September’s consumer and producer prices; August’s trade deficit and wholesale inventories

Major reports released last week included the September Consumer Price Index and the September Producer Price Index, both from the Bureau of Labor Statistics, the August report on our International Trade from the Commerce Dept, and the August report on Wholesale Trade, Sales and Inventories from the Census Bureau…

A major privately issued report released during the week was the Mortgage Monitor for October, which now comes from the Mortgage Technology unit of ICE, and which indicated that 3.34% of all mortgages were delinquent in August, down from the 3.37% of mortgages that were delinquent in July, but up from the 3.17% delinquency rate of August 2023, and that 0.35% of all mortgages were in the foreclosure process in August, unchanged from the 0.35% of mortgages in foreclosure in July, but down from the 0.41% foreclosure rate of August a year ago….the full Mortgage Monitor for October (pdf), which covers August data, is a comprehensive 22 pages of tables and graphics, with explanatory text…

Consumer Prices Rose 0.2% in September on Higher Food, Shelter, Clothing, & Utilities

The consumer price index was 0.2% higher in September, as higher prices for food, rent, clothing, furniture, electric and gas utility service, car insurance, vehicle repairs, airline fares, and medical care services were partly offset by lower prices for gasoline, lodging, recreational goods and services, drugs, and information technology commodities including smartphones….the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that the weighted average of seasonally adjusted prices for consumer goods and services was 0.2% higher in September, after being 0.2% higher in August, 0.2% higher in July, 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, and 0.1% higher last October, after rising by 0.4% in September 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 314.796 in August to 315.301 in September, which left it statistically 2.4406% higher than the index reading of 307.789 from September of last year, which is reported as a 2.4% year over year increase, less than the 2.5% year over year increase that was reported for August, with that widely cited year over year decrease reflecting the effect of last September’s 0.4% increase dropping out of the comparison…with energy prices down sharply vs a modest increase in food prices, seasonally adjusted core prices, which exclude both food and energy, were up by 0.3% for the month, as the unadjusted core price index rose from 320.017 to 321.109, which left the core index 3.3113% ahead of its year ago reading of 310.817, which is reported as a 3.3% year over year increase, up from the 3.2% year over year core price increases that were reported for July and August, but 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 1.9% lower in September, after being 0.8% lower in August, and after being 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% last October, but after rising by 1.2% last September, and is now 4.0% lower than in September of a year ago….the price index for energy commodities was 4.0% lower in September, while the price index for energy services was 0.7% higher, after the energy services index had fallen by 0.9% in August….the energy commodities index was down 4.0% on a 4.1% decrease in the price index for gasoline and a 6.0% decrease in the price index for fuel oil, while prices for “other energy commodities”, including propane, kerosene, and firewood, averaged 0.7% higher …within energy services, the price index for utility gas service was 0.7% higher in September after being 1.9% lower in August, and is now 2.0% higher than it was a year ago, while the electricity price index was 0.7% higher in September, after being 0.7% lower in August….energy commodities are now averaging 15.3% lower than their year ago levels, with gasoline prices averaging 15.5% lower than they were a year ago, while the energy services price index is now up 3.4% from last September, as electricity prices are still averaging 3.7% higher than a year ago…

Meanwhile, the seasonally adjusted food price index was 0.4% higher in September, after being 0.1% higher in August, 0.2% higher in July, 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, and 0.2% higher in September of last year, as the price index for food purchased for use at home was 0.4% higher in September, after being 0.1% higher in June, July and August, after being unchanged in May, 0.2% lower in April, and unchanged in February and March, while the price index for food bought to eat away from home was 0.3% higher, as average prices at fast food outlets rose 0.2%, average prices at full service restaurants rose 0.4%, the price index for food at elementary and secondary schools rose 2.1%, 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 0.3% higher, even as bread prices fell 0.2%, as the price index for rice, pasta, and cornmeal rose 1.3%, the price index for cookies rose 1.9%, and the price index for fresh sweetrolls, coffeecakes, doughnuts was 0.5% higher.…at the same time, the price index for the meats, poultry, fish, and eggs food group was 0.8% higher, as the price index for beef and veal rose 0.6%, the price index for pork rose 0.5% and egg prices were 8.4% higher….in addition, the seasonally adjusted price index for dairy products was 0.1% higher even though average milk prices fell 0.3%, as the price index for cheese and related products was 0.9% higher….at the same time, the fruits and vegetables price index was 0.9% higher, as the price index for fresh fruits rose 2.2%, and the price index for processed fruits and vegetables, not including those canned, averaged 0.5% higher….on the other hand, the beverages price index was unchanged, as the price index for carbonated drinks fell 0.4% and the price index for noncarbonated juices and drinks fell 0.3%, but the price index for coffee was 1.7% higher….lastly, the price index for the ‘other foods at home’ category was 0.2% higher, as the price index for butter and margarine rose 2.2%, the price index for salad dressing rose 3.3%, the price index for snacks rose 1.0%, and the price index for baby food and formula was 1.2% higher…

