December’s producer prices; November’s trade deficit, durable goods, factory inventories, and wholesale trade, et al

Major economic reports that were released last week were the December Producer Price Index, the November report on our International Trade from agencies within the Commerce Dept, and both the advance report on durable goods for November and the Full Report on Manufacturers’ Shipments, Inventories and Orders for November, and the November report on Wholesale Trade, Sales and Inventories, all from the Census Bureau….this week also saw the widely watched Case-Shiller Home Price Index for November from S&P Case-Shiller, which indicated that their national home price index for September, October and November averaged 1.4% higher than it was for prices of the same homes that sold during the same 3 month period a year earlier, which was the same as the 1.4% year over year index increase indicated by their October report, which indexed home sales prices over August, September and October against those of the same three months of a year earlier….

The week also saw the release of the Regional and State Employment and Unemployment Summary for December from the Bureau of Labor Statistics, which breaks down the previously published employment data by state and region, with quite a bit of detail included in the attached tables, and the Chicago Fed National Activity Index (CFNAI) for December, a weighted composite index of 85 different economic metrics, which rose to –0.04 in November from –0.42 in October…as a result, the more often cited 3 month average of the CFNAI rose to –0.23 in November, up from a revised from –0.34 in October, which, as a negative reading, still indicates that national economic activity was below the historical trend over those Autumn months…

In addition, the week also saw the last two regional Fed manufacturing surveys for January: the Richmond Fed Survey of Manufacturing Activity, covering an area that includes Virginia, Maryland, the Carolinas, the District of Columbia and West Virginia, reported its broadest composite index inched up to −6 in January from −7 in December, and up from −15 in November, indicating that a slightly smaller plurality of Fifth District manufacturers saw conditions worsen during the month than during the prior two months, and the Dallas Fed Texas Manufacturing Outlook Survey, which covers Texas and adjacent western Louisiana and southeastern New Mexico, reported their general business activity composite index rose to –1.2, up from December’s -10.9, with the near-zero reading indicating almost no change in business activity from December, when a modest plurality of manufactures reported a decrease…

Producer Price Index Rose 0.5% in December on Higher Prices for Trade and Transportation Services

The seasonally adjusted Producer Price Index (PPI) for final demand rose 0.5% in December, even as the final demand price index for wholesale goods was unchanged, as the more heavily weighted price index for final demand for services was 0.7% higher….that December PPI increase followed a revised 0.2% PPI increase in November, when the final demand price index for wholesale goods was 0.8% higher, while the price index for final demand for services was unchanged, and followed the report of an 0.1% increase in October, when the final demand price index for wholesale goods fell 0.4%, but the more heavily weighted price index for final demand for services was 0.3% higher, and also followed a revised 0.7% PPI increase in September, when the final demand price index for wholesale goods rose 0.9% and the price index for final demand for services was 0.6% higher….those post-shutdown reports followed a revised 0.2% decrease in August, when the final demand price index for wholesale goods rose 0.2%, but the more heavily weighted price index for final demand for services was 0.3% lower, and also followed an unrevised 0.8% increase in July, when the final demand price index for wholesale goods rose 0.6% and the price index for final demand for services was was 0.9% higher, and followed a 0.1% PPI increase in June, when the final demand price index for wholesale goods rose 0.3%, while the price index for final demand for services was unchanged, and a 0.4% increase in May, when the final demand price index for wholesale goods was 0.1% higher, and the price index for final demand for services 0.5% higher, and an unrevised 0.3% decrease in the April PPI, 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 0.2% 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 0.3% 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 last 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 last 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….on an unadjusted basis, producer prices are still 3.0% higher than a year ago, while the core producer price index, which excludes food, energy and trade services, was 0.4% higher for the month, and is 3.5% higher than it was a year ago…

