Written by rjs, MarketWatch 666
May’s consumer prices; April’s trade deficit, job openings and turnover, and wholesale sales
Major reports released during the past week included the May Consumer Price Index from the Bureau of Labor Statistics, the Commerce Dept’s report on our International Trade in Goods and Services for April, the Job Openings and Labor Turnover Survey (JOLTS) for April from the BLS, and the April report on Wholesale Trade, Sales and Inventories from the Census Bureau.
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This week also saw the Consumer Credit Report for April from the Fed, which showed that overall consumer credit, a measure of non-real estate personal debt, expanded by a seasonally adjusted $18.6 billion, or at a 5.3% annual rate, as non-revolving credit expanded at a 7.6% rate to $3,273.9 billion while revolving credit outstanding shrunk at a 2.4% rate to $963.6 billion…meanwhile, the major privately issued report released this week was the Mortgage Monitor for April (pdf) from Black Knight Financial Services, which indicated that 4.66% of mortgages were delinquent in April, down from the 5.02% that were delinquent in March, and down from the 6.45% delinquency rate of April 2020, and that a record low 0.29% of mortgages remained in the foreclosure process in April, down from 0.30% of all mortgages in March and down from the 0.40% of mortgages that were in foreclosure a year ago.
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CPI Rose 0.6% in May on Higher Prices for New and Used Vehicles, Clothing, and Airfares; Now Up 5% Year over Year
The consumer price index rose 0.6% in May, as higher prices for new and used vehicles, clothing, airfares, car and truck rentals, and utilities were only slightly offset by lower prices for gasoline and for health insurance…the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that seasonally adjusted prices averaged 0.6% higher in May, after rising by 0.8% in April. 0.6% in March, 0.4% in February, 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, but after falling by 0.1% last May….the unadjusted CPI-U index, which was set with prices of the 1982 to 1984 period equal to 100, rose from 267.054 in April to 269.195 in May, which left it statistically 4.9927% higher than the 256.394 index reading of May of last year, which is reported as a 5.0% year over year increase, up from the 4.2% year over year increase reported a month ago, and the largest annual increase since 2008…with lower prices for gasoline holding back the overall index increase, seasonally adjusted core prices, which exclude food and energy, were up by 0.7% for the month, as the unadjusted core price index rose from 273.968 to 275.893, which left the core index 3.7976% ahead of its year ago reading of 265.799, which is reported as a 3.8% year over year increase, up from the 3.0% year over year core price increase that was reported for March, and the largest year over year core price index increase since May 1992…
The volatile seasonally adjusted energy price index was unchanged in May, after falling by 0.1% in April, rising by 5.0% in March, by 3.9% in February, by 3.5% in January, by 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% last May, and hence is still 28.5% higher than in May a year ago….the price index for energy commodities was 0.6% lower in May, while the index for energy services was 0.7% higher, after rising 1.5% in April….the energy commodity index was down 0.6% on a 0.7% decrease in the price of gasoline, which was slightly offset by a 2.1% increase in the price index for fuel oil, while prices for other energy commodities, including propane, kerosene, and firewood, were on average 0.6% higher…within energy services, the price index for utility gas service rose 1.7% after rising 2.4% in April and is now 13.5% higher than it was a year ago, while the electricity price index rose 0.3% in May after rising 1.2% in April….despite two straight decreases, energy commodities are still averaging 54.5% higher than their year ago levels, with gasoline price averaging 56.2% higher than they were a year ago, while the energy services price index is now up 6.2% from last May, as electricity prices are also 4.2% higher than a year ago …
The seasonally adjusted food price index rose 0.4% in May, after rising by 0.4% in April, by 0.1% in March, 0.2% in February, 0.1% in January and by 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% last July, rising 0.5% last June, by 0.7% last May and by 1.4% last April, as the price index for food purchased for use at home was 0.6% higher in May, after rising 0.4% in April, while the index for food bought to eat away from home was 0.6% higher, as average prices at fast food outlets rose 0.5% and prices at full service restaurants rose 0.6%, while food prices at employee sites and schools averaged 1.2% higher…
