Written by rjs, MarketWatch 666
February’s consumer and producer prices, January’s wholesale trade and JOLTS
Major reports released this week included the February Consumer Price Index, the February Producer Price Index and the Job Openings and Labor Turnover Survey (JOLTS) report for January, all from the Bureau of Labor Statistics, and the January report on Wholesale Trade, Sales and Inventories from the Census Bureau.
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In addition, this week also saw the Mortgage Monitor for January from Black Knight Financial Services, which indicated that 5.85% of all mortgages were delinquent in January, down from 6.08% in December, but up from 3.22% in January of 2020, and that a record low of 0.32% of all mortgages were in the foreclosure process, down from the 0.33% that were in foreclosure in December and down from the 0.46% of mortgages that were in foreclosure a year earlier.
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CPI Rose 0.4% in February on Higher Prices for Energy and Medical Services
The consumer price index rose 0.4% in February, as higher prices for fuel, groceries, utilities,and medical services were only partly offset by lower prices for clothing, used vehicles, and airline fares…the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that seasonally adjusted prices averaged 0.4% higher in February, after rising by 0.3% in January, 0.2% in December, 0.2% in November, 0.1% in October, 0.2% in September, 0.4% in August, by 0.5% in July and by 0.5% in June, after falling by 0.1% in May, falling by 0.7% in April and by 0.3% in March, but after rising by 0.1% in February, of last year….the unadjusted CPI-U index, which was set with prices of the 1982 to 1984 period equal to 100, rose from 261.582 in January to 263.014 in February, which left it statistically 1.6762% higher than the 258.678 reading of February of last year, which is reported as a 1.7% year over year increase, up from the 1.4% year over year increase reported a month ago….with higher prices for energy and foods both factors in the overall index increase, seasonally adjusted core prices, which exclude food and energy, were up just 0.1% for the month, as the unadjusted core price index rose from 269.755 to 270.696, which left the core index 1.2826% ahead of its year ago reading of 267.268, which is reported as a 1.3% year over year increase, down from the 1.4% year over year core price increase that was reported for January and the 1.6% the year over year core price increase that was reported for December…
The volatile seasonally adjusted energy price index rose 3.9% in February, after rising by 3.5% in January, 2.6% in December, 0.7% in November, 0.6% in October, 1.4% in September, 0.9% in August, 2.1% in July, and by 4.4% in June, but after falling by 2.3% in May, by 9.5% in April, 5.8% in March, and by 2.5% last February, and hence is only 2.4% higher than in February a year ago…the price index for energy commodities was 6.6% higher in February, while the index for energy services was 0.9% higher, after falling 0.3% in January….the energy commodity index was up 6.6% on a 6.4% increase in the price of gasoline and a 9.9% increase in the index for fuel oil, while prices for other energy commodities, including propane, kerosene, and firewood, were on average 7.3% higher…within energy services, the price index for utility gas service rose 1.6% after falling 0.4% in January and is now 6.7% higher than it was a year ago, while the electricity price index rose 0.7% after falling 0.2% in January….energy commodities are now averaging 1.6% higher than their year ago levels, with gasoline price averaging 1.5% higher than they were a year ago, while the energy services price index is now up 3.2% from last February, as electricity prices are also 2.3% higher than a year ago …
The seasonally adjusted food price index rose 0.2% in February, after rising by 0.1% in January and 0.3% in December, after being unchanged in November, rising 0.2% in October, rising 0.1% in August and in September, after falling 0.3% in July, rising 0.5% in June, 0.7% in May, 1.4% in April, 0.3% in March, and by 0.3% last February, as the price index for food purchased for use at home was 0.3% higher in January, after falling 0.1% in January, while the index for food bought to eat away from home was 0.1% higher, as average prices at fast food outlets rose 0.4% and prices at full service restaurants rose 0.3%, while food prices at employee sites and schools averaged 12.2% lower…notably, the price index for food at elementary and secondary schools was down 13.7% and is now down 32.5% from a year ago…
In the food at home categories, the price index for cereals and bakery products was 0.3% higher even as average bread prices fell 0.2%, as the price index for fresh biscuits, rolls, muffins rose 2.0%, the price index for crackers and bread and cracker products rose 2.3% and the price index for frozen and refrigerated bakery products, pies, tarts, and turnovers rose 1.9%….the price index for the meats, poultry, fish, and eggs food group was also 0.3% higher as the price index for beef and veal rose 0.4%, the price index for pork rose 1.0%, the price index for fresh fish and seafood rose 0.7%, and egg prices rose 2.2%…on the other hand, the seasonally adjusted price index for dairy products was 0.2% lower, as whole milk prices fell 1.4% and the price index for cheese and related products was 0.5% lower….however, the fruits and vegetables price index was 0.7% higher as the price index for fresh fruits rose 1.8% and tomato prices rose 1.6%….meanwhile, the beverages price index was 0.1% lower as the price index for carbonated drinks fell 0.5% and the price index for coffee fell 0.4%….lastly, the price index for the ‘other foods at home’ category was 0.1% higher, as the price index for sugar and sugar substitutesrose 0.9%, the price index for margarine rose 2.8%, the price index for snacks rose 1.7%, and the price index for olives, pickles and relishes rose 1.8%…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 February, there are no food line items showing a price change greater than 10% over the past year…
