June’s consumer and producer prices, retail sales, industrial production, and new housing starts; May’s business inventories
Major reports that were released last week included the June Consumer Price Index,the June Producer Price Index, and the June Import-Export Price Index, all from the Bureau of Labor Statistics, and the Retail Sales Report for June, the June report on New Residential Construction and the Business Sales and Inventories Report for May, all from the Census Bureau, and the June report on Industrial Production and Capacity Utilization from the Fed…in addition, the week also saw the release of the Regional and State Employment and Unemployment Report for June, a report from the Bureau of Labor Statistics which breaks down their two employment surveys from the monthly national jobs report by state and region….while the text of this report provides a useful summary of this data, the serious statistics aggregation can be found in the tables linked at the end of the report, where one can find the civilian labor force data and the change in payrolls by industry for each of the 50 states, the District of Columbia, Puerto Rico, and the Virgin Islands…
This week also saw the release of the first two Fed regional manufacturing reports for July: the Empire State Manufacturing Survey from the New York Fed, which covers New York state, southwestern Connecticut, northern New Jersey, reported their headline general business conditions index jumped from –16.0 June to +5.5 in July, its first positive reading since February, indicating that a modest plurality of Second District manufacturers saw improving business conditions during the month, while the Philadelphia Fed Manufacturing Outlook Survey, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest diffusion index of manufacturing conditions rose to +15.9 in July, after readings at –4.0 in both May and June, which they explain was because “32 percent of the firms reported increases in general activity this month (up from 25 percent last month), while 16 percent reported decreases (down from 28 percent); 49 percent reported no change (up from 44 percent)…” (notice that the index value is computed by subtracting the percent of negative responses from positive ones, while ignoring the neutral ones)…
Consumer Prices Rose 0.3% in June on Higher Prices for Food, Shelter, Clothing, Gasoline, Electricity & Healthcare
The consumer price index was 0.3% higher in June, as higher prices for rent, fuel, electricity, groceries, eating out, medical goods and services, appliances, recreational goods, household and health insurance, and car and truck rental were only partly offset by lower prices for new and used vehicles, lodging away from home, telephone hardware, and admissions to sporting events….the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that their weighted average of seasonally adjusted prices for consumer goods and services was 0.3% higher in June, after being 0.1% higher in May, 0.2% higher in April, 0.1% lower in March, 0.2% higher in February, 0.5% higher in January, 0.4% higher in December, 0.3% higher in November, 0.2% higher in October, 0.2% higher in September. 0.2% higher last August, 0.2% higher last July, and unchanged in June 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 321.465 in May to 322.561 in June, which left it statistically 2.6692% higher than the index reading of 314.175 from June of last year, which is reported as a 2.7% year over year increase, more than the 2.4% year over year increase that was reported for May, with that widely cited year over year change reflecting the effect of last June’s 0.0% increase dropping out of the comparison and being replaced by the current month’s +0.3%, and not telling us anything about inflation beyond that….with higher food and energy prices major contributors to the 0.3% CPI increase. seasonally adjusted core prices, which exclude both food and energy, were up by 0.2% for the month, as the unadjusted core price index rose from 327.509 to 328.364, which left the core index 2.934455% ahead of its year ago reading of 319.003, which is reported as a 2.9% year over year increase, higher than the 2.8% year over