November’s jobs' report; October’s JOLTS, trade deficit, construction spending, and factory inventories

Major economic reports released this week included the Employment Situation Summary for November and the Job Openings and Labor Turnover Survey (JOLTS) for October, both from the Bureau of Labor Statistics, the Commerce Department’s report on our International Trade for October, and the October report on Construction Spending (pdf), and the Full Report on Manufacturers’ Shipments, Inventories and Orders for October, both from the Census Bureau….

The week’s major privately issued reports reports included the ADP Employment Report for November, the light vehicle sales report for November from Wards Automotive, which estimated that such vehicles sold at a 16.50 million annual rate in November, up from the 16.04 million annual rate in October, and up from the 15.32 million annual rate in November a year ago, and both of the widely watched purchasing manager’s surveys from the Institute for Supply Management (ISM): the November Manufacturing Report On Business reported that their manufacturing PMI (Purchasing Managers Index) rose to 48.4% in November, from 46.5% in October, which indicates that a smaller plurality of manufacturing purchasing managers continued to report worse conditions in various facets of their business in November than a month earlier, while the November Services Report On Business saw the Services index fall to 52.1% in November, down from 56.0% in October, indicating that a somewhat smaller plurality of service industry purchasing managers reported improvement in various facets of their business in November than in October…

Employers Added 227,000 Jobs in November: Employment Rate Fell to a 33 Month Low

The Employment Situation Summary for November from the Bureau of Labor Statistics reported an increase in payroll jobs that beat expectations, but that the unemployment rate unexpectedly rose while the employment rate fell 0.2% to a pandemic recovery low…estimates extrapolated from the seasonally adjusted establishment survey data projected that employers added 227,000 jobs in November, after the previously estimated payroll job increase for September was revised up from 223,000 to 255,000, while the payroll jobs increase for October was revised up from 12,000 to 36,000 …hence, this report shows a net of 283,000 more payroll jobs than last months report, 100,000 more than the gain of 183,000 jobs that was expected ahead of the report…. meanwhile, the unadjusted data shows that there were actually 525,000 more payroll jobs extent in November than in October, as the normal seasonal job increases in retail, shipping, & the education sector were washed out of the headline number by the seasonal adjustment…

Seasonally adjusted job increases in November were seen throughout the goods producing, service providing, and the government sectors, while a seasonal adjustment induced payroll job decrease of 28,000 jobs in the retail sector was the only major decrease….since the BLS summary of the job gains by sector is clear and more detailed than our usual synopsis, we’ll again just quote from that summary here:

• Over the month, employment trended up in health care, leisure and hospitality, government, and social assistance. Employment increased in transportation equipment manufacturing, reflecting the return of workers who were on strike. Retail trade lost jobs. (See table B-1.)
• Health care added 54,000 jobs in November, in line with the average monthly gain of 59,000 over the prior 12 months. In November, ambulatory health care services added 22,000 jobs, led by a gain of 16,000 in home health care services. Employment also increased in hospitals (+19,000) and nursing and residential care facilities (+12,000).
• Employment in leisure and hospitality trended up in November (+53,000), following little change in the prior month (+2,000). Over the month, employment trended up in food services and drinking places (+29,000). Leisure and hospitality had added an average of 21,000 jobs per month over the prior 12 months.
• In November, government employment continued to trend up (+33,000), in line with the average monthly gain over the prior 12 months (+41,000). Over the month, employment continued to trend up in state government (+20,000).
• Employment increased by 32,000 in transportation equipment manufacturing in November, reflecting the return of workers who were on strike.
• Employment in social assistance edged up by 19,000 in November, similar to the average monthly gain of 18,000 over the prior 12 months. Over the month, individual and family services added 17,000 jobs.
• Retail trade lost 28,000 jobs in November, after showing little net employment change over the prior 12 months. In November, employment declined in general merchandise retailers (-15,000), while electronics and appliance retailers added jobs (+4,000).
• Employment showed little or no change over the month in other major industries, including mining, quarrying, and oil and gas extraction; construction; wholesale trade; transportation and warehousing; information; financial activities; professional and business services; and other services.