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

Among the goods components of the core price index, which will initially be used by the Bureau of Economic Analysis to adjust September’s retail sales for inflation in national accounts data, the price index for household furnishings and supplies was unchanged, as the price index for living room, kitchen, and dining room furniture rose 3.3% and the price index for nonelectric cookware and tableware rose 5.7%, but the price index for tools, hardware and supplies fell 1.4%, and the index for outdoor equipment and supplies was 1.0% lower….on the other hand, the apparel price index was 1.1% higher on a 2.4% increase in the price index for men’s suits, sport coats, and outerwear, a 1.3% increase in the price index for boys’ apparel, a 1.0% increase in the price index for girls’ apparel, a 3.0% increase in the price index for boys’ and girls’ footwear, and a 5.2% increase in the price index for jewelry and watches…. at the same time, the price index for transportation commodities other than fuel was was 0.3% higher, as average prices for new vehicles were 0.2% higher, the price index for used cars and trucks rose 0.3% and the price index for tires was 1.1% higher… on the other hand, the price index for medical care commodities was 0.7% lower as nonprescription drug prices fell 0.6%, unadjusted prescription drug prices fell 0.5%, and the price index for medical equipment and supplies was 0.2% higher…in addition, the recreational commodities index was 0.3% lower, as the price index for video equipment other than TVs fell 1.3%, the price index for photographic equipment and supplies fell 1.0%, the price index for newspapers and magazines fell 3.3, and the price index for toys, games, hobbies and playground equipment was 0.5% lower…at the same time, the education and communication commodities index was 0.7% lower, on a 1.1% decrease in the price index for computers, peripherals, and smart home assistants, and a 1.2% decrease 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 0.1% higher, while the price index for ‘other goods’ was 0.3% higher on a 0.6% increase in the price index for air, dental, shaving, and miscellaneous personal care products and a 1.1% increase in the price index for miscellaneous personal goods…

Within core services, the price index for shelter was 0.2% higher, as rents rose 0.3%, homeowner’s equivalent rent rose 0.3%, while prices for lodging away from home at hotels and motels were 2.3% lower and the price index for household insurance fell 0.5% but the price index for water, sewers and trash collection was 0.7% higher…. at the same time, the price index for medical care services was 0.7% higher, as the price index for physicians' services rose 0.9%, the price index for services by other medical professionals other than dentists rose 1.5%, and the price index for care of invalids and elderly at home was 1.2% higher….in addition, the transportation services price index was 1.4% higher, as the price index for car and truck rental rose 1.2%, the price index for motor vehicle repairs rose 2.8%, the price index for parking and other fees rose 1.8%, the price index for motor vehicle insurance rose 1.2%, and the price index for airline fares was 3.2% higher…on the other hand, the recreation services price index was 0.5% lower, as the price index for admission to movies, theaters, and concerts fell 1.3%, the price index for subscription, and rental of videos and video games fell 0.5%, the price index for fees for lessons or instructions fell 0,8%, and the price index for fees for club membership for shopping clubs, fraternal, or other organizations, or participant sports fees was 2.1% lower…. meanwhile, the price index for education and communication services was 0.1% higher, as the price index for college tuition and fees rose 0.8%, the price index for elementary and high school tuition and fees rose 0.3%, and the price index for day care and preschool was 0.4% higher…lastly, the index for other personal services rose 0.1%, as the price index for laundry and dry cleaning services rose 0.2% and the price index for ax return preparation and other accounting fees was 0.6% higher..

