January’s jobs report; December’s trade deficit, construction spending, factory inventories, wholesale trade and JOLTS

Major economic releases from last week included the Employment Situation Summary for January and the Job Openings and Labor Turnover Survey (JOLTS) report for December, both from the Bureau of Labor Statistics, and four December reports that included metrics that were only estimated in last week’s 4th quarter GDP release: the Commerce Department’s report on our International Trade for December; the December report on Construction Spending, the Full Report on Manufacturers’ Shipments, Inventories and Orders for December, and the December report on Wholesale Trade, Sales and Inventories, with all of those from the Census Bureau….in addition, late Friday the Fed released the Consumer Credit Report for December, which showed that overall consumer credit, a measure of non-real estate personal debt, increased by a seasonally adjusted $40.8 billion, or at a 9.6% annual rate, as non-revolving credit grew at a 5.8% rate to $3,763.4 billion in November, while revolving credit outstanding grew at a 20.2% rate to $1,382.2 billion….that left consumer credit up at a seasonally adjusted annual rate of 4.2% rate over the fourth quarter, and up 2.4% for the year..

The week’s privately issued reports included the ADP Employment Report for January, wherein the payroll processor reported that private employment rose by 183,000 in January, the light vehicle sales report for January from Wards Automotive, which estimated that vehicles sold at a 15.60 million annual rate in January, down from the 16.50 million annual sales rate reported in December, but up from the 15.00 million annual sales rate of January a year ago, and the Mortgage Monitor for February from ICE Black Knight Financial Services, which indicated that 3.72% of all mortgages were delinquent in December, down from the 3.74% delinquent in November, but up from the 3.57% delinquency rate in December of 2023, and that 0.35% of all mortgages were in the foreclosure process, up from the 0.34% that were in foreclosure in November, but down from the 0.40 of mortgages that were in foreclosure in December a year ago…the full Mortgage Monitor pdf for February is a dense, graphic rich and detailed 21 pages, which appears to include maps with the mortgage status of most of the most of the 17,000 properties that were damaged in recent the Californian wildfires…

This week also saw both of the widely followed manufacturing purchasing manager’s surveys from the Institute for Supply Management (ISM): the January Manufacturing Report On Business indicated that the manufacturing PMI (Purchasing Managers Index) rose to 50.9% in January, up from a revised 49.2% in December, with the above-50% reading indicating that a small plurality of manufacturing purchasing managers reported improving conditions in various facets of their business in January for the first time in 37 months, and the January Services Report On Business, which saw the Services index fall to 52.8% in January, down from 54.1% in December, meaning that a smaller plurality of service industry purchasing managers reported improving conditions in various facets of their business in January than in December…

Employers Added 143,000 Jobs in January after Big Revisions to 2024 data, Unemployment Rate at 4.0%

The Employment Situation Summary for January from the Bureau of Labor Statistics indicated an increase in payroll jobs that was a little less than what had been forecast for the month, while the unemployment rate fell to 4.0%, after revisions to the household survey data to adjust for a large previously unreported increase in working age population…Estimates extrapolated from the seasonally adjusted establishment survey data projected that employers added 143,000 jobs in January, after the previously estimated payroll job increase for December was revised from 256,000 to 307,000, and the payroll jobs increase for November was revised from 212,000 to 261,000, changes that also reflect the effects of updated seasonal adjustment models, which were also part of the annual benchmark revision….the unadjusted data, meanwhile, shows that there were actually 2,852,000 fewer payroll jobs remaining in January than in December, as the normal post holiday seasonal layoffs in sectors such as retail, wholesale, goods transportation, leisure and hospitality were normalized by the seasonal adjustments..

