June’s consumer and producer prices, retail sales, industrial production, & new housing starts; May’s business inventories

Major reports that were released this 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…

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 rose from +5.7 in June to +15.6 in July, indicating that a significantly larger 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 +41.4 in July, up rom a reading of +10.3 in June, and its highest reading since November 2021, which they explain was because “more than 53 percent of the firms reported increases in general activity this month (up from 32 percent), far exceeding the 12 percent reporting decreases (down from 22 percent); while 24 percent of the firms reported no change in current activity (down from 45 percent)… (notice that the index value is computed by subtracting the percent of negative responses from the positive ones, while ignoring the neutral ones)…

CPI Fell 0.4% in June on Lower Prices for Fuel

The consumer price index was 0.4% lower in June, as lower prices for fuel, electricity, new cars, used cars and trucks, vehicle insurance, lodging away from home, clothing, appliances, computer and phone hardware, wireless telephone services, physicians' services, health insurance, and tax preparation were only partly offset were only partly offset by higher prices for rent, food, utility gas, public transportation, car and truck rentals, vehicle maintenance and repairs, furniture, recreational goods, haircuts, and admissions to sporting events….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 0.4% lower in June, the largest decrease since April 2020, after being 0.5% higher in May, 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, and 0.3% higher 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, fell from 335.123 in May to 333.952 in June, which left it 3.531425% higher than the index reading of 322.561 from June of last year, which is reported as a 3.5% year over year increase, down from the 4.2% year over year increase that was reported for May, with that widely cited year over year change simply reflecting the effect of last June’s +0.3% increase dropping out of the comparison and being replaced by the current month’s –0.4%, and not telling us anything more about inflation beyond that….with modestly higher prices for food and much lower prices for energy recorded this month, seasonally adjusted core prices, which exclude both food and energy, were virtually unchanged over the month, as the unadjusted core price index rose from 336.846 in May to 336.882 in June, which left the core index 2.59407% ahead of its year ago reading of 328.364, which is reported as a 2.6% year over year increase, down from the 2.9% year over year core price increase that was reported for May, and 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 5.7% lower in June, after being 3.9% higher in May, 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 last July, and 0.9% higher last June,  and is still 15.7% higher than in June of a year ago….the price index for energy commodities was 9.5% lower in June, on a 9.6% decrease in the price index for gasoline and a 9.2% decrease in the price index for fuel oil, while the price index for “other energy commodities”, including propane, kerosene, and firewood, averaged out to be 1.5% lower….meanwhile, the price index for energy services was 0.7% lower, after rising 0.4% in May, even as the price index for utility gas service was 0.5% higher in June, and is still 3.0% higher than it was a year ago, as the electricity price index was 1.0% lower, after rising 0.5% in May…. energy commodities are still averaging 27.1% above their year ago levels, with gasoline prices averaging 26.7% higher than they were a year ago, while the energy services price index is up 3.9% from last June, as electricity prices are still averaging 4.0% higher than a year ago…

Meanwhile, the seasonally adjusted food price index was 0.2% higher in May, after being 0.2% higher in May, 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 last July, and 0.3% higher last June, and is now 3.0% higher than a year ago….the price index for food purchased for use at home was 0.2% higher in April, while the price index for food bought to eat away from home was also 0.2% higher, as average prices at fast food outlets rose 0.1% and average prices at full service restaurants rose 0.4%, while the price index for food at employee sites and schools was 0.9% higher, and prices for other food away from home averaged 0.1% lower…