year core price increase that was reported for May, but still 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 0.9% higher in June, after being 1.0% lower in May, 0.7% higher in April, 2.4% lower in March, 0.2% higher in February, 1.1% higher in January, 2.4% higher in December, 0.1% higher in November, 0.2% lower in October, 1.0% lower in September, 1.0% lower in August, and 0.4% lower last July, but is still 0.8% lower than in June of a year ago….the price index for energy commodities was 1.0% higher in June , while the price index for energy services was 0.9% higher, after the energy services price index had risen by 0.4% in May….the energy commodities index was up 1.0% on a 1.0% increase in the price index for gasoline and a 1.3% increase in the price index for fuel oil, while prices for “other energy commodities”, including propane, kerosene, and firewood, averaged 1.1% higher…within energy services, the price index for utility gas service was 0.5% higher in June, after being 1.0% lower in May, and is still 14.2% higher than it was a year ago, while the electricity price index was 1.0% higher in June, after being 0.9% higher in May…. energy commodities are still averaging 7.9% below their year ago levels, with gasoline prices averaging 8.3% lower than they were a year ago, while the energy services price index is now up 7.5% from last June, as electricity prices are now averaging 5.8% higher than a year ago…
Meanwhile, the seasonally adjusted food price index was 0.3% higher in June, after being 0.3% higher in May, 0.1% lower in April, 0.4% higher in March, 0.2% higher in February, 0.4% higher in January, 0.3% higher in December, 0.3% higher in November, 0.2% higher in October, 0.3% higher in September, 0.2% higher in August, and 0.1% higher last July, as the price index for food purchased for use at home was 0.3% higher in May, after being 0.3% higher in May. 0.4% lower in April, 0.5% higher in March, unchanged in February, and 0.5% higher in January, while the price index for food bought to eat away from home was 0.4% higher, as average prices at fast food outlets rose 0.2% and average prices at full service restaurants rose 0.5%, while the price index for food at employee sites and schools was 2.7% higher, and prices for other food away from home averaged 0.5% higher…
In the food at home categories, the price index for cereals and bakery products was 0.2% lower, even though bread prices rose 0.1%, as the price index for flour and prepared flour mixes fell 1.2%, the price index for rice, pasta, and cornmeal also fell 1.2%, and the price index for cookies was 1.7% lower.…at the same time, the price index for the meats, poultry, fish, and eggs food group was 0.1% lower even though beef prices rose 2.0%, as the price index for ham fell 2.5%, and egg prices were 7.4% lower….in addition, the seasonally adjusted price index for dairy products was 0.3% lower, as average milk prices fell 0.7% while the price index for cheese and related products was 0.2% higher….on the other hand, the fruits and vegetables price index was 0.9% higher, as the price index for fresh fruits rose 1.3%, the price index for fresh vegetables rose 0.6%, and the price index for frozen fruits and vegetables was 1.2% higher.…in addition, the beverages price index was 1.4% higher, as the price index for noncarbonated juices and drinks rose 2.0% even and the price index for coffee was 2.2% higher….lastly, the price index for the ‘other foods at home’ category was 0.2% higher, as the price index for sugar and sweets rose 0.9%, the price index for peanut butter rose 2.2%, the price index for soups rose 1.1%, and the price index for spices, seasonings, condiments, and sauces was 1.4% higher…
Among the seasonally adjusted core components of the CPI, which rose by 0.2% in June, after rising by 0.1% in May, by 0.2% in April, 0.1% in March, 0.2% in February, by 0.4% in January. by 0.2% in December, by 0.3% in August, September, October and November, and by 0.2% last July, the composite price index of all goods less food and energy goods was 0.2% higher in June, while the more heavily weighted composite index for all services less energy services was 0.3% higher..
