May’s consumer and producer prices and existing home sales; April’s trade deficit and wholesale inventories

Major reports released last week included the May Consumer Price Index and the May Producer Price Index from the Bureau of Labor Statistics, the Commerce Dept’s report on our International Trade in Goods and Services for April, the Wholesale Trade, Sales and Inventories report for April from the Census Bureau, and the May report on existing home sales from the National Association of Realtors (NAR)…

CPI Rose 0.5% in May on Higher Prices for Fuel and Shelter

The consumer price index was 0.5% higher in May, as higher prices for fuel, rent, lodging away from home, electricity, clothing, airline fares, vehicle maintenance and repairs, internet and telephone service, postage and delivery services, hospital services, dentist’s services, appliances, tax preparation, and admissions to sporting events were only partly offset by lower prices for utility gas, new cars and trucks, car and truck rentals, vehicle insurance, tires, furniture, outdoor equipment, floor coverings, prescription and nonprescription drugs, health insurance, video services, TVs, and pets and pet supplies,….the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that the weighted average of seasonally adjusted prices for consumer goods and services was 0.5% higher in May , after being 0.6% higher in April, 0.9% higher in March, 0.3% higher in February, 0.2% higher in January, 0.3% higher in December, after being 0.2% higher the two months ending in November, 0.3% higher in September, 0.3% higher in August, 0.2% higher in July, 0.3% higher last June, and 0.1% higher in May 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 333.020 in April to 335.123 in May, which left it 4.248674% higher than the index reading of 321.465 from May of last year, which is reported as a 4.2% year over year increase, up from the 3.8% year over year increase that was reported for April, with that widely cited year over year change simply reflecting the effect of last May’s +0.1% increase dropping out of the comparison and being replaced by the current month’s +0.5%, and not telling us anything more about inflation beyond that….with modestly higher prices for food and much higher prices for energy recorded this month, 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 335.803 in April to 336.846 in May, which left the core index 2.850914% ahead of its year ago reading of 327.509, which is reported as a 2.9% year over year increase, up from the 2.8% year over year core price increase that was reported for February, but well below the 6.6% annual increase reported for September 2022, which had been the largest annual increase in core prices in forty years…

The volatile seasonally adjusted energy price index was 3.9% higher in May, after being  3.8% higher in April, 10.9% higher in March, 0.6% higher in February, 1.5% lower in January, 0.3% higher in December, 1.1% higher in November, 1.5% higher in September, 0.7% higher in August, 1.1% lower in July, 0.9% higher last June, and 1.0% lower last May,  and is now 23.5% higher than in May of a year ago….the price index for energy commodities was 6.7% higher in May, on a 7.0% increase in the price index for gasoline and a 3.8% increase in the price index for fuel oil, while the price index for “other energy commodities”, including propane, kerosene, and firewood, averaged out to 2.5% higher ….meanwhile, the price index for energy services was 0.4% higher, after rising 1.6% in April, even as the price index for utility gas service was 0.5% lower in May, but is still 3.0% higher than it was a year ago, while the electricity price index was 0.5% higher, after rising 2.1% in April…. energy commodities are now averaging 40.6% above their year ago levels, with gasoline prices averaging 40.5% higher than they were a year ago, while the energy services price index is up 5.3% from last May, as electricity prices are now averaging 5.9% higher than a year ago…

Meanwhile, the seasonally adjusted food price index was 0.2% higher in May, after being 0.5% higher in April, unchanged in March, 0.4% higher in February, 0.2% higher in January, 0.7% higher in December, 0.1% higher over the two months ending November, and after being 0.2% higher in September, 0.4% higher in August, unchanged in July, 0.3% higher last June, and 0.3% higher last May, and is now 3.2% higher than a year ago….the price index for food purchased for use at home was 0.1% higher in April, while the price index for food bought to eat away from home was 0.3% higher, as average prices at fast food outlets rose 0.3% and average prices at full service restaurants also rose 0.3%, while the price index for food at employee sites and schools was unchanged, and prices for other food away from home averaged 0.1% higher…

