July’s consumer and producer prices, retail sales, industrial production, and new home construction; June’s business inventories
The major economic reports released last week were the July Consumer Price Index and the July Producer Price Index, both from the Bureau of Labor Statistics, the Retail Sales Report for July and the concurrently released Business Sales and Inventories report for June, both from the Census bureau, the July report on Industrial Production and Capacity Utilization from the Fed, and the July report on New Residential Construction, also from the Census Bureau…in addition, the Bureau of Labor Statistics released the Regional and State Employment and Unemployment Report for July, a report which breaks down the two employment surveys from the monthly national jobs report by state and region….while the text of this report provides a useful summary of this data, the serious statistics aggregation can be found in the tables linked at the end of the report, where one can find the civilian labor force data and the change in payrolls by industry for each of the 50 states, the District of Columbia, Puerto Rico, and the Virgin Islands…
This week also saw the first two regional Fed manufacturing surveys for August: the Empire State Manufacturing Survey from the New York Fed, which covers New York state, southwestern Connecticut, and northern New Jersey, reported their headline general business conditions index rose from –6.0 in June and from –6.6 in July to –4.7 in August, meaning a smaller plurality of Second District manufacturers were reporting deteriorating business conditions in August than reported deteriorating business conditions during the prior two months, while the Philadelphia Fed Manufacturing Survey for August, covering most of Pennsylvania, southern New Jersey, and Delaware, reported their broadest diffusion index of manufacturing conditions fell from +13.9 to -7.0, its first negative reading since January, meaning that a moderate plurality of that region’s manufacturers are now reporting deterioration in various facets of their operations this month, for the first time in seven months..
Consumer Prices Rose 0.2% in July on Higher Rents
The consumer price index was 0.2% higher in July, as higher prices for rent, car insurance, appliances, information technology commodities, and fast food were partly offset by lower prices for clothing, new and used vehicles, gas utility service, airline fares, furniture, and hospital services….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 0.2% higher in July, after being 0.1% lower in June, unchanged in May, 0.3% higher in April, 0.4% higher in March, 0.4% higher in February, 0.3% higher in January, 0.2% higher in December, 0.2% higher in November, 0.1% higher in October, and 0.4% higher in September, after rising by 0.5% last August, and by 0.2% in July of last year….
The unadjusted CPI-U index, which was originally set to have prices of the 1982 to 1984 period equal to 100, rose from 314.175 in June to 314.540 in July, which left it statistically 2.89475% higher than the index reading of 305.691 from July of last year, which is reported as a 2.9% year over year increase, less than the 3.0% year over year increase reported for June, with such widely cited year over year figures usually telling us more about last year’s CPI changes than this years…with energy prices flat and the change in food prices matching the CPI print, seasonally adjusted core prices, which exclude food and energy, were also up by 0.2% for the month, as the unadjusted core price index rose from 319.003 to 319.214, which left the core index 3.1713% ahead of its year ago reading of 309.402, which is reported as a 3.2% year over year increase, which was less than the 3.3% year over year core price increase that was reported in June, and well below 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 was unchanged in July, after falling 2.0% in both May and June, but after rising by 1.1% in April, by 1.1% in March and by 2.3% in February, but after falling by 0.9% in January, 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 after being unchanged last July, and is still 1.1% higher than in July of a year ago….the price index for energy commodities was 0.1% higher in July, while the price index for energy services was 0.1% lower, after the energy services index had fallen by 0.1% in June….the energy commodities index was up 0.1% on a 0.9% increase in the price of fuel oil, while prices for gasoline were unchanged and prices for “other energy commodities”, including propane, kerosene, and firewood, averaged 1.9% higher…within energy services, the price index for utility gas service was 0.7% higher in July after being 2.4% lower in June, and is now 3.7% higher than it was a year ago, while the electricity price index was 0.1% higher in July, after being 0.7% lower in June… energy commodities are still averaging 2.0% lower than their year ago levels, with gasoline prices averaging 2.2% lower than they were a year ago, while the energy services price index is up 4.2% from last July, as electricity prices are still averaging 4.9% higher than a year ago…
Meanwhile, the seasonally adjusted food price index was 0.2% higher in July, after being 0.2% higher in June, 0.1% higher in May, unchanged in April, 0.1% higher in March, unchanged in February, 0.4% higher in January, 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 of last year, as the price index for food purchased for use at home was 0.1% higher in July, after being 0.1% higher in June, unchanged in May, 0.2% lower in April, unchanged in February and March, but after being 0.4% higher in January, while the price index for food bought to eat away from home was 0.2% higher, as average prices at fast food outlets rose 0.3%, average prices at full service restaurants rose 0.1%, and prices of other food away from home averaged 0.3% higher…
