January’s consumer and producer prices, retail sales, industrial production, and new home construction, December's business inventories..

Major reports released this week included the January Consumer Price Index, the January Producer Price Index and the January Import-Export Price Index, all from the Bureau of Labor Statistics, the Retail Sales Report for January and the Business Sales and Inventories Report for December from the Census Bureau, the January report on Industrial Production and Capacity Utilization from the Fed, and the January report on New Residential Construction from the Census Bureau…

The week also saw the release of the first two regional Fed manufacturing surveys for February: the Empire State Manufacturing Survey from the New York Fed, which covers all of New York state, one county in Connecticut, Puerto Rico and northern New Jersey, reported their headline general business conditions index rose from -43.7 in January to -2.4 in February, meaning that the ongoing contraction of Second District manufacturing was much less widespread than a month earlier....meanwhile, the Philadelphia Fed Manufacturing Survey, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest diffusion index of manufacturing conditions rose from -12.8 in December and from -10.6 in January to +5.6 in February, it's first positive print since August, indicating that a plurality of that region's manufacturers are now seeing improvement in various facets of their business, after 5 months of deteriorating conditions..

CPI Rose 0.3% in January on Higher Rent, Food, and Utilities

The consumer price index was 0.3% higher in January, as higher prices for rent, food, utilities, car insurance, health insurance, furniture and appliances, medical care, transportation services, and recreational and information technology commodities were just partly offset by lower prices for fuel, used vehicles, clothing, and medical care commodities...the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that the weighted average of seasonally adjusted prices of consumer goods and services was 0.3% higher in January, after being a revised 0.2% higher in December, 0.2% higher in November, 0.1% higher in October, 0.4% higher in September, after rising by 0.5% in August, by 0.2% in July, by 0.2% in June, by 0.1% in May, by 0.4% in April, by 0.1% in March, by 0.4% last February, and by 0.5% in January of last year, with all those monthly percentage figures now revised from a month ago based on a new seasonal adjustment computation, which did not affect the overall annual change....

The unadjusted CPI-U index, which was originally set to have prices of the 1982 to 1984 period equal to 100, rose from 306.746 in December to 308.417 in January which left it statistically 3.0908% higher than the index reading of 299.170 for January of last year, which is reported as a 3.1% year over year increase, down from the 3.4% year over year increase reported for December, with such widely cited year over year figures often telling us more about last year's CPI changes than this years…with lower fuel prices a drag on the overall index, seasonally adjusted core prices, which exclude food and energy, were up by 0.4% for the month, as the unadjusted core price index rose from 311.907 to 313.623, which left the core index 3.86174% ahead of its year ago reading of 301.962, which is reported as a 3.9% year over year increase, the same year over year core price increase that was reported in December, but well down from the 6.6% annual increase reported for September 2022, which had been the largest annual increase in core prices in forty years..

The volatile seasonally adjusted energy price index fell 0.9% in January, after falling by 0.2% in December, by 1.6% in November and by 2.1% in October, but after rising by 1.2% in September, rising by 4.4% in August, and being unchanged in July, and is now 4.6% lower than in January of a year ago....the price index for energy commodities was 3.2% lower in January, while the price index for energy services was 1.4% higher, after it had risen by 0.9% in December....the energy commodity index was down 3.2% on a 3.3% decrease in the price of gasoline and and a 4.5% decrease in the price of fuel oil, while prices for other energy commodities, including propane, kerosene, and firewood, were on average 0.3% higher...within energy services, the price index for utility gas service rose 2.0% in January after falling 0.6% in December, but is still 17.8% lower than it was a year ago, while the electricity price index rose 1.2% in January after rising 0.3% in December... energy commodities are now averaging 6.9% lower than their year ago levels, with gasoline prices averaging 6.4% lower than they were a year ago, while the energy services price index is also down 2.0% from last January, even as electricity prices are averaging 3.8% higher than a year ago…

Meanwhile, the seasonally adjusted food price index was 0.4% higher in January, after being 0.2% higher in December, 0.2% higher in November, 0.3% higher in October, 0.2% higher in September, 0.2% higher in August, and 0.2% higher in July, as the price index for food purchased for use at home was 0.4% higher in January, after being 0.1% higher in December, unchanged in November, 0.3% higher in October, 0.1% higher in September, 0.2% higher in August, and 0.2% higher in July, while the price index for food bought to eat away from home was 0.5% higher, as average prices at fast food outlets rose 0.6%, average prices at full service restaurants rose 0.4%, food prices at employee sites and schools averaged 0.1% lower, and while prices for "other food away from home" averaged 0.2% higher....