In the food at home categories, the price index for cereals and bakery products was 0.4% higher, even though average bread prices fell 0.7%, as the price index for flour and prepared flour mixes rose 2.6%, the price index for fresh biscuits, rolls, and muffins rose 4.7%, and the price index for frozen and refrigerated bakery products, pies, tarts, turnovers was 2.0% higher.…on the other hand, the price index for the meats, poultry, fish, and eggs food group was 0.2% lower, as the price index for beef and veal fell 1.6%, the price index for fresh whole chicken fell 0.3%, and the price index for processed fish and seafood was 1.5% lower….at the same time, the seasonally adjusted price index for dairy products was 0.6% lower, even though average milk prices rose 2.2%, as the price index for cheese and related products was 2.9% lower….however, the fruits and vegetables price index was 0.2% higher, as the price index for fresh vegetables rose 0.5%, the price index for canned vegetables rose 0.4% and the price index for canned fruits was 0.5% higher.…meanwhile, the beverages price index was 0.6% higher, as the price index for carbonated drinks rose 0.4%, the price index for coffee rose 0.6%, and the price index for other beverage materials including tea was 2.1% higher….lastly, the price index for the ‘other foods at home’ category was unchanged, as the price index for sugar and sweets rose 1.4%, the price index for soups rose 1.0%, and the price index for baby food and formula was 1.6% higher, while price index for salad dressing fell 4.9%, the price index for peanut butter fell 2.2%, and the price index for margarine was 2.3% lower…

Among the seasonally adjusted core components of the CPI, which rose by 0.2% in May, after rising by 0.4% in April, 0.2% in March, by 0.2% in February, by 0.3% in January, by 0.2% in December, by 0.2% over the 2 months ending in November, and by 0.3% in August, 0.3% in July, by 0.2% last June, and by 0.1% last May, the composite price index of all goods less food and energy goods was 0.1% lower in May, 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 May’s retail sales for inflation in national accounts data, the price index for household furnishings and supplies was 0.2% lower, as the price index for living room, kitchen, and dining room furniture fell 0.5%, the price index for bedroom furniture fell 1.1%, the price index for window coverings fell 1.6%, the price index for floor coverings fell 1.4%, the price index for outdoor equipment and supplies fell 1.0%, and the price index for household paper products was 0.3% lower….on the other hand, the apparel price index was 0.3% higher, on a 1.2% increase in the price index for men’s suits, sport coats, and outerwear, a 1.3% increase in the price index for men’s pants and shorts, a 3.7% increase in the price index for jewelry, and a 1.3% increase in the price index for women’s footwear…. meanwhile, the price index for transportation commodities other than fuel was was 0.1% lower, as average prices for new cars were 0.1% lower, average prices for new trucks were 0.3% lower, the price index for tires fell 0.8%, and the price index for vehicle parts and equipment other than tires was 0.3% lower…. at the same time, the price index for medical care commodities was 0.7% lower, as the price index for prescription drugs fell 0.9%, the price index for nonprescription drugs was 0.8% lower, and the price index for medical equipment and supplies was unchanged…in addition, the recreational commodities index was 0.1% lower, as the price index for televisions fell 1.5%, the price index for audio equipment fell 0.7%, the price index for pets, pet supplies, accessories fell 1.3%, and the price index for sewing machines, fabric and supplies was 1.9% lower… meanwhile, the education and communication commodities index was unchanged, as the price index for college textbooks rose 1.7%, while the price index for telephone hardware, calculators, and other consumer information items including smartphones was 0.2% lower.…lastly, a separate price index just for alcoholic beverages was 0.1% higher, while the price index for ‘other goods’ was 0.1% higher on a 1.2% increase in the price index for cigarettes…