Among the goods components of the core price index, which will initially be used by the Bureau of Economic Analysis to adjust June’s retail sales for inflation in national accounts data, the price index for household furnishings and supplies was 1.0% higher, as the price index for window and floor coverings rose 4.2%, the price index for furniture and bedding rose 0.4%, the price index for major appliances rose 1.9%, the price index for nonelectric cookware and tableware rose 3.7% and the price index for tools, hardware and supplies was 1.2% higher….at the same time, the apparel price index was 0.4% higher on a 3.9% increase in the price index for women’s dresses, a 1.6% increase in the price index for women’s underwear, nightwear, swimwear, and accessories, a 4.3% increase in the price index for men’s shirts and sweaters, and a 2.6% increase in the price index for men’s footwear….on the other hand, the price index for transportation commodities other than fuel was was 0.4% lower, as average prices for new cars fell 0.4%, the price index for used cars and trucks fell 0.7%, and the price index for motor oil, coolant, and fluids was 2.2% lower…however, the price index for medical care commodities was 0.1% higher as the price index for prescription drugs rose 0.4% and the price index for medical equipment and supplies was 0.5% higher…in addition, the recreational commodities index was 0.8% higher, as the price index for video equipment other than TVs rose 4.5%, the price index for audio equipment rose 2.9%, the price index for sporting goods including bicycles rose 1.4%, the price index for toys rose 1.8%, the price index for photographic equipment and supplies rose 0.7%, and the price index for recreational books was 3.8% higher… meanwhile, the education and communication commodities index was unchanged, as a 1.4% increase in the price index for computers, peripherals, and smart home assistants was offset by a 0.9% decrease in the price index telephone hardware, calculators, and other consumer information items.…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 0.9% increase in the price index for cosmetics, perfume, bath, nail preparations and implements, and a 0.7% increase in the price index for miscellaneous personal goods…
Within core services, the price index for shelter was 0.2% higher, as rents rose 0.2% and homeowner’s equivalent rent rose 0.3%, but prices for lodging away from home at hotels and motels were 3.6% lower, while the price index for household insurance was 1.1% higher, and the price index for water, sewers and trash collection services was 0.4% higher, and the price index for moving, storage, and freight expense was 0.3% higher… at the same time, the price index for medical care services was 0.6% higher, as the price index for dental services rose 1.3%, the price index for services by medical professionals other than doctors or dentists rose 0.8%, price index for hospital services was 0.7% higher, and the price index for health insurance was 0.6% higher….in addition, the transportation services price index was 0.2% higher, as the price index for vehicle body work rose 0.7%, and the price index for car and truck rental was 3.2% higher….in addition, the recreation services price index was also 0.2% higher, as the price index for cable, satellite, and live streaming television service rose 0.4%, and the price index for pet services was 1.6% higher…however, the price index for education and communication services was 0.1% higher, as the price index for internet services and electronic information providers rose 0.5%, the price index for postage and delivery services rose 0.4%, and the price index for residential telephone services was 0.7% higher…lastly, the index for other personal services was 0.6% higher, as the price index for laundry and dry cleaning rose 1.6% and the price index for apparel services other than laundry and dry cleaning was 1.9% higher..
Retail Sales Rose 0.6% in June
Seasonally adjusted retail sales rose 0.6% in June after minor revisions to retail sales for April and May….the Advance Retail Sales Report for June (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $720.1 billion during the month, which was 0.6 percent (±0.5 percent) higher than May’s revised sales of $715.5 billion, and was 3.9 percent (±0.5 percent) above the adjusted sales in June of last year…May’s seasonally adjusted sales were revised slightly higher, from the $715.4 billion reported last month to $715.5 billion, while April’s adjusted sales were revised less than half of 0.1% lower, from $722.0 billion to $721.8 billion, and as a result of those small revisions the percent change from April to May was left unchanged at down 0.9 percent (±0.2 percent)….estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated June’s sales actually fell 5.3%, from $753,390 million in May to $713,652 million in June, while they were up 3.7% from the $688,151 million of sales in June a year ago…
Included below is the table of the monthly and yearly percentage changes in sales by business type that we’ve taken from the Census retail sales pdf….the first pair of columns below gives us the seasonally adjusted percentage change in sales for each type of retail business from May to June and the year over year percentage change for those businesses since last June; the second pair of columns gives us the revised figures for May’s report, with April to May and the May 2024 to May 2025 change shown in those two columns…for your reference, our copy of this table as it appeared in the May advance report, before the revisions you see below, is here….lastly, the third pair of columns below shows the percentage change of the recent 3 months of sales (April, May and June) from the preceding three months (January, February and March) and from the same three months of a year ago….(click to enlarge)
The figures shown in that fifth column above, ie, comparing the sales of April, May and June to those of January, February and March, give us a quick sense of how the change in retail sales will impact the change in 2nd quarter GDP….as you can see, nominal retail sales for the three months of the second quarter were up by a modest 0.5% from the first three months of this year, which still need to be adjusted for the price changes of the corresponding months before inclusion in the growth of GDP..