In the food at home categories, the price index for cereals and bakery products was 0.5% lower, as bread prices fell 1.1%, the price index for flour and prepared flour mixes fell 0.4%, the price index for crackers and bread and cracker products fell 2.0%, and the price index for rice was 0.4% lower.…on the other hand, the price index for the meats, poultry, fish, and eggs food group was 0.3% higher, as the price index for beef and veal rose 1.2% and egg prices were 5.5% higher….however, the seasonally adjusted price index for dairy products was 0.2% lower, even though average milk prices rose 1.9%, as the price index for ice cream and related products fell 2.1% and the price index for “other” dairy products was 0.5% lower….on the other hand, the fruits and vegetables price index was 0.8% higher, as the price index for fresh fruits rose 1.1%, the price index for fresh vegetables rose 0.9%, and frozen vegetable prices averaged 0.8% higher….at the same time, the beverages price index was 0.5% higher, as the price index for carbonated drinks was 0.6% higher and the price index for coffee was 1.7% higher….lastly, the price index for the ‘other foods at home’ category was 0.5% lower, as the price index for margarine fell 1.8%, the price index for prepared salads fell 1.5%, the price index for olives, pickles, and relishes fell 1.9%, and the price index for snacks was 1.5% lower…
Among the seasonally adjusted core components of the CPI, which rose by 0.2% in July, after rising by 0.1% in June, by 0.2% in May, 0.3% in April, by 0.4% in March, by 0.4% in February, by 0.4% in January, 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% last July, the composite price index of all goods less food and energy goods was 0.3% lower in July, while the more heavily weighted composite index for all services less energy services was 0.3% higher….
Among the goods components of the core price index, which will initially be used by the Bureau of Economic Analysis to adjust May’s retail sales for inflation in national accounts data, the price index for household furnishings and supplies was 0.1% higher, as the price index for dishes and flatware rose 2.9%, the price index for appliances rose 0.5%, and the index for outdoor equipment and supplies was 0.4% higher….on the other hand, the apparel price index was 0.4% lower on a 4.2% decrease in the price index for men’s suits, sport coats, and outerwear, a 1.1% decrease in the price index for women’s outerwear, a 1.5% decrease in the price index for women's footwear, and a 1.9% decrease in the price index for jewelry…. at the same time, the price index for transportation commodities other than fuel was was 0.8% lower, as the price index for used cars and trucks fell 2.3%, average prices for new cars were 0.3% lower, and the price index for motor oil, coolant, and fluids was 0.4% lower….on the other hand, the price index for medical care commodities was 0.2% higher even as nonprescription drug prices fell 0.2% as prescription drug prices were 0.1% higher…however, the recreational commodities index was 0.3% lower, as the price index for TVs fell 1.1%, the price index for photographic equipment and supplies fell 1.0%, the price index for sports vehicles including bicycles fell 1.2%, and the price index for sewing machines, fabric and supplies was 2.2% lower… meanwhile, the education and communication commodities index was 0.4% higher, on a 0.9% increase in the price index for computer software and accessories, a 0.4% increase in the price index for computers, peripherals, and smart home assistants, and a 0.7% increase in the price index for telephone hardware, calculators, and other consumer information items including smartphones.…lastly, a separate price index just for alcoholic beverages was 0.2% higher, while the price index for ‘other goods’ was 0.2% higher on a 0.4% increase in the price index for cigarettes. a 0.6% increase in the price index for hair, dental, shaving, and miscellaneous personal care products, and a 2.9% increase in the price index for stationery, stationery supplies, and gift wrap…
Within core services, the price index for shelter was 0.4% higher, as rents rose 0.5%, homeowner’s equivalent rent was 0.4% higher, and prices for lodging away from home at hotels and motels were 0.2% higher, while the price index for household insurance was unchanged and the price index for water, sewers and trash collection was 0.5% higher….meanwhile, the price index for medical care services was 0.3% lower, as the price index for outpatient hospital services fell 1.9%, the price index for care of invalids and elderly at home fell 0.9%, and the price index for health insurance was 0.4% lower….on the other hand, the transportation services price index was 0.4% higher, as the price index for motor vehicle maintenance and servicing rose 1.0%, the price index for motor vehicle insurance rose 1.2%, and the price index for state motor vehicle registration and license fees was 0.8% higher…in addition, the recreation services price index was also 0.4% higher, as the price index for purchase, subscription, and rental of videos rose 7.6%, the price index for pet services rose 0.6%, the price index for admission to movies, theaters, and concerts rose 0.8%, and the price index for fees for lessons or instructions was 1.6% higher…. at the same time, the price index for education and communication services was 0.2% higher, as the price index for elementary and high school tuition and fees rose 0.6%, and the price index for postage and delivery services was 0.7% higher…lastly, the index for other personal services rose 0.1%, as the price index for haircuts and other personal care services rose 0.4%, and the price index for miscellaneous personal services was 0.4% higher..