As is usual for a January jobs report, this report included the results of the annual benchmark revision, which set March 2024 (the benchmark month) payroll jobs at 157,517,000, 589,000 fewer jobs than were previously reported for that month, then from that, concurrently revised payroll job totals prior for every month in 2024 by quantities ranging from a downward revision of 511.000 jobs for last January to a revision of 711,000 fewer payroll jobs than was previously reported for September 2024 (as is shown in Table A of the press release)…incorporating this revision, there were 2,020,000 more jobs in January 2025 than in January of a year ago, and as a result, January’s non-farm payrolls were 6,760,000 above the 152,309,000 seasonally adjusted jobs that are now indicated for February 2020, the monthly payroll job high before before the pandemic hit….since all the newly revised establishment survey figures are now incorporated into this month’s establishment report as if the previously reported totals had never been reported, that’s the way we’ll cover it…

Seasonally adjusted job increases in January were seen in the service providing sectors and in government, while jobs in the goods producing sector netted out as unchanged….since the BLS summary of the job changes by sector is clear and a bit more detailed than our usual synopsis from the tables, we’ll again just quote from that summary here:

• Total nonfarm payroll employment rose by 143,000 in January, similar to the average monthly gain of 166,000 in 2024. In January, job gains occurred in health care, retail trade, and social assistance. Employment declined in the mining, quarrying, and oil and gas extraction industry. (See table B-1. See the note at the end of this news release and table A for more information about the annual benchmark process.)
• Health care added 44,000 jobs in January, with gains in hospitals (+14,000), nursing and residential care facilities (+13,000), and home health care services (+11,000). Job growth in health care averaged 57,000 per month in 2024.
• Employment in retail trade increased by 34,000 in January. Job gains occurred in general merchandise retailers (+31,000) and furniture and home furnishings retailers (+5,000). Electronics and appliance retailers lost 7,000 jobs. Retail trade employment had shown little net change in 2024.
• Social assistance added 22,000 jobs in January, led by individual and family services (+20,000). Employment also rose in the community food and housing, emergency, and other relief services industry (+4,000). Employment in social assistance grew by an average of 20,000 per month in 2024.
• Government employment continued to trend up in January (+32,000), similar to the average monthly gain in 2024 (+38,000).
• Employment in the mining, quarrying, and oil and gas extraction industry declined by 8,000 over the month, following little net change in 2024. In January, the job loss was concentrated in support activities for mining (-8,000).
• Employment showed little change over the month in other major industries, including construction, manufacturing, wholesale trade, transportation and warehousing, information, financial activities, professional and business services, leisure and hospitality, and other services.

The establishment survey also showed that average hourly pay for all employees rose by 17 cents an hour to $35.87 an hour in January, after it had increased by a revised 11 cents an hour in December; at the same time, the average hourly earnings of production and nonsupervisory employees increased by 16 cents to $30.84 an hour…employers also reported that the average workweek for all private payroll employees decreased by 0.1 hour to 34.1 hours in January and hence was unchanged year over year, while hours for production and non-supervisory personnel decreased by 0.2 hour to 33.5 hours…at the same time, the manufacturing workweek was unchanged at 40.0 hours, and average factory overtime was unchanged at 2.8 hours…

Meanwhile, the January household survey‘s data reflects the benchmark revision to the 2024 population figures, which posted figures after the revision for January but not for December, the month that was actually revised….underlying revisions showed that December’s civilian noninstitutional population had been understated by a rounded 2,871,000; that the civilian labor force figure had been understated by 2,106,000, that the December employment figure had been understated by 2,000,000, that the December unemployment figure had been understated by 105,000, and that the resulting count of those not in the labor force had been understated by 765,000…applying those revised figures to the key household survey ratios, BLS found the employment-population ratio had been understated by 0.1%, the labor force participation had been understated by 0.1%, and the unemployment rate had been understated by 0.1% in the previously published figures for 2024, before the population revision….however, even after making those determinations, the BLS left the December data in the household survey summary as it was previously published, while incorporating the revisions to December into the January published data…