In the food at home categories, the price index for cereals and bakery products was 0.4% higher, as average bread prices rose 0.9%, the price index for fresh biscuits, rolls, muffins rose 0.7%, the price index for breakfast cereals rose 1.3% and the price index for flour and prepared flour mixes also rose 1.3%….at the same time, the price index for the meats, poultry, fish, and eggs food group was also 1.3% higher, as the price index for beef and veal rose 2.3%, the price index for bacon and related products rose 1.8%, the price index for poultry rose 1.9%, and the price index for fish and seafood rose 2.2%….moreover, the seasonally adjusted price index for dairy products was 0.4% higher, as milk prices rose 2.2% even as the price index for ice cream was 0.6% lower…meanwhile, the fruits and vegetables price index was unchanged as the price index for fresh vegetables rose 0.5% while the price index for processed fruits and vegetables fell 0.2% and the price index for dried beans, peas, and lentils fell 0.6%….on the other hand, the beverages price index was 0.5% lower, as the price index for carbonated drinks fell 1.3% and the price index for noncarbonated juices and drinks fell 0.6%….lastly, the price index for the ‘other foods at home’ category was unchanged, as the price index for sugar and sweets rose 0.5%, the price index for fats and oils rose 0.8% and the price index for prepared salads rose 1.9%, while the price index for soups fell 0.7% and the price index for snack foods was 1.7% lower…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 May, the only food line item showing a price change greater than 10% over the past year is bacon, which was 13.0% higher, while the price index for food at employee sites and schools is 34.4% lower on what was reported as a 43.5% year over year drop in the price index for food at elementary and secondary schools in March, but has not been itemized since…
Among the seasonally adjusted core components of the CPI, which rose 0.7% in May after rising 0.9% in April, 0.3% in March, 0.1% in February, 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 of last year, the composite price index of all goods less food and energy goods was 1.8% higher in May, while the more heavily weighted composite for all services less energy services was 0.4% higher….
Among the goods components, which will be used by the Bureau of Economic Analysis to adjust March retail sales for inflation in national accounts data, the price index for household furnishings and supplies was was 0.9% higher, as the price index for living room, kitchen, and dining room furniture rose 2.1%, the price index for “other” furniture rose 2.7%, the price indices for floor coverings and window coverings also both rose 2.7%, and the price index for outdoor equipment and supplies rose 2.3%….at the same time, the apparel price index was 1.2% higher on a 1.5% increase in the price index for men’s suits, sport coats, and outerwear, a 3.6% increase in the price index for women’s outerwear, a 5.2% increase in the price index for girl’s apparel, and a 3.5% increase in the price index for boys’ and girls’ footwear….at the same time, the price index for transportation commodities other than fuel rose another 4.0% after jumping 4.3% in April, as prices for new cars and new trucks were both 1.6% higher, prices for used cars and trucks rose by a 7.3%, the price index for motor oil, coolant, and fluids rose 1.4%, and the price index for tires was 1.0% higher… however, the price index for medical care commodities was unchanged, as prescription drug prices fell 0.3% while nonprescription drug prices rose 0.7% and the price index for medical equipment and supplies rose 1.2%…meanwhile, the recreational commodities index was 0.4% higher on an average 0.9% increase in TV prices, a 1.5% increase in the price index for sporting goods, and a 1.9% increase in the price index for photographic equipment and supplies…moreover, the education and communication commodities index was also 0.4% higher on a 0.7% increase in the price index for educational books and supplies, a 1.0% increase in the prices index for computer software and accessories, and a 0.6% increase in the price index for computers, peripherals, and smart home assistants … .lastly, a separate price index for alcoholic beverages was also 0.4% higher, while the price index for ‘other goods’ was 0.1% lower on a 1.1% decrease in the price index for cosmetics, perfume, bath, nail preparations and implements and a 0.2% decrease in the price index for stationery, stationery supplies, and gift wrap…
Within core services, the price index for shelter was 0.3% higher as rents rose 0.2%, homeowner’s equivalent rent was 0.3% higher, and prices for lodging away from home at hotels and motels rose 0.4%, while at the same time the shelter sub-index for water, sewers and trash collection rose 0.1%, and other household operation costs were on average 3.1% higher on a 6.4% increase in the price index for domestic services and a 5.5% increase in the price index for moving, storage, freight expenses…on the other hand, the price index for medical care services was 0.1% lower because the price index for health insurance fell 1.0%….but the transportation services price index was 1.5% higher as car and truck rentals rose 12.1%, the price index for airline fares rose 7.0%, the price index for parking fees and tolls rose 1.3% and the price index for vehicle insurance rose 0.7%…in addition, the recreation services price index rose 0.2% as the index for veterinarian services rose 1.2% and the price index for admissions to sporting events rose 1.5%…. at the same time, the index for education and communication services was also 0.2% higher as the price index for land-line telephone services rose 1.1%, the price index for elementary and high school tuition and fees rose 0.9% and the price index for delivery services rose 0.4%…lastly, the index for other personal services was 0.1% lower as the price index for haircuts and other personal care services was 0.6% lower while the price index for financial services fell 0.3%…