The establishment survey also showed that average hourly pay for all employees rose by 13 cents an hour to $35.61 an hour in November, after it had increased by a revised 15 cents an hour in October; at the same time, the average hourly earnings of production and non-supervisory employees increased by 9 cents to $30.57 an hour…employers also reported that the average workweek for all private payroll employees increased by 0.1 hour to 34.3 hours in November, while weekly hours for production and non-supervisory personnel was unchanged at 33.7 hours…at the same time, the manufacturing workweek was unchanged at 40.0 hours, while average overtime rose a tenth of an hour to 2.9 hours…

Meanwhile, the November household survey indicated that the seasonally adjusted extrapolation of those who reported being employed fell by an estimated 355,000 to 161,141,000, while the estimated number of those unemployed and looking for work rose by 161,000 to 7,145,000, and as a result the total labor force decreased by a rounded net of 193,000, which was enough to lower the labor force participation rate from 62.6% in October to 62.5% in November, matching the lowest rate since January 2023….since the working age population had grown by 227,000 over the same period, that meant the number of employment aged individuals who were not in the labor force rose by 368,000 to a 4 1/2 year high of 101,177,000…meanwhile, the decrease in number employed as a percentage of the population was enough to lower the employment to population ratio, which we could think of as an employment rate, from 60.0% in October to a 33 month low of 59.8% in November…at the same time, the increase in the number unemployed was enough to raise the unemployment rate by 0.1% to 4.2%….meanwhile, the number of those who reported they were forced to accept just part time work fell by 100,000, from 4,557,000 in October to 4,457,000 in November, which wasn’t enough to lower the alternative measure of unemployment, U-6, which includes those “employed part time for economic reasons”, which rose from 7.7% of the labor force in October to 7.8% in November….

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 and Job Quitting Rose in October, Hiring and Layoffs Fell

The Job Openings and Labor Turnover Survey (JOLTS) report for October from the Bureau of Labor Statistics estimated that seasonally adjusted job openings increased by 372,000, from 7,372,000 openings in September to 7,744,000 in October, after September’s job openings were revised 71,000 lower, from 7,443,000 to 7,372,000 ….however, October’s jobs openings were still 10.8% lower than the 8,685,000 job openings reported in October a year ago, as the job opening ratio expressed as a percentage of the employed rose to 4.5% in October from 4.4% September, but was down from 5.2% in October a year ago…among the largest percentage job opening changes were a 87,000 job opening increase to 208,000 openings in the information sector, and a 162,000 job opening increase to 1,029,000 openings in accommodation and food services, while job openings with the federal government fell from 141,000 to 115,000 (see table 1 for more details)…like most BLS releases, the press release for this report is easy to understand and also refers us to the associated tables 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 October, seasonally adjusted new hires totaled 5,313,000, down by 269,000 from the revised 5,582,000 who were hired or rehired in September, as the hiring rate as a percentage of all employed fell from 3.5% in September to 3.3% in October, and was also down from from the 3.7% hiring rate in October a year earlier (details of hiring by sector since March are in table 2)….meanwhile, total separations rose by 65,000, from 5,196,000 in September to 5,261,000 in October, while the separations rate as a percentage of the employed remained at 3.3% in October, but was down from 3.6% in October a year ago (see table 3)….subtracting the 5,261,000 total separations from the total hires of 5,313,000 would imply an increase of 52,000 jobs in October, a bit more than the revised payroll job increase of 36,000 for October reported in the November establishment survey, but still within the expected +/-115,000 margin of error for these extrapolated reports….

Breaking down the seasonally adjusted job separations, the BLS finds that 3,326,000 of us voluntarily quit our jobs in October, up by 228,000 from the 3,098,000 who quit their jobs in September, while the quits rate, widely watched as an indicator of worker confidence, rose to 2.1% of total employment from 1.9% in September, but was down from the 2.3% quits rate of a year earlier (see details in table 4)….in addition to those who quit, another 1,633,000 were either laid off, fired or otherwise discharged in October, down by 169,000 from the revised 1,802,000 who were discharged in September, while the discharges rate fell to 1.0% of all those who were employed during the month, down from the discharges rate of 1.1% in September and also from 1.1% a year earlier….meanwhile, other separations, which includes retirements and deaths, were at 301,000 in October, up from 296,000 in September, for an ‘other separations rate’ of 0.2%, which was unchanged from September and from October of last year….both seasonally adjusted and unadjusted details by industry and by region on hires and job separations, and on job quits and discharges can be accessed by using the links to tables at the bottom of the press release…

US Trade Deficit Fell 11.9% in October on Lower Imports of Capital Goods and Industrial Supplies