In the food at home categories, the price index for cereals and bakery products was 0.2% lower, even as bread prices rose 0.3%, as the price index for breakfast cereal fell 0.8%, the price index for flour and prepared flour mixes fell 1.2% and the price index for fresh cakes and cupcakes was 1.0% lower…however, the price index for the meats, poultry, fish, and eggs food group was unchanged, as the price index for beef and veal fell 0.3%, the price index for pork fell 0.3%, and the price index for shelf stable fish and seafood fell 2.9%, while the price index for poultry rose 0.3% and egg prices were 3.4% higher....meanwhile, the seasonally adjusted price index for dairy products was 0.2% higher, even as average milk prices fell 0.6%, as the price index for cheese and related products was 1.0% higher....at the same time, the fruits and vegetables price index was 0.4% higher, as the price index for fresh vegetables rose 2.4% while canned vegetables prices were 0.4% higher....in addition, the beverages price index was 1.2% higher, as the price index for carbonated drinks was 1.6% higher, the price index for noncarbonated juices and drinks was 1.7% higher, and the price index for coffee was 0.6% higher....lastly, the price index for the ‘other foods at home’ category was 0.6% higher, as the price index for sugar and and sweets rose 1.0%, the price index for margarine rose 1.1%, the price index for soups rose 1.0%, and the price index for spices, seasonings, condiments, sauces was also 1.0% higher...

Among the seasonally adjusted core components of the CPI, which rose by 0.4% in January, after rising by 0.3% in December, by 0.3% in November, by 0.2% in October, by 0.3% in September, by 0.2% in August, and by 0.2% in July, the composite price index of all goods less food and energy goods was 0.3% lower in January, while the more heavily weighted composite for all services less energy services was 0.7% higher....

Among the goods components of the core price index, which will be used by the Bureau of Economic Analysis to adjust October’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 furniture and bedding rose 1.3% and the major appliance index was 1.2% higher, as the price index for other household equipment and furnishings fell 1.2% and the price index for tools, hardware and supplies fell 2.0%...at the same time, the apparel price index was 0.7% lower on a 3.8% decrease in the price index for women's dresses, a 3.5% decrease in the price index for women's outerwear, and a 4.6% decrease in the price index for girls' apparel....meanwhile, the price index for transportation commodities other than fuel was 1.1% lower as average prices for new vehicles were unchanged, the price index for used cars and trucks fell 3.4% and the price index for motor oil, coolant, and fluids was 1.3% lower… in addition, the price index for medical care commodities was 0.6% lower because prescription drug prices fell 0.9%, while nonprescription drug prices rose 1.1%, but the price index for medical equipment and supplies was 1.4% lower…on the other hand, the recreational commodities index was 0.8% higher, as TV prices rose 0.9%, the price index for audio equipment rose 2.6%, the price index for recorded music and music subscriptions rose 2.0%, the price index for sporting good including bicycles rose 2.8%, and the price index for photographic equipment and supplies was 2.2% higher…at the same time, the education and communication commodities index was 0.6% higher on a 1.9% increase in the price index for computers, peripherals, and smart home assistants, and a 2.0% increase in the price index for computer software and accessories …lastly, a separate price index just for alcoholic beverages was 0.3% higher, while the price index for ‘other goods’ was 0.3% higher on a 0.7% increase in the price index for air, dental, shaving, and miscellaneous personal care products and a 0.5% increase in the price index for cigarettes...