Within core services, the price index for shelter was 0.3% higher, as rents rose 0.4%, homeowner’s equivalent rent rose 0.3%, and prices for lodging away from home at hotels and motels were 0.5% higher, while the price index for tenants and household insurance was 0.5% higher, and the price index for water, sewers and trash collection services was 0.2% higher… in addition, the price index for medical care services was 0.5% higher, as the price index for dental services rose 1.9%, the price index for hospital services rose 0.7%, and the price index for nursing homes and adult day services was 0.5% higher…on the other hand, the transportation services price index was 0.6% lower, even though the price index for airline fares rose 2.7%, as the price index for car and truck rental fell 4.2% and the price index for motor vehicle  insurance was 1.7% lower….meanwhile, the recreation services price index was 0.5% higher, as the price index for pet services rose 1.4%, the price index for photographers and photo processing rose 1.0%, and the price index for admission to sporting events was 2.8% higher…at the same time, the price index for education and communication services was 0.9% higher, as the price index for postage and delivery services rose 5.2%, the price index for internet services and electronic information providers rose 1.2%, and the price index for wireless  telephone services was 2.2% higher.…lastly, the index for other personal services was 1.4% higher, as the price index for haircuts and other personal care services rose 0.5%,  the price index for apparel services other than laundry and dry cleaning rose 0.9%, and the price index for tax return preparation and other accounting fees was 11.8% higher…

Producer Price Index Rose 1.1% in May on Higher Prices for Energy and Transportation Services

The seasonally adjusted Producer Price Index (PPI) for final demand rose 1.1% in May, as the final demand price index for wholesale goods rose 2.8%, while the more heavily weighted price index for final demand for services was 0.3% higher….that May PPI increase followed a revised 1.1% increase in April, when the final demand price index for wholesale goods rose 1.9% and the price index for final demand for services was 0.7% higher, and a revised 0.7% increase in March, when the final demand price index for wholesale goods rose 2.0%, while the price index for final demand for services was 0.2% higher, and followed a revised 0.5% increase in February, when the final demand price index for wholesale goods was 1.0% higher, and the price index for final demand for services was 0.3% higher, and followed revised 0.6% increase in January, when the final demand price index for wholesale goods was 0.1% lower, but the price index for final demand for services was 0.9% higher, and an unrevised 0.4% PPI increase in December, when the final demand price index for wholesale goods was 0.1% lower, while the price index for final demand for services was 0.6% higher, and a revised 0.4% PPI increase in November, when the final demand price index for wholesale goods was 0.8% higher, and the price index for final demand for services was 0.3% higher, and followed the unrevised report of a 0.1% PPI increase in October, when the final demand price index for wholesale goods fell 0.2%, but the more heavily weighted price index for final demand for services was 0.2% higher, and also followed a 0.6% PPI increase in September, when the final demand price index for wholesale goods rose 0.6% and the price index for final demand for services was also 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 a revised 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 0.2% 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 0.1% higher, and a 0.3% increase last May, when the final demand price index for wholesale goods was 0.1% higher, and the price index for final demand for services 0.4% higher….on an unadjusted basis, producer prices are now 6.5% higher than a year ago, the largest 12 month rise since November 2022, while the core producer price index, which excludes food, energy and trade services, was 0.8% higher for the month, the largest one month core price rise since March 2022, and is now 5.1% higher than it was a year ago…

As noted, the producer price index for final demand for goods was 2.8% higher in May, after being 1.9% higher in April, 2.0% higher in March, 1.0% higher in February, 0.1% lower in January, 0.1% lower in December, 0.8% higher in November, 0.1% lower in October, 0.6% higher in September, 0.2% lower in August, 0.6% higher in July, 0.3% higher last June, and 0.1% higher last May, and is now 10.4% higher than a year ago….the final demand goods price index was 2.8% higher in May because the price index for wholesale energy goods was 10.7% higher, after energy prices had been 7.5% higher in April, 10.4% higher in March, 2.1% higher in February, 1.7% lower in January, 1.5% lower in December, 3.4% higher in November, 2.2% lower in October, and 2.0% higher in September, and as the price index for wholesale foods was 0.6% higher, after wholesale foods had been had been 0.2% higher in April, 0.6% lower in March, 2.3% higher in February, and 1.1% lower in January, and while the index for final demand for core wholesale goods (excluding food and energy) was 0.8% higher in May, after it had been 0.7% higher in April, 0.3% higher in March, 0.3% higher in February. and 0.7% higher in January….

