Prices and Job Openings Remain Firm: August 6 – 10

Inflation continued to take hold, albeit still at a moderate rate. Here are the five things we learned from U.S. economic data released during the week ending August 10.

#1Consumer prices have risen 2.9 percent over the past year. The Bureau of Labor Statistics indicates the Consumer Price Index (CPI) grew a seasonally adjusted 0.2 percent during July, up from June’s 0.1 percent bump but matching April and May gains of 0.2 percent. Energy prices pulled back for a second consecutive month (-0.5 percent), with declines reported for gasoline (-0.6 percent), utility delivered gas (-0.5 percent), and electricity (-0.4 percent). Food CPI inched up 0.1 percent. Net of energy and food, core CPI grew 0.2 percent for the fifth time in six months. Rising were prices for used cars/trucks (+1.3 percent), transportation services (+0.5 percent), new vehicles (+0.3 percent), shelter (+0.3 percent), and medical care services (+0.1 percent). Prices dropped for medical care commodities (-1.1 percent) and apparel (-0.3 percent). Over the past year, CPI has risen 2.9 percent, its largest 12-month comparable in more than six years. The core measure has jumped 2.4 percent since last July, its largest 12-month comparable since September 2008. Both increases portend the Federal Reserve raising its short-term interest rate target at its upcoming September meeting.CPI 2008-2018 081018.png

#2While pausing in July wholesale prices were 3.3 percent ahead of their year-ago levels. Final demand Producer Price Index (PPI) was unchanged during the month on a seasonally adjusted basis, according to the Bureau of Labor Statistics. This followed gains in May and June of +0.5 percent and +0.3 percent, respectively. The core measure of wholesale prices, removing the impact of energy, food, and trade services, gained 0.3 percent during July. PPI for final demand good eked out a 0.1 percent gain as prices for both energy (-0.5 percent) and food (-0.1 percent) both dropped. PPI for core goods increased 0.3 percent for the sixth time in seven months (pharmaceutical preparations jumped 0.7 percent). Losing ground during July was PPI for final demand services, slipping 0.1 percent. Trade services PPI, a measure of retailer and wholesaler margins, slumped 0.8 percent. Over the past year, final demand PPI has risen 3.3 percent (just under its biggest increase since 2011) while the core measure has a 12-month comparable of +2.8 percent (its highest mark since March).

#3There remained more job openings than people seeking work in June. Per the Bureau of Labor Statistics, employers had a seasonally adjusted 6.662 million job openings at the end of the month, essentially matching the count from the end of May and up 8.8 percent from the same month a year earlier. Further, this was greater than the 6.564 million people the BLS had estimated were unemployed during the same month. Private sector employers had 6.053 million job openings at the end of June, up 8.6 percent from June 2017. Industries with the particularly sizeable year-to-year percentage gains in job openings included construction (+30.2 percent), retail (+29.7 percent), transportation/wholesale (+25.3 percent), manufacturing (+17.3 percent), and accommodation/food services (+9.7 percent). Hiring slowed by 104,000 to 5.651 million workers, which paced 3.4 percent ahead of year-ago hiring. Private sector employers hired 5.303 million workers during June, up 3.4 percent from a year earlier. 5.502 million people left their jobs during the month, up 83,000 from May and 3.9 percent from June 2017. 3.402 million voluntarily departed their jobs during the month (+7.5 percent versus June 2017) while 1.723 million people were laid off (-2.8 percent versus June 2017).

#4Consumers slowed the rate of them taking on debt. The Federal Reserve estimates that the American public held a seasonally adjusted $3.908 trillion in outstanding debt (not counting mortgages or other real estate-backed debt) at the end of June, a $10.2 billion increase for the month and up 4.7 percent from a year earlier. As a matter of context, consumer debt holdings had grown by $24.3 billion during May. All June’s gain came in the form of nonrevolving debt (e.g., college loans, auto loans), rising by $10.4 billion to $2.869 trillion (4.7 percent versus June 2017). Revolving credit (i.e., credit card) balances essentially held steady at $1.039 trillion (+4.8 percent June 2017).

#5The federal budget deficit is more than 20 percent larger than what it was this time last year. The Bureau of the Fiscal Service, a part of the Department of the Treasury, reports that the U.S. government had a budget deficit of $76.9 billion during July. This was up $2.0 billion from June and 79.0 percent from the same month a year earlier. Tax receipts totaled $225.3 billion while outlays were at $302.1 billion.  More notable is that the budget deficit generated over the first ten months of FY2018—$684.0 billion—was 20.8 percent greater than that of the first ten months of FY2017. Receipts over this time period were up a mere 1.0 percent while expenditures rose 4.4 percent. 

