September’s consumer & producer prices, retail sales, industrial production, and existing home sales; August’s business inventories

Widely watched reports that were released last week included the September Consumer Price Index, the September Producer Price Index, and the September Import and Export Price Indexes, all from the Bureau of Labor Statistics, the Retail Sales report for September and the corresponding Business Sales and Inventories report for August, both from the Census Bureau, the report on Industrial production and Capacity Utilization for September from the Fed, and the Existing Home Sales Report for September from the National Association of Realtors (NAR)….

In addition, this week also saw the release of the first two regional Fed manufacturing surveys for October: the Empire State Manufacturing Survey for October from the New York Fed, which covers New York, northern New Jersey, and an adjacent county in Connecticut, reported their headline general business conditions index rose from +7.6 in September to +25.5 in October, the highest in almost five years, meaning that a significant majority of Second District manufactures reported improving metrics in various facets of their business during the current month…meanwhile the Philadelphia Fed Manufacturing Survey for October, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest diffusion index of manufacturing conditions fell from +37.8 in September to +29.0 in October, an index value they arrived at because “41 percent of the firms reported increases in activity (down from 45 percent last month), and 20 percent reported decreases (up from 8 percent); while 27 percent of the firms reported no change in current activity (down from 45 percent)”

CPI Rose 0.6% in September on Higher Prices for Fuel, Housing, Hospital Services, etal

The consumer price index was 0.6% higher in September, as higher prices for fuel, rent, new and used cars and trucks, vehicle rentals, vehicle maintenance and repairs, motor oil, intracity public transportation, air fares, lodging away from home, eating out, dental and hospital services, checking and banking services, college tuition and fees, computers, telephone hardware, telephone services, sports vehicles, toys, boys' apparel, and admissions to sporting events were only partly offset by lower prices for groceries, utility gas, prescription drugs, furniture, window and floor coverings, appliances, TVs, video rentals, personal care products, health insurance, moving expenses, internet services, tax preparation, and admissions to movies, theaters, and concerts….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 0.6% higher in September, after being 0.4% higher in August, 0.1% higher in July, 0.4% lower in June, 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 0f 2025, and 0.3% higher in September 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 334.980 in August to 336.940 in September, which left it 3.7376847% higher than the index reading of 324.800 from September of last year, which is reported as a 3.7% year over year increase, up from the 3.4% year over year increase that was reported for August, with that widely cited year over year change simply reflecting the effect of last September’s rounded +0.3% increase dropping out of the comparison and being replaced by the current month’s rounded +0.6%, and not telling us anything more about inflation beyond that….with barely changed prices for food but much higher prices for energy this month, seasonally adjusted core prices, which exclude both food and energy, were 0.3% higher over the month, as the unadjusted core price index rose from  338.041 in August to 339.287 in September, which left the core index 2.564358% ahead of its year ago reading of 330.804, which is reported as a 2.6% year over year increase, up from the 2.4% year over year core price increase that was reported for August, but well below the 6.6% annual increase reported for September of 2022, which had been the largest annual increase in core prices in forty years…

The volatile seasonally adjusted energy price index was 5.2% higher in September, after being 2.1% higher in August, 1.5% lower in July, 5.7% lower in June, 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, and 1.5% higher last September, and is now 20.4% higher than in September of a year ago….the price index for energy commodities was 9.3% higher in September, on a 9.1% increase in the price index for gasoline and a 15.3% increase in the price index for fuel oil, while the price index for “other energy commodities”, including propane, kerosene, and firewood, averaged out to be 0.2% higher….meanwhile, the price index for energy services was 0.1% higher, after falling 0.4% in August, as the price index for utility gas service was 0.3% lower in September, but is still 5.0% higher than it was a year ago, while the electricity price index was 0.2% higher, after falling 0.2% in August…. energy commodities are now averaging 35.3% above their year ago levels, with gasoline prices averaging 34.2% higher than they were a year ago, while the energy services price index is up 4.6% from last September, as electricity prices are now averaging 4.0% higher than a year ago…

Meanwhile, the seasonally adjusted food price index was virtually unchanged in September, after being 0.1% higher in August, 0.1% higher in July, 0.2% higher in June, 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 last November, and after being 0.2% higher last September, and is still 2.5% higher than a year ago….the price index for food purchased for use at home was 0.1% lower in September, while the price index for food bought to eat away from home was 0.2% higher, as average prices at fast food outlets was 0.3% higher and average prices at full service restaurants was 0.2% higher, while the price index for food at employee sites and schools was 0.5% higher, and prices for other food away from home were virtually unchanged…