Wholesale energy prices were 10.7% higher in May on a 23.4% increase in wholesale prices for gasoline, a 16.3% increase in wholesale prices for home heating oil and distillates, a 15.7% increase in wholesale prices for No. 2 diesel fuel, and a 16.3% increase in wholesale prices for natural gas liquids, while the final demand for food price index was 0.6% higher on a 10.2% increase the wholesale price index for grains, a 8.7% increase the wholesale price index for fresh fruits and melons, a 5.0% increase in the wholesale price index for oilseeds, and a 1.3% increase in the wholesale price index for dairy products… among core wholesale goods, the wholesale price index for industrial chemicals rose 7.6%, the wholesale price index for nonferrous metals rose 3.0%, the wholesale price index for truck trailers rose 3.5%, and the wholesale price index for sporting and athletic goods was 1.4% higher…

Meanwhile, the price index for final demand for services was 0.3% higher in May, after being 0.7% higher in April, 0.2% higher in March, 0.3% higher in February, 0.9% higher in January, 0.6% higher in December, 0.2% higher in November, 0.2% higher in October, 0.6% higher in September, 0.3% lower in August, 0.9% higher in July, 0.1% higher last June, and 0.4% higher last May, and is now 4.9% higher than a year ago….the price index for final demand for trade services fell 1.1% in May, while the price index for final demand for transportation and warehousing services rose 2.6%, and the core index for final demand for services other than trade, transportation, and warehousing services was 0.7% higher….

Among trade services, seasonally adjusted margins for fuels and lubricants retailers fell 11.9%, margins for TV, video, and photographic equipment and supplies were 7.9% lower, margins for automobile retailers were 2.9% lower, margins for furniture retailers were 2.7% lower, and margins for machinery and vehicle wholesalers were 2.8% lower, but margins for chemicals and allied products wholesalers were 6.0% higher….among transportation and warehousing services, average margins for truck transportation of freight were 3.4% higher, margins for courier, messenger, and U.S. postal services rose 1.1%, and margins for airline passenger services were 2.5% higher….among the components of the core final demand for services index, the price index for portfolio management rose 4.8%, the price index for securities brokerage, dealing, investment advice, and related services rose 5.4%, the price index for cable and satellite subscriber services rose 1.4%, the price index for legal services rose 1.1%, and the price index for traveler accommodation services was 2.3% higher…