To compute June’s real personal consumption of goods data for national accounts from this June retail sales report, the BEA will use the corresponding price changes from the June consumer price index, which we reviewed above…to estimate what they will find, we’ll first separate out the volatile sales of gasoline from the other totals…from the third line on the above table, we can see that June retail sales excluding sales at gas stations were also up by 0.6%…..then, by subtracting the actual dollar amounts representing the 0.5% increase in grocery & beverage sales and the 0.6% increase in food services sales from that total, we find that core retail sales were up by more than 0.7% for the month….since the June CPI report showed that the composite price index of all goods less food and energy goods was 0.2% higher in June, we can thus figure that real retail sales excluding food and energy will show an increase of more than 0.5%…however, the actual adjustment in national accounts for each of the types of sales shown above will vary by the change in the related price index…for instance, while nominal sales at motor vehicle & parts dealers were up 1.2% in June, the June price index for transportation commodities other than fuel was 0.4% lower, which would suggest that real unit sales at auto & parts dealers were on the order of 1.6% higher, once lower prices are taken into account….similarly, while nominal sales at clothing stores were 0.9% higher in June, the apparel price index was 0.4% higher, which means that real sales of clothing only rose around 0.5%…
In addition to figuring those core retail sales, to make an estimate of the month’s change in real sales, we’ll need to adjust food and energy retail sales for their price changes separately, just as the BEA will do.…the June CPI report showed that the food price index was 0.3% higher, as the price index for food purchased for use at home was 0.3% higher in June, while the index for food bought to eat away from home was 0.4% higher, as prices at fast food outlets rose 0.2% and prices at full service restaurants rose 0.5%…thus, the 0.5% increase in nominal sales at food and beverage stores was partly due to higher prices, and real sales of groceries were only up 0.2%….meanwhile, the 0.6% increase in nominal sales at bars and restaurants, once adjusted for 0.4% higher prices, suggests that real sales at bars and restaurants probably rose around 0.2% during the month….on the other hand, while sales at gas stations were reportedly unchanged, there was an 1.0% increase in the price of gasoline during the month, which would suggest that real sales of gasoline were 1.0% lower, with a caveat that gasoline stations do sell more than gasoline, and those sales, which are not itemized here, should not be adjusted with the change in gasoline prices…reweighing and averaging the real sales changes that we have thus estimated back together, and excluding food services, we can then estimate that the income and outlays report for June will show that real personal consumption of goods rose by more than 0.5% in June, after falling a revised 0.8% in May, but after being unchanged in April, after rising by 1.6% in March, rising by 0.2% in February and falling by 1.7% in January…at the same time, the 0.2% increase in real sales at bars and restaurants will have a small positive impact on the growth rate of June’s real personal consumption of services….
Industrial Production Rose 0.3% in June on Air Conditioning
The Fed’s G17 release on Industrial production and Capacity Utilization for June reported that seasonally adjusted industrial production rose 0.6% in June after being unchanged in April and May, and was thus up at a 1.1% annual rate over the 2nd quarter as a whole, and 0.7% higher than a year ago….the industrial production index, with the benchmark now set for average 2017 production to equal to 100.0, rose from 103.7 in May to 104.0 in June, after the May reading for the IP index was revised up from 103.6 to 103.7, the April index was revised down from 103.8 to 103.7, the March index was revised but unchanged at 103.7, the February index was revised down from 104.0 to 103.9, and the January index was unrevised at 102.9….
