May’s jobs report, April’s trade deficit, construction spending. factory inventories and JOLTS

Major economic releases this week included both of the major monthly employment reports: the Employment Situation Summary for May and the Job Openings and Labor Turnover Survey (JOLTS) for April, both from the Bureau of Labor Statistics, in addition to the Commerce Dept’s report on our International Trade in Goods and Services for April, the April report on Construction Spending (pdf), the Full Report on Manufacturers’ Shipments, Inventories and Orders for April, and the April report on Wholesale Trade, Sales and Inventories, with all of those from the Census Bureau.…in addition, late Friday the Fed released the Consumer Credit Report for April, which showed that overall consumer credit, a measure of non-real estate personal debt, expanded by a seasonally adjusted $6.4 billion, or at a 1.5% annual rate, as non-revolving credit expanded at a 2.2% rate to $3,714.7 billion while revolving credit outstanding shrunk at a 0.4% rate to $1,338.5 billion…

Privately issued reports released this week included the ADP Employment Report for May and the light vehicle sales report for May from Wards Automotive, which estimated that vehicles sold at a 15.90 million annual rate in May, up from the 15.74 million annual rate of sales in April, and up from the 15.05 million annual sales rate of May a year ago, and the Mortgage Monitor for June (covering April data) from ICE Black Knight Financial Services, which indicated that 3.09% of mortgages were delinquent in April, down from the 3.27% that were delinquent in March, and down from the 3.31% delinquency rate of April 2023, and that 0.37% of mortgages remained in the foreclosure process in April, down from 0.38% in March and down from the 0.44% of mortgages that were in foreclosure a year ago…the full Mortgage Monitor for April is a graphics dense 27 page pdf, should you want to know more about the condition of US mortgages…

This week also saw both of the widely followed purchasing manager’s surveys for May from the Institute for Supply Management (ISM): the May Manufacturing Report On Business indicated that the manufacturing PMI (Purchasing Managers Index) fell to 48.7% in May, down from 49.2% in April, which suggests a slightly larger plurality of manufacturing industry purchasing managers nationally reported deterioration in various facets of their business in May, while the May Services Report On Business saw the ISM Services index rise from a contractionary reading of 49.4% in April to 53.8% in May, indicating a solid plurality of service industry purchasing managers were reporting improvement in various facets of their business in May..

Employers Added 272,000 Jobs in May; Unemployment Rate Rose to 28 Month High of 4.0%

The Employment Situation Summary for May indicated that employers created more payroll jobs than were expected, but that a larger number of workers reported being unemployed than in April, leading to an increase in the unemployment rate…seasonally adjusted estimates extrapolated from the establishment survey data projected that employers added 272,000 jobs in May, after the previously estimated payroll job increase for March was revised down from 315,000 to 310,000, and the payroll jobs increase for April was revised down from 175,000 to 165,000 jobs…with those revisions, that means that this report indicates an increase of 257,000 more jobs than were reported last month, still more than the 180,000 job increase that was expected….the unadjusted data shows that there were actually 917,000 more payroll jobs extant in May than in April, as typical seasonal job increases in sectors such as construction, services to buildings and dwellings, and leisure and hospitality were reduced to what is considered a normal increase by the seasonal adjustment algorithm…

Seasonally adjusted job increases in May were spread through the private goods and services sectors and government, with a 4,000 job loss in the resource exploitation sector the only notable exception…. since the BLS summary of the job gains by sector is clear and more detailed than our usual synopsis, we’ll just quote from that summary here:

• Total nonfarm payroll employment increased by 272,000 in May, higher than the average monthly gain of 232,000 over the prior 12 months. In May, employment continued to trend up in several industries, led by health care; government; leisure and hospitality; and professional, scientific, and technical services. (See table B-1.)
• Health care added 68,000 jobs in May, in line with the average monthly gain of 64,000 over the prior 12 months. In May, employment growth continued in ambulatory health care services (+43,000), hospitals (+15,000), and nursing and residential care facilities (+11,000).
• Government employment continued to trend up in May (+43,000), in line with the average monthly growth over the prior 12 months (+52,000).
• Employment in leisure and hospitality continued to trend up in May (+42,000), similar to the average monthly gain over the prior 12 months (+35,000). Employment in food services and drinking places continued to trend up over the month (+25,000).
• Professional, scientific, and technical services added 32,000 jobs in May, higher than the average monthly gain of 19,000 over the prior 12 months. Over the month, employment increased in management, scientific, and technical consulting services (+14,000) and in architectural, engineering, and related services (+10,000). Specialized design services lost 3,000 jobs.
• Social assistance employment continued to trend up in May (+15,000), primarily in individual and family services (+11,000). Over the prior 12 months, social assistance had added an average of 22,000 jobs per month.
• In May, employment in retail trade continued to trend up (+13,000), about in line with the average monthly gain over the prior 12 months (+8,000). Building material and garden equipment and supplies dealers added 12,000 jobs in May, while job losses occurred in department stores (-5,000) and furniture and home furnishings retailers (-4,000).
• Employment showed little or no change over the month in other major industries, including mining, quarrying, and oil and gas extraction; construction; manufacturing; wholesale trade; transportation and warehousing; information; financial activities; and other services.