Producer Prices unchanged in September as Lower Energy Prices Offset Higher Priced Foods and Services

The seasonally adjusted Producer Price Index (PPI) for final demand was unchanged in September, as the price index for finished wholesale goods was 0.2% lower, while the price index for final demand for services was 0.2% higher.…that September PPI reading followed a revised 0.2% increase in August, when prices for finished wholesale goods were unchanged, while the price index for final demand for services was 0.4% higher, a revised unchanged index in July, when the price index for finished wholesale goods rose 0.6%, while the price index for final demand for services was 0.2% lower, a revised 0.3% increase in June, when the price index for finished wholesale goods fell 0.3% while the price index for final demand for services was 0.6% higher, an 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% PPI 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, an unrevised and 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 last 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 1.8% higher than a year ago, while the core producer price index, which excludes food, energy and trade services, was 0.1% 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 0.2% lower in September, after being unchanged in August, 0.6% higher in July, 0.3% 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 last October, and 0.9% higher last September, and is now 1.1% lower than a year ago….the final demand goods price index was 0.2% lower in September because the price index for wholesale energy goods was 2.7% lower, after it had fallen by 1.0% in August risen by 1.7% in July, fallen by 2.0% in June and 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% last October, while the price index for wholesale foods was 1.0% higher, after being up 0.2% in August, up 0.6% in July, up 0.1% in June, down 0.1% in May, down 0.8% 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 0.2% higher in August, 0.2% higher in July, unchanged in June, and after 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 down 2.7% in September on a 5.6% decrease in wholesale prices for gasoline, a 17.6% decrease in wholesale prices for diesel fuel, a 10.5% decrease in wholesale prices for jet fuel, and an 11.1% decrease in wholesale prices for home heating oil and distillates, while the final demand for food price index was 1.0% higher on an 8.3% increase in the wholesale price index for fresh fruits and melons, a 4.8% increase in the wholesale price index for grains, a 9.9% increase in the wholesale price index for processed young chickens, and a 1.5% increase in the wholesale price index for beef and veal…. among core wholesale goods, the wholesale price index for heavy motor trucks rose 1.3%, the wholesale price index for electronic computers and computer equipment rose 1.6%, and the wholesale price index for sanitary paper products was 3.5% higher…

Meanwhile, the price index for final demand for services was 0.2% higher in September, after being 0.4% higher in August, 0.2% lower in July, 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 last October, but 0.1% lower last September, and is now 3.1% higher than a year ago…the price index for final demand for trade services rose 0.2%, the price index for final demand for transportation and warehousing services rose 0.3%, and the core index for final demand for services other than trade, transportation, and warehousing services was 0.1% higher….

Among trade services, seasonally adjusted margins for apparel retailers rose 6.5%, margins for furniture retailers rose 6.1%, margins for major household appliances retailers rose 11.4%, margins for TV, video, and photographic equipment and supplies retailers rose 4.2%, and margins for computer hardware, software, and supplies retailers rose 3.1%, but margins for sporting goods and boat retailers were 5.7% lower….among transportation and warehousing services, average margins for air transportation of freight were 0.4% higher, and margins for airline passenger services were 1.5% higher….among the components of the core final demand for services index, the price index for passenger car rentals rose 3.6%, the price index for deposit services rose 3.0%, the price index for traveler accommodation services rose 1.3%, and the price index for application software publishing increased 1.7%…