As noted, the producer price index for final demand for goods was unchanged in December, after being 0.8% higher in November, 0.4% lower in October, 0.9% higher in September, 0.3% lower in August, 0.6% higher in July, 0.3% higher in June, 0.1% higher in May, unchanged in April, 0.9% lower in March, 0.3% higher in February, 0.7% higher last January, and 0.5% higher last December, and is now 2.5% higher than a year ago….the final demand goods price index was unchanged in December as the price index for wholesale energy goods was 1.4% lower, after it had been 3.7% higher in November, 3.3% lower in October, 2.9% higher in September, 0.3% lower in August, 0.7% higher in July, 1.1% higher in June, 0.4% lower in May, 0.3% lower in April, 3.9% lower in March, 1.4% lower in February, and 2.0% higher last January, while the price index for wholesale foods was 0.3% lower , after it had been unchanged in November, 0.6% lower in October, 0.9% higher in September, unchanged in August, 1.4% higher in July, 0.1% higher in June, unchanged in May, 0.9% lower in April, 2.2% lower in March, up 1.6% in February, and up 1.0% in January, and as the index for final demand for core wholesale goods (excluding food and energy) was 0.4% higher in December, after it had been 0.2 higher in November, 0.5% higher in October, 0.2% higher in September, 0.4% higher in August, and 0.4% higher in July….

Wholesale energy prices were 1.4% lower in December on a 14.6% decrease in wholesale prices for diesel fuel, a 1.0% decrease in wholesale prices for gasoline, and a 1.3% increase in wholesale prices for home heating oil and distillates, while the final demand for food price index was 0.3% lower on a 20.4% decrease the wholesale price index for fresh and dry vegetables, a 4.9% decrease the wholesale price index for eggs for fresh use, and a 2.1% decrease in the wholesale price index for beef and veal… among core wholesale goods, the wholesale price index for textile house furnishings rose 1.9%, the wholesale price index for household appliances rose 1.1%, the wholesale price index for printing trades machinery and equipment rose 1.2%, the wholesale price index for costume jewelry and novelties rose 1.4%, and the wholesale price index for tools, dies, jigs, fixtures, and industrial molds was 1.0% higher…

Meanwhile, the price index for final demand for services was 0.7% higher in December, after being unchanged in November, 0.3% higher in October, 0.6% higher in September, 0.3% lower in August, 0.9% higher in July, unchanged in June, 0.5% higher in May, 0.3% lower in April, 0.2% higher in March. 0.1% higher in February, 0.7% higher in January, and 0.5% higher last December, and is now 3.2% higher than a year ago….the price index for final demand for trade services rose 1.7%, and the price index for final demand for transportation and warehousing services rose 0.5%, while the core index for final demand for services other than trade, transportation, and warehousing services was 0.3% higher….

Among trade services, seasonally adjusted margins for automobile retailers rose 9.3%, margins for food and alcohol retailers were 3.5% higher, margins for apparel, jewelry, footwear, and accessories retailers were 2.7% higher, margins for health, beauty, and optical goods retailers were 4.2% higher, margins for TV, video, and photographic equipment and supplies retailers were 2.4% higher, and margins for machinery and vehicle wholesalers were 5.8% higher, but margins for fuels and lubricants retailers were 4.7% lower….among transportation and warehousing services, average margins for courier, messenger, and the U.S. postal service were 0.9% higher and margins for airline passenger services were 2.9% higher….among the components of the core final demand for services index, the price index for application software publishing rose 2.0%, the price index for passenger car rental rose 2.4%, the price index for deposit services rose 3.0%, and the price index for traveler accommodation services was 7.3% higher…