The establishment survey also showed that average hourly pay for all employees rose by 14 cents an hour to $34.91 an hour in May, after it had increased by a revised ​8 cents an hour in April; at the same time, the average hourly earnings of production and non-supervisory employees also increased by 14 cents to $29.99 an hour….employers also reported that the average workweek for all private payroll employees was unchanged at 34.3 hours in May, while hours for production and non-supervisory personnel increased a tenth of an hour to 33.8 hours…at the same time, the manufacturing workweek was unchanged at 40.1 hour, while average factory overtime was up by 0.1 hour to 3.0 hours…

Meanwhile, the seasonally adjusted extrapolation from the May household survey estimated indicated that the number of those who were employed fell by an estimated 408,000 to 161,083,000, while the similarly estimated number of those who were unemployed rose by 157,000 to 6,649,000; which thus meant there was a rounded decrease of 250,000 in the total labor force…since the working age population had grown by 182,000 over the same period, that meant the number of employment aged individuals who were not in the labor force rose by 433,000 to​ 167,732,000….​ meanwhile, the decrease of those in the labor force as a percentage of the increasing working age population was enough to lower the labor force participation rate by 0.2%, from 62.7% in April to 62.5% in May….likewise, the decrease in ​the number employed vis a vis the increasing population was enough to lower the employment to population ratio, which we could think of as an employment rate, from 60.2% to 60.1%…meanwhile, the increase in those counted as unemployed vis a vis the total labor force was enough to raise the unemployment rate from 3.9% in April to a 2​8 month high of 4.0% in May…on the other hand, the number who reported they were involuntarily working part time fell by 50,000 to 4,419,000 in May, which meant the the alternative measure of unemployment, U-6, which includes those “employed part time for economic reasons”, remained unchanged at 7.4% of the labor force in May…

Like most reports from the Bureau of Labor Statistics, the employment situation press release itself is easy to read and understand, so you can get more details on these two reports from there…note that almost every paragraph in that release points to one or more of the tables that are linked to on the bottom of the release, and those tables are also on a separate html page here that you can open it alongside the press release to avoid the need to scroll up and down the page..

Job Openings Sharply Lower in April, Job Quitting Up, Layoffs Down, Hiring Little Changed

The Job Openings and Labor Turnover Survey (JOLTS) report for April from the Bureau of Labor Statistics estimated that seasonally adjusted job openings fell by 296,000, from 8,355,000 in March to 8,059,000 job openings in April, after March’s job openings were revised 133,000 lower, from the originally reported 8,488,000 to 8,355,000…April’s jobs openings were also down by 18.6% from the 9,904,000 job openings reported for April a year ago, as the job opening ratio expressed as a percentage of the employed fell from 5.0% in March to 4.8% in April, and it was down considerably from 6.0% a year ago and 7.2% two years ago​, when there were two job opening for each person reported unemployed…the greatest decrease in April job openings was in the health care and social assistance sector, where openings fell by 209,000 to 942,000, while job openings in professional and business services rose by 122,000 to 1,512,000… (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 5,640,000, up by 23,000 from the revised 5,617,000 who were hired or rehired in March, as the hiring rate as a percentage of all those employed remained at 3.6%, but was down from the 3.8% hiring rate of April a year earlier (details of hiring by industry since January are in table 2)….meanwhile, total separations were also higher, rising by 42,000, from 5,330,000 in March to 5,372,000 in April, as the separations rate as a percentage of the employed remained at 3.4% in April, which was down from the 3.6% separations rate in April a year ago (see table 3)…subtracting the 5,372,000 total separations from the total hires of 5,640,000 would imply an increase of 268,000 jobs in April, quite a bit more than the revised payroll job increase of 172,000 for April reported by the May establishment survey we reviewed above, but still with the expected +/-110,000 margin of error in these incomplete extrapolations…