The manufacturing index, which accounts for around 7 7% of the total IP index, increased by 0.1% in June, as the manufacturing index rose from 100.1 in May to 100.2 in June, after the May manufacturing index was revised from the 100.0 published last month to 100.1, the April manufacturing index was revised from 99.8 to 99.8, the March index was revised from 100.4 to 100.3, the February manufacturing index was revised from 99.8 to 99.7, and the January manufacturing index was revised from 98.6 to 98.5….meanwhile, the mining index, which includes oil and gas well drilling, decreased by 0.3%, from 121.5 in May to 121.1 in June, after the May mining index was revised down from the originally reported 121.7, which still left the mining index 1.6% above what it was a year ago….finally, the seasonally adjusted utility index, which often fluctuates due to above or below normal temperatures, rose 2.8% to 108.0 in our hot June, after the May index was revised down from 105.3 to 105.1, which left the utility index 0.8% below its year earlier reading…
This report also includes capacity utilization figures, which are expressed as the percentage of our plant and equipment that was in use during the month…seasonally adjusted capacity utilization for total industry rose to 77.6% in June from 77.5% in May, after capacity utilization for May was revised up from the 77.4% reported a month ago….capacity utilization by NAICS durable goods production facilities fell from 75.4% in May to 75.3% in June, while capacity utilization for NAICS non-durable producers rose from 78.3% to 78.4%…capacity utilization for the mining sector fell to 90.6% in June, from a revised 90.*% in May, which was originally reported as 91.1%, while utilities were operating at 70.1% of capacity during June, up from a revised 68.4% May, which was originally published as 68.5%…for more details on capacity utilization by type of manufacturer, see Table 7: Capacity Utilization: Manufacturing, Mining, and Utilities, which shows the historical capacity utilization figures for a dozen types of durable goods manufacturers, 8 classifications of non-durable manufacturers, mining, utilities, and capacity utilization for a handful of other special categories….
Producer Prices Unchanged in June as Higher Priced Goods Offset Lower Priced Services
The seasonally adjusted Producer Price Index (PPI) for final demand was unchanged in June, as the final demand price index for wholesale goods rose 0.3%, while the heavily weighted price index for final demand for services was was 0.1% lower….that unchanged June PPI came after the May PPI was revised from a 0.1% increase to a 0.3% increase, now showing the final demand price index for wholesale goods 0.1% higher, and the price index for final demand for services 0.4% higher, and after the April PPI was revised from a 0.2% decrease to a 0.3% decrease, with the final demand price index for wholesale goods unchanged, and the price index for final demand for services 0.3% lower, and also followed a downwardly revised 0.1% decrease in March, when the final demand price index for wholesale goods fell 0.9% while the price index for final demand for services was revised to 0.2% higher, and a unrevised 0.1% increase in February, when the price index for wholesale goods rose 0.3% while the price index for final demand for services was 0.1% higher, and an unrevised 0.7% increase in January, when the final demand price index for wholesale goods rose 0.7% and the price index for final demand for services was also 0.7% higher, and also followed a 0.5% PPI increase in December, when the final demand price index for wholesale goods rose 0.5% and the price index for final demand for services was also 0.5% higher, a 0.1% increase in November, when final demand prices for wholesale goods rose 0.6% and the price index for final demand for services was 0.1% lower, an upwardly revised 0.3% PPI increase in October, when the final demand price index for wholesale goods rose 0.1% and the price index for final demand for services was 0.5% higher, an unrevised 0.3% increase in September, when the price index for finished wholesale goods was 0.2% lower, but the price index for final demand for services was 0.5% higher, and an unrevised 0.3% increase in August, when prices for finished wholesale goods averaged unchanged, while the price index for final demand for services was 0.5% higher….on an unadjusted basis, producer prices are now 2.3% higher than a year ago, while the core producer price index, which excludes food, energy and trade services, was unchanged for the month, and is 2.5% higher than it was a year ago…
As noted, the producer price index for final demand for goods was 0.3% higher in June, after being 0.1% higher in May, unchanged in April, 0.9% lower in March, 0.3% higher in February, 0.7% higher in January, 0.5% higher in December, 0.6% higher in November, 0.1% higher in October, 0.2% lower in September, unchanged in August, 0.4% higher in July, and 0.2% lower last June, and is now 1.7% higher than a year ago….the final demand goods price index was 0.3% higher in June as the price index for wholesale energy goods was 0.6% higher, after it had been 0.3% lower in May, 0.3% lower in April, 3.9% lower in March, 1.4% lower in February, 2.0% higher in January, and 2.2% higher in December, and as the price index for wholesale foods was 0.2% higher, after it had been unchanged in May, 0.9% lower in April, 2.1% lower in March, up 1.6% in February, and up 1.0% in January, while the index for final demand for core wholesale goods (excluding food and energy) was 0.2% higher May, after being 0.2% higher May, 0.3% higher April, 0.3% higher March, 0.3% higher February, and 0.2% higher in January….