Other U.S. economic data released over the past week:
Jobless Claims (week ending August 4, 2018, First-Time Claims, seasonally adjusted): 213,000 (-6,000 vs. previous week; -39,000 vs. the same week a year earlier). 4-week moving average: 214,250 (-11.3% vs. the same week a year earlier).
Wholesale Trade (June 2018, Wholesale Inventories, seasonally adjusted): $632.4 billion (+0.1% vs. May 2018, +5.1% vs. June 2017).
Senior Loan Officer Opinion Survey on Bank Lending 

The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.

Job Openings Outpaces Unemployment Again: July 9 – 13

Employers continue to struggle to fill their job openings. Here are the five things we learned from U.S. economic data released during the week ending July 13.

#1There remain more job openings than people unemployed. The Bureau of Labor Statistics estimates there were a seasonally adjusted 6.638 million job openings at the end of May. While down 202,000 from the prior month, the count of job openings was not only 16.7 percent larger than that of a year earlier but also higher than the 6.065 million people the BLS had reported being jobless in last week’s employment report. Private sector job openings have grown 16.6 percent over the past year, with some of largest year-to-year percentage gains seen for construction (+32.8 percent), transportation/warehousing (+28.9 percent), manufacturing (+24.6 percent), and professional/business services (+20.6 percent). During the same month, hiring grew by 268,000 to 5.754 million (+4.9 percent versus June 2017). Private sector hiring has risen 5.2 percent over the past year, with substantial year-to-year percentage gains seen in transportation/warehousing (+11.6 percent), health care/social assistance (+9.7 percent), accommodation/food services (+9.6 percent), professional/business services (+5.3 percent), and manufacturing (+4.2 percent). 5.468 million people left their jobs during June, an increase of 44,000 for the month and up 3.8 percent from a year earlier. This included a record 3.561 million people voluntarily quitting their jobs (increasing 212,000 for the month and 10.4 percent over the past year), reflecting the robust employment opportunities for workers.Job Openings Unemployment 071318.png

#2Consumer prices grew at a slower rate in June, thanks to lower electricity and natural gas prices. The Consumer Price Index (CPI) increased 0.1 percent on a seasonally adjusted basis, following two consecutive 0.2 percent monthly gains, as reported by the Bureau of Labor Statistics. Energy prices fell 0.3 percent (its first drop since March), thanks to lower electricity and natural gas prices. Meanwhile, gasoline prices grew 0.5 percent. Food CPI increased 0.2 percent. Net of energy and food, core CPI expanded 0.2 percent for the fourth time in five months. Growing during June were prices for used cars/trucks (+0.7 percent), medical care services (+0.5 percent), new vehicles (+0.4 percent), transportation services (+0.2 percent), and shelter (+0.1 percent). On the other end of the spectrum, apparel prices slumped 0.9 percent. CPI has risen 2.9 percent over the past year, while core CPI has a 12-month comparable of +2.3 percent.

#3Meanwhile, wholesale prices firmed further. The Producer Price Index (PPI) for final demand jumped 0.3 percent on a seasonally adjusted basis in June, down from May’s 0.5 percent bounce. The Bureau of Labor Statistics’ core measure for wholesale prices—final demand PPI net of energy, food and trade services—grew by a more modest 0.1 percent. Energy PPI blossomed 0.8 percent, with prices for fuels and lubricants surging 21.8 percent. Food PPI, however, fell 1.1 percent as vegetable prices plummeted 13.8 percent. Net of energy and food, core goods PPI increased 0.3 percent. PPI for final demand services grew 0.4 percent, its largest single-month rise since January. Trade services PPI (a measure of retailer and wholesaler margins) jumped 0.7 percent in June after rising 0.9 percent during May. Over the past year, PPI has increased 3.4 percent, with the core measure of wholesale prices growing 2.7 percent over the past 12 months.

#4Even with a slight pullback, small business owners remained confident in June. The Small Business Optimism Index from the National Federation of Independent Business lost 6/10ths of a point during the month to a seasonally adjusted 107.2 (1986=100). Even with the decline, the index has been above a reading of 100 for 19 consecutive months. Five of the index components improved during the month (including those for current inventories and current job openings) while the other five lost ground (including those for expected real sales and whether it is a good time to expand). The press release argued that the “first six months of the year have been very good to small business thanks to tax cuts, regulatory reform, and policies that help them grow.”