In the food at home categories, the price index for cereals and bakery products was 0.1% higher, even as average bread prices fell 0.1%, as the price index for breakfast cereal rose 0.9%, the price index for rice, pasta,and cornmeal rose 1.2%, the price index for fresh sweetrolls, coffeecakes, doughnuts was 1.9% higher, and the price index for fresh frozen and refrigerated bakery products, pies, tarts, turnovers was 4.0% higher.…on the other hand, the price index for the meats, poultry, fish, and eggs food group was 0.5% lower, as the price index for beef and veal fell 1.0%, the price index for pork also fell 1.0%, and egg prices were 1.3% lower….in addition, the seasonally adjusted price index for dairy products was 0.9% lower, even as average milk prices fell 2.0%, as the price index for ice cream and related products fell 1.3% and the price index for other dairy products (not including cheese) was 0.8% lower …on the other hand, the fruits and vegetables price index was 0.5% higher, as the price index for fresh fruit rose 0.8%, the price index for canned vegetables rose 0.5, and the price index for frozen vegetables was 1.4% higher.…at the same time, the beverages price index was 0.9% higher, as the price index for carbonated drinks rose 1.2%, the price index for noncarbonated juices and drinks rose 1.0%, and the price index for coffee was 0.9% higher….lastly, the price index for the ‘other foods at home’ category was 0.2% lower, as the price index for butter and margarine fell 2.3%, the price index for olives, pickles, and relishes fell 1.6%, the price index for snacks fell 1.6%, and the price index for baby food and formula was 1.0% lower…

Among the seasonally adjusted core components of the CPI, which was 0.3% higher in September, after being 0.3% higher in August, 0.2% higher in July, 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 two months ending in November, and by 0.3% last September, the composite price index of all goods less food and energy goods was 0.3% higher in September, while the more heavily weighted composite index for all services less energy services was 0.4% higher..

Among the goods components of the core price index, which will initially be used by the Bureau of Economic Analysis to adjust September’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 furniture and bedding fell 0.8%, the price index for appliances fell 0.7%, the price index for window and floor coverings fell 2.4%, and the price index for household paper products was 1.4% lower….on the other hand, the apparel price index was 0.3% higher, on a 1.9% increase in the price index for men’s suits, sport coats, and outerwear, a 5.0% increase in the price index for boys’ apparel, a 2.3% increase in the price index for infants' and toddlers' apparel, a 2.7% increase in the price index for boys’ and girls’ footwear, and a 1.9% increase in the price index for jewelry and watches…. at the same time, the price index for transportation commodities other than fuel was was 0.4% higher, as average prices for new cars rose 0.4%, average prices for used cars and trucks were 0.7% higher, the price index for tires rose 0.4%, and the price index for motor oil, coolant, and fluids was 1.0% higher….on the other hand, the price index for medical care commodities was 0.7% lower, as the price index for medicinal drugs fell 0.8% while the price index for medical equipment and supplies was 0.4% higher…meanwhile , the recreational commodities index was 0.9% higher, even as the price index for televisions fell 1.9%, as the price index for other video equipment rose 4.5%, the price index for audio equipment rose 1.4%, the price index for sports vehicles including bicycles rose 0.9%, the price index for recreational reading materials rose 2.2%, the price index for music instruments and accessories rose 1.0%, and the price index for toys, games, hobbies and playground equipment was 5.1% higher… at the same time, the education and communication commodities index was also 0.9% higher, as the price index for computers, peripherals, and smart home assistants rose 1.4%, and the price index for telephone hardware, calculators, and other consumer information items including smartphones was 0.6% higher.…lastly, a separate price index just for alcoholic beverages was unchanged, while the price index for ‘other goods’ was 0.1% higher on an 0.8% increase in the price index for cigarettes, an 0.8% increase in the price index for hair, dental, shaving, and miscellaneous personal care products, and a 2.9% increase in the price index for stationery, stationery supplies, and gift wrap…