Retail Sales Rose 1.0% in July After May and June Sales were Revised Lower
Seasonally adjusted retail sales rose 1.0% in July after retail sales for May and June were revised lower….the Advance Retail Sales Report for July (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $709.7 billion during the month, which was up 1.0 percent (±0.5 percent) from June’s revised sales of $702.9 billion, and was 2.7 percent (±0.5 percent) above the adjusted sales in July of last year…June’s seasonally adjusted sales were revised more than 0.2% lower, from the $704.5 billion reported last month to $702.9 billion , while May sales were revised less than 0.1% lower, from $704.5 billion to $704.3 billion, and as a result the rounded June sales percentage increase was revised from virtually unchanged to -0.2%….estimated unadjusted sales, extrapolated from a survey of a small sampling of retailers, indicated sales actually rose 3.2%, from $724,070 million in June to $701,787 million in July, while they were up 4.0% from the $696,200 million of sales in July a year ago…
Combined, the downward revisions to May and June sales indicate that the 2nd quarter’s adjusted sales were roughly $1.8 billion lower than was previously reported, a revision which would subtract about $7.2 billion from the BEA’s annual rate calculation of 2nd quarter personal consumption expenditures, before the inflation adjustment….That revision should be enough to reduce 2nd quarter GDP by almost 0.10 percentage points when the 2nd estimate is published at the end of the month…
Included below we have the table of the monthly and yearly percentage changes in retail sales by business type taken from the July Census pdf….the first double column below gives us the seasonally adjusted percentage change in sales for each type of retail business from June to July in the first sub-column, and then the year over year percentage change for those businesses since last July in the 2nd column; the second pair of columns gives us the revision of last month’s June advance monthly estimates (now called “preliminary”) as revised in this report, likewise for each business type, with the May to June change under “May 2024 (r)evised” and the revised June 2023 to June 2024 percentage change in the last column shown…should you want to check which sales metrics were most revised, our copy of the table of last month’s advance June sale estimates, before this month’s revision, is here….
To compute July’s real personal consumption of goods data for national accounts from this July retail sales report, the BEA will initially use the corresponding price changes from the July consumer price index, which we reviewed above….to estimate what they will find, we’ll first remove the usually volatile sales of gasoline from the other totals…from the third line on the above table, we can see that July retail sales, excluding the 0.1% increase in sales at gas stations, were also up by 1.0%….then, subtracting the figures representing the 0.9% increase in grocery & beverage sales and the 0.3% increase in food services sales from that total, we find that core retail sales were up by 1.2% over the month…since the July CPI report showed that the the composite price index of all goods less food and energy goods was 0.3% lower in July, we can thus figure that real retail sales excluding food and energy, or real core PCE, would show an increase of about 1.5% for the month….however, the actual adjustment in national accounts 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 motor vehicle & parts dealers were up 3.6%%, the July price index for transportation commodities other than fuel was 0.8% lower, which would suggest that real sales at auto & parts dealers were 4.4% higher, once lower prices are taken into account… similarly, while nominal sales at clothing stores were 0.1% lower in July, the apparel price index was 0.4% lower, which would suggest that real sales of clothing were up around 0.3%…