In the food at home categories, the price index for cereals and bakery products was 0.3% higher, a average bread prices rose 0.5%, the price index for breakfast cereal rose 0.8%, the price index for rice, pasta, and cornmeal rose 1.6%. the price index for fresh sweetrolls, coffeecakes, doughnuts rose 2.0%, and the price index for crackers and bread and cracker products was 3.2% higher.…at the same time, the price index for the meats, poultry, fish, and eggs food group was 0.6% higher, as the price index for beef and veal rose 1.2%, the price index for processed fish and seafood rose 1.1%, and egg prices were 4.3% higher….in addition, the seasonally adjusted price index for dairy products was 1.2% higher, as average milk prices rose 2.0%, and the price index for cheese and related products was 2.8% higher….on the other hand, the fruits and vegetables price index was 0.2% lower, as the price index for fresh vegetables fell 1.4%, the price index for fresh fruits fell 0.4%, and the price index for canned vegetables was 0.2% lower.…meanwhile, the beverages price index was 1.5% lower, as the price index for carbonated drinks fell 0.7%, the price index for noncarbonated juices and drinks fell 1.7%, the price index for coffee fell 2.0%, and the price index for other beverage materials including tea was 2.3% lower….lastly, the price index for the ‘other foods at home’ category 0.5% higher, as the price index for sugar and sweets rose 0.6%, the price index for salad dressing rose 3.4%, the price index for peanut butter rose 1.9%, the price index for frozen and freeze dried prepared foods rose 1.6%, the price index for baby food and formula was 1.8% higher, and the price index for margarine was 1.8% higher…

Among the seasonally adjusted core components of the CPI, which was unchanged in June, after rising by 0.2% in May, 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% last July, and by 0.2% last June, the composite price index of all goods less food and energy goods was 0.1% lower in June, while the more heavily weighted composite index for all services less energy services was unchanged..

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 0.1% lower, as the price index for bedroom furniture fell 0.5%, the price index for appliances fell 1.5%, the price index for clocks, lamps, and decorator items fell 1.2%, the price index for floor coverings fell 0.3%, the price index for outdoor equipment and supplies fell 1.6%, and the price index for household paper products was 1.1% lower….at the same time, the apparel price index was 0.6% lower, on a 2.1% decrease in the price index for w0men’s  outerwear, a 1.4% decrease in the price index for infants' and toddlers' apparel, a 6.0% decrease in the price index for jewelry, and a 1.0% decrease 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 0.2% lower, average prices for used cars and trucks were 0.2% lower, while the price index for tires was 0.1% higher…. in addition, the price index for medical care commodities was 0.2% lower, as the price index for prescription drugs fell 0.1%, the price index for nonprescription drugs rose 0.1%, and the price index for medical equipment and supplies was 1.4% lower…on the other hand, the recreational commodities index was 0.9% higher, as the price index for video equipment other than televisions rose 7.7%, the price index for sports vehicles including bicycles rose 2.5 %, the price index for newspapers and magazines rose 2.2%, and the price index for toys, games, hobbies and playground equipment was 3.3% higher… meanwhile, the education and communication commodities index was 0.8% lower, as the price index for computers, peripherals, and smart home assistants fell 0.7%, and the price index for telephone hardware, calculators, and other consumer information items including smartphones was 1.3% lower.…lastly, a separate price index just for alcoholic beverages was unchanged, while the price index for ‘other goods’ was 0.2% lower on a 0.7% decrease in the price index for tobacco and smoking products and a 0.6% decrease in the price index miscellaneous personal goods…

Within core services, the price index for shelter was 0.1% higher, as rents rose 0.1%, and homeowner’s equivalent rent rose 0.2%, but prices for lodging away from home at hotels and motels were 2.8% lower, while the price index for tenants and household insurance was 0.2% higher, and the price index for water, sewer and trash collection services was 0.3% higher… however, the price index for medical care services was 0.1% lower, as the price index for physicians' services fell 0.2% and the price index for health insurance was 0.5% lower…at the same time, the transportation services price index was 0.3% lower, even though the price index for airline fares rose 0.2%, as the price index for intercity transportation other than air fell 1.6% and the price index for motor vehicle  insurance was 2.0% lower….meanwhile, the recreation services price index was 0.3% higher, as the price index for pet services including veterinary rose 0.6%, the price index for cable, satellite, and live streaming television service rose 0.7%, and the price index for admission to sporting events was 3.3% higher…however, the price index for education and communication services was 0.8% lower, as the price index for delivery services fell 0.3% and the price index for wireless telephone services was 3.3% lower.…lastly, the price index for other personal services was 0.5% higher, as the price index for haircuts and other personal care services rose 1.3%,  the price index for laundry and dry cleaning rose 0.5%, and the price index for apparel services other than laundry and dry cleaning  was 0.6% higher…