This report also showed the price index for intermediate processed goods was 3.5% higher in May, after being 2.7% higher in April, 2.9% higher in March, 1.5% higher in February, 0.1% higher in January, 0.1% higher in December, 0.6% higher in November, 0.1% lower in October, 0.2% higher in September, 0.4% higher in August, 0.7% higher in July, 0.1% lower last June, and 0.2% higher last May….the price index for intermediate energy goods rose 10.4% in May as refinery prices for gasoline rose 23.4%, refinery prices for No. 2 diesel fuel rose 15.7%, refinery prices for jet fuel rose 22.5%, refinery prices for residual fuels rose 12.4%, and producer prices for natural gas liquids were 15.6% higher….at the same time, the price index for intermediate processed foods and feeds rose 0.7%, as the producer price index for prepared animal feeds rose 1.2%, the producer price index for dairy products rose 1.3%, the producer price index for processed fruits and vegetables rose 1.2%, and the producer price index for fats and oils was 5.8% higher… in addition, the core price index for intermediate processed goods less food and energy goods was 1.8% higher, as the producer price index for plastic resins and materials rose 14.0%, the producer price index for synthetic rubber rose 4.7%, the producer price index for copper and brass mill shapes rose 4.3%, the producer price index for aluminum mill shapes rose 4.2%, the producer price index for nonferrous wire and cable rose 5.8%, the producer price index for basic organic chemicals rose 9.0%, the producer price index for paving mixtures and blocks rose 6.0%, and the producer price index for parts for manufacturing from plastics was 3.4% higher….average prices for intermediate processed goods are now 13.3% higher than in May 2025, the 19th year over year increase in 39 months, but are still way off 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 4.9% in May, after rising 1.5% in April, falling 0.3% in March, rising 5.9% in February, rising 4.3% in January, and 2.1% in December and 2.4% in November, after falling 1.3% in October, falling 0.5% in September, and falling 1.8% in August….that was as the May price index for crude energy goods rose 6.9%, as crude oil prices rose 11.8%, unprocessed natural gas prices fell 18.2%, and coal prices were 1.2% higher… meanwhile, the price index for unprocessed foodstuffs and feedstuffs was4.8% higher, as the producer price index for wheat rose 14.7%, the producer price index for corn rose 10.0% the producer price index for raw milk rose 9.0%, the producer price index for hay and hayseeds rose 7.3%, the producer price index for slaughter cattle rose 5.4%, and the producer price index for oilseeds was 5.0% higher….at the same time, the index for core raw materials other than food and energy materials was 2.6% higher, on a 13.0% increase in the price index for raw cotton, a 17.3% increase in the price index for aluminum base scrap, and a 7.1% increase in the price index for copper base scrap….this raw materials price index is now 22.2% higher than a year ago, the 15th year over year increase in the past 40 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 0.5% higher in May, after being 0.9% higher in April, unchanged in March, 0.3% higher in February, 0.6% higher in January, 0.6% higher in December, 0.2% higher in November, 0.4% higher in October, 0.3% higher in September, unchanged in August, 0.6% higher in July, 0.1% higher last June, and 0.1% higher last May.…the price index for intermediate trade services was 0.2% lower, as margins for machinery and equipment parts and supplies fell 1.2%, and margins for building materials, paint, and hardware wholesalers fell 2.7%….at the same time, the price index for transportation and warehousing services for intermediate demand was 1.2% higher, as the intermediate price index for truck transportation of freight rose 3.4%, the intermediate price index for water transportation of freight rose 2.9%, the intermediate index for air transportation of freight rose 0.5%, and the intermediate index for transportation of passengers was 2.5% higher….meanwhile, the core price index for intermediate services other than trade, transportation, and warehousing services was 0.5% higher, as the intermediate price index for securities brokerage, dealing, investment advice, and related services rose 5.4%, the intermediate price index for portfolio management rose 4.8%, the intermediate price index for radio advertising time sales rose 4.0%, the intermediate price index for television advertising time sales rose 2.9%, and the intermediate price index for executive search services was 3.3% higher….over the 12 months ended in May, the price index for services for intermediate demand was 4.7% higher than it was a year earlier, the sixty-seventh 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 Fell 1.2% in April on Increased Exports of Crude Oil and Petroleum Products

Our trade deficit was 1.2% lower April, as our exports increased more than our imports did….the Commerce Dept report on our international trade in goods and services for April, incorporating an annual revision of goods trade figures back to 2021, and services trade figures back to 1999, indicated that our seasonally adjusted goods and services trade deficit fell by $0.7 billion to $55.9 billion in April, from a March deficit that was revised from the originally reported $60.3 billion to $56.6 billion, a revision which should result in an upward revision of about 0.17 percentage points to 1st quarter GDP when the third estimate is released at the end of the month…however, since this month’s report also reflects revised statistics on trade in goods on both a Census basis and a balance of payments (BOP) basis beginning with 2021, and revised statistics on trade in services going back to 1999, the 4th quarter basis for the 1st quarter’s growth in trade would also need to be revised to determine the ultimate impact on 1st quarter GDP, and the BEA will not include that revision until the annual revision to GDP is released at the end of September…

In rounded figures, the value of our April exports rose by $8.3 billion, or by 3.0%, to $327.1 billion, on an $8.7 billion increase to $221.3 billion in our exports of goods, which was partly offset by a $0.4 billion decrease to $105.8 billion in our exports of services, while the value of our imports rose by $6.7 billion to $383.0 billion, on a $6.4 billion increase to $304.9 billion in our imports of goods, and $1.3 billion increase to $78.0 billion in our imports of services…export prices averaged 3.3% higher in April, which means that the nominal increase in exports for the month was due to higher prices, and that real exports likely fell about 0.7%, while import prices were 1.9% higher, meaning that increase in the value of our imports was also price related, and that our real imports probably fell about 0.1%….