In addition to figuring those core retail sales, to make a complete estimate of July’s real PCE, we’ll need to adjust food and energy retail sales for their price changes separately, just as the BEA will do…the July CPI report showed that the food price index was 0.2% higher, as the price index for food purchased for use at home rose 0.1% while the index for food bought away from home was 0.2% higher…thus, while nominal sales at food and beverage stores were 0.9% higher, real sales of food and beverages would have been around 0.8% higher in light of the concurrent 0.1% increase in prices…at the same time, the 0.3% increase in nominal sales at bars and restaurants, once adjusted for 0.2% higher prices, suggests that real sales at bars and restaurants only rose around 0.1% during the month…meanwhile, while sales at gas stations were up 0.1%, the price of gasoline was unchanged during the month, which would suggest that real sales of gasoline were actually 0.1% higher for the month, with a caveat that gasoline stations do sell more than gasoline, products which should not be adjusted with gasoline prices…by reweighing and averaging the real sales changes that we have thus estimated back together, and excluding food services, we can then estimate that the income and outlays report for July will show that real personal consumption of goods rose by 1.3% in July, after being revised down to unchanged in June, and after rising by a revised 0.9% in May, and after falling 0.4% in April, but after rising by 0.7% in March, falling by 0.1% in February and falling by 1.3% in January….at the same time, the 0.1% increase in real sales at bars and restaurants would have a negligible positive impact on July’s real personal consumption of services…
Industrial Production Fell 0.6% in July on Hurricane Impacts and on Less Abnormal Temperatures
The Fed’s G17 release on Industrial production and Capacity Utilization for July indicated that industrial production fell by 0.6% due to shutdowns of petrochemicals and related industries due to Hurricane Beryl in July, after rising by a revised 0.3% in June and by a revised 0.8% in May, and is now down 0.2% from a year ago….the industrial production index, with the benchmark now set for average 2017 production to equal to 100.0, fell to 102.9 in July from 103.5 in June, which was revised from the 104.0 reported for June a month ago…at the same time, the May reading for the IP index was revised but left unchanged at 103.3, the April reading for the index was revised up from 102.4 to 102,5, and the March reading for the index was also revised up from 102.4 to 102,5, while the February index was revised up from 102.6 to 102.7….
The manufacturing index, which accounts for around 75% of the total IP index, decreased by 0.3% to 99.5 in July, after June’s manufacturing index was revised from 100.3 to 99.8, May’s manufacturing index was revised from 99.9 to 99.8, the April manufacturing index was revised from 98.9 to 99.0, and the March manufacturing index was revised from 99.4 to 99.5, which left the manufacturing index up 0.1% from a year ago…the July manufacturing decrease was largely due to a seasonally adjusted on a 7.8% drop in the index for motor vehicles and parts, which decreased because some vehicle manufacturers canceled their normal July retooling shutdowns in prior years, skewing the seasonal adjustment; excluding that drop in motor vehicles, other factory output was up 0.3%….meanwhile, the mining index, which includes oil and gas well drilling, was unchanged at 118.6 in July, after the June index was revised down from 119.3, which left mining 1.5% lower than it was a year ago, …finally, the seasonally adjusted utility index, which often fluctuates due to above or below normal temperatures, dropped 3.7% to 105.8 in our hot July because June’s temperatures were more abnormal, after the June utility index was revised from 109.7 to 109.8 and the May index was revised from 106.7 to 107.0, still leaving the utility index 0.1% below its year ago reading of 118.7, when July’s temperature were at a record high…
This report also provides capacity utilization figures, which are 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 from 78.4% in June to 77.8% in July, after capacity utilization for June was revised down from the 78.8% reported a month ago…capacity utilization by NAICS durable goods production facilities fell from 75.6% in June to 74.9% in July, while capacity utilization for non-durables producers rose from 79.2 to 79.4% at the same time….meanwhile, capacity utilization for the mining sector was at 88.8% for a third straight month in July, after June’s utilization was revised down from 89.3% and May’s was revised down from 89.0%….meanwhile. utilities were operating at 71.0% of capacity during July, down from their 73.9% of capacity during June, a figure that was originally reported at 73.8%….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 0.1% in July on Higher Food and Energy Goods