Among the seasonally adjusted core components of the CPI, which rose 0.1% in February after being unchanged in January and December, after rising by 0.2% in November, by 0.1% in October, by 0.2% in September, by 0.3% in August, by 0.5% in July and by 0.2% in June, after falling by 0.1% in May, by 0.4% in April and being unchanged in March, but after rising by 0.2% last February, the composite price index of all goods less food and energy goods was 0.2% lower in February, 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 February’s retail sales for inflation in national accounts data, the price index for household furnishings and supplies was 0.1% lower even as the price index for appliances rose 1.9%, as the price index for bedroom furniture fell 1.4%, the price index for window coverings fell 1.2%, and the price index for housekeeping supplies fell 1.4%….meanwhile, the apparel price index was 0.7% lower on a 5.4% decrease in the price index for men’s shirts and sweaters, a 4.9% decrease in the price index for women’s dresses, a 2.3% decrease in the price index for girls’ apparel, and a 2.0% decrease in the price index for boys’ apparel….at the same time, the price index for transportation commodities other than fuel was 0.4% lower as prices for new cars were unchanged, prices for used cars and trucks fell 0.9%, and the price index for vehicle parts and equipment other than tires was 0.8% lower…meanwhile, the price index for medical care commodities 0.7% lower, as prescription drug prices fell 0.7% and nonprescription drug prices fell 0.6% while the price index for medical equipment and supplies rose 0.4%…on the other hand, the recreational commodities index was 0.5% higher on a 1.3% increase in TV prices, a 2.0% increase in the price index for sports vehicles including bicycles, a 1.1% increase in the price index for photographic equipment and supplies, and a 2.3% increase in the price index for sewing machines, fabric and supplies…however, the education and communication commodities index was 0.2% lower on a 1.8% decrease in the price index for telephone hardware, calculators, and other consumer information items and a 0.4% decrease in the price index for computer software and accessories … .lastly, a separate price index for alcoholic beverages was 0.1% higher, while the price index for ‘other goods’ was up 0.3% on a 0.3% increase in the price index for Cosmetics, perfume, bath, nail preparations and implements and a 0.7% increase in cigarette prices…
Within core services, the price index for shelter was 0.2% higher as rents rose 0.2% and homeowner’s equivalent rent was 0.3% higher, while prices for lodging away from home at hotels and motels fell 2.7%, 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 0.8% increase in the price index for repair of household items and a 0.7% 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 2.0% and the price index for Eyeglasses and eye care rose 0.5%….on the other hand, the transportation services price index was 0.1% lower even though car and truck rentals rose 7.4% and the price index for intracity mass transit rose 4.3% because as airline fares fell 5.1%…however, the recreation services price index rose 0.6% as the index for video discs and other media, including rentals rose 2.9% and the price index for admissions to sporting events rose 4.9%…. at the same time, the index for education and communication services was 0.1% higher as the price index delivery services rose 0.8% and the price index for land-line telephone services rose 1.0%…lastly, the index for other personal services was up 0.5% as the price index for checking accounts and other bank services rose 4.0% while the price index for funeral expenses was 0.6% higher…
Among core line items, the price index for telephone hardware, calculators, and other consumer information items, which is now down by 17.9% since last January, the price index for men’s suits, sport coats, and outerwear, which is now down 16.8% from a year ago, the price index for women’s dresses, which has also fallen by 16.8% in the past year, the price index for checking account and other bank services, which is down by 10.3% from a year ago, the price index for lodging away from home including hotels and motels, which has fallen by 17.2% in the past year, the price index for admission to sporting events, which is still down by 14.1% from a year ago, and airline fares, which are now down by 25.6% since last February, have all seen prices drop by more than 10% over the past year, while the price index for car and truck rental, which has risen 11.5% from a year ago, and the price index for laundry equipment, which is up 24.3% from last February, are the only line items to have increased by a double digit magnitude over that span.