The news release for this month’s report gives us a brief synopsis of Exhibits 7 and 8 in the Full Release and Tables pdf for March, which details the major reasons for the increases in our exports and in our imports:

Exports of goods on a Census basis increased $8.0 billion.

• Capital goods increased $4.0 billion.
  • Computers increased $2.5 billion.
  • Civilian aircraft increased $1.0 billion.
• Industrial supplies and materials increased $2.5 billion.
  • Crude oil increased $6.4 billion.
  • Fuel oil increased $1.3 billion.
  • Other petroleum products increased $1.0 billion.
  • Nonmonetary gold decreased $5.8 billion.
  • Other precious metals decreased $1.9 billion.
• Consumer goods increased $1.7 billion.

Imports of goods on a Census basis increased $5.9 billion.

• Capital goods increased $7.0 billion.
• Computers increased $2.2 billion.
• Semiconductors increased $1.7 billion.
• Telecommunications equipment increased $1.6 billion.

That news 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 April figures show surpluses, in billions of dollars, with Netherlands ($8.5), South and Central America ($7.8), Hong Kong ($6.1), Switzerland ($4.4), Singapore ($3.1), United Kingdom ($2.6), Brazil ($2.2), Australia ($2.1), Belgium ($1.4), and Israel ($0.1). Deficits were recorded, in billions of dollars, with Taiwan ($19.3), Vietnam ($19.3), Mexico ($14.8), China ($12.0), European Union ($7.2), Canada ($6.2), Germany ($5.6), South Korea ($4.7), Ireland ($2.9), Japan ($2.8), Malaysia ($2.6), India ($2.4), France ($2.4), Italy ($2.3), and Saudi Arabia (less than $0.1).

• The deficit with China decreased $2.6 billion to $12.0 billion in April. Exports decreased $0.2 billion to $10.1 billion and imports decreased $2.9 billion to $22.1 billion.
• The surplus with South and Central America increased $2.6 billion to $7.8 billion in April. Exports increased $2.1 billion to $21.6 billion and imports decreased $0.4 billion to $13.8 billion.
• The surplus with the United Kingdom decreased $3.8 billion to $2.6 billion in April. Exports decreased $4.3 billion to $7.8 billion and imports decreased $0.5 billion to $5.2 billion.

To gauge the impact of April’s trade on 2nd quarter growth, 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 for inflation in chained 2017 dollars, the same inflation adjustment that’s used by the BEA to compute trade figures for GDP, with the only difference being that the figures are not annualized in the table in this report…from that table, we can figure that the 1st quarter’s real exports of goods averaged 159,501 million monthly in 2017 dollars, while April’s inflation adjusted exports were at 165,357 million in that same 2017 dollar quantity index representation… figuring the annualized change between those two figures, we find that April’s real exports of goods were rising at a 15.5% annual rate from those of the 1st quarter, or at a pace that would add about 0.89 percentage points to 2nd quarter GDP if it were continued through May and June…..from that same table, we can figure that our 1st quarter real imports of goods averaged 243,265.7 million monthly in chained 2017 dollars, while inflation adjusted April goods imports were at 249,696 million in that same 2017 dollar representation… that would indicate that so far in the 2nd quarter, our real imports of goods have increased at a 11.0% annual rate from those of the 1st quarter…since imports are subtracted from GDP because they allegedly represent the portion of consumption or investment that occurred during the quarter that was not produced domestically, their increase at an 11.0% rate would subtract about 1.04 percentage points from 2nd quarter GDP….hence, if the April trade deficit is maintained at the same level throughout the 2nd quarter, our slightly poorer balance of trade in goods would subtract about 0.06 percentage points from  the growth of 2nd quarter GDP…. note that we have not estimated the impact of the change in services here, largely because the Census does not provide handy inflation adjusted data on those, but that with our nominal exports of services down by $0.4 billion while our nominal imports of services were up by $1.3 billion in April, we can figure that the change in our balance of trade in services would have a moderately negative impact on 2nd quarter GDP as well…