Within core services, the price index for shelter was 0.4% higher, as rents rose 0.2%, and homeowner’s equivalent rent rose 0.3%, and prices for lodging away from home at hotels and motels were 2.0% higher, 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 also 0.2% higher, but the price index for moving, storage, freight expense was 2.3% lower … at the same time, the price index for medical care services was 0.3% higher, as the price index for dental’ services rose 0.5%, and the price index for outpatient hospital services  rose 1.4%, while the price index for health insurance was 0.2% lower….in addition, the transportation services price index was 0.5% higher, as the price index for airline fares rose 1.2%, the price index for intracity public transportation rose 2.2%, the price index for car and truck rental rose 5.4% and the price index for motor vehicle maintenance and repair rose 0.7%….at the same time, the recreation services price index was 0.3% higher, as the price index for cable, satellite, and live streaming television services rose 0.6%, the price index for veterinarian services rose 0.3%, and the price index for admission to sporting events was 7.6% higher…meanwhile, the price index for education and communication services was unchanged, as the price index for college tuition and fees rose 1.2% and the price index for delivery services was 1.7% higher, while the price index for wireless telephone services fell 0.5% and the price index for internet services and electronic information providers was 1.3% lower.…lastly, the price index for other personal services was 0.4% higher, as the price index for checking account and other bank services rose 2.7%,  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 0.9% higher…

Retail Sales Rose 0.8% in September after Prior Monthly Sales were Revised Lower

The seasonally adjusted value of retail sales rose 0.8% in September after retail sales for July & August were revised lower, due to an annual revision based on historical corrections and the results of the 2023 and 2024 Annual Integrated Economic Survey, which revised retail sales figures going back to 1992….the Advance Retail Sales Report for September (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $745.0 billion during the month, which was 0.8 percent (±0.4 percent) higher August’s revised sales of $739.3 billion, and 6.3 percent (±0.5 percent) above the adjusted sales in September of last year….as a result of the annual revision, August’s seasonally adjusted sales were revised 4.5% lower, from $773.9 billion to $739.3 billion, and July sales were also revised 4.5% lower, from $764.5 billion to $729.9 billion, but the July to August percent change was still revised from up 1.2 percent (±0.4 percent) to up 1.3 percent (±0.1 percent)….unadjusted sales estimates, extrapolated from surveys of a small sampling of retailers, indicated sales actually fell 3.2%, from $750,707 million in August to $727,033 million in September, while they were 6.8% higher than the $680,630 million of sales of September a year ago…

Since it’s the end of the quarter for retail sales, we’ll include the entire table from this report showing the change in retail sales by business type, including the quarter over quarter data…again, to explain what this table shows, the first double column below shows us the seasonally adjusted percentage change in sales for each kind of business from the August revised figure to this month’s September “advance” report figure in the first sub-column, and then the year over year percentage sales change since last September in the 2nd column; the second double column pair below gives us the revision of the August advance estimates (now called “preliminary”) as of this report, with the new July to August percentage change under “Jul 2026 (r)” (revised) and the August 2025 to August 2026 percentage change as revised in the 2nd column of the pair.. (for your reference, the table of last month’s advance estimate of August sales, before this month’s revisions, is here)…. lastly, the third pair of columns below shows the percentage change of the most recent 3 months of this year’s sales (July, August and September) from the preceding three months of the 2nd quarter (April, May and June) and then from the same three months (July, August and September) of a year ago….Note that the first column of that pair gives us a snapshot comparison of 2nd quarter sales to third quarter sales which, after adjustment for price changes, could be useful in estimating the impact of this report on 3rd quarter GDP….

To compute September’s real personal consumption of goods data for national accounts from this September retail sales report, the BEA will initially use the corresponding price changes from the September consumer price index, which we reviewed above…to estimate what they will find, we’ll start by pulling out the usually volatile sales of gasoline from the other totals…from the third line on the above table, we can see that September retail sales excluding the 6.4% price related increase in sales at gas stations were up by 0.2%….then, subtracting the figures representing the 0.4% increase in grocery & beverage sales and the 1.1% increase in food services sales from that total, we find that core retail sales were up by less than 0.1% for the month….since the CPI report showed that the composite price index of all goods less food and energy goods was 0.3% higher in September, we can thus figure that real retail sales excluding food and energy were down by more than 0.2% month over month…however, the adjustment 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 health and personal care stores stores were up 0.7%, the price index for medical care commodities was 0.7% lower, which would mean that real unit sales drug stores would have been around 1.4% higher…meanwhile, while sales at clothing stores were unchanged in September, the apparel price index was 0.3% higher at the same time, which would suggest that real sales of clothing were about 0.3% lower…