With that, the January household survey data appears to indicate that the seasonally adjusted extrapolation of those who reported being employed rose by an estimated 2,234,000 to 163,895,000, and that the estimated number of those unemployed fell by 37,000 to 6,849,000; which thus led to an apparent 2,197,000 increase in the total labor force, and left those not in the labor force up by 850,000 at 100,265,000, all after an apparent population increase of 3,047,000….after adjusting for the effect of the unpublished population revision to December’s figures on those changes, then, we find that the number employed in January was actually up by 234,000, that the number unemployed was down by 142,000, and hence the labor force rose by a rounded 91,000, and those not in the labor force rose by 85,000, as the population actually rose by 176,000…given those revised December figures, which are not revised in the report, the labor force participation rate was actually unchanged at 62.6%, the employment to population ratio, which we could think of as an employment rate, remained at 60.2% in January, while the 142,000 decrease in the number counted as unemployed was apparently large enough to lower the unemployment rate from a revised 4.2% in December to 4.0% in January ….at the same time, the number of those who reported they were forced to accept just part time work rose by 119,000, from 4,358,000 in December to 4,477,000 in January, which was enough to reverse the effect of the decrease in unemployment and leave the alternative measure of unemployment, U-6, which includes those “employed part time for economic reasons”, unchanged at 7.5% of the labor force in January…

Like most reports from the Bureau of Labor Statistics, the employment situation press release itself is usually 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 along side of the press release to avoid the need to scroll up and down the page to view the tables you want to see..

Job Openings Fell Sharply In December, Hiring and Job Quitting Rose, Layoffs were a bit Lower

The Job Openings and Labor Turnover Survey (JOLTS) report for December from the Bureau of Labor Statistics estimated that seasonally adjusted job openings decreased by 556,000, from 8,156,000 in November to 7,600,000 in December, after November’s job openings were revised 58,000 higher, from 8,098,000 to 8,156,000….December’s jobs openings were also 14.5% lower than the 8,889,000 job openings reported for December a year ago, as the job opening ratio expressed as a percentage of the employed fell from 4.9% in November to 4.5% in December, and was also down from 5.3% in December a year ago…the finance and insurance sector, with a 136,000 job opening decrease to 291,000 openings, saw the largest percentage job openings decrease, while arts, entertainment, and recreation saw job openings increase from 115,000 to 180,000 (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 table for the data cited, which are linked to at the end of the text…

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 December, seasonally adjusted new hires totaled 5,462,000, up by 89,000 from the revised 5,373,000 who were hired or rehired in November, even as the hiring rate as a percentage of all employed was unchanged at 3.4% in December, but was still down from the 3.7% hiring rate in December a year earlier (details of hiring by sector since September are in table 2)….meanwhile, total separations rose by 38,000, from 5,231,000 in November to 5,269,000 in December, as the separations rate as a percentage of the employed remained at 3.3% in December, which was still down from the 3.4% separations rate in December a year ago (see table 3 for details)…subtracting the 5,269,000 total separations from the total new hires of 5,462,000 would imply an increase of 193,000 jobs in December, far less than the revised payroll job increase of 307,000 for December reported in the January establishment survey, and just outside the expected +/-110,000 margin of error in these incomplete survey extrapolations…

Breaking down the seasonally adjusted job separations, the BLS finds that 3,197,000 of us voluntarily quit our jobs in December, up by 67,000 from the revised 3,130,000 who quit their jobs in November, while the quits rate, widely watched as an indicator of worker confidence, remained at 2.0% of total employment, but was still down from 2.2% a year earlier (see details in table 4)….in addition to those who quit, 1,771,000 were either laid off, fired or otherwise discharged in December, down by 29,000 from the revised 1,800,000 who were discharged in November, as the discharges rate remained at 1.1% of all those who were employed during the month, which was up from the 1.0% the discharges rate of a year earlier (see details in table 5)….meanwhile, other separations, which includes retirements and deaths, were at 302,000 in December, up from 301,000 in November, for an ‘other separations rate’ of 0.2%, same as in November and as in December 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 using the links to tables at the bottom of the press release…