Within core services, the price index for shelter was 0.6% higher, as rents rose 0.4%, homeowner's equivalent rent was 0.6% higher, prices for lodging away from home at hotels and motels was 2.4% higher and the price index for water, sewers and trash collection was 1.1% higher....at the same time, the price index for medical care services was 0.7% higher, as the price index for outpatient hospital services rose 1.5%, the price index for outpatient hospital services rose 2.0%, and the price index for health insurance was 1.4% higher...in addition, the transportation services price index was 1.0% higher, as the price index for vehicle maintenance and servicing rose 1.0%, the price index for parking and other fees rose 1.9%, the price index for airline fares rose 1.4%, and the price index for motor vehicle insurance rose was 1.4% higher…moreover, the recreation services price index was 0.4% higher, as the price index for pet services rose 5.6%, the price index for fees for lessons or instructions rose 0.7%, and the price index for admission to movies, theaters, and concerts was 0.4% higher…at the same time, the price index for education and communication services was also 0.4% higher, as the price index for postage rose 1.4%, the price index for residential telephone services rose 1.4%, and the price index for internet services and electronic information providers was 1.2% higher…lastly, the index for other personal services rose 1.0%, as the price index for financial services rose 2.4% and the price index for miscellaneous personal services was 1.2% higher..

Retail Sales Fell 0.8% in January after December Sales Revised 0.5% Lower

The value of seasonally adjusted retail sales decreased 0.8% in January after retail sales for November and December were both revised lower...the Advance Retail Sales Report for January (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $700.3 billion during the month, which was down 0.8 percent (±0.5%) from December's revised sales of $706.2 billion, but 0.6 percent (±0.7 percent)* above the adjusted sales in January of last year....December's seasonally adjusted sales were revised more than 0.5% lower, from $709.9 billion to $706.2 billion, while November's sales were revised almost 0.4% lower, from $706.0 billion to $703.336 billion; as a result, the November to December change was revised from up 0.6 percent (±0.5 percent) to up 0.4 percent (±0.3 percent).....the downward revisions to November and December sales indicate that the 4th quarter's nominal personal consumption expenditures would be revised lower at an annual rate of around $25.5 billion, which would decrease 4th quarter GDP by around 0.43 percentage points....estimated unadjusted retail sales, extrapolated from surveys of a small sampling of retailers, indicated sales actually fell 16.6%, from $769,114 million in December to $641,509 million in January, while they were still 2.0% higher than the $629,035 million of sales in January a year ago, so we can see how the seasonal adjustment to post holiday sales boosted the headline sales result to a big jump, in contrast to the big sales drop that we would normally expect to see in January...

Included below is the table of the monthly and yearly percentage changes in retail sales by business type taken from the January 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 revised December figure to this month's January "advance" report in the first sub-column, and then the year over year percentage sales change since last January in the 2nd column...the second double column pair below gives us the revision of the December advance estimates (now called "preliminary") as of this report, with the new November to December percentage change under "Nov 2023 r" (revised) and the December 2022 to December 2023 percentage change as revised in the last column shown...for your reference, the table of last month’s advance estimate of December sales, before this month's revisions, is here...

To compute January's real personal consumption of goods data for national accounts from this January retail sales report, the BEA will use the corresponding price changes from the January consumer price index, which we reviewed above...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 the above table, we can see that January retail sales excluding the 1.7% decrease in sales at gas station were down by 0.8%...then, subtracting the figures representing the 0.1% increase in grocery & beverage store sales and the 0.7% increase in food services sales from that total, we find that core retail sales were down by 1.2% for the month...since the CPI report showed that the composite price index for all goods less food and energy goods was 0.3% lower in January, we can thus approximate that real retail sales excluding food and energy will show a decrease of roughly 0.9%....however, the actual adjustment in national accounts data for each of the types of sales shown above will vary by the change in the related price index…for instance, while nominal sales at furniture stores were up 1.5%, the price index for the price index for furniture and bedding was 1.3% higher, which would suggest that real sales at furniture stores only rose by 0.2%…on the other hand, while nominal sales at health and personal care stores were 1.1% higher in January, the medical commodities price index was 0.6% lower, which means that real sales at drug stores were probably about 1.7% higher...