#5The U.S. budget deficit continued to pace ahead of that from last year. Per the Department of the Treasury, the federal government ran a budget deficit of -$74.9 billion. Receipts totaled $316.3 billion for the month (down 6.6 percent from the same month a year earlier) while expenditures were $391.1 billion (8.8 percent smaller than that of June 2017). Over the first nine months of FY2018, the U.S. government has run up a -$607.1 billion trade deficit, up 16.1 percent from the same nine months during the previous fiscal year. Receipt collected over these nine months—$2.540 trillion—was pacing 1.3 percent ahead of that from the same period in FY2018. Over this same time period, personal income tax collections were 8.9 percent larger than that of a year earlier while corporate taxes were down 27.6 percent. Expenditures totaled $3.148 trillion, up 3.8 percent from the nine-month total of a year earlier.

Other U.S. economic data released over the past week:
Jobless Claims (week ending July 7, 2018, First-Time Claims, seasonally adjusted): 214,000 (-18,000 vs. previous week; -30,000 vs. the same week a year earlier). 4-week moving average: 223,000 (-9.2% vs. the same week a year earlier).
Import Prices (June 2018, All Imports, not seasonally adjusted): -0.4% vs. May 2018, +4.3% vs. June 2017. Nonfuel imports: -0.3% vs. May 2018, +1.5% vs. June 2017.
Export Prices (June 2018, All Exports, not seasonally adjusted): +0.3% vs. May 2018, +5.3% vs. June 2017. Nonagricultural exports: +0.4% vs. May 2018, +5.4% vs. June 2017.
University of Michigan Consumer Sentiment (July 2018-preliminary, Index of Consumer Sentiment, seasonally adjusted): 97.1 (vs. June 2018: 98.2, vs. July 2017: 93.4).
Consumer Credit (May 2018, Outstanding Consumer Credit-net of real estate-backed loans, seasonally adjusted): $3.898 trillion (+$24.5 billion vs. April 2018, +4.8% vs. May 2017). 

The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.

Retail Gains (for Some), Inflation Rebounds: May 8 – 12

Retail sales increased during April, although not all retailers benefited from increased consumer spending. Meanwhile, inflation rebounded during April after having taken March off. Here are the 5 things we learned from U.S. economic data released during the week ending May 12.

#1On the whole, retail sales grew during April, but not all sectors shared in the gain. The Census Bureau places its estimate of April sales for retail and food services at a seasonally adjusted $474.9 billion, up 0.4 percent from March and 4.8 percent from a year earlier. (The Census Bureau also raised its previously released estimate of March retail sales from a 0.2 percent decrease to a 0.1 percent gain.) Some of the gains came from a rebound in sales at auto dealers (and parts retailers) with a 0.7 percent sales increase. Net of activity at auto dealers, retail sales increased 0.3 percent during April and were up 4.5 percent over the past year. Sales grew at retailers focused on electronics/appliances (+1.3 percent), building materials/garden (+1.2 percent), personal care (+0.8 percent), and sporting goods/hobbies (+0.6 percent). Sales also improved at restaurants/bars (+0.4%). And, reflecting the continuing shift of sales away from traditional brick and mortar stores, sales at nonstore retailers (e.g., web retailers) jumped 1.4 percent during April and were 11.9 percent above their April 2016 rate. Sales weakened 0.5 percent at furniture retailers, 0.5 percent at apparel retailers, and 0.4 percent at grocery stores. Reflecting the shift above in consumer preferences, sales also fell 0.5 percent at general merchandise retailers, although sales did gain 0.2 percent at non-luxury department stores. Sales were 0.7 percent below those a year earlier at general merchandisers with the 12-month comparable at non-luxury department stores at -3.7 percent. Other retail segments with weak year-to-year sales comparables included sporting goods/hobbies (-2.4 percent), apparel (+0.5 percent), and electronics/appliances (+0.7 percent).Change in Retail Sales-April 2017-051217

#2Energy and food price pulled up consumer prices during April. The Bureau of Labor Statistics reports that the Consumer Price Index (CPI) gained 0.2 percent on a seasonally adjusted basis during the month and was 2.2 percent above its year-ago mark. Energy prices rose 1.1 percent during April as gasoline prices jumped 1.2 percent (also rise were the price indices for utility delivered natural gas (+2.2 percent), energy services (+0.9 percent), and electricity (+0.6 percent). Energy CPI has risen 9.3 percent over the past year. Food CPI gained 0.2 percent during the month but only by 0.5 percent since April 2016. Core CPI, which removes both energy and food goods from the analysis, inched up 0.1 percent during the month and was 1.9 percent above where it was a year ago. While shelter prices grew 0.3 percent during April, falling were prices for medical care commodities (-0.8 percent), used vehicles (-0.5 percent), apparel (-0.3 percent), new vehicles (-0.2 percent), and transportation services (-0.2 percent).

