Sales and Prices Take Off: July 12 – 16

Retail sales rose, but so did inflation. Here are the five things we learned from U.S. economic data released during the week ending July 16.

June featured soaring retail sales even with shortages at auto dealers. The Census Bureau estimates retail and food services sales were at a seasonally adjusted $621.3 billion during the month, up 0.6 percent from May and 18.0 percent from a year earlier. The headline figure rose despite a shortage-spurred 2.0 percent drop in sales at motor vehicle/parts dealers. Removing that activity and at gas stations (+2.5 percent), core retail sales advanced 1.1 percent in June and 15.8 percent from a year earlier. Sales rose at department stores (+5.9 percent), restaurants/bars (+2.3 percent) and at retailers focused on electronics/appliances (+3.3 percent), apparel (+2.6 percent), health/personal care (+1.6 percent), and groceries (+0.4 percent). Among major categories, sales declined only at retailers focused on furniture (-3.6 percent), sporting goods/hobbies (-1.7 percent), and building materials (-1.6 percent).

Consumer prices rose again in June. The Consumer Price Index (CPI) swelled a seasonally adjusted 0.9 percent during the month. The largest single-month increase for the Bureau of Labor Statistics measure since June 2008 follows gains of 0.6 percent, 0.8 percent, and 0.6 percent during the three prior months. Energy CPI jumped 1.5 percent (gasoline: +2.5 percent) while food CPI jumped 0.8 percent. Net of energy and food, core CPI rose 0.9 percent in June after 0.9 percent and 0.7 percent gains during the two previous months. Used car prices surged 10.5 percent, with sizable prices increases also for new vehicles (+2.0 percent), transportation services (+1.5 percent), apparel (+0.7 percent), and shelter (+0.5 percent). CPI has risen 5.4 percent over the past year (highest in most than 12 years), while the 12-month comparable for core CPI was +4.5 percent (a 29-year record).

…as did wholesale prices. The final demand Producer Price Index (PPI) jumped a seasonally adjusted 1.0 percent in June, continuing a 2021 trend of big jumps in the Bureau of Labor Statistics measure. The core measure—which nets out food, energy, and trade services—increased 0.5 percent. Final demand goods prices grew 1.2 percent, including gains for energy and food of +2.1 percent and +0.8 percent, respectively. Services PPI rose 0.8 percent. Over the past year, PPI has grown 7.3 percent, while the core measure’s 12-month comparable was +5.5 percent.

Manufacturing output slipped in June. The Federal Reserve reports that manufacturing production declined a seasonally adjusted 0.1 percent during the month after growing 0.9 percent in May. Durable goods manufacturing eased 0.2 percent (motor vehicles: -6.6 percent) while nondurables production grew 0.2 percent. Overall industrial production held steady in June after expanding 0.8 percent during the prior month. Output gained 1.4 percent in mining and 2.7 percent at utilities. Compared to a year earlier, both manufacturing and overall industrial output have risen 9.8 percent.

Small business owner sentiment hits its highest level since last November. From the National Federation Independent Business, the Small Business Optimism Index added 2.9 points to a seasonally adjusted 102.5 (1986=100). Seven of ten index components improved during the month, led by expectations for the economy to improve, earnings trends, plans to increase inventories, and expected real sales. Falling were measures for plans to make capital investments, current job openings, and expected credit conditions. Survey respondents noted difficulties hiring workers, “keeping their inventory stocks up and supply chain problems.”

Other U.S. economic data released over the past week:

• Jobless Claims (Week ending July 10, 2021, First-Time Claims, seasonally adjusted): 360,000 -26,000 vs. the previous week, -1,119,000 vs. the same week a year earlier). 4-week moving average: 382,500 (-73.5% vs. the same week a year earlier).

• University of Michigan Surveys of Consumers (July 2021-preliminary, Index of Consumer Sentiment (1966Q1=100), seasonally adjusted): 80.8 (vs. June 2021: 85.5; vs. July 2020: 72.5).

• Import Prices (June 2021, All Imports, not seasonally adjusted): +1.0% vs. May 2021, +11.2% vs. June 2020. Nonfuel Imports: +0.7% vs. May 2021, +6.5% vs. June 2020.

• Export Prices (June 2021, All Exports, not seasonally adjusted): +1.2% vs. May 2021, +16.8% vs. June 2020. Nonagricultural Exports: +1.1% vs. May 2021, +15.0% vs. June 2020.

• State Employment (June 2021, Nonfarm Payrolls, seasonally adjusted): Vs. May 2021: Increased in 25 states, decreased in 1 state, and essentially unchanged in 24 states and the District of Columbia. Vs. June 2020: Increased in all 50 states and the District of Columbia.

• Treasury International Capital Flows (May 2021, Net Foreign Purchases of Domestic Securities, not seasonally adjusted): -$40.3 billion (vs. April 2021: +$57.0 billion; vs. May 2020: +$59.1 billion).

• Beige Book

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