Retail Sales Rose 0.2% in June after April and May Sales were Revised Higher

Seasonally adjusted retail sales rose 0.2% in June after upward 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 $768.6 billion during the month, which was 0.2 percent (±0.4 percent)* higher than May’s revised sales of $766.9 billion, and was 6.7 percent (±0.5 percent) above the adjusted sales in June of last year…May’s seasonally adjusted sales were revised 0.4% higher, from the $763.7 billion reported last month to $766.9 billion, while April’s adjusted sales were revised 0.3% higher, from $757.0 billion to $759.1 billion, and as a result of those revisions the percent change from April to May was revised from up 0.9 percent (±0.4 percent) to up 1.0 percent (±0.2 percent)….estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated June’s sales actually fell 2.4%, from $796,039 million in May to $776,915 million in June, while they were up 8.4% from the $716,698 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 copied 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 2025 to May 2026 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, before any inflation adjustments….as you can see, nominal retail sales for the three months of the second quarter were up by 2.9% from the first three months of this year, which would still need to be adjusted for the price changes of the good sold during 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 initially 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 the 5.3% decrease in sales at gas stations, were up by 0.7%…..then, by subtracting the actual dollar amounts representing the 0.2% decrease in grocery & beverage sales and the 0.1% increase in food services sales from that total, we find that core retail sales were up by 1.0% for the month….since the June CPI report showed that the composite price index of all goods less food and energy goods was 0.1% lower in June, we can thus figure that real retail sales excluding food and energy will show an increase of around 1.1%…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 1.9% in June, the June price index for transportation commodities other than fuel was 0.1% lower, which would suggest that real unit sales at auto & parts dealers were on the order of 2.0% higher, once lower prices are taken into account….similarly, while nominal sales at clothing stores were 0.3% lower in June, the apparel price index was 0.6% lower, which means that real sales of clothing really rose around 0.3%…

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 0.2% higher, as the price index for food purchased for use at home was 0.2% higher in June, while the index for food bought to eat away from home was 0.2% higher, as prices at fast food outlets rose 0.1% and prices at full service restaurants rose 0.4%…thus, the 0.2% decrease in nominal sales at food and beverage stores was despite higher prices, and real sales of groceries were likely down about 0.4%….meanwhile, the 0.1% increase in nominal sales at bars and restaurants, once adjusted for 0.2% higher prices, suggests that real sales at bars and restaurants probably fell around 0.1% during the month….on the other hand, while sales at gas stations were reportedly 5.3% lower, there was a 9.7% decrease in the price of gasoline during the month, which would suggest that real sales of gasoline were almost 4.9% higher, 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 of those components 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 almost 1.3% in June, after rising by a revised 0.9% in May, but after falling 0.1% in April, after rising by 0.9% in March, rising by 0.8% in February and falling by 0.6% in January…at the same time, the 0.1% decrease in real sales at bars and restaurants would have a small negative impact on the growth rate of June’s real personal consumption of services…. (note: we again have little confidence in our PCE goods estimate because of the aberrant gasoline sales adjustment we needed to use; without gasoline, our estimate would show that May’s real PCE goods would be around 0.9% higher..)

Producer Price Index Fell 0.3% in June on Lower Prices for Food, Energy and Transportation Services

The seasonally adjusted Producer Price Index (PPI) for final demand fell 0.3% in June, as the final demand price index for wholesale goods fell 1.4%, while the more heavily weighted price index for final demand for services was 0.2% higher…that June PPI decrease followed a revised 0.6% increase in May, when the final demand price index for wholesale goods rose 2.3%, while price index for final demand for services was 0.1% lower, and 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 0.8% 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 0.3% 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 an unrevised 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  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 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 last 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 a 0.2% PPI increase last 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….on an unadjusted basis, producer prices are 5.5% higher than a year ago, while the core producer price index, which excludes food, energy and trade services, was 0.1% higher for the month, the largest one month core price rise since March 2022, and is still 5.1% higher than it was a year ago…