Our trade deficit fell 11.9% in October, as both the value of our exports and the value of our imports decreased, but the value of our imports decreased by more than three times as much….the Commerce Dept report on our international trade in goods and services for October indicated that our seasonally adjusted goods and services trade deficit fell by a rounded $10.0 billion to $83.8 billion in October, from a revised deficit of $83.8 billion in September, which had previously been reported as a deficit of $84.4 billion, a 2-1/2-year high.. .note that trade figures for the months going back to April were also revised to incorporate more comprehensive and updated quarterly and monthly data…in rounded figures, the value of our October exports fell by $4.3 billion to $265.7 billion, as a $5.3 billion decrease to $170.7 billion in our exports of goods was partly offset by a $1.0 billion increase to $95.1 billion in our exports of services, while our imports fell by $14.3 billion to $339.6 billion, as a $15.7 billion decrease to $269.3 billion in our imports of goods was partly offset by a $1.4 billion increase to $70.2 billion in our imports of services….export prices were on average 0.8% higher in October, so the decrease in this month’s real exports was that much greater, and hence real exports likely fell by around 2.4%, while import prices were 0.3% higher, meaning that our real imports were smaller than the nominal change reported here by that percentage, or that real imports probably fell about 4.3%…

The $5.3 billion decrease in our exports of goods in October was due to lower exports of consumer goods, automotive products, and industrial supplies and materials, and was partly offset by greater exports of “other goods”, reflecting a backlog caused by a delay in the compilation of statistics on U.S. exports of goods to Canada​, which will be properly allocated in future revisions…referencing the Full Release and Tables for October (pdf), in Exhibit 7 we find that our exports of capital goods fell by $3,933 million to $51,945 million, led by a $1​,238 million decrease in our exports of computer accessories, a $649 million decrease in our exports of industrial machinery other than machinery itemized separately, and a $507 million decrease in our exports of electric apparatuses, and that our exports of automotive vehicles, parts, and engines fell by $2,471 million to $12,033 million, on a $1,329 million decrease in our exports of passenger cars and a a $1,262 million decrease in our exports of trucks, buses, and special purpose vehicles….in addition, our exports of industrial supplies and materials fell by $2,523 million to $57,305 million on a $547 million decrease in our exports of plastic materials, a $547 million decrease in our exports of chemicals not otherwise listed, and a $409 million decrease in our exports of fuel oil, and our exports of consumer goods fell by $1​,282 million to $20,060 million​, led by a $617 million decrease in our exports of gem diamonds, ​w​hile our exports of foods, feeds and beverages fell by $583 million to $13,534 million…partly offsetting the decreases in those end-use categories, our exports of other goods not categorized by end use rose by $5,728 million to $14,112 million…

Meanwhile, Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our imports​ of goods and shows that lower imports in all end use categories were responsible for the $15.7 billion decrease in our goods imports, led by a drop in imports of capital goods, which fell by $7,525 million to $78,703 million on a $3,726 million decrease in our imports of computers, a $1,629 million decrease in our imports of semiconductors, a $433 million decrease in our imports of generators and accessories, a $374 million decrease in our imports of electric apparatuses, a $351 million decrease in our imports of civilian aircraft, a $331 million decrease in our imports of excavating machinery, and a $300 million decrease in our imports of civilian aircraft parts… in addition, our imports of industrial supplies and materials fell by $3,260 million to $52,685 million as a $1,351 million decrease in our imports of crude oil, a $524 million decrease in our imports of copper, a $384 million decrease in our imports of nonmonetary gold, and a $383 million decrease in our imports of petroleum products other than fuel oil were partly offset by a $455 million increase in our imports of finished metal shapes, while our imports of consumer goods fell by $278 million to $68,975 million as a $1,136 million decrease in our imports of pharmaceutical preparations and a $379 million decrease in our imports of stereo equipment and related goods were partly offset by a $769 million increase in our imports of pharmaceutical preparations….at the same time, our imports of automotive vehicles, parts and engines fell by $1.585 million to $38,053 million on $598 million decrease in our imports of of new and used passenger cars, a $411 million decrease in our imports of trucks, buses, and special purpose vehicles, and a $388 million decrease in our imports of automotive parts and accessories other than engines, chassis, and tires, while our imports of foods, feeds, and beverages fell by $628 million to $18,141 million, and our imports of other goods not categorized by end use fell by $663 million to $10,688 million…