In addition to figuring those core retail sales, to make a complete estimate of real September PCE, we would need to adjust food and energy retail sales for their price changes separately, just as the BEA will do….the September CPI report showed that the food price index was unchanged in September, with the price index for food purchased for use at home 0.1% lower, while prices for food bought at restaurants averaged 0.2% higher… hence, while nominal sales at food and beverage stores were up 0.4%, real sales of food and beverages would be roughly 0.5% higher in light of 0.1% lower prices.…similarly, the 1.1% increase in nominal sales at bars and restaurants, once adjusted for 0.2% higher prices, suggests that real sales at bars and restaurants were 0.9% higher….and while sales at gas stations were up 6.4%, there was a 9.1% increase in the price index for gasoline, which would suggest real sales of gasoline were down by nearly 2.5%, with the caveat that gasoline stations do sell more than gasoline, products which should not be adjusted with gasoline prices, so the decrease in real sales at gas stations was likely somewhat less than our imputed estimate…by reweighing and averaging the real sales changes that we have thus estimated back together, and excluding food services, we can then estimate that the income and outlays report for September will show that real personal consumption of goods fell by almost 0.4% in September*, after rising by a revised 1.4% in August, but after falling by 0.5% in July, and after rising by in June, rising by 0.9% in May, and after rising by 0.4% in April…..at the same time, the 0.9% increase in real sales at bars and restaurants would have a modest positive impact on September’s real personal consumption of services…

*Note: we again have a low confidence in that result because of the unlikely 2.5% decrease in gasoline consumption implied by the figures; without gasoline, our estimate would show that September’s real PCE goods would only be 0.1% lower…also note that the 4.5% downward revision to July and August’s retail sales resulting from the annual revision may skew 3rd quarter GDP figures, because while the BEA will use the revised figures for 3rd quarter PCE goods, they historically leave prior quarters unchanged until the next annual revision, which now won’t come until  September 2027…one would think they’d have to make an adjustment in this case, but in the 15 years or so i’ve been watching them, i can’t recall that they’ve ever done so..

Industrial Production Rose 0.7% in September on Record Cooling Demand

The Fed’s G17 release on Industrial production and Capacity Utilization indicated that industrial production increased by 0.7% in September, after increasing by a revised 0.1% in August, which was revised from the virtually unchanged increase previously reported, leaving industrial production 2.2% higher than in September a year ago, up from the 1.4% year over year increase reported a month ago…..the industrial production index, with the benchmark now set for average 2017 production to equal to 100.0, rose from a revised 103.3 in August to 104.0 September; after the index for August was revised from the previously reported 103.1 to 103.3, the index for July was revised from the previously reported 103.0 to 103.2, the index for June was revised from the previously reported 102.8 to 103.0, and the index for May was revised from the previously reported 102.6 to 102.7, while the April index of 102.6 was revised but unchanged from the previous report….

The manufacturing index, which accounts for more than 75% of the total IP index, increased by 0.3% in September, from 98.2 in August to 98.4, after August’s manufacturing index was revised but unchanged at 98.2 and July’s manufacturing index was revised but unchanged at 98.4….meanwhile, the mining index, which includes oil and gas well drilling, rose by 0.2%, from 124.3 in August to 124.5 in September, after the August mining index was revised up from 122.7, and is now 2.8% higher than it was a year ago….finally, the utility index, which often fluctuates due to above or below normal temperatures because seasonal adjustment is to the norm, rose 3.5% to 117.3 in our record hot September, after the August index was revised up from 113.0 to 113.3, leaving the utility index 8.7% higher than in September of a year ago…

This report also includes capacity utilization data, which is expressed as the percentage of our plant and equipment that was in use during the month, and which indicated that seasonally adjusted capacity utilization for total industry rose from 76.4% in August to 76.9% in September, after August utilization was unchanged from July….capacity utilization of NAICS durable goods production facilities was unchanged at 76.0% in September, after August’s utilization of durable manufacturing was revised up from 75.8%, while capacity utilization for non-durables producers rose from 75.5% to 75.8%…capacity utilization for the mining sector rose to 87.5% in September from 87.4% in August, which itself was revised up from the previously reported 86.3%, while utilities were operating at 73.8% of capacity during September, up from their 71.5% of capacity during August, which was revised up from 71.3%…for more details on capacity utilization by type of manufacturer, see Table 7: Capacity Utilization: Manufacturing, Mining, and Utilities, which shows the historical capacity utilization figures for a dozen types of durable goods manufacturers, 8 classifications of non-durable manufacturers, mining, utilities, and capacity utilization for a handful of other special categories….