Wholesale energy prices were 0.6% higher in June on a 1.8% increase in wholesale prices for gasoline and a 1.0% increase in wholesale prices for residential electric power, while the final demand for food price index was 0.2% higher on a 3.1% increase in the wholesale price index for fresh fruits and melons, a 1.1% increase in the wholesale price index for bakery products, and a 3.7% increase in the wholesale price index for processed turkeys….among core wholesale goods, the wholesale price index for industrial material handling equipment rose 1.9%, the wholesale price index for household furniture rose 1.0%, and the wholesale price index for iron and steel scrap was 4.3% higher…
Meanwhile, the price index for final demand for services was 0.1% lower in June, after being 0.4% higher in May, 0.3% lower in April, 0.2% higher in March. 0.1% higher in February, 0.7% higher in January, 0.5% higher in December, 0.1% lower in November, 0.4% higher in October, 0.5% higher in September, 0.5% higher in August, but 0.2% lower last July, and is still 1.7% higher than a year ago…the price index for final demand for trade services was unchanged, the price index for final demand for transportation and warehousing services fell 0.9%, and the core index for final demand for services other than trade, transportation, and warehousing services was 0.1% lower….
Among trade services, seasonally adjusted margins for furniture retailers rose 6.1%, margins for cleaning supplies and paper products retailers were 3.4% higher, margins for hardware, building materials, and supplies retailers were 5.7% higher, and margins for apparel wholesalers were 2.7% higher, but margins for computer hardware, software, and supplies retailers were 5.8% lower. margins for TV, video, and photographic equipment and supplies retailers were 10.4% lower, and margins for automobile retailers were 5.4% lower,….among transportation and warehousing services, average margins for airline passenger services were 2.7% lower and margins for truck transportation of freight were 0.6% lower….among the components of the core final demand for services index, the price index for deposit services fell 5.4%, the price index for traveler accommodation services fell 4.1%, and the price index for passenger car rental fell 1.4%, while the price index for portfolio management rose 2.2% and the price index for consumer loans was 1.6% higher…
This report also showed the price index for intermediate processed goods was 0.1% higher in June, after being 0.1% higher in May, 03% higher in April, 0.1% lower in March, 0.4% higher in February, 1.0% higher in January, 0.2% higher in December, 0.1% higher in November, 0.3% higher in October, but 0.8% lower in September, 0.1% lower in August, and 0.5% higher last July….the price index for intermediate energy goods rose 0.6% in May as refinery prices for gasoline rose 1.8%, producer prices for natural gas to electric utilities rose 12.1%, and producer prices for industrial electric power rose 2.2% ….on the other hand, the price index for intermediate processed foods and feeds fell 0.3%, as the producer price index for ungraded chicken eggs dropped 25.0% and the index for prepared animal feeds was 0.6% lower, while the producer price index for processed poultry was 3.5% higher….meanwhile, the core price index for intermediate processed goods less food and energy goods was unchanged, as the producer price index for primary nonferrous metals rose 4.4%, the producer price index for nitrogenates rose 6.1%, the producer price index for phosphates rose 10.9%, and the producer price index for ball and roller bearings rose 3.9%, while the producer price index for building paper and board fell 8.8%, the producer price index for steel mill products fell 5.5%, and the producer price index for asphalt fell 5.2%….average prices for intermediate processed goods were 1.9% higher than in June 2024, the 8th year over year increase in 28 months, and are way down from their 26.6% year over year increase of November 2021, which had been a 46 year high…