The press release for this month’s report summarizes Exhibit 19 in the Full Release and Tables pdf, giving us surplus and deficit details on our goods trade with selected countries:

The October figures show surpluses, in billions of dollars, with Netherlands ($4.5), South and Central America ($3.8), United Kingdom ($2.0), Hong Kong ($1.5), Australia ($0.9), Brazil ($0.8), Belgium ($0.7), Singapore ($0.7), and Saudi Arabia ($0.4). Deficits were recorded, in billions of dollars, with China ($25.5), European Union ($17.1), Mexico ($15.4), Vietnam ($10.6), Ireland ($9.0), Japan ($6.5), Taiwan ($6.5), Germany ($5.4), South Korea ($4.5), India ($4.5), Canada ($4.4), Switzerland ($3.7), Italy ($3.4), Malaysia ($2.4), Israel ($0.5), and France ($0.1).

• The deficit with the European Union decreased $6.7 billion to $17.1 billion in October. Exports increased $0.1 billion to $30.6 billion and imports decreased $6.6 billion to $47.8 billion.
• The deficit with Vietnam decreased $1.7 billion to $10.6 billion in October. Exports increased $0.1 billion to $1.2 billion and imports decreased $1.6 billion to $11.8 billion.
• The deficit with Switzerland increased $1.4 billion to $3.7 billion in October. Exports decreased $1.0 billion to $1.4 billion and imports increased $0.4 billion to $5.1 billion.

The $0.6 billion downward revision to the September trade deficit would normally have the effect of lowering the annualized 3rd quarter trade deficit used in the GDP report by about $2.4 billion before inflation adjustment, but since trade figures going back to April were also revised with this report, the trade deficit for the 2nd quarter would need to be recomputed before one could get an accurate read of the impact of the 3rd quarter revisions on the quarter over quarter change in GDP…however, the BEA will not revise the 2nd quarter trade figures in the National Income and Product Accounts until the annual revision to GDP next summer, while the downward revisions to the 3rd quarter trade deficit will be applied to the 3rd estimate of GDP that will be out later this month….hence, that estimate may incorrectly overstate or understate the positive impact of the downward revisions to the 3rd quarter trade deficit that accompanies this report, with the magnitude of that error ultimately depending on the eventual 2nd quarter revisions…as it stands, we’d expect that September trade deficit revision to result in an upward revision of about 0.05 percentage points to 3nd quarter GDP when the third estimate is released on December 19th..

Meanwhile, to estimate the impact of October trade in goods on 4th quarter GDP growth figures, we’ll 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 in chained 2017 dollars, the same inflation adjustment now used by the BEA to compute trade figures for GDP, except that the figures are not annualized here….from that table, we can figure that the 3rd quarter's real exports of goods averaged 147,582.7 million monthly in 2017 dollars, while inflation adjusted goods exports for October were at 141,911 million in that same 2017 dollar quantity index representation… annualizing the change between those two figures, we find that October’s real exports of goods are running at a 14.5% annual rate below those of the 3rd quarter, or at a pace that would subtract about 0.99 percentage points from 4th quarter GDP if continued through November and December….in a similar manner, we find that our 3rd quarter real imports of goods averaged 242,783.3 million monthly in chained 2017 dollars, while inflation adjusted October goods imports were at 234,330 million in that same 2017 dollar representation…that would indicate that so far in the 4th quarter, our real imports of goods have decreased at annual rate of 13.22% from those of the 3rd quarter…since imports subtract from GDP because they represent the portion of our consumption or investment that occurred during the quarter that was not produced domestically, their decrease at a 13.22% rate would conversely add about 1.42 percentage points to 4th quarter GDP….hence, if the October trade deficit is maintained at the same level throughout the 4th quarter, our improving balance of trade in goods could add a net of roughly 0.43 percentage points to the growth rate of 4th quarter GDP….