Breaking down the seasonally adjusted job separations, the BLS found that 3,507,000 of us voluntarily quit our jobs in April, up by 98,000 from the revised 3,409,000 who quit their jobs in March, while the quits rate, widely watched as an indicator of worker confidence, remained at 2.2% in April, which was still down from the quits rate of 2.3% a year earlier (see ​quits details in table 4)….in addition to those who quit, 1,515,000 of us were either laid off, fired or otherwise discharged in April, down by 86,000 from the revised 1,601,000 who were discharged in March, even as the discharges rate remained at 1.0% of all those who were employed during the month, which was lower than the 1.1% discharges rate of a year earlier….meanwhile, other separations, which includes retirements and deaths, were at 349,000 in April, up from 320,000 in March, for an ‘other separations’ rate of 0.2%, the same rate as in March and​ as in April a year ago….both seasonally adjusted and the 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…

US Trade Deficit Increased 8.7% in April on Higher Imports Automotive Products and Capital Goods

Our trade deficit was 8.7% higher in April, as both our exports and our imports increased, but our imports increased by nearly four times as much….the Commerce Dept report on our international trade in goods and services for April, incorporating an annual revision of trade figures back to 2019, indicated that our seasonally adjusted goods and services trade deficit rose by $6.0 billion to $74.6 billion in April, from a March deficit that was revised from the originally reported $69.4 billion to $68.6 billion, a revision which should result in an upward revision of about 0.04 percentage points to 1st quarter GDP when the third estimate is released at the end of the month…however, since this month’s report also reflects revised statistics on trade in goods on both a Census basis and a balance of payments (BOP) basis, and revised statistics on trade in services going back to 2019, the 4th quarter basis for the 1st quarter’s growth in trade would also need to be revised to determine the ultimate impact on 1st quarter GDP, and the BEA will not make that revision until the annual revision to GDP is released at the end of September…

In rounded figures, the value of our April exports rose by $2.1 billion, or by 0.8%, to $263.7 billion, as a $2.2 billion increase to $172.7 billion in our exports of goods was partly offset by a $0.2 billion decrease to $90.9 billion in our exports of services, while the value of our imports rose by $8.0 billion, or by 2.4% to $338.2 billion, as a $8.1 billion increase to $271.9 billion in our imports of goods was partly offset by a $0.1 billion decrease to ​S66.3 billion in our imports of services…export prices averaged 0.5% higher in April, which means part of the nominal increase in exports for the month was price related, and that real exports likely only rose about 0.3%, while import prices were 0.9% higher, meaning the increase in imports was also partly due to higher prices and that real imports likely rose around 1.5%….

The April increase in our exports of goods came about largely as a result of higher exports of capital goods and consumer goods…referencing the Full Release and Tables for April (pdf), in Exhibit 7 we find that our exports of capital goods rose by $1,868 million to $52,641 million on a $555 million increase in our exports of electric apparatuses, a $​378 million increase in our exports of industrial machinery not itemized separately, and a $364 million increase in our exports of semiconductors, and that our exports of consumer goods rose by $1,195 million to $22,209 million on a $1,080 million increase in our exports of pharmaceutical preparations and a $460 million increase in our exports of jewelry….in addition, our exports of automotive vehicles, parts, and engines rose by $873 million to $14,849 million on a $458 million increase in our exports of automotive parts and accessories other than engines, chassis, or tires and a $393 million increase in our exports of trucks, buses, and special purpose vehicles, and our exports of other goods not categorized by end use rose by $410 million to $7,697 million….partly offsetting the decreases in those export categories, our exports of foods, feeds and beverages fell by $814 million to $12,882 million on a $747 million decrease in our exports of soybeans, and our exports of industrial supplies and materials fell by $1066 million to $61,053 million on a $465 million decrease in our exports of nonmonetary gold, and a $369 million decrease in our exports of metallurgical grade coal….

Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our imports of goods and indicates that greater imports of automotive products, capital goods, and industrial supplies and materials were largely responsible for the $8.1 billion April increase in our imports….our imports of automotive vehicles, parts and engines rose by $3,940 million to $37,140 million on an $3,023 million increase in our imports of passenger cars and a $574 million increase in our imports of automotive parts and accessories other than tires, engines, and chassis, while our imports of capital goods rose by $2,373 million to $78,084 million as a $985 million increase in our imports of computer accessories, a $733 million increase in our imports of telecommunications equipment, a $594 million increase in our imports of computers, a $320 million increase in our imports of civilian aircraft, and a $474 million increase in our imports of semiconductors were partly offset by a $417 million decrease in our imports of civilian aircraft engines…in addition, our imports of industrial supplies and materials rose by $1,261 million to $55,275 million on a $670 million increase in our imports of crude oil, a $394 million increase in our imports of petroleum products other than fuel oil, a $369 million increase in our imports of organic chemicals, and a $324 million increase in our imports of iron and steel mill products, and our imports of other goods not categorized by end use rose by $678 million to $11,078 million….slightly offsetting the increases in those end use categories, our imports of foods, feeds, and beverages fell by $75 million to $17,500 million on lower imports of vegetables and other foods. and our imports of consumer goods fell by $200 million to 65,690 million as a $590 million increase in our imports of textile apparel and household goods not otherwise itemized and a $491 million increase in our imports of furniture and related household goods was more than offset by a $2,334 million decrease in our imports of pharmaceutical preparations and a $341 million decrease in our imports of artwork and other collectibles…

The press release for this month’s report summarizes Exhibit 19 in the full release pdf for April, which 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 ($4.6), Netherlands ($4.4), Hong Kong ($1.5), United Kingdom ($1.3), Australia ($1.3), Brazil ($0.6), Singapore ($0.4), and Belgium ($0.3). Deficits were recorded, in billions of dollars, with European Union ($22.5), China ($22.1), Mexico ($12.8), Vietnam ($9.6), Ireland ($8.7), Germany ($7.7), Japan ($5.8), South Korea ($5.8), Taiwan ($5.2), Canada ($5.0), Italy ($4.6), India ($4.0), Malaysia ($2.3), Switzerland ($1.9), France ($1.4), Israel ($0.5), and Saudi Arabia ($0.1).

• The deficit with Ireland increased $2.0 billion to $8.7 billion in April. Exports increased $0.2 billion to $1.5 billion and imports increased $2.2 billion to $10.2 billion.
• The deficit with Canada increased $1.2 billion to $5.0 billion in April. Exports decreased $0.7 billion to $29.0 billion and imports increased $0.5 billion to $34.0 billion.
• The deficit with China decreased $2.5 billion to $22.1 billion in April. Exports increased $0.1 billion to $12.2 billion and imports decreased $2.3 billion to $34.3 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 2017 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 the 1st quarter’s real exports of goods averaged 144,106.3 million monthly in 2017 dollars, while April’s inflation adjusted exports were at 142,894 million in that same 2017 dollar quantity index representation… figuring the annualized change between those two figures, we find that April’s real exports of goods were falling at a 3.32% annual rate from those of the 1st quarter, or at a pace that would subtract about 0.24 percentage points from 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 231,460.7 million monthly in chained 2017 dollars, while inflation adjusted April imports were at 236,362 million in that same 2017 dollar representation… that would indicate that so far in the 2nd quarter, our real imports have increased at a 8.74% 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 8.74% rate would subtract about 0.95 percentage points from 2nd quarter GDP….hence, if the April trade deficit is maintained at the same level throughout the 2nd quarter, our deteriorating balance of trade in goods would subtract about 1.19 percentage points from the growth of 2nd quarter GDP…. 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 of services down by less than $0.2 billion while our nominal imports of services were down by $0.1 billion in April, we can figure that the change in our balance of trade in services would have a fairly negligible impact on 2nd quarter GDP…

Construction Spending Fell 0.1% in April after February and March Figures were Revised 0.8% Higher

The Census Bureau’s report on construction spending for April (pdf) estimated that the month’s seasonally adjusted construction spending was at a $2,099.0 billion annual rate during the month, down 0.1 percent (±1.0 percent)* from the revised March annual spending rate of $2,101.5 billion, but 10.0 percent (±1.5 percent) above the estimated annualized level of construction spending in April of last year…the annualized March construction spending estimate was revised more than 0.8% higher, from $2,083.9 billion to $2,101.5 billion, while the annual rate of construction spending for February was also revised more than 0.8% higher, from $2,087.8 billion to $2,105.54…taken together, those $35.3 billion annualized upward revisions would suggest an upward revision of $11.8 billion to first quarter construction spending on a annualized basis, which would in turn add 0.17 percentage points, give or take, to 1st quarter GDP when the third estimate is released at the end of June…