This report also showed the price index for intermediate processed goods was 0.8% lower in September, after being 0.2% lower in August, 0.6% higher in July, 0.1% lower in June, 1.3% lower in May, 0.5% 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 ​last October, but after rising 0.5% last September….the price index for intermediate energy goods fell 4.7% in September as refinery prices for gasoline fell 5.6%, refinery prices for diesel fuel fell 17.6%, refinery prices for jet fuel fell 6.1%, and the producer price index for natural gas to electric utilities fell 1.3%… on the other hand, the price index for intermediate processed foods and feeds rose 0.9%, as the producer price index for meats rose 1.5%, the producer price index for processed poultry rose 8.8%, and the producer price index for dairy products was 1.5% higher….meanwhile, the core price index for intermediate processed goods less food and energy goods was 0.1% lower, as the producer price index for asphalt fell 14.6% and the producer price index for plastic resins and materials fell 2.4%​, while the producer price index for softwood lumber rose 4.0%….average prices for intermediate processed goods are now 2.7% lower than in September 2023, the 18th year over year decrease in 19 months, 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 fell 3.2% in September, after falling 3.1% in August, rising 2.1% in July, rising 0.6% in June, being unchanged 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, and after rising by 2.9% last September ….that was as the September price index for crude energy goods fell 12.6%, as crude oil prices fell 16.7% while unprocessed natural gas prices rose 2.4%, and coal prices were 2.1% lower…the price index for unprocessed foodstuffs and feedstuffs was 2.7% higher, on an 29.8% increase in producer prices for hay and hayseeds, an 11.6% increase in producer prices for slaughter turkeys, an 11.6% increase in producer prices for slaughter hogs, and a 4.8% increase in producer prices for corn….at the same time, the index for core raw materials other than food and energy materials was 1.9% higher, on an 8.6% increase in the price index for aluminum base scrap, an 8.3% increase in the price index for copper base scrap, a 3.4% increase in the price index for recyclable paper, and a 1.9% increase in the price index for nonferrous metal ores….this raw materials price index is now 9.5% lower than a year ago, the 18th year over year decrease in the past 20 months, which in turn 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 0.2% higher in September, after being 0.1% lower in August, 0.3% higher in July, 0.4% higher in June, 0.3% higher in May, 0.2% 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 last November….the price index for intermediate trade services was 0.2% higher, as margins for metals, minerals, and ores wholesalers rose 1.5%, margins for food wholesalers rose 1.0%, and margins for intermediate automotive parts and tires retailers rose 0.3%….at the same time, the index for transportation and warehousing services for intermediate demand was 0.3% higher, as the intermediate price index for transportation of passengers (partial) rose 1.5%, the intermediate price index for courier and messenger services, except for air mail, rose 0.5%, and the intermediate index for air transportation of freight rose 0.4%….meanwhile, the core price index for intermediate services other than trade, transportation, and warehousing services was 0.2% higher, as the intermediate price index for radio advertising time sales rose 12.9%, the intermediate price index for passenger car rental rose 3.6%, the intermediate price index for staffing services rose 2.7% and the intermediate price index for deposit services (partial) was 3.0% higher…over the 12 months ended in July, the year over year price index for services for intermediate demand is now 3.5% higher than it was a year ago, the forty-eighth 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 the current annual increase is still much lower than the record 9.5% year over year increase that’s indicated for July 2021…

Trade Deficit Fell 10.8% in August, Reversing July Jump, Should Add to Q3 GDP

Our trade deficit fell by 10.8% in August as the value of our exports increased while the value of our imports decreased….the Commerce Dept report on our international trade in goods and services for August indicated that our seasonally adjusted goods and services trade deficit fell by a rounded $8.5 billion to $70.4 billion in August, from a July deficit of $78.9 billion, which was revised from the $78.8 billion deficit that had been reported for July last month…after rounding, the value of our August exports rose by $5.3 billion to $271.8 billion on a $4.4 billion increase to $179.4 billion in our exports of goods, and an increase of $0.9 billion to $92.3 billion in our exports of services, while the value of our imports fell by $3.2 billion to $342.2 billion as a $3.9 billion decrease to $274.3 billion in our imports of goods was partly offset by a $0.7 billion increase to $67.9 billion in our imports of services…prices for our exports were on average 0.7% lower in August, which means our real exports were that much greater and likely rose by about 2.7%, while import prices were 0.3% lower, meaning that part of the decrease in our imports was due to lower prices and that our real imports probably only fell about 0.6%…