Among core line items, the price index for car and truck rental, which has now risen 109.8% from a year ago, the price index for used car and trucks, which is now up 29.7% from a year ago, the price index for airline fares, which is up 24.1% since last May, the price index for ther intercity transportation, which is up 11.1% over the same span, the price index for men’s pants and shorts, which is now up 12.3% from a year ago, the price index for women’s dresses, which has risen by 10.3% over the past year, the price index for jewelry, which is now up 14.7 from a year ago, the price index for lodging away from home including at hotels and motels, which has now risen 10.0% in the past year, the price index for domestic services, which has risen 13.7% year over year, the price index for moving, storage, freight expense, which is up by 16.2% over the last 12 months, the price index for laundry equipment, which is up 26.5% from last May, and the price index for “other furniture”, which is up 11.4% year over year, have all seen prices rise by more than 10% over the past year, while the price index for telephone hardware, calculators, and other consumer information items, which is now down by 19.1% since last May, is the only core line item to have decreased by a double digit magnitude over that one year span.
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April Trade Deficit Decreased 8.2% on Lower Imports of Consumer Goods and Automotives
Our trade deficit was 8.2% lower in April, as our exports increased and our imports decreased….the Commerce Dept report on our international trade in goods and services for April, incorporating an annual revision, indicated that our seasonally adjusted goods and services trade deficit fell by a rounded $6.1 billion to $68.9 billion in April, from a March deficit that was revised from the originally reported $74.4 billion to $75.0 billion, a revision which should result in an downward revision of about 0.10 percentage points to 1st quarter GDP when the third estimate is released at the end of June; however, this month’s report also reflects revised statistics on trade in goods on both a Census basis and a balance of payments (BOP) basis going back to 2016, and revised statistics on trade in services beginning with 2013, so the 4th quarter basis for the 1st quarter’s growth in trade will also need to be revised to determine the ultimate impact on 1st quarter GDP, and the BEA will not make that revision till the annual revision to GDP is released at the end of July…
In rounded figures, the value of our April exports rose by $2.3 billion, or 1.1%, to $205.0 billion, on a $1.6 billion increase to $145.3 billion in our exports of goods and a $0.7 billion increase to $59.7 billion in our exports of services, while our imports fell by $3.8 billion, or 1.4% to $273.9 billion on a $4.5 billion decrease to $232.0 billion in our imports of goods, which was partly offset a $0.7 billion increase to $41.9 billion in our imports of services…export prices averaged 0.8% higher in April, which means the change in our real exports was less than than the nominal increase by roughly that percentage, while import prices were 0.7% higher, meaning that our real imports were likewise smaller than than their nominal value by that percentage…
The increase in our April exports of goods came about largely as a result of higher exports of capital goods and of industrial supplies and materials, which were partly offset by lower exports of automotive goods…referencing the Full Release and Tables for April (pdf), in Exhibit 7 we find that our exports of capital goods rose by $2,074 million to $44,250 million on a $1,425 million increase in our exports of civilian aircraft and a $305 million increase in our exports of semiconductors, and that our exports of industrial supplies and materials rose by $831 million to $52,200 million on a $981 million increase in our exports of crude oil, a $518 million increase in our exports of fuel oil, a $623 million increase in our exports of petroleum products other than fuel oil, and a $344 million increase in our exports of organic chemicals, which were partly offset by a $1313 million decrease in our exports of non monetary gold and a $328 million decrease in our exports of other precious metals…in addition, our exports of foods, feeds and beverages rose by $268 million to $13,798 million on increases exports of several food items, despite lower exports of corn, soybeans, and other animal feeds…partly offsetting the increases in those export categories, our exports of automotive vehicles, parts, and engines fell by $1,027 million to $11,916 million on a $411 million decrease in our exports of parts and accessories of vehicles other than engines, chassis, and tires and a $398 million decrease in our exports of trucks, buses, and special purpose vehicles, our exports of consumer goods fell by $252 million to $16,976 million on a $243 million decrease in our exports of cell phones, and our exports of other goods not categorized by end use fell by $260 million to $5,633 million….
Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our goods imports and indicates that lower imports of consumer goods and of automotive goods were largely responsible for the April decrease in our imports….our imports of consumer goods fell by $2,612 million to $63,719 million on a a $890 million decrease in our imports of apparel and textiles other than those of wool or cotton, a $692 million decrease in our imports of toys, games, and sporting goods, a $682 million decrease in our imports of household appliances, a $616 million decrease in our imports of cotton apparel and household goods, a $565 million decrease in our imports of stereo equipment and related goods, a $393 million decrease in our imports of footwear, a $351 million decrease in our imports of art, antiques, and other collectibles, and a $324 million decrease in our imports of non-textile apparel and household goods, which were partly offset by a $1,689 million increase in our imports of cell phones and similar household goods and a $308 million increase in our imports of pharmaceuticals…at the same time, our imports of automotive vehicles, parts and engines fell by $1,056 million to $29,361 million on a $695 million decrease in our imports of parts and accessories of vehicles other than engines, chassis, and tires and a $478 million decrease in our imports of new and used passenger cars, while our imports of industrial supplies and materials fell by $814 million to $49,695 million on a $504 million decrease in our imports of fuel oil, and our imports of other goods not categorized by end use fell by $819 million to $9,475 million….partly offsetting those increases, our imports of foods, feeds, and beverages rose by $473 million to $14,546 million on a $229 increase in our imports of fish and shellfish, our imports of capital goods rose by $272 million to $63,705 million on a $382 million increase in our imports of civilian aircraft and increases in imports of other capital goods, offset by a $749 million decrease in our imports of semiconductors and a $544 million decrease in our imports of computers…
The Full Release and Tables pdf for this report also gives us surplus and deficit details on our goods trade with selected countries:
The April figures show surpluses, in billions of dollars, with South and Central America ($3.5), Hong Kong ($3.0), Brazil ($1.1), Singapore ($0.8), United Kingdom ($0.6), and Saudi Arabia ($0.3). Deficits were recorded, in billions of dollars, with China ($32.4), European Union ($16.1), Mexico ($10.0), Japan ($5.4), Germany ($5.1), Taiwan ($3.2), Canada ($3.0), Italy ($2.9), India ($2.6), France ($1.9), and South Korea ($1.2).
- The deficit with China decreased $7.1 billion to $32.4 billion in April. Exports increased $1.0 billion to $13.1 billion and imports decreased $6.0 billion to $45.5 billion.
- The deficit with the European Union decreased $1.0 billion to $16.1 billion in April. Exports increased $2.0 billion to $22.2 billion and imports increased $1.0 billion to $38.3 billion.
- The deficit with Mexico increased $1.2 billion to $10.0 billion in April. Exports increased less than $0.1 billion to $22.5 billion and imports increased $1.3 billion to $32.4 billion.
To gauge the impact of April’s trade on 2nd quarter growth, we use exhibit 10 in the pdf for this report, which gives us monthly goods trade figures by end use category and in total, already adjusted for inflation in chained 2012 dollars, the same inflation adjustment that’s used by the BEA to compute trade figures for GDP, with the only difference being that they are not annualized in the table here…from that table, we can figure that 1st quarter real exports of goods averaged 143,737.3 million monthly in 2012 dollars, while April’s inflation adjusted exports were at 148,458 million in that same 2012 dollar quantity index representation… figuring the annualized change between those two figures, we find that April’s real exports of goods were rising at a 13.80% annual rate from those of the 1st quarter, or at a pace that would add about 0.85 percentage points to 2nd quarter GDP if it were continued through May and June…..from that same table, we can figure that our 1st quarter real imports averaged 245,402.6 million monthly in chained 2012 dollars, while inflation adjusted April imports were at 247,050 million in that same 2012 dollar representation…that would indicate that so far in the 2nd quarter, our real imports have increased at a 2.71% annual rate from those of the 1st quarter…since imports are subtracted from GDP because they represent the portion of consumption or investment that occurred during the quarter that was not produced domestically, their increase at a 2.71% rate would subtract about 0.28 percentage points from 2nd quarter GDP….hence, if the April trade deficit is maintained at the same level throughout the 2nd quarter, our improving balance of trade in goods would add about 0.57 percentage points to the growth of 2nd quarter GDP….however, note that we have not estimated the impact of the change in services here, largely because the Census does not provide handy inflation adjusted data on those, but that with our nominal exports and imports of services both up by $0.7 billion in April, we can figure that the change in our balance of trade in services would likely have a negligible impact on 2nd quarter GDP.