#3Wholesale prices rebounded in April after slipping in March. The Producer Price Index (PPI) for final demand jumped 0.5 percent on a seasonally adjusted during April after having declined 0.1 percent during the previous month. The Bureau of Labor Statistics’ measure has increased 2.5 percent over the past year, its largest 12-month comparable since February 2012. The rise in PPI was widespread. The core measure for wholesale prices—final demand PPI net of energy, food, and trade services—jumped 0.7 percent during April and was has grown 2.1 percent over the past year. PPI for final demand goods grew a robust 0.5 percent, which included strong gains in wholesale energy and food prices of 0.8 percent, and 0.9 percent, respectively. Net of energy and food, core goods producer prices increased 0.3 percent, the fifth time over the past six months in which that measure had grown by at least that amount. PPI for final demand services grew 0.4 percent during the month, pulled up by higher prices for financial services, guestroom rentals, and transportation and warehousing services.

#4The number of job openings grew during March, but the pace of hiring held firm. The Bureau of Labor Statistics estimates nonfarm employers hired 5.260 million people on a seasonally adjusted basis during the month, up 11,000 from February but off 37,000 from a year earlier. Private sector employers hired 4.928 million workers during March, up 23,000 from February and 8,000 from March 2016. Industries with the largest year-to-year percentage increases in hiring were manufacturing (+22.9 percent), transportation (+10.2 percent), and health care/social assistance (+8.9 percent). Meanwhile, the count of people hired by retailers was off 3.2 percent from the same month a year earlier. The slow growth in hiring happened even as the count of job openings grew by 61,000 during March to a seasonally adjusted 5.743 million. (-1.9 percent versus March 2016). Private sector job openings totaled 5.207 million, 2.5 percent below March 2016 levels. Industries with the largest year-to-year percentage increases in job openings include manufacturing (+15.2 percent), health care/social assistance (+10.4 percent), financial activities (+7.7 percent), and wholesale trade (+3.4 percent). 5.088 million people left their job during March, up 80,000 from February and 1.0 percent from a year earlier. While layoffs edge up by 21,000 during the month to 1.615 million, this remained 6.4% below that of a year earlier. The voluntary quits figure of 3.036 million people was down 150,000 from February but still 3.5 percent above that of a year earlier.

#5A change in business tax payment deadlines leads to a larger budget surplus in April. Per the Bureau of the Fiscal Service, the U.S. government ran a budget surplus of $182.4 billion. This compares to a deficit of $172.2 billion during the previous month and a $33.4 billion surplus during the same month a year earlier. The significantly larger deficit is largely the result of a change in rules that shifted the due date for corporate tax payments from March to April. Receipts totaled $455.6 billion (up 16.3 percent from April 2016) while expenditures dropped 18.0 percent. The U.S. government ran a budget deficit of $344.4 billion during the first seven months of FY2017, 2.4 percent smaler than the deficit incurred during the same seven months of FY2016.

Other U.S. economic data released over the past week:
Jobless Claims (week ending May 6, 2017, First-Time Claims, seasonally adjusted): 236,000 (-2,000 vs. previous week; -50,000 vs. the same week a year earlier). 4-week moving average: 243,500 (-9.8% vs. the same week a year earlier).
University of Michigan Index of Consumer Sentiment (May 2017-preliminary, Index (1966Q1=100), seasonally adjusted): 97.7 (vs. April 2017: 97.0, vs. May 2017: 94.7).
Import Prices (April 2017, not seasonally adjusted): +0.5% vs. March 2017, +4.1% vs. April 2016. Nonfuel imports: +0.3% vs. March 2017, +1.1% vs. April 2016.
Export Prices (April 2017, not seasonally adjusted): +0.2% vs. March 2017, +3.0% vs. April 2016. Nonagricultural exports: +0.1% vs. March 2017, +2.9% vs. April 2016.
Small Business Optimism Survey (April 2017, Index (1986=100), seasonally adjusted): 104.5 (vs. March 2017: 104.7, April 2016: 93.6).
Manufacturing and Trade Inventories (March 2016, Business Inventories, seasonally adjusted): $1.841 trillion (+0.2% vs. February 2017, +2.6% vs. March 2016).

The opinions expressed here are not necessarily those of Kevin’s current and previous employers. No endorsements are implied.