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Producer Prices rose 0.5% in February on Higher Wholesale Food & Energy Prices
The seasonally adjusted Producer Price Index (PPI) for final demand rose 0.5% in February, as prices for finished wholesale goods were on average 1.4% higher, while margins of final services providers increased by 0.1%…that followed a January report that had the PPI 1.3% higher, with average prices for finished wholesale goods rising 1.4%, while margins of final services providers increased by 1.3%, a December report that indicated the PPI was up 0.3%, with prices for finished wholesale goods up 1.0% while margins of final services providers were 0.1% lower, a revised November report that now shows the PPI was unchanged, with prices for finished wholesale goods rising 0.4% while margins of final services providers decreased 0.3%, and a revised October report that now indicates the PPI was 0.6% higher, with prices for finished wholesale goods rising 0.5% and margins of final services providers rising 0.7%….on an unadjusted basis, producer prices are now 2.8% higher than a year ago, up from the 1.7% year over year increase indicated by last month’s report, while, the core producer price index, which excludes food, energy and trade services, rose by 0.2% for the month, and is now 2.2% higher than in February a year ago, up from the 2.0% year over year increase as was shown in January…
As noted, the price index for final demand for goods, aka ‘finished goods’, was 1.4% higher in February, after being 1.4% higher in January, 1.0% higher in December, 0.4% higher in November, 0.5% higher in October, 0.4% higher in September, 0.4% higher in August, 0.5% higher in July, 0.4% higher in June, 1.4% higher in May, 2.8% lower in April, 1.7% lower in March, and 0.7% lower in February of last year…the finished goods price index rose 1.4% in February because the price index for wholesale energy goods was 6.0% higher, after it had risen by 5.1% in January, 4.9% in December, 1.5% in November, and by 0.5% in October, while the price index for wholesale foods rose 1.3%, after rising by 0.2% in January, falling 0.2% in December, rising by a revised 0.4% in November, by a revised 2.1% in October, and by 1.7% in September, and while the index for final demand for core wholesale goods (excluding food and energy) was 0.3% higher, after rising by 0.8% in January….wholesale energy prices averaged 6.0% higher due to a 13.1% increase in wholesale prices for gasoline, a 14.9% increase in wholesale prices for No.2 diesel fuel, and a 12.7% increase in wholesale prices for liquefied petroleum gas…meanwhile, the wholesale food price index rose 1.3% on a 41.1% increase in the wholesale price index for eggs for fresh use, an 13.0% increase in the wholesale price index for beef and veal, and a 7.0% increase in wholesale price index for fin-fish and shellfish….among core wholesale goods, the wholesale price index for industrial chemicals rose 4.2%,the wholesale price index for toys, games, and children’s vehicles rose 2.5%, and the wholesale price index for mobile homes rose 2.1%, while the wholesale price index for iron and steel scrap fell 10.3% ..