A further breakdown of the different subsets of construction spending are provided by a Census summary, which precedes the detailed spreadsheets, is included below:

• Private Construction - Spending on private construction was at a seasonally adjusted annual rate of $1,611.9 billion, 0.1 percent (±0.7 percent)* below the revised March estimate of $1,613.3 billion. Residential construction was at a seasonally adjusted annual rate of $890.4 billion in April, 0.1 percent (±1.3 percent)* above the revised March estimate of $889.5 billion. Nonresidential construction was at a seasonally adjusted annual rate of $721.5 billion in April, 0.3 percent (±0.7 percent)* below the revised March estimate of $723.8 billion.
• Public Construction - In April, the estimated seasonally adjusted annual rate of public construction spending was $487.1 billion, 0.2 percent (±2.1 percent)* below the revised March estimate of $488.2 billion. Educational construction was at a seasonally adjusted annual rate of $103.5 billion, 0.2 percent (±2.1 percent)* below the revised March estimate of $103.6 billion. Highway construction was at a seasonally adjusted annual rate of $149.6 billion, 0.5 percent (±6.7 percent)* below the revised March estimate of $150.4 billion.

This construction spending report is used as source data for 3 subcomponents of GDP; investment in private non-residential structures, investment in residential structures, and as government investment outlays, for both state and local and Federal governments…however, getting an accurate read on the impact of April’s construction spending reported in this release on 2nd quarter GDP is difficult because all figures given here are in nominal dollars and as you know, data used to compute the change in GDP must be adjusted for changes in price…there are many different price indexes for different types of construction listed in the National Income and Product Accounts Handbook, Chapter 6 (pdf) that are used by the BEA to make those inflation adjustments, so in lieu of trying to adjust for price changes for all of those types of construction separately the way the BEA will do, we’ve opted to just use the producer price index for final demand construction as an inexact shortcut to make the price adjustment needed for an estimate…that index showed that aggregate construction costs were up by 0.1% from March to April, up 0.1% from February to March and unchanged from January to February….

On that basis, we can estimate that April’s construction costs were roughly 0.2% more than those of February and also 0.2% more than those of January, and 0.1% more than those of March….we then use those ​crude percentage differences to inflate spending for each of those three months, which is arithmetically the same as deflating April construction spending against the first quarter, for comparison purposes….annualized construction spending in millions of dollars for the first quarter months is given as 2,101,511 for March, 2,105,541 for February, and 2,087,508 for January….thus to compare April’s annualized construction spending of $2,099,039 million to our ‘inflation adjusted’ figures of the first quarter, our calculation is: 2,099,039 / (( 2,101,511 * 1.001 + 2,105,541 * 1.002 + 2,087,508 * 1.002 ) / 3) = 0.99874, meaning real construction spending in April was down roughly ​0.12578% vis a vis the 1st quarter, or down at a 0.502% annual rate….to estimate the potential effect of that change on 2nd quarter GDP, we take the annualized difference between the first quarter average inflation adjusted construction spending and April’s spending as a fraction of the annualized 1st quarter GDP figure, and ​find from that estimate that real April construction spending was falling at a rate that would subtract about 0.02 percentage points to the growth rate of 2nd quarter GDP, in the unlikely event that May and June’s inflation adjusted construction is little changed from that of April…

Factory Shipments Rose 1.0% in April, Factory Inventories Rose 0.1%

The April Full Report on Manufacturers’ Shipments, Inventories, & Orders(pdf) from the Census Bureau reported that the seasonally adjusted value of new orders for manufactured goods increased by increased $4.3 billion or 0.7 percent to $588.2 billion in April, the fourth increase in five months, following an increase of 0.7% to $584.0 billion in March, which was originally reported as a 1.6 percent increase to $584.5 billion last month….note that other than the usual monthly revisions to the underlying data, this month’s report also reflects the May 14th re-benchmarking of shipments and inventories data from January 2012 through March 2024, and then the adjusting of the new orders data to be consistent with the re-benchmarked benchmarked shipments and unfilled orders data…