In addition to figuring those core retail sales, we should also adjust food and energy retail sales for their price changes separately…the January CPI report showed that the food price index was 0.4% higher, with the index for food purchased for use at home 0.4% higher, while prices for food bought to eat away from home averaged 0.5% higher... thus, while nominal sales at food and beverage stores were 0.1% higher, real sales of food and beverages would actually be 0.3% lower in light of the 0.4% higher prices…meanwhile, the 0.7% increase in nominal sales at bars and restaurants, once adjusted for 0.5% higher prices, suggests that real sales at bars and restaurants only rose about 0.2% during the month....in addition, while sales at gas stations were down 1.7% in dollars, there was also a 3.3% decrease in the retail price of gasoline during the month, which would suggest that real sales of gasoline were up nearly 1.7%, with the caveat that gasoline stations do sell more than gasoline, and we haven’t accounted for those other sales...by averaging real sales that we have thus estimated together with an appropriate weighting, we can then estimate that the income and outlays report for January will show that real personal consumption of goods fell by almost 0.6% in January, after rising by a revised 0.7% in December, and by a revised 0.1% in November...at the same time, the 0.2% increase in real sales at bars and restaurants would add an insignificant fraction to January’s real personal consumption of services....note that in estimating November & December's revised real goods consumption, we have incorporated both the revision to nominal sales and last week's 0.1% upward revision to November's consumer prices and the 0.1% downward revision to December's consumer prices, which would precipitate a similar revisions to the the corresponding PCE price index changes, and thus a corresponding change in the real sales for those months..

Industrial Production Fell 0.1% in January After Prior 2 Months Were Revised Higher

The Fed's G17 release on Industrial production and Capacity Utilization reported that seasonally adjusted industrial production was 0.1% lower in January after being unchanged in December and rising by 0.3% percent in November, and is now unchanged from a year ago...the industrial production index, with the benchmark now set for average 2017 production to be equal to 100.0, fell to 102.6 in January from 102.7 in December, after the December index was revised from the 102.5 reported last month to 102.7, the November index was revised from 102.4 to 102.7, the October index was revised from 102.5 to 102.4, the September index was revised from 103.3 to 103.2 and the August index was revised from 103.2 to 103.1...

The manufacturing index, which accounts for around 77% of the total IP index, fell 0.5% in January, from 99.1 in December to 98.6 in January, led by losses in .production of nonmetallic mineral products, primary metals, petroleum and coal products, chemicals, and plastics and rubber products...that decrease came after the December manufacturing index was unrevised at 99.1, the November manufacturing index was revised from 99.0 to 99.1, the October manufacturing index was revised from 98.8 to 98.7, the September manufacturing index was revised from 99.6 to 99.5, and the August manufacturing index was revised from 99.5 to 99.4...meanwhile, the mining index, which includes oil and gas well drilling, fell 2.3%, from 120.1 in December to 117.3 in January after the December index was revised up from 119.2, which still left the mining index 1.2% below where it was a year earlier...lastly, the seasonally adjusted utility index, which often fluctuates due to above or below normal temperatures, jumped 6.0% in January, from 104.3 in our mild December to 110.5 in our cold January, after the December utility index was revised from 103.9 to 104.3 and the November utility index was revised from 105.0 to 106.1....since last year's heating requirements for January were below normal and left the utility index lower at that time, this year's utility index is now 9.0% higher than it was a year ago...

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 industry fell to 78.5% in January from 78.8% in December, which was revised up from the 78.6% that was reported for December last month ...capacity utilization of NAICS durable goods production facilities fell from a upwardly revised 75.0% in December to 74.9% in January, while capacity utilization for non-durables producers fell from a downwardly revised 79.2% to 78.2%...capacity utilization for the mining sector fell to 92.2% in January from 94.5% in December, which was originally reported as 93.8%, while utilities were operating at 74.2% of capacity during January, up from their 70.2% of capacity during December, which was previously reported at 70.0%...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....