The $4.4 billion increase in the nominal value of our August exports of goods resulted from greater exports of capital goods, consumer goods, industrial supplies and materials, and of automotive products….referencing the Full Release and Tables for August (pdf), in Exhibit 7 we find that our exports of capital goods rose by $1,711 million to $57,763 million on a $498 million increase in our exports of telecommunications equipment, a $422 million increase in our exports of civilian aircraft, a $381 million increase in our exports of computer accessories, and a $359 million increase in our exports of industrial machines other than those itemized separately, which were partly partly offset by a $759 million decrease in our exports of semiconductors, and ​that our exports of consumer goods rose by $1,015 million to $22,778 million on an $1,034 million increase in our exports of pharmaceuticals, which were partly offset by a $377 million decrease in our exports of jewelry….in addition, our exports of industrial supplies and materials rose by $906 million to $61,279 million as a $1,553 million increase in our exports of non-monetary gold, a $457 million increase in our exports of fuel oil, and a $427 million increase in our exports of petroleum products other than fuel oil were partly offset by a $1,081 million decrease in our exports of crude oil, a $424 million decrease in our exports of natural gas, and a $356 million decrease in our exports of precious metals other than gold, and our exports of automotive vehicles, parts, and engines rose by $836 million to $14,254 million on a $584 million increase in our exports of passenger cars, ​w​hile our exports of other goods not categorized by end use rose by $537 million to $8,324 million…slightly offsetting the increases in those end-use categories, our exports of foods, feeds and beverages fell by $105 million to $13,404 million due to a $401 million decrease in our exports of soybeans..

Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our imports of goods and shows that lower imports of industrial supplies and materials and lower imports of automotive products were responsible for the $3.9 billion decrease in our imports of goods, even as our imports of other end use categories increased….our imports of industrial supplies and materials fell by $3,900 million to $53,732 million on a $1,181 million decrease in our imports of nonmonetary gold, a $1,020 million decrease in our imports of finished metal shapes, and a $1,015 million decrease in our imports of crude oil, while our imports of automotive vehicles, parts and engines fell by $1,309 million to $38,477 million on a $1,107 million decrease in our imports of new & used passenger cars and a $303 million decrease in our exports of parts and accessories of vehicles other than engines, chassis, and tires…. in addition, our imports of capital goods fell by $30 million to $83,428 million as a $1​,243 million decrease in our imports of computer accessories and a $308 million decrease in our imports of semiconductors were offset by a $973 million increase in our imports of computers, a $559 million increase in our imports of electric apparatuses and a $348 million increase in our imports of engines for civilian aircraft… partially offsetting the decreases in those end use categories, our imports of foods, feeds, and beverages rose by $446 million to $17,939 million on greater imports of green coffee, vegetables, and alcoholic beverages,​ our imports of consumer goods rose by $365 million to $66,977 million as a $512 million increase in our imports of pharmaceuticals a $512 million increase in our imports of cellphones and similar household goods were partly offset by a $440 million decrease in our imports of artwork and other collectibles, and our imports of other goods not categorized by end use rose by $637 million to $11,467 million….

The Press Release for this month’s report summarizes Exhibit 19 in the full release, which gives us surplus and deficit details on our goods trade with selected countries:

The August figures show surpluses, in billions of dollars, with Netherlands ($5.5), South and Central America ($4.0), Australia ($1.9), Hong Kong ($1.6), Brazil ($0.8), Singapore ($0.5), and United Kingdom ($0.3). Deficits were recorded, in billions of dollars, with China ($24.7), European Union ($19.1), Mexico ($14.3), Vietnam ($9.8), Ireland ($8.0), Taiwan ($7.3), Germany ($6.6), Japan ($4.9), South Korea ($4.9), Canada ($3.9), Italy ($2.9), India ($2.7), Switzerland ($2.5), France ($1.7), Malaysia ($1.1), Israel ($1.0), Belgium ($0.6), and Saudi Arabia ($0.1).

• The deficit with Canada decreased $3.8 billion to $3.9 billion in August. Exports increased $1.1 billion to $28.5 billion and imports decreased $2.7 billion to $32.3 billion.
• The deficit with China decreased $2.6 billion to $24.7 billion in August. Exports increased $1.1 billion to $12.6 billion and imports decreased $1.5 billion to $37.3 billion.
• The balance with Belgium shifted from a surplus of $1.0 billion in July to a deficit of $0.6 billion in August. Exports decreased $0.1 billion to $2.8 billion and imports increased $1.5 billion to $3.4 billion.