Meanwhile, the price index for intermediate unprocessed goods rose 1.6% in June, after falling 2.0% in May, 3.8% in April, and 4.0% in March, but after rising 0.2% in February, 5.8% in January and 2.9% in December, after being unchanged in November, after rising 2.3% in October, after falling 1.9% in September and falling 3.2% in August….that was as the June price index for crude energy goods rose 1.4%, even as crude oil prices fell 0.1%, as unprocessed natural gas prices rose 5.9%, while coal prices were 2.5% higher….however, the price index for unprocessed foodstuffs and feedstuffs was 0.2% lower, as the producer price index for ungraded chicken eggs dropped 25.0%, the producer price index for hay and hayseeds fell 6.6%, and the producer price index for raw milk was 5.5% lower….meanwhile, the index for core raw materials other than food and energy materials was 1.1% higher, on a 2.8% increase in the price index for copper base scrap and a 4.3% increase in the price index for iron and steel scrap….this raw materials price index is now 1.3% lower than a year ago, the 22nd year over year decrease in the past 29 months, which followed a run of 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 was 0.1% lower in June, after being 0.1% higher in May, 0.2% lower in April, 0.3% higher in March, unchanged in February, 0.1% higher in January, 0.6% higher in December, 0.2% lower in November, 0.1% higher in October, 0.2% higher in September, 0.1% higher in August, 0.3% higher in July, and 0.5% higher last June.…the price index for intermediate trade services was 0.3% lower, as margins for metals, minerals, and ores wholesalers fell 0.9%, margins for food wholesalers fell 1.3% lower, and margins for paper and plastics products wholesalers fell 2.2%, while margins for chemicals and allied products wholesalers were 1.6% higher….on the other hand, the price index for transportation and warehousing services for intermediate demand was 0.2% higher, as the intermediate price index for air mail and package delivery services, excluding by USPS, rose 1.9%, and the intermediate index for water transportation of freight was 1.4% higher….at the same time, the core price index for intermediate services other than trade, transportation, and warehousing services was 0.1% lower, as the intermediate price index for deposit services(partial) fell 5.4%, the intermediate price index for executive search services fell 2.6%, the intermediate price index for business wired telecommunication services fell 2.0%, and the intermediate price index for traveler accommodation services was 4.1% lower….over the 12 months ended in June, price index for services for intermediate demand was 1.4% higher than it was a year ago, the fifty-sixth consecutive annual increase in this index, after it had briefly turned negative year over year at the onset of the pandemic, from April to August of 2020, while the current annual increase is still much lower than the record 9.5% year over year increase that was indicated for July 2021…
Business Sales Fell 0.4% in May; Business Inventories were ‘Unchanged’
Following the release of the June retail sales report, the Census Bureau released the composite Manufacturing and Trade Inventories and Sales report for May(pdf), which incorporates the revised May retail data from that June report and the previously published wholesale and factory data for May to give us a broad picture of the business contribution to the economy during that month….according to the Census Bureau, total manufacturer’s and trade sales were estimated to be valued at a seasonally adjusted $1,913.9 billion in May, down 0.4 percent (±0.2 percent) from April’s revised sales, but 3.1 percent (±0.3 percent) higher than May’s sales of a year earlier…note that total April sales were revised from the originally reported $1,922.8 billion to $1,921.556 billion, and hence their change from March was revised from –0.1% to -0.2%… manufacturer’s sales were up 0.1% from April at $599,362 million during May, but retail trade sales, which exclude restaurant & bar sales from the revised May retail sales reported earlier, fell 1.0% to $617,367 million, and wholesale sales were 0.3% lower at $697,164 million…
Meanwhile, total manufacturer’s and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $2,656.7 billion at the end of May, virtually unchanged (±0.1%) from April, but 1.7 percent (±0.3 percent) higher than in May a year earlier…the value of end of April inventories were revised to $2,656.1 billion from the $2,656.5 billion reported in this report last month, but are still virtually unchanged from March.…seasonally adjusted inventories of manufacturers were estimated to be valued at $944,081 million, 0.1% more than in April, while inventories of retailers were valued at $807,091 million, 0.3% more than in April, while inventories of wholesalers were estimated to be valued at $905,536 million at the end of May, 0.3% less than in April…