Producer Prices Rose 0.3% in January on Higher Core Services

The seasonally adjusted Producer Price Index (PPI) for final demand rose 0.3% in January, even as the price index for finished wholesale goods fell 0.2%, as the price index for final demand for services was 0.6% higher…that followed a 0.1% PPI decrease in December, when the index for prices of wholesale goods was 0.3% lower, while the price index for final demand for services fell 0.1%, a revised 0.1% increase in November, when the average of prices for wholesale goods was 0.1% lower, while the price index for final demand for services was 0.2% higher, a 0.4% PPI decrease in October, when the weighted average of prices for wholesale goods was 1.3% lower while the price index for final demand for services was 0.1% higher, and a revised 0.2% increase in September, when the weighted average of prices for wholesale goods was 0.9% higher and the price index for final demand for services was 0.1% lower....on an unadjusted basis, producer prices are 0.9% higher than a year ago, while the core producer price index, which excludes food, energy and trade services, was up 0.2% for the month, and is still 2.6% higher than it was a year ago…

As noted, the producer price index for final demand for goods was 0.2% lower in January, after being 0.3% lower in December, 0.1% lower in November, 1.3% lower in October. 0.9% higher in September, 1.7% higher in August, and 0.2% higher in July, but is still down 1.7% from a year ago....the final demand goods price index was down 0.2% in January as the price index for wholesale energy goods was 1.7% lower, after falling 1.0% in December, 1.8% in November, and falling 6.5% in October, while the price index for wholesale foods was 0.3% lower, after falling 0.7% in December but after rising 0.7% in November, while the index for final demand for core wholesale goods (excluding food and energy) was 0.3% higher, after being 0.1% higher in December...

Wholesale energy prices were down 1.7% in January on a 3.5% decrease in wholesale prices for gasoline, and a 1.2% decrease in wholesale prices for residential electric power, while the final demand food price index was 0.3% lower on a 4.4% decrease in the wholesale price index for beef and veal, a 4.4% decrease in the wholesale price index for pork, a 9.2% decrease in the wholesale price index for oilseeds, and a 5.4% decrease in the wholesale price index for grains....among core wholesale goods, the wholesale price index for women's, girls', and infants' apparel rose 2.4%, the wholesale price index for tools, dies, jigs, fixtures, and industrial molds increased 3.5%, the wholesale price index for oil field and gas field machinery rose 2.7%, the wholesale price index for communication and related equipment rose 2.4%, and wholesale price index for internal combustion engines was 2.4% higher ...

Meanwhile, the price index for final demand for services was 0.6% higher in January, after being 0.1% lower in December, 0.2% higher in November, 0.1% higher in October, but 0.1% lower in September, 0.2% higher in August, and 0.8% higher in July, and is now 2.2% higher than a year ago…the price index for final demand for trade services rose 0.2%, but the price index for final demand for transportation and warehousing services fell 0.4%, while the core index for final demand for services less trade, transportation, and warehousing services was 0.8% higher....

Among trade services, seasonally adjusted margins for apparel, jewelry, footwear, and accessories retailers rose 2.7%, margins for sporting goods and boat retailers rose 2.2%, and margins for chemicals and allied products wholesalers rose 11.6%, but margins for computer hardware, software, and supplies retailers fell 28.1%....among transportation and warehousing services, average margins for air transportation of freight fell 0.9% and margins for truck transportation of freight fell 0.6%....among the components of the core final demand for services index, the price index for portfolio management rose 5.5%, the price index for traveler accommodation services rose 4.7%, the price index for bundled wired telecommunications access services rose 2.7%, and the price index for hospital outpatient care increased 2.2%...