This report also showed the price index for intermediate processed goods was 0.1% lower in December, after being 0.5% higher in November, 0.3% lower in October, 0.3% higher in September, 0.4% higher in August, 0.8% higher in July, 0.1% lower in June, 0.1% higher in May, 0.3% higher in April, 0.1% lower in March, 0.4% higher in February, 1.0% higher last January, and 0.2% higher last December….the price index for intermediate energy goods fell 2.4% in December as refinery prices for No. 2 diesel fuel fell 14.6%, refinery prices for jet fuel fell 7.3%, and producer prices for residual fuels were 7.6% lower….at the same time, the price index for intermediate processed foods and feeds fell 1.3%, as the producer price index for meats fell 0.8%, the producer price index for processed poultry fell 1.8% and the producer price index for refined sugar and byproducts was 1.2% lower…. on the other hand, the core price index for intermediate processed goods less food and energy goods was 0.7% higher, as the producer price index for asphalt rose 8.0%, the producer price index for industrial gases rose 3.4%, the producer price index for primary nonferrous metals rose 3.2%, the producer price index for secondary nonferrous metals rose 4.2%, the producer price index for steel mill products rose 6.4%, and the producer price index for copper and brass mill shapes was 3.1% higher….average prices for intermediate processed goods were still 3.4% higher than in December 2024, the 14th year over year increase in 34 months, but are still no where near the 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 2.3% in December, after rising 0.5% in November, falling 1.3% in October, after being unchanged in September, falling 1.7% in August, rising 1.6% in July and 2.2% in June, after falling 1.6% in May, 3.7% in April, and 3.9% in March, but after rising 0.2% last February, 5.8% last January and 2.9% last December….that was as the December price index for crude energy goods rose 5.5%, even as crude oil prices fell 2.7%, as unprocessed natural gas prices rose 34.8% while coal prices were 1.2% lower… meanwhile the price index for unprocessed foodstuffs and feedstuffs was 0.6% lower, as the producer price index for slaughter hogs fell 10.1%, the producer price index for hay and hayseeds fell 32.3%, the producer price index for wheat fell 0.8%, and the producer price index for raw cane sugar and byproducts was 2.5% lower….meanwhile, the index for core raw materials other than food and energy materials was 2.6% higher, on a 3.4% increase in the price index for copper base scrap, a 7.3% increase in the price index for recyclable paper, and a 7.8% increase in the price index for nonferrous metal ores….because last December’s 2.9% increase dropped out of the year over year comparison, this raw materials price index is now 0.3% lower than a year ago, the 23rd year over year decrease in the past 35 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 0.7% higher in December, after being 0.1% higher in November, 0.3% higher in October, 0.3% higher in September, 0.1% higher in August, 0.7% higher in July, 0.1% higher in June, 0.1% higher in May, 0.3% lower in April, 0.3% higher in March, unchanged last February, 0.1% higher last January, and 0.6% higher last December.…the price index for intermediate trade services was 0.6% higher, as margins for machinery and equipment parts and supplies wholesalers rose 3.0%, margins for metals, minerals, and ores wholesalers rose 2.4%, and margins for intermediate hardware, building material, and supplies retailers were 0.9% higher….at the same time, the price index for transportation and warehousing services for intermediate demand was 0.7% higher, as the intermediate price index for air mail and package delivery services, excluding by USPS, rose 1.4%, the intermediate price index for water transportation of freight rose 3.0%, the intermediate price index for transportation of passengers rose 2.8%, the intermediate price index for courier and messenger services, except air mail rose 1.4%, and the intermediate index for pipeline transportation was 1.8% higher….in addition, the core price index for intermediate services other than trade, transportation, and warehousing services was also 0.7% higher, as the intermediate price index for nonresidential real estate rents rose 2.3%, intermediate price index for deposit services (partial) rose 3.0%, the intermediate price index for portfolio management rose 2.0%, the intermediate price index for traveler accommodation services rose 7.3%, and the intermediate price index for passenger car rental was 2.4% higher….over the 12 months ended in December, price index for services for intermediate demand was 2.7% higher than it was a year earlier, the sixty-second consecutive annual increase in this index, after it had briefly turned negative year over year at the onset of the pandemic, from April to August of 2020, even as the current annual increase is still much lower than the record 9.5% year over year increase that was indicated for July 2021…

US Trade Deficit Rose 94.6% in November, Led by Imbalanced Trade in Gold and Drugs

Our trade deficit rose 94.6% in November, after falling 39.3% to a sixteen year low in October, as the value of our exports decreased and the value of our imports increased….the Commerce Dept report on our international trade in goods and services for November indicated that our seasonally adjusted goods and services trade deficit rose by $27.6 billion to $56.8 billion in November, from an October deficit of $29.2 billion, which was revised from the $29.4 billion deficit reported for October a month ago….the value of our exports fell by $10.9 billion to a rounded $292.1 billion in November, on a $11.1 billion decrease to $185.6 billion in our exports of goods and a $0.2 billion increase to $106.4 billion in our exports of services, while the value of our imports rose by $16.8 billion to $348.9 billion on a $16.8 billion increase to $272.5 billion in our imports of goods and a decrease of less than $0.1 billion to $76.3 billion in our imports of services…export prices were on average 0.5% higher in November, which means the decrease in the value of this month’s exports 0.5% greater in real terms, and that our real exports likely fell about 4.1%, while import prices were 0.4% higher, meaning that a small part of the jump in the value of our imports was due to higher prices, and that our real imports probably rose by about 4.6%….