At the same time, the index for final demand for services rose 0.1% in February, after rising 1.3% in January, after falling by 0.1% in December, falling by 0.3% in November, and rising by 0.7% in October, as the index for final demand for trade services rose 0.1%, the index for final demand for transportation and warehousing services rose 1.1%, and the core index for final demand for services less trade, transportation, and warehousing services was unchanged…among trade services, seasonally adjusted margins for hardware, building materials, and supplies retailers rose 8.1%, margins for TV, video, and photographic equipment and supplies retailers rose 11.3%, and margins for furniture retailers rose 6.4%, while margins for apparel, jewelry, footwear, and accessories retailers fell 6.5%.. among transportation and warehousing services, average margins for air transportation of passengers rose 3.7% while average margins for rail transportation of freight and mail rose 0.8%…among the components of the core final demand for services index, the index for securities brokerage, dealing, and investment advice rose 5.8%, the index for passenger car rental rose 3.6%, and margins for consumer loans rose 2.5%, while margins for application software publishing fell 3.5% …
This report also showed the price index for intermediate processed goods rose 2.7% in February, after rising 1.7% in January, 1.4% in December, a revised 0.8% in November, a revised 0.9% in October, 0.6% in September, 0.9% in August, 1.4% in July, and 1.2% in June, but after being unchanged in May and falling the prior 5 months….the price index for intermediate energy goods rose 6.5%, as refinery prices for gasoline rose 13.1%, refinery prices for No. 2 diesel fuel rose 14.9%, producer prices for liquefied petroleum gas rose 12.7%, and producer prices for natural gas to electric utilities rose 8.8%… meanwhile, the price index for intermediate processed foods and feeds rose 2.2%, as the producer price index for fats and oil rose 3.7%, the producer price index for processed poultry rose 6.1%, and the producer price index for meats rose 5.2%…at the same time, the core price index for intermediate processed goods less food and energy rose 1.8% as the producer price index for plastic resins and materials rose 5.3%, the producer price index for steel mill products rose 11.8%, the producer price index for secondary nonferrous metals rose 8.8%, and the producer price index for softwood lumber rose 5.3%…prices for intermediate processed goods are now 6.6% higher than in February a year ago, the third increase after 19 consecutive year over year decreases, which followed 29 months of year over year increases, which had been preceded by 16 months of negative year over year comparisons, as prices for intermediate goods fell every month from July 2015 through March 2016….
Meanwhile, the price index for intermediate unprocessed goods rose 3.8% in February, after rising 3.8% in January, 2.2% in December, a revised 6.4% in November, a revised 1.3% in October, 5.2% in September, 4.0% in August, 0.6% in July, 5.4% in June and 8.4% in May, but after falling 13.7% in April, 8.1% in March and by 6.5% last February….that was as the February price index for crude energy goods rose 9.8% as crude oil prices rose 8.6%, unprocessed natural gas prices rose 14.5%, and coal prices fell 0.2%, while the price index for unprocessed foodstuffs and feedstuffs rose 3.5% on a 11.3% increase in the price of slaughter chickens, a 6.4% increase in the price of slaughter hogs, and a 4.7% increase in the price of corn…at the same time, the index for core raw materials other than food and energy materials fell 1.3%, as the price index for iron and steel scrap fell 10.3% against minor price changes in other materials… this raw materials index is now 19.0% higher than a year ago, just the fourth annual increase in more than 2 years, as the year over year change on this index had been negative from the beginning of 2019 through October of last year…
Lastly, the price index for services for intermediate demand rose 0.7% in February, after rising 1.3% in January, 0.4% in December, falling a revised 0.2% in November, rising 0.7% in October, rising 1.1% in September, 0.8% in August, 0.5% in July, and 0.3% last June … .the price index for intermediate trade services was 2.0% higher, as margins for metals, minerals, and ores wholesalers rose 12.4%, margins for intermediate hardware, building material, and supplies retailers rose 8.1% and margins for machinery and equipment parts and supplies wholesalers rose 4.7%…meanwhile, the index for transportation and warehousing services for intermediate demand was 1.5% higher, as the intermediate price index for transportation of passengers rose 3.6% and the intermediate price index for arrangement of freight and cargo rose 17.4%…at the same time, the core price index for intermediate services less trade, transportation, and warehousing rose 0.1%, as the intermediate price index for securities brokerage, dealing, investment advice, and related services rose 5.8%, the intermediate price index for investment banking rose 5.5%, and the intermediate price index for network compensation from broadcast TV, cable TV, radio rose 3.8%, while the intermediate price index for traveler accommodation services fell 7.1%..over the 12 months ended in January, the year over year price index for services for intermediate demand is 3.7% higher than it was a year ago, the sixth consecutive positive annual change since it briefly turned negative year over year from April to August for the first time in the history of this index.