Note, however, 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 grew by $1.0 billion in October, whereas our imports in services rose $1.4 billion, which would suggest a modest hit to GDP on the services side of the trade ledger…

Construction Spending Rose 0.4% in October after Prior Months Were Revised Higher

The Census Bureau’s report on construction spending for October (pdf) estimated that the month’s seasonally adjusted construction spending would work out to $2,174.0 billion annually if extrapolated over an entire year, which was 0.4 percent (±1.2 percent)* above the revised September estimated annual rate of $$2,164.7 billion and 5.0 percent (±1.5 percent) above the estimated annual rate of construction spending in October of last year…for the first ten months of this year, construction spending totaled $1,814.8 billion, which was 7.2 percent (±1.2 percent) more than the $1,693.2 billion spent on construction over the same period in 2023…

The annualized construction spending estimate ​for September was revised more than 0.7% higher with this release, from $2,148.8 billion to $2,164.7 billion, while the annual rate of construction spending for August was revised almost 0.8% higher, from $2,146.0 billion to 2,162.1 billion. The combined upward revisions of $32.0 billion to annualized August and September construction spending figures would be averaged over the 3 months of the quarter and increase the annualized 3rd quarter construction figures by around $10.7 billion, before any inflation adjustment, which would thus suggest an upward revision of about 0.17 percentage points to the relevant components of third quarter GDP when the third estimate is released on December 21st…

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

• Private Construction: Spending on private construction was at a seasonally adjusted annual rate of $1,676.4 billion, 0.7 percent (±0.7 percent)* above the revised September estimate of $1,664.7 billion. Residential construction was at a seasonally adjusted annual rate of $934.0 billion in October, 1.5 percent (±1.3 percent) above the revised September estimate of $920.3 billion. Nonresidential construction was at a seasonally adjusted annual rate of $742.3 billion in October, 0.3 percent (±0.7 percent)* below the revised September estimate of $744.4 billion.
• Public Construction: In October, the estimated seasonally adjusted annual rate of public construction spending was $497.6 billion, 0.5 percent (±2.0 percent)* below the revised September estimate of $500.0 billion. Educational construction was at a seasonally adjusted annual rate of $105.3 billion, 0.4 percent (±2.5 percent)* below the revised September estimate of $105.7 billion. Highway construction was at a seasonally adjusted annual rate of $141.1 billion, 0.7 percent (±5.3 percent)* below the revised September estimate of $142.1 billion

As you can tell from the above​ synopsis, the construction spending reported here would be included in 3 subcomponents of GDP; investment in private non-residential structures, investment in residential structures, and into government investment outlays, for both state and local and Federal governments…however, getting an accurate read on the impact of October spending reported in this release on 4th 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….but accurately adjusting construction spending for price changes is not easy, because the National Income and Product Accounts Handbook, Chapter 6, lists a multitude of privately published deflators that are used by the BEA for the various components of non-residential investment, ie, such as using the Handy-Whitman construction cost indexes for electric light and power plants and for utility building​s…in lieu of trying to find and adjust for all of the obscure price indices the BEA uses separately, we’ve opted to use the producer price index for final demand construction as an inexact shortcut in an attempt to make a reasonable price adjustment on the total.. That index showed that aggregate construction costs were down 0.2% month over month in October, after increasing by 0.1% in September and being unchanged in August…

On that basis, we could estimate that October’s construction costs were roughly 0.1% less than those of July, 0.1% less than those of August, and obviously 0.2% less than those of September. We’ll then use those percentage change differences to deflate the higher cost spending figures for those 3rd quarter months, which is arithmetically the same as inflating lower cost October construction spending, for purposes of comparison. Annualized construction spending in millions of dollars for the third quarter months is shown to be $2,164,747 in September, $2,162,132 in August, and $1,969,005 in July. Thus to adjust October’s nominal construction spending of $2,173,968 million for inflation in order to compare it to that of the third quarter, our arithmetic formula would be: 2,173,968 / (((2,164,747 * 0.998 ) + (2,162,132 * 0.999) + (2,143,139 * 0.999)) / 3) = 1.00936653, meaning real construction in October averaged 0.94% higher than that of the 3rd quarter, or that it rose at a 3.80% annual rate. To figure the effect of that change on GDP, we figure the difference between the third quarter inflation adjusted average and that of October and take the annualized result of that as a fraction of the inflation adjusted 3rd quarter GDP figure, and find that real October construction spending is rising at a rate that would add about 0.32 percentage points to 4th quarter GDP, assuming hypothetically that there would be no change in real construction over the next two months….