Wholesale Sales Rose 2.6% in April, Wholesale Inventories Rose 0.6%

The April report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at “$789.1 billion, up 2.0 percent (±0.5 percent) from the revised March level and were up 13.3 percent (±1.1 percent) from the revised April 2025 level”… the March preliminary estimate of wholesale sales was revised from the $772.2 billion reported last month to $773.6 billion, which meant “the February 2026 to March 2026 percent change was revised from the preliminary estimate of up 2.8 percent (±0.4 percent) to up 3.0 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, since any goods on the shelf or in intermediate storage represent goods that were produced but not sold, and this April report estimated that wholesale inventories were valued at a seasonally adjusted “$940.3 billion at the end of April, up 0.6 percent (±0.4 percent) from the revised March level. Total inventories were up 3.6 percent (±1.2 percent) from the revised April 2025 level.”, with the March preliminary estimate revised from the $932.8 billion reported a month ago to $934.6 billion at the same time, thus revising the change in March inventories from the 1.3% increase reported a month ago to an increase of 1.5%…

That $1.8 billion upward revision to March’s wholesale inventories should raise 1st quarter GDP by about 0.09 percentage points from what was reported in the 2nd estimate…. meanwhile, April wholesale inventories, after an adjustment for price changes for each category of wholesale goods as indicated by the components of the April producer price index, which averaged 1.9% higher for finished goods, appears to indicate a real wholesale inventory decrease of around 1.3% at the beginning of the 2nd quarter, compared to a 1st quarter’s real wholesale inventory change that was modestly positive, accounting for about 20% of the quarter’s increase in inventories. as indicated by the key source data and assumptions (xls) for the second estimate of 1st quarter GDP….hence, unless subsequent months of the 2nd quarter indicate an even larger increase in wholesale inventories than we saw in the first quarter, they will subtract from 2nd quarter GDP, first by subtracting the first quarter increase, then by subtracting the 2nd quarter’s decrease..

Existing Home Sales Rose 3.2% in May Despite Higher Prices

The National Association of Realtors (NAR) reported that seasonally adjusted existing home sales rose 3.2% from April to May, projecting that 4.17 million homes would sell over an entire year if the May home sales pace were extrapolated over that year, a pace that was also 3.2% higher than the revised annual sales rate projected in May of a year ago….that came after homes sold at an annual sales rate of 4.04 million in April, which was revised from the 4.02 million sales rate indicated by last month’s report.…the NAR also reported that the median sales price for all existing-home types was at $429,300 in May, which was 1.3% higher than in May a year earlier, which they report was “the 35th consecutive month of year-over-year price increases“….the NAR press release, which is titled NAR Existing-Home Sales Report Shows 3.2% Increase in May, is in easy to read plain English, so if you’re interested in a regional breakdown, or the details on housing inventories, cash sales, distressed sales, first time home buyers, etc, you can easily find that information in that press release…as sales of existing properties do not add to our national output, neither these home sales nor the prices for which these homes sell are included in GDP, except insofar as real estate, local government and banking services are rendered during the selling process..

Since this report is entirely seasonally adjusted and at a not very informative annual rate, we usually look at the raw data overview (pdf), which gives us a close approximation to the actual number of homes that sold each month…this data indicates that roughly 390,000 homes sold in May, up by 9.6% from the 356,000 homes that sold in April, but unchanged from the the 390,000 homes that sold in May of last year, so we can see the effect of the seasonal adjustment to reduce the springtime increase typical for May home sales…that same pdf indicates that the median home selling price for all housing types rose 2.8%, from a revised $417,500 in April to $429,300 in May, with the regional median home sales prices ranging from a low of $336,300 in the Midwest to a median high of $625,900 in the West…

(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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