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Job Openings Rose in January; Hiring, Job Quitting and Layoffs All Fell
The Job Openings and Labor Turnover Survey (JOLTS) report for January from the Bureau of Labor Statistics estimated that seasonally adjusted job openings increased by 165,000, from 6,752,000 in December to 6,917,000 in January, after December job openings were revised 106,000 higher, from 6,646,000 to 6,752,000, incorporating an annual revision of 2020’s job openings and labor turnover data, tables for which are included in the release…January’s jobs openings were still 3.3% lower than the revised 7,154,000 job openings reported for January a year ago, as the job opening ratio expressed as a percentage of the employed increased to 4.6% from the 4.5% logged in December, and was also up from the 4.5% rate of January a year ago…the state and local government education sector, with a 56,000 job opening increase to 273,000 openings, saw the largest percentage increase, while the professional and business services sector saw job openings decrease by 123,000 to 1,355,000 (details on job openings by industry and region can be viewed in Table 1)…like most BLS releases, the press release for this 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 January, seasonally adjusted new hires totaled 5,301,000, down by 110,000 from the revised 5,411,000 who were hired or rehired in December, as the hiring rate as a percentage of all employed fell from 3.8% in December to 3.7% in January, and was also down from the 3.9% hiring rate in January a year earlier (details of hiring by sector since September are in table 2)….meanwhile, total separations fell by 275,000, from 5,582,000 in December to 5,307,000 in January, as the separations rate as a percentage of the employed fell from 3.9% to 3.7%, which was also down from 3.8% in January a year ago (see table 3)…subtracting the 5,307,000 total separations from the total hires of 5,301,000 would imply a decrease of 6,000 jobs in January, in contrast to the revised payroll job increase of 166,000 for January reported in the February establishment survey of two weeks ago 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 3,311,000 of us voluntarily quit our jobs in January, down from the revised 3,407,000 who quit their jobs in December, while the quits rate, widely watched as an indicator of worker confidence, fell from 2.4% to 2.3% of total employment, while it was the same as the 2.3% quits rate of a year earlier (see details in table 4)….in addition to those who quit, another 1,687,000 were either laid off, fired or otherwise discharged in January, down by 136,000 from the revised 1,823,000 who were discharged in December, as the discharges rate fell from 1.3% to 1.2% of all those who were employed during the month, which was also the same as the discharges rate of 1.2% a year earlier….meanwhile, other separations, which includes retirements and deaths, were at 310,000 in January, down from 352,000 in December, for an ‘other separations rate’ of 0.2%, the same as in December and as in January 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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January Wholesale Sales Up 1.6%, Wholesale Inventories Down 0.4%
The January report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at $531.7 billion, up 4.9 percent (plus/minus 0.7 percent) from the revised December level and up 5.9 percent (plus/minus 0.7 percent) from the revised wholesale sales of January 2020….the December preliminary estimate of wholesale sales was revised up from $503.8 billion to $506.844 billion, which meant December’s sales were 1.9% above the November level, rather than up 1.2% as was reported a month ago…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 sold….
On the other hand, the monthly change in private inventories is a major factor in GDP, as additional goods in a warehouse represent goods that were produced but not sold, and this January report estimated that wholesale inventories were valued at $661.7 billion at month end, an increase of 1.3 percent (+/-0.4%) from the revised December level and 0.6 percent (plus/minus 0.9)* percent higher than January a year ago…the December preliminary inventory estimate was concurrently revised upward from $651.5 billion to $653.3 billion, now up 0.6% from November…
In national accounts data, January’s wholesale inventories will be adjusted the producer price index for January to determine their real change..with notable exceptions such as farm products, chemicals and petroleum, we’ve estimated that wholesale inventories appear to be roughly 70% finished goods…with the January producer price index for finished goods up by 1.3% while the producer price indexes for intermediate goods & raw goods were 1.7% and 3.8% higher respectively, we can thus figure that January’s real wholesale inventories will be down by a few tenths of a percent…since real wholesale inventories increased slightly over the 4th quarter, January’s wholesale inventories real decrease will have a modest negative impact on 1st quarter GDP.
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