The $11.1 billion decrease in the value of our exports of goods in November was led by lower exports of industrial supplies and materials, of consumer goods, and of other goods… referencing the Full Release and Tables for November (pdf), in Exhibit 7, we find that our exports of industrial supplies and materials fell by $6,096 million to $70,883 million, as a $4,221 million decrease in our exports of nonmonetary gold, a $2,570 million decrease in our exports of precious metals other than gold, a $1,374 million decrease in our exports of crude oil, and a $339 million decrease in our exports of raw cotton were partly offset by a $372 million increase in our exports of petroleum products other than fuel oil, while the value of our exports of consumer goods fell by $3,118 million to $21,123 million on a $2,949 million decrease in our exports of pharmaceutical preparations, which was partly offset by a $372 million increase in our exports of gem diamonds…in addition, the value of our exports of automotive vehicles, parts, and engines fell by $762 million to $12,329 million on a $436 million decrease in our exports of trucks, buses, and special purpose vehicles, while our exports of foods, feeds and beverages fell by $570 million to $13,509 million, and our exports of other goods not categorized by end use fell by $1,255 million to $8,036 million…

Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our imports of goods, and shows that greater imports of computer goods, of capital goods, and of other goods accounted for the lion’s share of the $16.8 billion increase in our imports of goods, even as our imports of industrial supplies and materials were lower…the value of our imports of consumer goods rose by $9,170 million to $61,360 million on a $6,748 million increase in our imports of pharmaceutical preparations, a $500 million increase in our imports of cellphones, a $378 million increase in our imports of textile apparel and household goods not otherwise itemized, a $366 million increase in our imports of toys, games, and sporting goods, and a $356 million increase in our imports of cotton apparel and household goods, while the value of our imports of capital goods rose by $7,413 million to $101,850 million as a $6,637 million increase in our imports of computers, $1,974 million increase in our imports of semiconductors, a $927 million increase in our imports of civilian aircraft, and a $443 million increase in our imports of electric apparatuses, were partly offset by a $668 million decrease in our imports of telecommunications equipment, and a $3,040 million decrease in our imports of computer accessories…in addition, the value of our imports of foods, feeds, and beverages increased by $620 million to $16,780 million, led by higher imports of fish and shellfish, and wine, beer, and related products, and the value of our imports of other goods not categorized by end use rose by $1,925 million to $13,879 million…partly offsetting the increases in those end-use categories, our imports of industrial supplies and materials fell by $2,373 million to $44,714 million, led by a $606 million decrease in our imports of nonmonetary gold, a $569 million decrease in our imports of crude oil, a $532 million decrease in our imports of nuclear fuel materials, a $449 million decrease in our imports of exports of precious metals other than gold. and a $378million decrease in our imports of copper, and our imports of automotive vehicles, parts and engines fell by $209 million to $32,423 million on $491 million decrease in our imports of of new and used passenger cars…

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

The November figures show surpluses, in billions of dollars, with Switzerland ($7.8), Netherlands ($5.6), South and Central America ($5.1), United Kingdom ($4.2), Hong Kong ($2.2), Brazil ($2.1), Australia ($1.2), Belgium ($1.2), and Saudi Arabia ($0.4). Deficits were recorded, in billions of dollars, with Mexico ($17.8), Vietnam ($16.2), Taiwan ($15.6), China ($14.7), European Union ($14.5), Germany ($7.4), Japan ($4.7), India ($4.4), South Korea ($3.7), France ($3.6), Canada ($3.5), Ireland ($3.0), Italy ($3.0), Malaysia ($3.0), Singapore ($1.1), and Israel ($0.6).