This report also showed the price index for intermediate processed goods was 0.2% lower in January, after being 0.5% lower in December, 0.5% lower in November and 1.0% lower in October, but after rising 0.5% in September and by 2.0% in August....the price index for intermediate energy goods fell 1.7% in January as refinery prices for gasoline fell 3.6%, refinery prices for jet fuel fell 1.6%, the price index for commercial electric power fell 3.3%, and the price index for industrial electric power fell 1.9%... at the same time, the price index for intermediate processed foods and feeds fell 1.5%, as the producer price index for meats fell 3.5%, the producer price index for fats and oils fell 2.6% the producer price index for prepared animal feeds fell 2.4%, and the producer price index for dairy products fell 1.4%....on the other hand, the core price index for intermediate processed goods less food and energy goods was 0.3% higher, as the producer price index for phosphates rose 3.9%, the producer price index for steel mill products rose 5.4%, the producer price index for bolts, nuts, screws, rivets, and washers rose 1.9%, and the producer price index for internal combustion engines rose 2.4%, while the producer price index for softwood lumber fell 1.8%....average prices for intermediate processed goods are now 3.8% lower than in January 2023, the eleventh consecutive year over year decrease, and are thus way down from their 26.6% year over year increase of November 2021, which had been a 46 year high...

Meanwhile, the price index for intermediate unprocessed goods rose 0.1% in January, after falling 4.4% in December, 2.1% in November and by 1.6% in October, after rising 2.9% in September, 2.1% in August and 2.5% in July....that was as the January price index for crude energy goods rose 3.8%, even as unprocessed natural gas prices fell 1.4%, as crude oil prices rose 6.1% and coal prices were 0.4% higher...on the other hand, the price index for unprocessed foodstuffs and feedstuffs was 2.2% lower, led by a 9.2% decrease in producer prices for oilseeds, a 2.9% decrease in producer prices for slaughter hogs, a 3.3% decrease in producer prices for slaughter chickens, and a 6.5% decrease in producer prices for corn....at the same time, the index for core raw materials other than food and energy materials was 1.7% lower on a 6.2% decrease in the price index for iron and steel scrap, a 5.0% decrease in the price index for aluminum base scrap, and a 1.1% decrease in the price index for nonferrous metal ores....this raw materials price index is now 15.0% lower than a year ago, the twelfth negative print after twenty-seven consecutive year over year increases, which came after the annual change on this index had been negative from the beginning of 2019 through October of 2020...

Lastly, the price index for services for intermediate demand was 0.5% higher in January, after being 0.4% higher in December, and 0.3% higher in November, but 0.1% lower in October, 0.3% higher in September, 0.1% lower in August, and 0.7% higher in July….the price index for intermediate trade services rose 0.1%, as margins for intermediate chemicals and allied products wholesalers rose 11.6%, and margins for metals, minerals, and ores wholesalers rose 2.5%....on the other hand, the index for transportation and warehousing services for intermediate demand was 0.1% lower, as the intermediate price index for air transportation of freight fell 0.9%, the intermediate price index for truck transportation of freight fell 0.6%, and the intermediate price index for water transportation of freight was 0.7% lower...at the same time, the core price index for intermediate services other than trade, transportation, and warehousing services was 0.7% higher, as the intermediate price index for portfolio management rose 5.5%, the intermediate price index for residential property management fees rose 3.3%, and the intermediate price index for traveler accommodation services rose 4.7%...over the 12 months ended in October, the year over year price index for services for intermediate demand is still 3.1% higher than it was a year ago, the fortieth consecutive annual increase in this index change after it briefly turned negative year over year at the onset of the pandemic, from April to August of 2020, even as it is still much lower than the record 9.5% year over year increase indicated for July 2021...

Business Sales and Business Inventories were Both Up 0.4% in December

After the release of the January retail sales report, the Census Bureau released the composite Manufacturing and Trade, Inventories and Sales report for December (pdf), which incorporates the revised December retail data from that January report and the earlier published December wholesale and factory data to give us a relatively complete picture of the business contribution to the economy for that month....according to the Census Bureau, total manufacturer's and trade sales were estimated to be valued at a seasonally adjusted $1,863.6 billion in December, up 0.4 percent (±0.2 percent) from November's revised sales, and up 2.2 percent (±0.3 percent) from December’s sales of a year earlier...note that total November sales were concurrently revised up from the originally reported $1,858.8 billion to $1,855.9 billion, now virtually unchanged from October, rather than up 0.2%.. manufacturer's sales were virtually unchanged in December; retail trade sales, which exclude restaurant & bar sales from the revised December retail sales reported earlier, rose 0.6%, while wholesale sales were 0.7% higher...