As noted, the producer price index for final demand for goods was 1.4% lower in June, after being 2.3% higher in May, 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 last July, and 0.3% higher last June, and is still 7.9% higher than a year ago….the final demand goods price index was 1.4% lower in June because the price index for wholesale energy goods was 6.4% lower, after energy prices had been 8.4% higher in May, 7.2% higher in April, 10.2% higher in March, 2.0% higher in February, and 1.7% lower in January,  and because the price index for wholesale foods was 0.6% lower, after wholesale foods had been had been 0.5% higher in May, 0.2% higher in April, 0.6% lower in March, 2.3% higher in February, and 1.1% lower in January, and as the price index for final demand for core wholesale goods (excluding food and energy) was 0.2% higher in June, after it had been 0.7% higher in May, 0.7% higher in April, 0.3% higher in March, 0.4% higher in February. and 0.7% higher in January….

Wholesale energy prices were 6.4% lower in June on a 12.0% decrease in wholesale prices for gasoline, an 8.2% decrease in wholesale prices for home heating oil and distillates, an 18.0% decrease in wholesale prices for No. 2 diesel fuel, and a 6.4% decrease in wholesale prices for natural gas liquids, while the final demand for food price index was 0.6% lower on a 12.0% decrease the wholesale price index for grains, a 7.8% decrease in the wholesale price index for oilseeds, a 2.2% decrease the wholesale price index for fresh fruits and melons, and a 6.0% decrease in the wholesale price index for fresh and dry vegetables… among core wholesale goods, the wholesale price index for electronic computers and computer equipment rose 2.5%, the wholesale price index for floor coverings rose 1.6%, the wholesale price index for travel trailers and campers rose 2.0%, and the wholesale price index for tools, dies, jigs, fixtures, and industrial molds was 1.4% higher…

Meanwhile, the price index for final demand for services was 0.2% higher in June, after being 0.1% lower in May, 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 last July, and 0.1% higher last June, and is thus 4.6% higher than a year ago….the price index for final demand for trade services rose 0.4% in May, while the price index for final demand for transportation and warehousing services slipped 0.1%, and the core index for final demand for services other than trade, transportation, and warehousing services was 0.1% higher….

Among trade services, seasonally adjusted margins for fuels and lubricants retailers rose 13.0%, margins for furniture retailers were 10.6% higher, margins for apparel, jewelry, footwear, and accessories retailers were 3.6% higher, margins for automobile retailers were 1.7% higher, and margins for food and alcohol retailers were 1.0% higher, but margins for food and alcohol wholesalers were 9.7% lower….among transportation and warehousing services, average margins for courier, messenger, and U.S. postal services fell 0.5%, and margins for airline passenger services were 0.4% lower….among the components of the core final demand for services index, the price index for consumer loans rose 6.0%, the price index for securities brokerage, dealing, investment advice, and related services rose 3.1%, the price index for arrangement of flights rose 4.8%, the price index for legal services rose 0.5%, and the price index for cable and satellite subscriber services was 0.8% higher…