Producer Price Index Rose 1.3% in September on Higher Energy & Transportation Prices

The seasonally adjusted Producer Price Index (PPI) for final demand was 1.3% higher September, the largest price increase since March 2022, as the final demand price index for wholesale goods rose 2.6%, while the more heavily weighted price index for final demand for services was 0.8% higher…that September jump in the PPI followed a revised 0.5% increase in August, when the final demand price index for wholesale goods rose 1.1%, and price index for final demand for services was 0.2% higher, and followed a revised 0.2% increase in July, when the final demand price index for wholesale goods fell 0.4%, but the price index for final demand for services was 0.3% higher, and a revised 0.1% decrease in June, when the final demand price index for wholesale goods fell 1.4%, while the price index for final demand for services was 0.5% higher, and a revised 0.5% PPI increase in May, when the final demand price index for wholesale goods rose 2.2%, while price index for final demand for services was 0.2% lower…those revised figures followed an unrevised 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 0.8% higher, and an 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 an unrevised 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 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 last 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 last 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 ….on an unadjusted basis, producer prices are now 6.3% higher than a year ago, while the core producer price index, which excludes food, energy and trade services, was 0.5% higher for the month. and is now 5.0% higher than it was a year ago…

As noted, the producer price index for final demand for goods was 2.6% higher September, after being 1.1% higher in August, 0.4% lower in July, 1.4% lower in June, 2.2% 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 last October, and 0.6% higher last September, and is now 9.8% higher than a year ago….the final demand goods price index was 2.6% higher September because the price index for wholesale energy goods was 10.8% higher, after energy prices had been 4.5% higher in August, 1.7% lower in July, 6.8% lower in June, 8.2% higher in May, 7.1% higher in April, 10.5% higher in March, 2.0% higher in February, and 1.7% lower in January,  and because the price index for wholesale foods was 1.2% higher, after wholesale foods had been had been 0.3% lower in August, 1.0% lower in July, 0.6% lower in June, 0.6% higher in May, 0.3% 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 0.3% higher in September, after it had been 0.4% higher in August, 0.2% higher in July, 0.2% higher in June, 0.7% higher in May, 0.7% higher in April, 0.4% higher in March, 0.4% higher in February. and 0.7% higher in January….

Wholesale energy prices were 10.8% higher in September on a 20.3% increase in wholesale prices for gasoline, a 21.0% increase in wholesale prices for No. 2 diesel fuel, an 18.8% increase in wholesale prices for home heating oil and distillates, and a 14.6% increase in wholesale prices for natural gas liquids, while the final demand for food price index was 1.2% higher on a 41.0% increase the wholesale price index for fresh and dry vegetables, a 17.4% increase in the wholesale price index for grains, and an 11.4% increase the wholesale price index for oilseeds… among core wholesale goods, the wholesale price index for industrial chemicals rose 0.9%, the wholesale price index for commercial furniture rose 0.6%, the wholesale price index for truck trailers rose 0.5%, and the wholesale price index for jewelry, platinum and karat gold was 0.9% higher…

Meanwhile, the price index for final demand for services was 0.8% higher in September, after being 0.2% higher in August, 0.3% higher in July, 0.5% higher in June, 0.2% lower in May, 0.8% higher in April, 0.3% 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 last September, and 0.3% lower last August, and is now 4.9% higher than a year ago….the price index for final demand for trade services rose 1.4% in September, the price index for final demand for transportation and warehousing services rose 3.4%, and 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 TV, video, and photographic equipment and supplies retailers rose 8.2%, margins for major household appliance retailers rose 5.8%  and margins for apparel wholesalers were 7.5% higher, and margins for hardware, building materials, and supplies retailers were 4.9% higher, while margins for fuels and lubricants retailers were 25.0% lower….among transportation and warehousing services, average margins for truck transportation of freight rose 3.8%, margins for courier, messenger, and U.S. postal services rose 1.0%, and margins for airline passenger services were 5.0% higher….among the components of the core final demand for services index, the price index for application software publishing rose 3.7%, the price index for traveler accommodation services rose 5.6%, the price index for deposit services rose 2.2%, and the price index for arrangement of flights was 1.5% higher..