Trade Deficit Rose 24.7% on Record Imports in December, Was Up 17.0% in 2024

Our trade deficit rose 24.7% to a 33 month high in December, as the value of our exports decreased while the value of our imports increased….the Census report on our international trade in goods and services for December indicated that our seasonally adjusted goods and services trade deficit increased by $19.5 billion to $98.4 billion in December, from a revised November deficit of $78.9 billion, which was previously reported at $78.2 billion.…the value of our December exports fell by a rounded $7.1 billion or 2.6% to $266.5 billion on a $7.5 billion decrease to $170.2 billion in our exports of goods, which was partly offset by an $0.4 billion increase to $96.3 billion in our exports of services, while the value of our imports rose by a rounded $12.4 billion or 3.5% to $364.9 billion on an $11.4 billion increase to $293.1 billion in our imports of goods and a $1.0 billion increase to $71.8 billion in our imports of services…export prices were on average 0.3% higher in December, which means that the decrease in our real exports was roughly 0.3% greater than the nominal value increase, or that our real exports likely fell on the order of 2.9%, while import prices were 0.1% higher, meaning that the jump in the value of our imports was also mostly real, ie, not due to higher prices, and that our real imports probably rose by about 3.4%…

With this report, the seasonally adjusted goods data for every prior month of 2024 were revised, which thus means that previously published quarter over quarter trade figures for GDP need to be revised as well….however, that won’t be done until the GDP annual revision next September, which means that 4th quarter GDP will be computed by comparing revised 4th quarter trade data to unrevised 3rd quarter data… for all of 2024, the revised data indicated goods and services deficit was $914.4 billion, up $133.5 billion or 79.0% from the $784.9 billion deficit of 2023, as our 2024 exports were valued at $3,191.6 billion, up $119.8 billion from 2023, while our imports were valued at $4,110.0 billion, up $253.3 billion from 2023.

The $7.5 billion decrease in the value of our December exports of goods was due to lower exports of consumer goods, of industrial supplies and materials, of capital goods, and of automotive products…referencing the Full Release and Tables for December (pdf), in Exhibit 7 we find that our exports of consumer goods fell by $1,834 million to $19,819 million, on a $1,355 million decrease in our exports of pharmaceutical preparations, and that our exports of industrial supplies and materials fell by $1,832 million to $59,827 million, led by a $915 decrease in our exports of crude oil and a $348 million decrease in our exports of petroleum products other than fuel oil, which were partly offset by a $611 million increase in our exports of nonmonetary gold and a $535 million increase in our exports of natural gas …in addition, our exports of capital goods fell by $1,392 million to $52,415 million as a $910 million decrease in our exports of computers was offset by a $1,350 million increase in our exports of civilian aircraft, and our exports of automotive vehicles, parts, and engines fell by $931 million to $13,014 million on a $374 million decrease in our exports of trucks, buses, and special purpose vehicles, and a $313 million decrease in our exports of parts and accessories other than engines, chassis, and tires…,in addition, our exports of foods, feeds and beverages fell by $119 million to $14,518 million on lower exports of nuts and wheat, while our exports of those goods not categorized by end use fell by $563 million to $9,217 million….

Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our goods imports and shows that greater imports of industrial supplies and materials and of consumer goods more than accounted for the $11.4 billion increase in our imports, whilee those increases were partly offset by lower imports of imports of automotive vehicles, parts, and engines and of foods and feeds…our imports of industrial supplies and materials rose by $10,191 million to $67,309 million as a $9,190 million increase in our imports of finished metal shapes, a $1,030 million increase in our imports of nonmonetary gold, a $448 million increase in our imports of crude oil, a $344 million increase in our imports of petroleum products other than fuel oil, and a $316 increase in our imports of precious metals other than gold were partly offset by a $535 million decrease in our imports of nuclear fuel materials. while our imports of consumer goods rose by $2,179 million to $72,252 million on a $823 million increase in our imports of toys, games, and sporting goods, an $812 million increase in our imports of cellphones, a $482 million increase in our imports of pharmaceutical preparations, and a $323 million increase in our imports of gem diamonds….at the same time, our imports of capital goods rose by $1,269 million to $83,761 million as a $1,192 million increase in our imports of computers and a $640 million increase in our imports of computer accessories were partly offset by a $1,102 million decrease in our imports of civilian aircraft and a $311 million decrease in our imports of generators and accessories……partly offsetting the increases in those import categories, our imports of automotive vehicles, parts and engines fell by $2,153 million to $37,112 million as a $1,649 million decrease in our imports of passenger cars and a $642 million decrease in our imports of automotive parts other than engines, chassis, and tires were partly offset by a $301 million increase in our imports 'of trucks, buses, and special purpose vehicles, our imports of foods, feeds, and beverages fell by $321 million to $19,198 million on lower imports of ‘other foods’, and our imports of goods not categorized by end use fell by $103 million to $10,627 million.

The press release for this month’s report also summarizes Exhibit 19 in the pdf, which gives us surplus and deficit details on our goods trade with selected countries…

The December figures show surpluses, in billions of dollars, with Netherlands ($5.0), South and Central America ($3.5), United Kingdom ($2.3), Hong Kong ($0.7), Brazil ($0.4), Saudi Arabia ($0.4), Belgium ($0.3), and Australia ($0.2). Deficits were recorded, in billions of dollars, with China ($25.3), European Union ($20.4), Mexico ($15.2), Switzerland ($13.0), Vietnam ($11.4), Canada ($7.9), Germany ($7.6), Taiwan ($6.9), Ireland ($6.2), South Korea ($5.6), Japan ($5.5), India ($4.9), Italy ($4.1), Malaysia ($2.5), France ($1.1), Israel ($0.8), and Singapore ($0.4).

• The deficit with Switzerland increased $9.1 billion to $13.0 billion in December. Exports decreased $0.7 billion to $1.2 billion and imports increased $8.4 billion to $14.2 billion.
• The deficit with Canada increased $2.9 billion to $7.9 billion in December. Exports decreased $0.4 billion to $29.1 billion and imports increased $2.5 billion to $37.0 billion.
• The deficit with Ireland decreased $3.1 billion to $6.2 billion in December. Exports decreased $0.1 billion to $1.2 billion and imports decreased $3.2 billion to $7.5 billion.

In the advance estimate of 4th quarter GDP published last week, our December trade deficit in goods was estimated based on the sketchy Advance Report on our International Trade in Goods which was released just before the GDP release…that report estimated that our seasonally adjusted December goods trade deficit was at $122,111 million, up $18,607 million from $103,504 million in November on a Census basis, on a $7,845 million decrease to $167,495 million in our exports of goods and a $10,762 million increase to $289,606 million in our imports of goods…this report revises that and shows that our actual Census basis goods trade deficit in December was at $122,014 million, on Census adjusted goods exports of $168,808 million and adjusted goods imports of $290,822 million…at the same time, the November goods trade deficit was revised up from the $103,504 million indicated in that advance report to $104,054 million, and the October goods trade deficit was revised up from $97,529 million to $98,060 million …net, those revisions from the previously published figures would suggest that the 4th quarter trade deficit in goods was roughly $984 million more than the figures used for trade in goods in the GDP report, or around $3.9 billion more on an annualized basis, indicating a net revision which would subtract about 0.05 or 0.06 percentage points from 4th quarter GDP when the 2nd estimate is released at the end of this month….

