICS durable goods production facilities rose from 71.1% in October to 72.1% in November as capacity utilization for motor vehicles and parts factories rose from 73.9% to 77.8%, while capacity utilization for non-durables producers remained unchanged at 74.1%…at the same time, capacity utilization for the mining sector rose to 79.4% in November from 77.5% in October, which was originally reported at 77.9%, while utilities were operating at 70.2% of capacity during November, down from their 73.5% of capacity during October, which was revised up from the previously reported 72.7%…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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Housing Starts Reported Higher in November; SAAR Building Permits at a 14 Year High
The November 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 1,547,000 units during the month, which was 1.2 percent (plus/minus 8.6 percent)* above the revised October estimated annual rate of 1,528,000 housing unit starts, and was 12.8 percent (plus/minus 11.3 percent) above last November’s rate of 1,371,000 housing starts a year…the asterisk indicates that the Census does not have sufficient data to determine whether housing starts actually rose or fell over the past month, with the figure in parenthesis the most likely range of the change indicated; in other words, November housing starts could have been down by 7.4% or up by as much as 9.8% from those of October, with even larger revisions possible…in this report, the annual rate for October housing starts was revised from the 1,530,000 units reported last month to 1,528,000, while September starts, which were first reported at a 1,415,000 rannual rate, were revised from last month’s initial revised figure of 1,459,000 back to 1,437,000 with this report….
Those annual rates of starts reported here were extrapolated from a survey of a small percentage of US building permit offices visited by canvassing Census field agents, which estimated that 117.500 housing units were started in November, down from the 131,400 units that were started in October…of those housing units started in November, an estimated 87,800 were single family homes and 29,000 were units in structures with more than 5 units, down from last month’s revised 100,800 single family starts, but up from the 28,800 units started in structures with more than 5 units in October…
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 often revised housing starts data…in November, Census estimated new building permits were being issued at a seasonally adjusted rate of 1,639,000 housing units annually, the highest rate since September 2006, which was also 6.2 percent (plus/minus 1.5 percent) above the revised October annual rate of 1,544,000 permits, and was 8.5 percent (plus/minus 1.8 percent) above the rate of building permit issuance in November a year earlier…the annual rate for housing permits issued in October was revised from the 1,545,000 that was originally reported….
Again, these annual estimates for new permits reported here were extrapolated from the unadjusted estimates collected monthly by canvassing census agents, which showed permits for 175,500 housing units were issued in November, down from the revised estimate of 179,800 new permits issued in October…the November permits included 98,100 permits for single family homes, down from 103,300 single family permits issued in October, and 74,400 permits for housing units in apartment buildings with 5 or more units, up from 74,000 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 1.547 Million Annual Rate in November and Comments on November Housing Starts.
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October Business Sales Rose 0.9%, Business Inventories Rose 0.7%
After the release of the November retail sales report, the Census Bureau released the composite Manufacturing and Trade, Inventories and Sales report for October (pdf), which incorporates the revised October retail data from that November report and the earlier published October wholesale and factory data to give us a complete picture of the business contribution to the economy for the month….according to the Census Bureau, total manufacturer’s and trade sales were estimated to be valued at a seasonally adjusted $1,482.3 billion in October, up 0.9 percent (plus/minus 0.1%) from September’s revised sales, and up 2.2 percent (plus/minus 0.3 percent) from October sales of a year earlier…note that total September sales were concurrently revised up from the originally reported $1,465.1 billion to $1,468.5 billion….seasonally adjusted manufacturer’s sales rose 1.0% to $488,600 million in October; retail trade sales, which exclude restaurant & bar sales from the revised October retail sales reported earlier, were statistically unchanged from September at $497,067 million, while wholesale sales rose 1.8% to $496,585 million…
Meanwhile, total manufacturer’s and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $1,948.7 billion at the end of October, up 0.7 percent (plus/minus 0.1%) from September, but 4.0 percent (plus/minus 0.4 percent) lower than in October a year earlier…at the same time, the value of end of September inventories was revised from the $1,932.8 billion reported last month to $1,934.9 billion, now up 0.8% from August…that $2.1 billion upward revision to September inventories should increase the previous estimate of the inventory component to 3rd quarter GDP by more than $8.4 billion annually, which would add around 0.13 percentage points to 3rd quarter GDP…seasonally adjusted inventories of manufacturers were estimated to be valued at $687,258 million at the end of October, an increase of 0.2% from September, and inventories of retailers were valued at $612,468 million, 0.9% greater than September, and inventories of wholesalers were estimated to be valued at $648,998 million at the end of October, 1.1% greater than in September…
For GDP purposes, all inventories, including retail, will be adjusted for inflation with appropriate component price indices of the producer price index for October, which was 0.5% higher for finished goods…two week ago, we looked at real factory inventories with price adjustments for goods at various stages of production, and judged those inventories would have a negative impact on 4th quarter GDP … then last week, we found that real wholesale inventories were higher in October after being down sharply in the 3rd quarter and hence would have a substantial positive impact on 4th quarter GDP growth … .since the nominal value of retail inventories for October has now been shown to be 0.9% higher, real retail inventories for the month, after the 0.5% finished goods price adjustment, thus would have thus increased by 0.4% from September, after a third quarter that saw a small real decrease in real retail inventories, before the pending revision we noted above…therefore, any retail inventory increase over the 4th quarter would add the amount of the 3rd quarter decrease, plus the amount of the 4th quarter increase, to the growth of 4th quarter GDP.
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