This report also showed the price index for intermediate processed goods was 2.5% higher in September, after being 1.8% higher in August, 0.4% lower in July, 1.1% lower in June, 2.7% higher in May, 2.6% higher in April, 3.0% 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 last October, and 0.2% higher last September….the price index for intermediate energy goods rose 10.2% in September as refinery prices for No. 2 diesel fuel rose 21.0%, refinery prices for gasoline rose 20.3%, refinery prices for jet fuel rose 15.4%, and producer prices for natural gas liquids were 14.6% higher….at the same time, the price index for intermediate processed foods and feeds rise 0.4%, as the producer price index for prepared animal feeds rose 2.3% and the producer price index for refined sugar and byproducts was 0.7% higher…meanwhile, the core price index for intermediate processed goods less food and energy goods was 0.5% higher, as the producer price index for building paper and board rose 3.3%, the producer price index for steel mill products rose 2.2%, the producer price index for paperboard rose 1.5%, the producer price index for copper and brass mill shapes rose 1.4%, the producer price index for aircraft parts and auxiliary equipment rose 1.5%, and the producer price index for fabricated structural metal products was 1.4% higher….average prices for intermediate processed goods are now 14.1% higher than in September 2025, the 23rd year over year increase in 43 months, but 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 rose 8.4% in September, after rising 0.9% in August, falling 0.2% in July, falling 6.5% % in June, rising 3.0% in May and 1.9% 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% last October,  and falling 0.5% last September….that was as the September price index for crude energy goods rose rose 22.2%, as crude oil prices rose 28.3%, unprocessed natural gas prices rose 5.1%, but coal prices were 0.1% lower… at the same time, the price index for unprocessed foodstuffs and feedstuffs was 0.8% higher, as the producer price index for corn rose 19.1%, the producer price index for wheat rose 10.2%, and the producer price index for slaughter turkeys was 2.7% higher….meanwhile, the index for core raw materials other than food and energy materials was 2.5% higher, on a 2.3% increase in the price index for nonferrous metal ores, an 0.9% increase in the price index for copper base scrap, and a 3.8% increase in the price index for recyclable paper….this raw materials price index is now 21.5% higher than a year ago, the 19th year over year increase in the past 44 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 0.9% higher in September, after being 0.7% higher in August, 0.2% higher in July, 0.8% higher in June, 0.5% 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 last November, 0.4% higher last October, and 0.3% higher last September.…the price index for intermediate trade services was 2.0% higher, as margins for margins for intermediate food wholesalers rose 7.6%, margins for intermediate hardware, building material, and supplies retailers, rose 4.9%, and margins for intermediate paper and plastics products wholesalers rose 3.6%….at the same time, the price index for transportation and warehousing services for intermediate demand was 1.8% higher, as the intermediate price index for truck transportation of freight rose 3.8%, the intermediate price index for water transportation of freight rose 0.8%, the intermediate index for air mail and package delivery services, excluding by USPS, rose 2.5%, and the intermediate index for transportation of passengers was 5.0% higher….in addition, the core price index for intermediate services other than trade, transportation, and warehousing services was 0.3% higher, as the intermediate price index for television advertising time sales rose 4.6%, the intermediate price index for executive search services also rose 4.6%, the intermediate price index for deposit services rose 2.2%, and the intermediate price index for traveler accommodation services services was 5.6% higher….over the 12 months ended in September, the price index for services for intermediate demand was 6.3 higher than it was a year earlier, the seventy-first  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 lower than the record 9.5% year over year increase that was indicated for July 2021…

Business Sales Rose 1.1% in August; Business Inventories Rose 0.4%

After the release of the September retail sales report, the Census Bureau released the composite Manufacturing and Trade Inventories and Sales report for August (pdf), which incorporates the revised August retail data from that September report and the earlier published August wholesale and factory data to give us a complete picture of the business contribution to the economy for the month….according to the Census Bureau, total manufacturer’s and trade sales were estimated to be valued at a seasonally adjusted $2,123.5 billion  in August, up 1.1 percent (±0.1) from July’s revised sales, and up 10.2 percent (±0.3 percent) from August sales of a year earlier….note that total July sales were concurrently revised down from the originally reported $2,120.7 billion to $2,101.1 billion, but were now a 0.5% increase from June, revised from the 0.3% increase reported a month ago….