This report also showed the price index for intermediate processed goods was 1.2% lower in June, after being 2.8% higher in May, 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 last July, and 0.1% lower last June….the price index for intermediate energy goods fell 7.3% in June as refinery prices for gasoline fell 12.0%, refinery prices for No. 2 diesel fuel fell 18.0%, refinery prices for jet fuel fell 17.2%, and producer prices for natural gas liquids were 6.4% lower….on the other hand, the price index for intermediate processed foods and feeds rose 0.1%, as the producer price index for prepared animal feeds rose 0.9%, the producer price index for dairy products rose 0.7%, the producer price index for refined sugar and byproducts rose 1.1%, and the producer price index for fats and oils was 0.8% higher… in addition, the core price index for intermediate processed goods less food and energy goods was 0.6% higher, as the producer price index for asphalt rose 22.5%, the producer price index for phosphates rose 5.1%, the producer price index for plastic packaging products rose 3.4%, the producer price index for paper rose 2.6%, the producer price index for aluminum mill shapes rose 2.3%, the producer price index for steel mill products rose 3.6%, and the producer price index for asphalt felts and coatings was 3.7% higher….average prices for intermediate processed goods are still 11.1% higher than in June 2025, the 20th year over year increase in 40 months, and are 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 fell 4.1% in June, after rising 3.2% in May and 1.7% in April, falling 0.2% 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% last August….that was as the June price index for crude energy goods fell 8.1%, as crude oil prices fell 12.1%, unprocessed natural gas prices rose 18.2%, and coal prices were 0.5% lower… meanwhile, the price index for unprocessed foodstuffs and feedstuffs was 2.1% lower, as the producer price index for wheat fell 12.3%, the producer price index for corn fell 12.6%, the producer price index for slaughter hogs fell 6.0%, and the producer price index for oilseeds was 7.8% lower….at the same time, the index for core raw materials other than food and energy materials was 1.2% lower, on a 17.9% decrease in the price index for raw cotton, and a 0.6% decrease in the price index for nonferrous metal ores….this raw materials price index is still 13.0% higher than a year ago, the 16th year over year increase in the past 41 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 0.3% higher in June, after being 0.6% higher in May, 0.9% higher in April, 0.1% higher 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 last July, and 0.1% higher last June.…the price index for intermediate trade services was 0.6% higher, as margins for chemicals and allied products wholesalers rose 0.8%, and margins for intermediate hardware, building material, and supplies retailers rose 0.4%….on the other hand, the price index for transportation and warehousing services for intermediate demand was 0.3% lower, 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 mail and package delivery services, excluding by USPS, fell 2.4%, and the intermediate index for transportation of passengers was 0.4% lower….meanwhile, the core price index for intermediate services other than trade, transportation, and warehousing services was 0.4% higher, as the intermediate price index for securities brokerage, dealing, investment advice, and related services rose 3.1%, the intermediate price index for business loans rose 6.0%, the intermediate price index for radio advertising time sales rose 3.4%, and the intermediate price index for construction, mining, and forestry machinery and equipment rental and leasing was 2.7% higher….over the 12 months ended in June, the price index for services for intermediate demand was 5.0% higher than it was a year earlier, the sixty-eighth 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…

Industrial Production Rose 0.1% in June on Oil Drilling and Air Conditioning

The Fed’s G17 release on Industrial production and Capacity Utilization for June reported that seasonally adjusted industrial production rose 0.1% in June after rising 0.1% May and 0.8% in April, and was thus up at a 4.0% annual rate over the 2nd quarter as a whole, and 1.1% higher than a year ago….the industrial production index, with the benchmark now set for average 2017 production to equal to 100.0, was statistically unchanged at 102.6 in June, after the May reading for the IP index was revised but statistically unchanged at 102.6, the April index was revised down from 102.5 to 102.4, the March index was revised but unchanged at 101.6, the February index was unchanged at 101.9, and the January index was revised down from 101.1 to 101.0….

The manufacturing index, which accounts for around 77% of the total IP index, was indicated to be unchanged, even as the manufacturing index fell from 98.0 in May to 97.9 in June, after the May manufacturing index was revised from the 97.9 published last month to 98.0, the April manufacturing index was revised but unchanged at 97.8, and the March index was revised but unchanged at 97.1….meanwhile, the mining index, which includes oil and gas well drilling, increased by 0.4%, from 123.7 in May to 124.2 in June, after the May mining index was revised up from the originally reported 122.9, which left the mining index 2.4% above what it was a year ago….finally, the seasonally adjusted utility index, which often fluctuates due to above or below normal temperatures, also rose 0.4% to 109.6 in our warmer than normal June, after the May index was revised down from 111.1 to 109.2, which left the utility index 0.3% above its year earlier reading….(NB: i don’t see an explanation for the sharp revisions to the May mining and utility indices; the IP annual revision is planned for this autumn)

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 was unchanged at 76.1% in June, after capacity utilization for May was revised from the 76.2% reported a month ago to 76.1% ….capacity utilization by NAICS durable goods production facilities fell from 75.4% in May to 75.2% in June, while capacity utilization for NAICS non-durable producers rose from 75.8% to 75.9%…capacity utilization for the mining sector rose to 87.4% in June, from a revised 87.0% in May, which was originally reported as 85.5%, while utilities were operating at 69.5% of capacity during June, up from a revised 69.3% May, which was originally published as 71.0%…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….