• The deficit with the European Union increased $8.2 billion to $14.5 billion in November. Exports decreased $0.4 billion to $34.3 billion and imports increased $7.7 billion to $48.8 billion.
• The balance with Singapore shifted from a surplus of $1.8 billion in October to a deficit of $1.1 billion in November. Exports decreased $0.1 billion to $3.7 billion and imports increased $2.8 billion to $4.8 billion.
• The surplus with Switzerland increased $0.6 billion to $7.8 billion in November. Exports increased $0.6 billion to $11.3 billion and imports increased less than $0.1 billion to $3.5 billion.

To estimate the impact of October’s and November’s trade in goods on the 4th quarter GDP growth figures that will be released at the end of the month, we 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 used by the BEA to compute trade figures for GDP, except that the figures given here are not annualized….from that table, we can figure that the 3rd quarter’s real exports of goods averaged 148,555.3 million monthly in 2017 dollars, while our similarly inflation adjusted October and November exports were at 158,135 million and 148,603 million respectively, in that same 2017 dollar quantity index representation… computing the annual change between the average monthly real exports of the data available for those two quarters, we find that the 4th quarter’s real exports of goods are running at a 13.6% annual rate above those of the 3rd quarter, or at a pace that would add about 0.91 percentage points to 4th quarter GDP if it were to continue at the same pace through December….in a similar manner, we find that the 3rd quarter’s real imports of goods averaged 235 877.7 million monthly in chained 2017 dollars, while inflation adjusted October and November imports were at 221,752 million and 235,688 million in 2017 dollars respectively… those chained dollar representations of real goods imports would indicate that so far in the 4th quarter, our real imports have been falling at annual rate of 11.6% from those of the 3rd quarter…since imports are subtracted from GDP because they represent the portion of the consumption and investment components of GDP that occurred during the quarter that was not produced domestically, their decrease at a 11.6% rate would conversely add about 1.31 percentage points to 4th quarter GDP….hence, if our October and November trade deficit in goods is maintained at these levels through December, our improving balance of trade in goods would add a net of roughly 2.22 percentage points to the growth of 4th quarter GDP…..

Note that we have not computed the impact of the usually less volatile change in services here, because the BEA does not provide inflation adjusted data on those, and because we don’t have a straightforward way to adjust the various services for all their price changes…however, we do know that our exports in services grew by roughly $0.2 billion over October and November, and that our imports in services grew $1.1 billion over those two months, which would suggest a negative impact on GDP from the services side of the trade ledger…

November Durable Goods: New Orders Rose 5.3%, Shipments Fell 0.2%, Inventories Rose 0.2%

The Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders for November(pdf) from the Census Bureau reported that the value of the widely watched new orders for manufactured durable goods increased by $16.4 billion or 5.3 percent to $323.8 billion in November, the third increase in four months, after October’s new orders were revised from the 2.2% decrease to $307.4 billion reported last month to a 2.1% decrease to $307.4 billion…year to date new orders are now 7.3% above those of the first eleven months of 2024, up from the 7.1% year to date increase we saw in this report last month….

An increase in the value of the volatile monthly new orders for transportation equipment drove this month’s increase, as the value of new transportation equipment orders rose $15.3 billion or 14.7 percent to $119.3 billion, led by a 97.6% increase to $35,407 million in new orders for nondefense aircraft and parts… excluding orders for transportation equipment, other new orders were up 0.5%, while excluding just new orders for defense equipment, new orders rose 6.6%….at the same time, the value of new orders for nondefense capital goods less aircraft, a proxy for new equipment investment orders, rose $551 million or by 0.7% to $78,393 million, after rising by a downwardly revised 0.3% in October..