The seasonally adjusted Producer Price Index (PPI) for final demand rose 0.1% in July, as the price index for finished wholesale goods rose 0.6% while the price index for final demand for services was 0.6% lower.…that July increase followed a revised 0.2% increase in June, when the price index for finished wholesale goods fell 0.4% while the price index for final demand for services was 0.4% higher, a unchanged May index, when an 0.8% decrease in the price index for finished wholesale goods was offset by a 0.4% increase in the price index for final demand for services, and followed a 0.5% increase in April, when the price index for finished wholesale goods rose 0.4% while the price index for final demand for services was 0.6% higher, a revised unchanged PPI index in March, when the price index for wholesale goods fell 0.2% and the price index for final demand for services was 0.1% higher, an unrevised 0.6% PPI increase in February, when the price index for wholesale goods rose 1.1% and the price index for final demand for services was 0.3% higher, an unrevised 0.4% PPI increase in January, when the price index for finished wholesale goods fell 0.1%, while the price index for final demand for services was 0.6% higher; a 0.1% PPI decrease in December, when the index for prices of wholesale goods was 0.1% lower and the price index for final demand for services was also 0.1% lower; an unrevised 0.1% PPI increase in November, when the average of prices for wholesale goods was 0.2% lower, while the price index for final demand for services was 0.2% higher; an unrevised 0.3% PPI decrease in October, when the weighted average of prices for wholesale goods was 1.2% lower while the price index for final demand for services was 0.1% higher, and an unrevised 0.2% increase in September of last year, 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 now 2.8% higher than a year ago, while the core producer price index, which excludes food, energy and trade services, was 0.3% higher for the month, and is now 3.3% higher than it was a year ago…
As noted, the producer price index for final demand for goods was 0.6% higher in July, after being 0.4% lower in June, 0.8% lower in May, 0.4% higher in April, 0.2% lower in March, 1.1% higher in February, 0.1% lower in January, 0.1% lower in December, 0.2% lower in November, 1.2% lower in October. 0.9% higher in September, 1.7% higher in August, and 0.2% higher last July, and is now up 1.7% from a year ago….the final demand goods price index was up 0.6% in July because the price index for wholesale energy goods was 1.9% higher, after it had fallen by 2.1% in June, by 4.6% in May, after rising 1.8% in April, falling 1.2% in March, rising 3.9% in February, after falling 1.1% in January, by 0.8% in December, by 2.0% in November, and by 6.4% in October, and because the price index for wholesale foods was 0.6% higher, after being up 0.1% in June, down 0.1% in May, down 0.7% in April, up 0.3% in March and up 1.0% in February, while the index for final demand for core wholesale goods (excluding food and energy) was 0.2% higher, after being unchanged in June, rising by 0.2% in May and by 0.3% April, after being unchanged in March and 0.3% higher in both January and February…
Wholesale energy prices were up 1.9% in July on a 2.8% increase in wholesale prices for gasoline, a 12.9% increase in wholesale prices for diesel fuel, a 9.6% increase in wholesale prices for home heating oil and distillates, and a 0.9% increase in wholesale prices for residential natural gas, while the final demand for food price index was 0.6% higher on a 10.3% increase in the wholesale price index for fresh fruits and melons, a 7.7% increase in the wholesale price index for beef and veal, a 1.3% increase in the wholesale price index for pork, a 1.2% increase in the wholesale price index for dairy products, and a 3.3% increase in the wholesale price index for roast coffee…. among core wholesale goods, the wholesale price index for mining machinery and equipment rose 2.4%, the wholesale price index for Industrial chemicals also increased 2.4%, the wholesale price index for iron and steel scrap rose 7.9%, and the wholesale price index for jewelry, platinum and karat gold was 1.0% higher…
Meanwhile, the price index for final demand for services was 0.2% lower in July, after being 0.6% higher in June, 0.4% higher in May, 0.6% higher in April, 0.1% higher in March, 0.3% higher in February, and 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 last July, but is still 2.6% higher than a year ago…the price index for final demand for trade services fell 1.3% while the price index for final demand for transportation and warehousing services rose 0.4%, and the core index for final demand for services less trade, transportation, and warehousing services was 0.3% higher….