Value of Factory Shipments Fell 0.2% in October, Factory Inventories Fell 0.1%

The Full Report on Manufacturers’ Shipments, Inventories, & Orders (pdf) for October from the Census Bureau reported that the seasonally adjusted value of new orders for manufactured goods rose by $1.1 billion or 0.2 percent to $586.7 billion in October, following a decrease of 0.2% to $585.6 billion in September, which was revised from the 0.5% decrease to $584.2 billion that was reported for September new orders last month….however, since the Census Bureau does not even collect data on new orders for non durable goods for this widely watched “factory orders report”, both the “new orders” and “unfilled orders” sections of this report are really only accurate as revised updates to the October advance report on durable goods we reported on last week…on those durable goods 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 October, up following two consecutive monthly decreases, increased $1.1 billion or 0.2 percent to $586.7 billion, the U.S. Census Bureau reported today. This followed a 0.2 percent September decrease. Shipments, down three consecutive months, decreased $1.2 billion or 0.2 percent to $585.4 billion. This followed a 0.4 percent September decrease. Unfilled orders, up fifty of the last fifty-one months, increased $6.1 billion or 0.4 percent to $1,398.8 billion. This followed a 0.3 percent September increase. The unfilled orders-to-shipments ratio was 7.03, up from 6.97 in September. Inventories, down two consecutive months, decreased $0.4 billion or 0.1 percent to $856.8 billion. This followed a 0.3 percent September decrease. The inventories-to-shipments ratio was 1.46, unchanged from September.
• New Orders for manufactured durable goods in October, up following two consecutive monthly decreases, increased $0.8 billion or 0.3 percent to $286.8 billion, up from the previously published 0.2 percent increase. This followed a 0.4 percent September decrease. Transportation equipment, also up following two consecutive monthly decreases, led the increase, $0.5 billion or 0.5 percent to $97.1 billion. New orders for manufactured nondurable goods increased $0.3 billion or 0.1 percent to $299.9 billion.
• Shipments of manufactured durable goods in October, down three consecutive months, decreased $1.5 billion or 0.5 percent to $285.5 billion, up from the previously published 0.6 percent decrease. This followed a 0.8 percent September decrease. Transportation equipment, also down three consecutive months, drove the decrease, $1.9 billion or 2.0 percent to $92.0 billion. Shipments of manufactured nondurable goods, up following two consecutive monthly decreases, increased $0.3 billion or 0.1 percent to $299.9 billion. This followed a 0.1 percent September decrease. Petroleum and coal products, also up following two consecutive monthly decreases, drove the increase, $0.3 billion or 0.4 percent to $62.1 billion.
• Unfilled Orders for manufactured durable goods in October, up fifty of the last fifty-one months, increased $6.1 billion or 0.4 percent to $1,398.8 billion, unchanged from the previously published increase. This followed a 0.3 percent September increase. Transportation equipment, up forty-five of the last forty-six months, led the increase, $5.1 billion or 0.6 percent to $901.9 billion.
• Inventories of manufactured durable goods in October, down four of the last five months, decreased $0.2 billion or virtually unchanged to $527.7 billion, unchanged from the previously published decrease. This followed a 0.2 percent September decrease. Transportation equipment, also down four of the last five months, drove the decrease, $0.4 billion or 0.2 percent to $170.5 billion. Inventories of manufactured nondurable goods, down four of the last five months, decreased $0.3 billion or 0.1 percent to $329.1 billion. This followed a 0.4 percent September decrease. Food products, down six consecutive months, drove the decrease, $0.3 billion or 0.4 percent to $68.7 billion. .

To estimate the effect of those October factory inventories on 4th quarter GDP, they must first be adjusted for changes in price with appropriate components of the producer price index…by stage of fabrication, the value of finished goods inventories was 0.3% higher at $293,788 million; the value of work in process inventories was 0.3% lower at $249,816 million, and materials and supplies inventories were valued 0.1% lower at $313,240 million…the October producer price index reported that prices for finished goods were on average 0.1% higher, that prices for intermediate processed goods were on average 0.5% higher, and that prices for unprocessed goods were 4.1% higher…assuming similar valuations for like types of inventories, those price increases would suggest that October’s real finished goods inventories were about 0.2% higher, that real inventories of intermediate processed goods were about 0.8% lower, and that real raw material inventory inventories were about 4.2% lower…since real NIPA factory inventories were slightly higher in the 3rd quarter, accounting for just 2% of the aggregate inventory increase, that small 3rd quarter​increase, plus the modest decrease in real October factory inventories​, would be subtracted from the growth rate of 4th quarter GDP​, in the unlikely event that there are no further changes in November or December…

 

 

(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…)