Meanwhile, the seasonally adjusted value of November’s shipments of durable goods, which will ultimately be included as inputs into various components of 4th quarter GDP after adjusting for changes in prices, fell for the first time in three months, decreasing by $0.7 billion or 0.2 percent to $308.7 billion, after the value of October shipments was revised from $309.6 billion to $309.3 billion, now up 0.5% from September…the value of shipments transportation equipment fell $1.7 billion or 1.7 percent to $100.8 billion, on an 11.7% decrease in the value of shipments of commercial aircraft and parts, while the value of shipments of durable goods other than those of transportation equipment were up 0.5% for the month…of those, shipments of nondefense capital goods less aircraft rose 0.4% to $78,134 million, after October’s capital goods shipments value was revised up from $77,740 million to $73,816 million, now an 0.8% increase from September….

At the same time, the value of seasonally adjusted inventories of durable goods, also a major GDP contributor, rose for the eleventh time in twelve months, increasing by $1.0 billion or 0.2 percent to $591.7 billion, after the value of October inventories was revised from $590.5 billion to $590.756 billion, now up 0.2% from September… the value of inventories of transportation equipment increased $0.7 billion or 0.4 percent to $187.1 billion, led by an 0.8% increase to $15,461 million in the value of inventories of defense aircraft and parts….excluding inventories of transportation equipment, the value of all other durable goods inventories rose 0.1%, while the value of inventories of capital goods less aircraft also rose by 0.1% to $184,776 million…

Finally, unfilled orders for manufactured durable goods, which are probably a better measure of industry conditions than the widely watched but volatile new orders, rose for the sixteenth time in seventeen months, increasing by $20.1 billion or 1.3 percent to $1,513.2 billion, after unfilled orders for October were revised from $1,492.8 billion to $1,493.15 billion, still a 0.2% increase from September….a $18.6 billion or 2.0 percent increase to $949.1 billion in the value of unfilled orders for transportation equipment led for the November increase, while unfilled orders other than those for transportation equipment rose 0.3% to $564,148 million…compared to a year earlier, the unfilled order book for durable goods was 9.3% above its level of last November, with unfilled orders for transportation equipment 14.7% above their year ago level, largely due to an 18.7% increase in the value of the backlog of orders for commercial aircraft….

Value of Factory Shipments Fell 0.1% in November, Factory Inventories Rose 0.1%

The Full Report on Manufacturers’ Shipments, Inventories, & Orders (pdf) for November from the Census Bureau reported that the seasonally adjusted value of new orders for manufactured goods increased $16.2 billion or 2.7 percent to $621.6 billion in November, following a decrease of 1.2% to $605.4 billion in October, which was revised from the 1.3% decrease to $604.8 billion that was reported for October a month ago….however, since the Census Bureau does not even collect any 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 November advance report on durable goods we just reported on…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 November, up three of the last four months, increased $16.2 billion or 2.7 percent to $621.6 billion, the U.S. Census Bureau reported today. This followed a 1.2 percent October decrease. Shipments, down three of the last four months, decreased $0.8 billion or 0.1 percent to $606.3 billion. This followed a 0.1 percent October increase. Unfilled orders, up sixteen of the last seventeen months, increased $20.2 billion or 1.4 percent to $1,513.5 billion. This followed a 0.2 percent October increase. The unfilled orders-to-shipments ratio was 7.04, up from 6.93 in October. Inventories, up two consecutive months, increased $1.4 billion or 0.1 percent to $948.4 billion. This followed a virtually unchanged October increase. The inventories-to-shipments ratio was 1.56, unchanged from October.
• New Orders for manufactured durable goods in November, up three of the last four months, increased $16.2 billion or 5.3 percent to $323.8 billion, unchanged from the previously published increase. This followed a 2.1 percent October decrease. Transportation equipment, also up three of the last four months, led the increase, $15.3 billion or 14.7 percent to $119.4 billion. New orders for manufactured nondurable goods increased less than $0.1 billion or virtually unchanged to $297.9 billion.
• Shipments of manufactured durable goods in November, down following two consecutive monthly increases, decreased $0.9 billion or 0.3 percent to $308.5 billion, down from the previously published 0.2 percent decrease. This followed a 0.5 percent October increase. Transportation equipment, down three of the last four months, drove the decrease, $1.8 billion or 1.7 percent to $100.7 billion. Shipments of manufactured nondurable goods, up following three consecutive monthly decreases, increased less than $0.1 billion or virtually unchanged to $297.9 billion. This followed a 0.3 percent October decrease. Chemical products, up four of the last five months, drove the increase, $0.7 billion or 0.8 percent to $82.2 billion.
• Unfilled Orders for manufactured durable goods in November, up sixteen of the last seventeen months, increased $20.2 billion or 1.4 percent to $1,513.5 billion, up from the previously published 1.3 percent increase. This followed a 0.2 percent October increase. Transportation equipment, up eight of the last nine months, led the increase, $18.7 billion or 2.0 percent to $949.3 billion.
• Inventories of manufactured durable goods in November, up two consecutive months, increased $1.0 billion or 0.2 percent to $591.7 billion, unchanged from the previously published increase. This followed a 0.2 percent October increase. Transportation equipment, also up two consecutive months, led the increase, $0.7 billion or 0.4 percent to $187.1 billion. Inventories of manufactured nondurable goods, up following three consecutive monthly decreases, increased $0.4 billion or 0.1 percent to $356.7 billion. This followed a 0.2 percent October decrease. Petroleum and coal products, up following two consecutive monthly decreases, led the increase, $0.2 billion or 0.5 percent to $44.2 billion.