Meanwhile, total manufacturer’s and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $2,818.8 billion at the end of August, up 0.4 percent (±0.1 percent) from July, and 4.6 percent (±0.4 percent) higher than in August a year earlier…the value of end of July inventories were revised from the originally reported $2,764.7 billion to $2,807.1 billion, and they are now shown as a 0.9% increase from June, vs the 0..8% increase previously reported…seasonally adjusted inventories of manufacturers were estimated to be valued at $972,382 million, up 0.5% from July, and inventories of retailers were valued at $882,176 million, 0.2% more than in July, while inventories of wholesalers were estimated to be valued at $964,199 million at the end of August, 0.5% higher than in July…

For GDP purposes, all inventories, including retail, are adjusted for inflation with appropriate component price indices of the producer price index…when we reviewed the September earlier, it indicated that the producer price index for August showed that aggregate prices for finished goods were on average 1.1% higher, that prices for intermediate processed goods were 1.8% higher, and that prices for unprocessed goods were 0.9% higher….retail inventories are all finished goods, as are about 70% of wholesale inventories, while factory inventories are roughly evenly split between the three stages of production… when we looked at factory inventories two weeks ago, we judged the real August inventory decrease to be smaller than the 2nd quarter decrease, and hence a positive for 3rd quarter GDP… then, with the release of the wholesale inventory report last week, we figured that while real wholesale inventories so far in the quarter were lower, that came after a larger 2nd quarter decrease, and hence would also be positive for 3rd quarter GDP…since the producer price index for August showed that prices for finished goods were on average 1.1% higher, that means that real retail inventories were roughly 0.9% lower for the month…however, since real retail inventories saw a modest increase in the second quarter, that decrease in real August retail inventories means that both the 2nd quarter inventory increase and the 3rd quarter decrease would be subtracted from the growth rate of 3rd quarter GDP…

Existing Home Sales Rose 1.5% in September on Lower Prices

The National Association of Realtors (NAR) reported that their seasonally adjusted tally of existing home sales rose 1.5% from August to September, the first increase in four months, projecting that 3.99 million homes would sell over an entire year if the September home sales pace were extrapolated over that year, a pace that was still 2.2% below the 4.08 million annual sales rate projected in September of a year ago…August sales, now shown at a 3.93 million annual rate, were revised from the 3.98 million annual rate reported a month ago …the NAR also reported that the median sales price for all existing-home types was $417,500 in September, 1.3% higher than in September a year earlier, which they say is “the 39th consecutive month of year-over-year price gains“….the NAR press release, which is titled “Existing-Home Sales Increased 1.5% in September, According to NAR Report“, is in easy to read plain English, so if you’re interested in the details on housing inventories, cash sales, distressed sales, first time home buyers, et al., you can easily find them in that press release…since sales of existing properties do not add to our national output, neither these home sales nor the prices for which these homes sell for are included in GDP, except insofar as real estate, local government and banking services are rendered during the home buying and selling process…

Since this report is entirely seasonally adjusted and at a not very informative annual rate, we like to look at the raw data overview (pdf), which gives us a close approximation to the actual number of homes that sold each month…that unadjusted data indicates that roughly 341,000 homes sold in September, down 4.7% from the 358,000 homes that sold in August, and 3.9% fewer homes than the 355,000 homes that sold in September of last year, so we can see that the seasonal adjustment gave a large enough boost to the headline changes published in the Realtor’s press release to turn them positive….that same pdf indicates that the median home selling price for all housing types fell for a third consecutive month, from a revised $427,700 in August to $417,500 in September, and is now down 5.7% from the $442,800 median sales price of June.…regional median home sales prices ranged from a low of $329,600 in the Midwest, to a high of $613,600 in the West, with prices in the Northeast falling 3.4% in the current report, from $542,100 in August to $523,600 in September, even as they were still 4.7% higher than a year 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…)