For our trade in services, the BEA’s Key source data and assumptions (xls) for the advance estimate of fourth quarter GDP provides aggregate exports and imports of services at annual rates on an international-transactions-accounts basis, indicating that the BEA assumed a $3.9 billion increase in exports of services, and a $15.2 billion increase in imports of services on an annual basis in December when computing 4th quarter GDP….while there is no comparable annualized metric or adjusted data in this trade report that we could directly compare that to, this release does show that our exports of services rose $0.445 billion in December after November’s exports of services were revised $0.075 billion higher, and that our imports of services rose $1.019 billion in December after November’s imports of services were revised $0.143 billion higher…after multiplying those revised monthly figures by 12 to crudely approximate an annualized change, that suggests that the annual rate for December exports of services used in the GDP report was on the order of $2.3 billion too low, while the annual rate for December imports of services used in the GDP report was about $1.3 billion too high…applying those annualized differences, and also 'annualizing' the services trade revisions for November vis a vis those reported in the GDP report in the same manner, the annual rate for 4th quarter services exports would be revised about $3.2 billion higher, while the annual rate for 4th quarter services imports would be revised about $0.4 billion higher…a resulting upward revision of about $2.8 billion annualized to our total services surplus in NIPA terms should be enough to add 0.03 or 0.04 percentage points to 4th quarter GDP….combining our estimated revisions to goods trade with those services revisions, it appears that revisions generated by this report would therefore subtract a net of about 0.02 percentage points from the 4th quarter GDP revisions when they’re released on February 29th, with a wide margin of error on that estimate given our crude method of estimating annualized services…

Construction Spending Rose 0.5% in December after Prior Months Were Revised Much Higher

The Census Bureau’s report on construction spending for December (pdf) estimated that the month’s seasonally adjusted construction spending would work out to $2,192.2 billion annually if extrapolated over an entire year, which was 0.5 percent (± 0.8 percent)* above the revised November estimate of a $2,180.3 billion rate annually, and 13.9 percent (±1.5 percent) above the estimated annualized level of construction spending in December of last year…the annualized November construction spending estimate was revised almost 1.3% higher, from $2,152.6 billion to $2,180.3 billion, and the annual rate of construction spending for October was revised about 1.1% higher, from $2,152.3 billion to $2,176.6 billion…for all of 2024, construction spending totaled $2,154.4 billion, 6.5 percent (±1.0 percent) above the $1,626.4 billion spent in 2023…

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 $1,688.5 billion, 0.9 percent (±0.5 percent) above the revised November estimate of $1,674.1 billion. Residential construction was at a seasonally adjusted annual rate of $939.5 billion in December, 1.5 percent (±1.3 percent) above the revised November estimate of $925.5 billion. Nonresidential construction was at a seasonally adjusted annual rate of $749.0 billion in December, 0.1 percent (±0.5 percent)* above the revised November estimate of $748.6 billion.
• The value of private construction in 2024 was $1,661.7 billion, 5.6 percent (±1.2 percent) above the $1,573.0 billion spent in 2023. Residential construction in 2024 was $917.9 billion, 5.9 percent (±2.1 percent) above the 2023 figure of $866.9 billion and nonresidential construction was $743.8 billion, 5.3 percent (±1.2 percent) above the $706.1 billion in 2023.
• Public Construction: In December, the estimated seasonally adjusted annual rate of public construction spending was $503.6 billion, 0.5 percent (±1.6 percent)* below the revised November estimate of $506.2 billion. Educational construction was at a seasonally adjusted annual rate of $109.5 billion, 0.6 percent (±2.0 percent)* below the revised November estimate of $110.2 billion. Highway construction was at a seasonally adjusted annual rate of $143.3 billion, 0.7 percent (±3.5 percent)* above the revised November estimate of $142.3 billion.
• The value of public construction in 2024 was $492.7 billion, 9.3 percent (±2.0 percent) above the $450.7 billion spent in 2023. Educational construction in 2024 was $105.2 billion, 8.5 percent (±4.1 percent) above the 2023 figure of $97.0 billion and highway construction was $142.7 billion, 4.1 percent (±4.4 percent)* above the $137.0 billion in 2023.