To gauge the impact of November 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 November’s finished goods inventories was 0.3% lower at $331,628 million; the value of work in process inventories was 0.7% higher at $262,112 million, and materials and supplies inventories were 0.2% higher at $223,975 million…the producer price index for November indicated that prices for finished goods were 0.9% higher, that prices for intermediate processed goods were on average 0.6% higher, and that prices for unprocessed goods were on average 0.4% higher….assuming similar valuations for like types of inventories, those price changes would suggest that November’s real finished goods inventories were around 0.6% lower, that real inventories of intermediate processed goods were 0.1% greater, and that real inventories of materials and supplies were around 0.2% smaller.…those November inventory changes follow an October factory report that saw flat inventory values with lower prices, meaning real inventories increased…given that real inventory changes for those two months offset each other, 4th quarter real inventories would be little changed based on the data we have so far.…since real NIPA factory inventories were sharply lower in the 3rd quarter, accounting for most of the quarter’s aggregate inventory decrease, that the October and November reports indicate little change in real factory inventories means that the 3rd quarter inventory decrease, plus any 4th quarter increase, would be reversed and added to the growth rate of 4th quarter GDP…

Wholesale Sales Rose 1.3% in November, Wholesale Inventories Rose 0.2%

The November report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at “$714.1 billion, up 1.3 percent (±0.4 percent) from the revised October level and were up 5.2 percent (±0.7 percent) from the revised November 2024 level“…October’s sales were revised down to $704.7 billion from the $704.9 billion reported last month, but the “September 2025 to October 2025 percent change was unrevised from the preliminary estimate of down 0.4 percent (±0.5 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 left in a warehouse represent goods that were produced but not sold, and this November report estimated that wholesale inventories were valued at a seasonally adjusted “$915.0 billion at the end of November, up 0.2 percent (±0.2 percent)* from the revised October level. Total inventories were up 1.8 percent (±0.9 percent) from the revised November 2024 level.” ..the value of inventories at the end of October was unrevised from the $913.5 billion indicated by last month’s report, which up 0.2% from September…

To estimate the impact of November’s wholesale inventories on 4th quarter GDP, we must first adjust them for changes in price with appropriate components of the producer price index…although relevant details are not broken out in this report, we’ve previously estimated that about 2/3rds of wholesale inventories are finished goods, with notable exceptions such as inventories of crude oil and farm products….the producer price index for November indicated that prices for finished goods were 0.9% higher, that prices for intermediate processed goods were 0.6% higher, and that prices for unprocessed goods were 0.4% higher.…those price increases would thus suggest that real inventories were down about 0.5%…that follows an October report which appeared to show that real inventories were up by a slightly larger percentage…..since real wholesale inventories in the 3rd quarter were modestly lower, accounting for less than a tenth of the quarter’s decrease, any 4th quarter real wholesale inventory increase would reverse that 3rd quarter decrease and also add the 4th quarter increase to the growth rate of 4th quarter GDP…

 

 

(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…)