Meanwhile, total manufacturer's and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $2,556.0 billion at the end of December, up 0.4 percent (±0.1 percent) from November, and also 0.4 percent (±0.5 percent)* higher than in December a year earlier...at the same time, the value of end of November inventories was revised from the $2,548.9 billion reported last month to $2,546.8 billion, still down 0.1% from October....seasonally adjusted inventories of manufacturers were estimated to be valued at $857,691 million at the end of December, 0.1% more than at the end of November, inventories of retailers were valued at $801,130 million, up 0.6% from November, and inventories of wholesalers were estimated to be valued at $897,214 million at the end of December 0.4% higher than in November...

Last week we estimated that 4th quarter GDP was overestimated by around 0.05 percentage points based on what the wholesale inventory report showed, and a week earlier we estimated 4th quarter GDP was overestimated by around by about 0.05 more percentage points based on what the factory inventories report showed....in the advance report on 4th quarter GDP of three weeks ago, retail inventories were estimated based on the sketchy Advance Report on Wholesale and Retail Inventories, which was released the day before the GDP release...that report estimated that our seasonally adjusted retail inventories were valued at $803,281 billion at the end of December, up 0.8% from a revised $796,760 billion in November....that's $2.82 billion more than the $801,130 and $796,091 billion for those two months that this report shows, which would mean that the quarterly change in 4th quarter retail inventories were overestimated at roughly a $11.3 billion annual rate, or by an amount that would subtract about 0.15 percentage points to GDP, give or take, depending on how the inflation adjustments shake out...combined with our previous estimates on factory and wholesale inventories, then, this report would suggest that the growth rate of 4th quarter GDP should be revised downwards by around 0.25 percentage points when the 2nd estimate is released next week....

January Housing Starts Much Lower; Building Permits Also Down

The January report on New Residential Construction (pdf) from the Census Bureau estimated that their widely watched count of new housing units started in January was at a seasonally adjusted annual rate of 1,331,000, which was 14.8 percent (±10.2 percent) below the revised December estimated annual rate of 1,562,000, and was 0.7 percent (±11.6 percent)* below last January's rate of 1,340,000 housing starts annually....the asterisk indicates that the Census does not have sufficient data to determine whether housing starts actually rose or fell over the past year, with the figures in parenthesis the most likely range of the change indicated; in other words, January housing starts could have been up by 10.7% or down by as much as 12.3% from those of a year ago, with revisions of a greater magnitude in either direction possible...in this report, the annual rate for December housing starts was revised from the 1,460,000 reported a month ago to 1,562,000, while November starts, which were first reported at a 1,569,000 annual rate, were revised from last week's initial revised figure of 1,525,000 down to a 1,512,000 annual rate....

The 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 108,800 housing units were started in January, down from the revised 116,500 units that were started in December, and down from the 115,100 units that were started in November...of those housing units started in January, an estimated 72,300 were single family homes and 35,200 were units in structures with more than 5 units, down from the revised 84,900 single family starts in December but up from the 30,600 units started in structures with more than 5 units in December...

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 January, Census estimated new building permits for housing units were being issued at a seasonally adjusted annual rate of 1,470,000, 1.5% below the revised December rate of 1,493,000 permits, but 8.6 percent above the 1,340,000 a year rate of building permit issuance in January a year earlier...the annual rate for housing permits issued in December was revised from the 1,495,000 reported last month to 1,493,000....

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 roughly 104,900 housing units were issued in January, down from the revised estimate of 108,800 new permits issued in December....of those, 64,900 were permits for single family homes and 36,600 were permits for units in structures of more than 5 units, down from the 69,600 single family permits in December, but up from the 35,500 permits for units in structures of more than 5 units....for graphs and commentary on this report, see the following two posts by Bill McBride at Calculated Risk: Housing Starts decreased to 1.309 Million Annual Rate in January and Single Family Starts Up 22% Year-over-year in January; Multi-Family Starts Down Sharply which links to his real estate newsletter post with the same title..

  

(the above is the synopsis that accompanied my regular sunday morning news links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most of which are picked from the aforementioned GGO posts, contact me…)