Business Sales Rose 2.1% in May; Business Inventories Rose 0.3%

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 $2,135.0 billion in May, up 2.1 percent (±0.2 percent) from April’s revised sales, and 11.9 percent (±0.4 percent) higher than May’s sales of a year earlier…note that total April sales were revised from the originally reported $2,086.0 billion to $2,091.473 billion, and hence their change from March was revised from +1.2% to +1.4%…manufacturer’s sales were up 1.6% from April at $653,185 million during May, and retail trade sales, which exclude restaurant & bar sales from the revised May retail sales we reported earlier, rose 1.0% to $664,439 million, and wholesale sales were 3.4% higher at $817,407 million…

Meanwhile, total manufacturer’s and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $2,736.2 billion at the end of May, up 0.3 percent (±0.1%) from April, and 3.1 percent (±0.5 percent) higher than in May a year earlier…the value of end of April inventories were revised to $2,728.1 billion from the $2,726.6 billion reported in this report last month, and are now 0.6% higher than in March.…seasonally adjusted inventories of manufacturers were estimated to be valued at $961,984 million, 0.2% more than in April, and inventories of retailers were valued at $832,414 million, 0.6% more than in April, and inventories of wholesalers were estimated to be valued at $941,760 million at the end of May, 0.1% more 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 decrease over April and May would be in contrast to 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….meanwhile, the inflation adjusted factory inventory data from two weeks ago indicated a decrease in May’s real inventories, following a similar decrease in April, after the decrease in first quarter factory inventories, and hence their impact on the growth rate of 2nd quarter GDP would be determined by which quarter had the larger decrease….with prices for finished goods on average 2.3% higher in May, this report suggests that real retail inventories had decreased at a rate of about 1.7% in May, following a real decrease of around 1.2% in April….since the key source data and assumptions (xls) for the third estimate of 1st quarter GDP indicated that 1st quarter real retail inventories had accounted for most of the 1st quarter inventory increase, any decrease in the 2nd quarter’s real retail inventories would first reverse the first quarter increase, then subtract the second quarter decrease from the growth rate of 2nd quarter GDP…hence, with two months of inventory data now available, it appears that the real inventory component will subtract substantially from 2nd quarter GDP…

New Housing Starts Reported 19% Higher in June; Building Permits 3% Lower

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 1,427,000 in June, which was 19.0 percent (±15.9 percent) above the revised May estimated annual rate of 1,199,000 units started, and was 3.5 percent (±14.3 percent)* above last June’s pace of 1,399,000 housing starts annually…the asterisk indicates that the Census does not have sufficient data to determine whether housing starts actually rose or fell from those of last June, with the figures in parenthesis the most likely range of the change indicated; in other words, June’s housing starts could have been up by 3.1% or up by as much as 34.9% 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 six year low of 1,177,000 units reported last month to 1,199,000, while April’s housing starts, which were first reported at a 1,465,000 annual rate, were revised from last month’s initial revised annual figure of 1,392,000 annually back up to a 1,414,000 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 134,200 housing units were started in June, up from the 108,900 units started in May,and up from the 129,100 units started in June of a year ago….of those housing units started in June, an estimated 85,500 were single family homes and 46,900 were units in structures with more than 5 units, up from the revised 82,900 single family starts in May, and up from the the 25,000 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 1,367,000 housing units, which was 3.0 percent below the revised May rate of 1,410,000 permits, and was 2.3 percent below the June 2025 rate of 1,399,000 building permit issuance…the annual rate of housing permits issued in May was revised from the 1,413,000 reported last month to 1,410,000…

Again, the annualized estimates for new permits reported here were extrapolated from the unadjusted estimates collected by canvassing census agents, which showed permits for 129,900 housing units were issued in June, up from the revised estimate of 120,500 new permits issued in May…the June permits included 83,700 permits for single family homes, up from 79,200 in May, and 41,400 permits for housing units in apartment buildings with 5 or more units, up from 36,900 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…)