However, since the Census Bureau does not even collect data on new orders for non durable goods for this widely watched “factory orders report”, and uses non-durables shipments data in its place instead, we believe that this month’s “new orders” and “unfilled orders” sections of this report are really only useful as a revised update to the April advance report on durable goods we reported on two weeks ago… for those durable goods orders revisions, the Census Bureau’s own summary, which precedes their detailed spreadsheet of the metrics included in this report, is quite clear and complete, so we’ll just quote directly from that summary here:

• Summary: New orders for manufactured goods in April, up three consecutive months, increased $4.3 billion or 0.7 percent to $588.2 billion, the U.S. Census Bureau reported today. This followed a 0.7 percent March increase. Shipments, also up three consecutive months, increased $5.9 billion or 1.0 percent to $590.2 billion. This followed a 0.4 percent March increase. Unfilled orders, up forty-five consecutive months, increased $2.8 billion or 0.2 percent to $1,400.6 billion. This followed a 0.3 percent March increase. The unfilled orders-to-shipments ratio was 7.10, down from 7.20 in March. Inventories, up four of the last five months, increased $0.9 billion or 0.1 percent to $858.3 billion. This followed a virtually unchanged March increase. The inventories-to-shipments ratio was 1.45, down from 1.47 in March.
• New Orders for manufactured durable goods in April, up three consecutive months, increased $1.8 billion or 0.6 percent to $283.9 billion, down from the previously published 0.7 percent increase. This followed a 0.8 percent March increase. Transportation equipment, also up three consecutive months, led the increase, $1.0 billion or 1.1 percent to $96.0 billion. New orders for manufactured nondurable goods increased $2.4 billion or 0.8 percent to $304.3 billion.
• Shipments of manufactured durable goods in April, up three consecutive months, increased $3.5 billion or 1.2 percent to $285.9 billion, unchanged from the previously published increase. This followed a 0.1 percent March increase. Transportation equipment, also up three consecutive months, led the increase, $3.1 billion or 3.4 percent to $93.0 billion. Shipments of manufactured nondurable goods, up four of the last five months, increased $2.4 billion or 0.8 percent to $304.3 billion. This followed a 0.7 percent March increase. Petroleum and coal products, up three consecutive months, led the increase, $1.5 billion or 2.2 percent to $70.2 billion.
• Unfilled orders for manufactured durable goods in April, up forty-five consecutive months, increased $2.8 billion or 0.2 percent to $1,400.6 billion, unchanged from the previously published increase. This followed a 0.3 percent March increase. Transportation equipment, up forty-two of the last forty-three months, drove the increase, $3.0 billion or 0.3 percent to $906.6 billion.
• Inventories of manufactured durable goods in April, up four of the last five months, increased $0.6 billion or 0.1 percent to $528.5 billion, unchanged from the previously published increase. This followed a virtually unchanged March decrease. Transportation equipment, up ten of the last eleven months, drove the increase, $0.6 billion or 0.4 percent to $170.9 billion. Inventories of manufactured nondurable goods, up three consecutive months, increased $0.4 billion or 0.1 percent to $329.9 billion. This followed a 0.1 percent March increase. Chemical products, up following three consecutive monthly decreases, led the increase, $0.2 billion or 0.2 percent to $112.9 billion.

To estimate the effect of those April factory inventories on 2nd quarter GDP, they must first be adjusted for changes in price with appropriate components of the producer price index…by stage of fabrication, the total value of finished goods inventories was 0.1% lower at $296,815 million; the value of work in process inventories rose 0.3% to $248,849 million, and the value of materials and supplies inventories was 0.2% higher at $312,666 million…the April producer price index reported that prices for finished good were on average 0.4% higher, that prices for intermediate processed goods were on average 0.6% higher, and that prices for unprocessed goods were 3.2% higher on a 10.6 jump in prices for crude oil….assuming similar valuations for like types of inventories, those prices would suggest that April’s real finished goods inventories were about 0.5% lower than those of March, that real inventories of intermediate processed goods were roughly 0.3% lower, and that real raw material inventory inventories were also lower, even after the price of oil is pulled out…since real NIPA factory inventories were a bit higher in the 1st quarter, and this report seems to indicate a modest decrease in April’s real inventories, it appears that the real change in factory inventories indicated here would have a modest negative impact on the growth rate of 2nd quarter GDP…’

 

 

(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…)