Among trade services, seasonally adjusted margins for fuels and lubricants retailers fell 5.3%, margins for automobiles retailers fell 3.8%, margins for machinery and vehicle wholesalers fell 4.1%, and margins for apparel wholesalers fell 1.9%, but margins for RVs, trailers, and campers retailers were 9.7% higher….among transportation and warehousing services, average margins for rail transportation of freight and mail were 0.6% higher, and margins for truck transportation of freight were also 0.6% higher….among the components of the core final demand for services index, the price index for portfolio management rose 2.3%, the price index for securities brokerage, dealing, investment advice, and related services rose 1.8%, the price index for arrangement of vehicle rentals and lodging rose 3.6%, and the price index for arrangement of flights (partial) increased 3.4%…
This report also showed the price index for intermediate processed goods was 0.7% higher in July, after being 0.2% lower in June, 1.4% lower in May, 0.6% higher in April, 0.6% lower in March, 1.4% higher in February, 0.1% lower in January, 0.4% lower in December, 0.7% lower in November and 1.0% lower in October, but after rising 0.5% in September and by 2.0% last August….the price index for intermediate energy goods rose 2.6% in July as refinery prices for No. 2 diesel fuel rose 12.9%, refinery prices for jet fuel rose 7.1%, refinery prices for gasoline rose 2.8%, the price index for industrial natural gas rose 2.8%, and the producer price index for natural gas to electric utilities rose 2.7%… at the same time, the price index for intermediate processed foods and feeds rose 1.3%, as the producer price index for meats rose 4.5%, as the producer price index for dairy products rose 1.2%, and the producer price index for fats and oils rose 2.3%….meanwhile, the core price index for intermediate processed goods less food and energy goods was 0.1% higher, as the producer price index for plastic resins and materials rose 1.4%, the producer price index for phosphates rose 1.7%, the producer price index for basic organic chemicals rose 3.1%, and the producer price index for metal containers rose 1.1%….average prices for intermediate processed goods are now 0.8% higher than in July 2023, the first year over year increase in 17 months, but are still 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 1.4% in June, after rising 0.8% in June, rising 0.1% in May, rising 2.1% in April. falling 1.4% in March and 0.3% in February, after rising 1.4% in January, falling 4.1% in December, falling 2.1% in November and by 1.6% in October, after rising by 2.9% in September, by 2.1% in August and by 2.5% last July….that was as the July price index for crude energy goods rose 6.2%, as crude oil prices rose 5.5%, unprocessed natural gas prices rose 13.3% and coal prices were 0.3% higher…the price index for unprocessed foodstuffs and feedstuffs was 1.9% higher, on an 8.9% increase in producer prices for slaughter chickens, an 8.2% increase in producer prices for slaughter turkeys, a 3.9% increase in producer prices for slaughter cattle, a 7.6% increase in producer prices for raw milk, and a 4.2% increase in producer prices for hay and hayseeds….at the same time, the index for core raw materials other than food and energy materials was 0.7% higher, on a 7.9% increase in the price index for iron and steel scrap, a 3.0% increase in the price index for copper base scrap, and a 2.2% increase in the price index for nonferrous metal ores….this raw materials price index is now 3.2% higher than a year ago, the 2nd year over year increase following sixteen consecutive negative annual prints, which had followed 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 0.3% higher in July, after being 0.2% higher in June, 0.3% higher in May, 0.3% higher in April, 0.2% higher in March, unchanged in February, 0.9% higher in January, 0.5% higher in December, and 0.5% higher in November….the price index for intermediate trade services was 0.1% higher, as margins for intermediate machinery and equipment parts and supplies wholesalers rose 1.5%, margins for chemicals and allied products wholesalers rose 2.1%, but margins for building materials, paint, and hardware wholesalers fell 0.5%….at the same time, the index for transportation and warehousing services for intermediate demand was also 0.1% higher, as the intermediate price index for air mail and package delivery services excluding those by USPS rose 1.2%, the intermediate price index rail transportation of freight and mail rose 0.6%, and the intermediate price index for truck transportation of freight was 0.6% higher….meanwhile, the core price index for intermediate services other than trade, transportation, and warehousing services was 0.3% higher, as the intermediate price index for portfolio management rose 2.3%, the intermediate price index for securities brokerage, dealing, investment advice, and related services rose 1.8%, the intermediate price index for nonresidential property sales and leases rose 1.7% and the intermediate price index for nonresidential real estate rents was 1.6% higher…over the 12 months ended in July, the year over year price index for services for intermediate demand is now 3.3% higher than it was a year ago, the forty-sixth consecutive annual increase in this index, after it had 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…
June Business Sales Down 0.1%, Business Inventories Up 0.3%, Higher than Q2 GDP Estimate