Construction spending for all three months of the fourth quarter was higher than was estimated in the advance estimate of 4th quarter GDP last week. As we’ve already noted above, October’s annualized construction spending figure was revised $24.3 billion higher, and November’s annualized construction spending figure was revised $27.7 billion higher…The BEA’s key source data and assumptions​ (xls) accompanying last week’s 4th quarter GDP report indicates that they had estimated that December’s residential construction would increase by an annualized $1.8 billion from previously published November figures, that nonresidential construction would decrease by an annualized $1.4 billion from last month’s report, and that December’s public construction would increase by an annualized $0.2 billion from the figures shown in November’s construction spending report….hence, by totaling the changes of those BEA estimates, we find the BEA had estimated December construction spending would be $0.6 higher than the previously reported November level, which ha​s​ now been revised $27.7 billion higher…since this report indicated that total construction spending for December was $11.9 billion higher than the revised November figure, that means the net of the annualized construction figures used for December in the GDP report was $39.0 billion too low…averaging the differences between the monthly annual rates in this report and those used in the GDP report for the three months of the 4th quarter would mean that this report suggests that the nominal construction spending figures used as source for the 4th quarter GDP report was underestimated by $30.3 billion (at an annual rate), implying an upward revision to the related GDP components at a rate that should result in addition of about 0.32 percentage points to 4th quarter GDP when the 2nd estimate is released at the end of the month, an estimate that should be considered very rough, since we have only allowed for an average aggregate deflator across all three types of construction for the revisions, rather than one addressing the specific components revised…

Factory Shipments Rose 0.6% in December; Factory Inventories Up 0.4%

The Full Report on Manufacturers’ Shipments, Inventories, & Orders (pdf) for December from the Census Bureau reported that the seasonally adjusted value of new orders for manufactured goods decreased by $5.2 billion or 0.9 percent to $578.5 billion, in December, following a decrease of 0.8% to $583.7 billion in November, which was revised down from the 0.4% decrease to $586.1 billion that was reported for November’s new orders a month ago…. however, since the Census Bureau does not even collect orders data on non durable goods for this widely watched “factory orders report”, both the “new orders” and “unfilled orders” sections of this report are really only useful as revised updates to the December advance report on durable goods which was released 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 December, down four of the last five months, decreased $5.2 billion or 0.9 percent to $578.5 billion, the U.S. Census Bureau reported today. This followed a 0.8 percent November decrease. Shipments, up two consecutive months, increased $3.7 billion or 0.6 percent to $589.7 billion. This followed a 0.1 percent November increase. Unfilled orders, down following five consecutive monthly increases, decreased $6.4 billion or 0.5 percent to $1,396.3 billion. This followed a 0.2 percent November increase. The unfilled orders-to-shipments ratio was 6.93, down from 7.06 in November. Inventories, up two consecutive months, increased $3.3 billion or 0.4 percent to $863.2 billion. This followed a 0.4 percent November increase. The inventories-to-shipments ratio was 1.46, down from 1.47 in November.
• New Orders for manufactured durable goods in December, down four of the last five months, decreased $6.2 billion or 2.2 percent to $276.1 billion, unchanged from the previously published decrease. This followed a 2.0 percent November decrease. Transportation equipment, also down four of the last five months, drove the decrease, $6.9 billion or 7.4 percent to $86.1 billion. New orders for manufactured nondurable goods increased $1.0 billion or 0.3 percent to $302.4 billion.
• Shipments of manufactured durable goods in December, up following four consecutive monthly decreases, increased $2.7 billion or 0.9 percent to $287.3 billion, unchanged from the previously published increase. This followed a 0.3 percent November decrease. Transportation equipment, also up following four consecutive monthly decreases, led the increase, $2.6 billion or 2.8 percent to $93.3 billion. Shipments of manufactured nondurable goods, up three consecutive months, increased $1.0 billion or 0.3 percent to $302.4 billion. This followed a 0.4 percent November increase. Petroleum and coal products, also up three consecutive months, led the increase, $0.5 billion or 0.7 percent to $63.1 billion.
• Unfilled Orders for manufactured durable goods in December, down following five consecutive monthly increases, decreased $6.4 billion or 0.5 percent to $1,396.3 billion, unchanged from the previously published decrease. This followed a 0.2 percent November increase. Transportation equipment, also down following five consecutive monthly increases, drove the decrease, $7.2 billion or 0.8 percent to $898.4 billion.
• Inventories of manufactured durable goods in December, up two consecutive months, increased $2.2 billion or 0.4 percent to $532.7 billion, unchanged from the previously published increase. This followed a 0.5 percent November increase. Transportation equipment, also up two consecutive months, led the increase, $1.9 billion or 1.1 percent to $174.5 billion. Inventories of manufactured nondurable goods, up two consecutive months, increased $1.1 billion or 0.3 percent to $330.5 billion. This followed a 0.1 percent November increase. Petroleum and coal products, also up two consecutive months, led the increase, $0.9 billion or 1.9 percent to $48.2 billion. By stage of fabrication, December materials and supplies decreased 0.1 percent in durable goods and 0.3 percent in nondurable goods. Work in process increased 1.2 percent in both durable and nondurable goods. Finished goods were virtually unchanged in durable goods and increased 0.4 percent in nondurable goods.