In national accounts reports, the various categories of business inventories will be adjusted for price changes using item appropriate price indexes from the producer price index….with the release of wholesale inventories data last week, we figured that a real wholesale inventory increase over April and May would be far short of the increase in real wholesale inventories in the first quarter, and hence would have a sharply negative impact on the growth rate of 2nd quarter GDP….similarly, the inflation adjusted factory inventory data from two weeks ago indicated a small increase in May’s real inventories, following a similar increase in April, after the increase in first quarter factory inventories was at a record level, and hence they would also have big negative impact on the growth rate of 2nd quarter GDP….with prices for finished goods on average 0.1% higher in May, this report suggests that real retail inventories had increased at a rate of about 0.2% in May, following a real decrease of around 0.2% in April….since the key source data and assumptions (xls) for the third estimate of 1st quarter GDP indicated that the 1st quarter’s real retail inventory change was moderately positive, accounting for about 10% of the 1st quarter record inventory increase, any change in the 2nd quarter’s real retail inventories that is smaller than that would subtract from 2nd quarter GDP by the difference between the increases of the two quarters…hence, with two months of inventory data now available, it appears that all three real inventory components will subtract substantially from 2nd quarter GDP…
New Housing Starts and Building Permits Reported Higher in June
The June report on New Residential Construction (pdf) from the Census Bureau estimated that new housing units were being started at a seasonally adjusted annual rate of 1,321,000 in June, which was 4.6 percent (±10.6 percent)* above the revised May estimated annual rate of 1,263,000 units started, but was 0.5 percent (±9.9 percent)* below last June’s pace of 1,327,000 housing starts annually…the asterisks indicate that the Census does not have sufficient data to determine whether housing starts actually rose or fell from May or even from those of last June, with the figure in parenthesis the most likely range of the change indicated; in other words, June’s housing starts could have been down by 6.0% or up by as much as 15.2% from those of May, with revisions outside of that range also eventually possible…with this report, the annual rate for May housing starts was revised from the five year low of 1,256,000 units reported last month to 1,263,000, while April’s housing starts, which were first reported at a 1,361,000 annual rate, were revised from last month’s initial revised annual figure of 1,392,000 annually up to a 1,398,000 annual rate with this report…
The annual rates of housing starts reported here were extrapolated from a survey of a small percentage of US building permit offices visited by Census field agents, which estimated that 123,200 housing units were started in June, up from the 115,900 units started in May but down from the 123,600 units started in June of a year ago….of those housing units started in June, an estimated 84,400 were single family homes and 36,700 were units in structures with more than 5 units, down from the revised 95,700 single family starts in May, but up from the the 28,500 units started in structures with more than 5 units in May..
The monthly data on new building permits, with a smaller margin of error, are probably a better monthly indicator of new housing construction trends than the volatile and broadly revised housing starts data…in June, Census estimated new building permits were being issued for a seasonally adjusted annual rate of 1,397,000 housing units, which was 0.2 percent above the revised May rate of 1,394,000 permits, but was 4.4 percent below the June 2023 rate of 1,461,000 the rate of building permit issuance in June a year earlier…the annual rate of housing permits issued in May was revised from the 1,393,000 reported last month to 1,394,000…
Again, the annualized estimates for new permits reported here were extrapolated from the unadjusted estimates collected by canvassing census agents, which showed permits for 129,100 housing units were issued in June, up from the revised estimate of 134,900 new permits issued in May…the June permits included 80,100 permits for single family homes, down from 84,100 in May, and 44,500 permits for housing units in apartment buildings with 5 or more units, up from 33,000 such multifamily permits a month earlier…
(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 chosen from the aforementioned GGO posts, contact me…)
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