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Job Openings Jump 12% to Another Record in April, Record High Job Quitting; Record Low Layoff Rate
The Job Openings and Labor Turnover Survey (JOLTS) report for April from the Bureau of Labor Statistics estimated that seasonally adjusted job openings jumped by by 998,000, from 8,288,000 in March to 9,286,000 job openings in April, after March’s record job openings were revised 165,000 higher, from 8,123,000 to 8,288,000…April’s jobs openings were up by 37.5% from the beginning of this year, and also more than double the 4,630,000 job openings reported for April a year ago, as the job opening ratio expressed as a percentage of the employed rose from 5.4% in March to 6.0% in April, and it was up from 3.4% a year ago…the greatest percentage increase in April job openings was in the accommodation and food services sector, where openings jumped by 349,000 to 1,338,000, while job openings in private educational services services fell by 23,000 to 883,000… (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 to 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 April, seasonally adjusted new hires totaled 6,075,000, up by 69,000 from the revised 6,006,000 who were hired or rehired in March, as the hiring rate as a percentage of all those employed remained at 4.2%, but was up from the 3.0% hiring rate in April a year earlier (details of hiring by industry since December are in table 2)….meanwhile, total separations also rose, by 324,000, from 5,436,000 in March to 5,760,000 in April, as the separations rate as a percentage of the employed rose from 3.8% in March to 4.0% in April, which was still way down from the pandemic hit separations rate of 9.1% in April a year ago (see table 3)…subtracting the 5,760,000 total separations from the total hires of 6,075,000 would imply an increase of 315,000 jobs in April, a bit less than the revised payroll job increase of 278,000 for April reported by the May establishment survey last week, but still within the expected +/-110,000 margin of error in these incomplete extrapolations…
Breaking down the seasonally adjusted job separations, the BLS found that 3,952,000 of us voluntarily quit our jobs in April, up by 384,000 from the revised 3,568,000 who quit their jobs in March, while the quits rate, widely watched as an indicator of worker confidence, rose from a record high of 2.5% in March to new record high of 2.7% in April, which was also up from the quits rate of 1.6% a year earlier (see details in table 4)….in addition to those who quit, another 1,525,000 were either laid off, fired or otherwise discharged in April, down by 198,000 from the revised 1,723,000 who were discharged in March, as the discharges rate fell from 1.1% to a record low of 1.0% of all those who were employed during the month, which was also way down from the 7.2% rate of a year earlier….meanwhile, other separations, which includes retirements and deaths, were at 364,000 in April, up from 343,000 in March, for an ‘other separations’ rate of 0.3%, up from 0.2% in March but the same rate as in April a year ago….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…
April Wholesale Sales Up 0.8%, Wholesale Inventories Up 0.8%
The April report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at $570.8 billion, up 0.8 percent (plus/minus 0.4 percent) from the revised March sales level, and up 43.6 percent (plus/minus 1.4 percent) from wholesale sales of April 2019… the March preliminary sales estimate was revised from the $567.9 billion reported last month to $565,946 million, which meant the February to March percent change was revised from the preliminary estimate of an increase of 4.6 percent (plus/minus 0.7 percent) to an increase of 4.3 percent (plus/minus 0.7 percent)….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, since any goods on the shelf or in intermediate storage represent goods that were produced but not sold, and this April report estimated that wholesale inventories were valued at a seasonally adjusted $698.0 billion at month end, an increase of 0.8 percent (+/-0.4%) from the revised March level and 5.2 percent (plus/minus 1.2 percent) higher than in April a year ago, with the March preliminary estimate revised from the $693.6 billion reported a month ago to $692.8 billion at the same time, now up 1.2% from February….
That $0.8 billion downward revision to March’s wholesale inventories should reduce 1st quarter GDP by 0.01 or 0.02 percentage points from what was reported in the 2nd estimate….meanwhile, April wholesale inventories, after an adjustment for price changes for each category of wholesale goods as indicated by the components of the April producer price index, appears to indicate a real wholesale inventory increase on the order of 0.2% heading into the 2nd quarter, which is less than half the magnitude of the 1st quarter’s real inventory decrease that was indicated by the key source data and assumptions (xls) for the second estimate of 1st quarter GDP….if that April real inventory level holds, the change in 2nd quarter real wholesale inventories would be negative and modestly subtract from the growth rate of 2nd quarter GDP.
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