As you see above, December’s inventories of durable goods were unchanged from the previously published increase, which had been incorporated into last week’s 4th quarter GDP report…on the other hand, the BEA’s key source data and assumptions (xls) for 4th quarter GDP indicates that they had estimated that the value of non-durable goods inventories would increase by $1.2 billion on a Census basis in December before they estimated the 4th quarter’s output, so the actual $1.1 billion increase, following an unrevised $0.4 billion increase in November’s non-durable goods inventories, would indicate that they overestimated the end of 4th quarter GDP non-durable factory inventory component by about $0.1 billion….that would work out to around $0.4 billion on an annualized basis, which would suggest that the change in 4th quarter GDP might have to be revised downwards by 0.01 percentage points to account for what this report shows..

Wholesale Sales Rose 1.0% in December; Wholesale Inventories Fell 0.5%

The December report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at “$686.5 billion, up 1.0 percent (±0.5 percent) from the revised November level and were up 2.8 percent (±1.1 percent) from the revised December 2023 level”… the November preliminary estimate was revised up to $679.75 billion from the $678.0 billion in sales reported last month, which meant that “the October 2024 to November 2024 percent change was revised from the preliminary estimate of up 0.6 percent (±0.4 percent) to up 0.9 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 a shelf or in intermediate storage represent goods that were produced ​e​ven if they were not sold, and this December report estimated that wholesale inventories were valued at a seasonally adjusted $898.5 billion at month end, down 0.5 percent (±0.2 percent) from the revised November level and 0.1 percent (±0.5 percent)* lower than in December a year ago, with the November preliminary estimate revised higher, from $901.6 billion to $902.6 billion at the same time, now down just 0.1 percent (±0.2 percent) from October….

In the advance report on 4th quarter GDP of last week, wholesale inventories were estimated based on the sketchy Advance Report on Wholesale and Retail Inventories​, which was released the day before the GDP release…that report estimated that our seasonally adjusted wholesale inventories were valued at $898,035 million at the end of December, down from $902,189 million in November….that’s a net $0.853 billion less than the $898,472 billion and $902,605 billion for those two month that this report shows, which would imply that the quarterly change in 4th quarter wholesale inventories was underestimated at roughly a $3.4 billion annual rate…assuming there’s no distortion caused by reweighting the inflation adjustments to those inventories, that would mean that the growth rate of 4th quarter GDP was underestimated by around 0.04 or 0.05 percentage points, just based on what this report shows…

 

 

(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…)