To gauge the impact of July and August goods trade on 3rd quarter GDP growth figures, we use exhibit 10 in the full pdf for this report, which gives us monthly goods trade figures by end use category and in total, already adjusted in chained 2017 dollars, the same inflation adjustment used by the BEA to compute ​the impact of foeign trade ​o​n GDP, except that the figures are not annualized here….from that table, we can compute that the 2nd quarter real exports of goods averaged 143,432.3 million monthly in 2017 dollars, while the similarly inflation adjusted July and August goods export figures were at 144,617 million and 150,088 million respectively, in that same 2017 dollar quantity index representation…computing the annual rate of change between the second and third quarter inflation adjusted averages, we find that the 3rd quarter’s real exports of goods are running at an 11.39% annual rate above those of the 2nd quarter, or at a pace that would add about 0.83 percentage points to 3rd quarter GDP if it were continued through September….in a similar manner, we find that our 2nd quarter real imports of goods averaged 236,472.7 million monthly in chained 2017 dollars, while inflation adjusted July and August imports were at 241,892 million and 238,736 million in 2017 dollars respectively…that would mean that so far in the 3rd quarter, our real imports have ​risen at a 6.66% annual rate from those of the 2nd quarter…since imports subtract 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 6.66% rate would subtract about 0.71 percentage points from 3rd quarter GDP…..hence, if our real trade in goods remains at the same levels as in July and August throughout September, our improving balance of trade in goods over that of the 2nd quarter would add about 0.12 percentage points to the growth of 3rd quarter GDP….

However, you might note that we have not computed the impact of the usually less volatile change in services here, because the BEA does not provide inflation adjusted data on those, and we don’t have a straightforward way to adjust the various services for all their price changes, but that our exports in services rose by $0.9 billion in August, whereas our imports in services grew $0.7 billion, virtually reversing the imbalance in July​'s trade in services, which would the suggest that the services side of the trade ledger will have a negligible impact on 3rd quarter GDP…

Wholesale Sales Fell 0.1% in August, Wholesale Inventories Rose 0.1%

The August report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at $670.9 billion, down0.1 percent (±0.4 percent)* from the July’s revised sales, but up 1.1 percent (±0.5 percent) from the wholesale sales of August 2023… the July preliminary estimate was revised to $671.3 billion from the $671.0 billion in wholesale sales reported last month, which left the June to July change at an increase of 1.1 percent (±0.4 percent)…..as an intermediate activity, wholesale sales are not included in GDP except insofar as they are a trade service, since the traded goods themselves do not represent an increase in the output of the goods produced or finally sold….

On the other hand, the monthly change in private inventories is a major factor in GDP, as additional goods on the shelf represent goods that were produced but not sold, and this August report estimated that wholesale inventories were valued at a seasonally adjusted $904.8 billion at month end, up 0.1 percent (+/-0.2%)* from the revised July level, and 0.6 percent (±0.7 percent)* higher than in August a year ago…July’s inventory value was revised from the $903.5 billion reported a month ago to $903.7 billion, which left the July inventory increase unchanged at up 0.2 percent (+/-0.2%)*…

August wholesale inventories would be adjusted for inflation with the appropriate sub-indices of the August producer price index, which showed that aggregate prices for finished goods were on average unchanged, that prices for intermediate processed goods were 0.1% lower, and that prices for unprocessed goods were 3.7% lower….since the majority of wholesale inventories other than commodities are finished goods, those producer price changes suggest a small real increase in August inventories …however, since the key source data and assumptions (xls) for the third estimate of 2nd quarter GDP indicated a real increase of $27.9 billion in wholesale inventories on a NIPA basis, August’s increase in real inventories would fall short of that and subtract the difference between the two increases from 3rd quarter GDP, because a decrease of inventory growth would mean some 3rd quarter sales were from inventories, instead of indicating an increase of domestic production.

 

 

(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…)