Following the release of the July retail sales report, the Census Bureau released the composite Manufacturing and Trade Inventories and Sales report for June (pdf), which incorporates the revised June retail data from that July retail report and the earlier published wholesale and factory data to give us a composite 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 $1,857.9 billion in June, down 0.1 percent (±0.2)* from May’s revised sales, but up 2.2 percent (±0.3 percent) from June sales of a year earlier…note that total May sales were revised from the originally reported $1,861.4 billion to $1,860.554 billion, which was still statistically unchanged from April..….manufacturer’s adjusted sales were up 0.5% to $587,962 million in June, while retail trade sales, which exclude restaurant & bar sales from the revised June retail sales reported earlier, were down 0.3% to $608,460 million, and wholesale trade sales were down 0.6% to $661,470 million…
Meanwhile, total manufacturer’s and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $2,541.1 billion at the end of June, up 0.3 percent (±0.1 percent) from May, and 2.1 percent (±0.3 percent) higher than in June of last year…the value of end of May inventories was revised up from the $2,558.5 billion reported last month to $2,558.8 billion, but that’s still up 0.5% from April…seasonally adjusted inventories of manufacturers were estimated to be valued at $859,198 million at the end of June, virtually unchanged from the end of May, inventories of retailers were valued at $805,306 million, 0.9% more than at the end of May, while inventories of wholesalers were estimated to be valued at $903,031 million at the end of June, up 0.2% from May…
Two weeks ago, we estimated that there would be a 0.02 percentage point downward revision to second quarter GDP based on the inventory change the June factory report showed, while last week we figured that 2nd quarter GDP was overestimated by around 0.04 percentage points based on what the wholesale inventories report showed……in the advance report on 2nd 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 same day as the GDP release…that report estimated that our seasonally adjusted retail inventories were valued at $802,125 billion at the end of June, up 0.7% from a revised $796,303 billion in May….that’s $5,105 billion less than the $805,306 and $798,227 billion for those two months that this report shows, which would mean that the quarterly change in 2nd quarter retail inventories was underestimated at roughly a $20.4 billion annual rate, or by an amount that would add about 0.29 percentage points to 2nd quarter GDP, give or take, depending on how the inflation adjustments shake out…combined with our previous estimates on revisions to factory and wholesale inventories, then, this report would suggest that the growth rate of 2nd quarter GDP would be revised upwards by around 0.23 percentage points when the 2nd estimate is released next week….
Housing Starts Reported at Four Year Low in July; Building Permits Down 4%
The July report on New Residential Construction (pdf) from the Census Bureau estimated that new housing units were being started at a seasonally adjusted annual rate of 1,238,000 in July, which was the lowest since the onset of the pandemic in early 2020, and 6.8 percent (±10.3 percent)* below the revised June housing unit start rate of 1,529,000, and was 16.0 percent (±10.5 percent) below last July’s pace of 1,473,000 housing starts annually…..the asterisk indicates that the Census does not have sufficient data to determine whether housing starts actually rose or fell from June, while the figures in parenthesis indicate the most likely range of the change indicated; in other words, July’s housing starts could have been up by 3.5% or down by as much as 18.1% from those of June, with even larger revisions eventually possible…in this report, the annual rate for June housing starts was revised down from the 1,353,000 reported last month to 1,329,000, while May starts, which were first reported at a 1,277,000 unit annual rate, were revised from last month’s initial revised figure of 1,314,000 annually to an annual rate of 1,315,000 with this report….
Those annual rates of housing starts reported here were extrapolated from a survey of a small percentage of US building permit offices visited by Census field agents, from which they estimated that 113,000 housing units were started in July, down from the 124,000 units started in June, and down from the 120,900 starts estimated in May….of those housing units started in July, an estimated 79,800 were single family homes and 31,200 were units in structures with more than 5 units, down from the revised 94,400 single family starts in June, but up from the 28,500 units started in structures with more than 5 units in June…
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 broadly revised housing starts data….in July, Census estimated new building permits were being issued for a seasonally adjusted annual rate of 1,396,000 housing units, which was 4.0 percent below the revised June annual rate of 1,454,000 permits, and was 7.0 percent below the rate of building permit issuance in July a year earlier…the annual rate for housing permits issued in June was revised from 1,446,000 to 1,454,000….
Again, these annualized estimates for new permits reported here were extrapolated from the unadjusted estimates collected by canvassing census agents, which showed permits for 125,600 housing units were issued in July, down from the revised estimate of 125,700 new permits issued in June…the July permits included 85,600 permits for single family homes, up from 83,700 single family permits in June, and 35,700 permits for housing units in apartment buildings with 5 or more units, down from 37,800 such multifamily permits a month earlier… for graphs and commentary on this report, see the following two posts by Bill McBride at Calculated Risk: Housing Starts Decreased to 1.238 Million Annual Rate in July and Housing Starts: Single Family Down Year-15% over-year in July; Multi-Family Down 18% YoY…
(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…)
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