Gas Prices Dropped as 2018 Ended: January 7 – 11

Core consumer prices grew at a steady, moderate pace in December. Here are the five things we learned from U.S. economic data released during the week ending January 11.  

Note that the partial shutdown of the federal government has and will delay the release of certain economic data reports.

#1Consumer prices fell in December, but core prices inched up. The Consumer Price Index (CPI) declined 0.1 percent on a seasonally adjusted basis during the month, per the Bureau of Labor Statistics. This was the first drop in consumer prices since last March, with gasoline prices being the main culprit. Energy CPI slumped by 3.5 percent (its third decline in four months) with gasoline prices plummeting 7.5 percent. Prices for both electricity (+1.8 percent) and utility delivered natural gas (+0.7 percent) both rose. Also rising were food prices (+0.4 percent—its biggest single-month gain since May 2014), pulled up by increased costs for fruit and vegetables. Net of energy and food, core CPI gained 0.2 percent. Rising were prices for medical care services (+0.4 percent) and shelter (+0.3 percent) while prices fell 0.2 percent for transportation services, used cars/trucks, and medical care commodities. Over the past year, CPI has increased by 1.9 percent while core consumer prices have risen 2.2 percent.CPI December 2018 111119.png

#2Even with a decline in November, there were more job openings than the number of unemployed people. The Bureau of Labor Statistics reports that there were 6.888 million open jobs on the final day of November, down 243,000 from October but 16.1 percent ahead of the November 2017 count. This was greater than the BLS’s estimate of 6.018 million unemployed people during the month. Private sector employers had 6.266 million open jobs in November, up 15.5 percent from a year earlier. Most industries reported double-digit percentage increases in job openings, with notable exceptions being retail (-6.2 percent), wholesale trade (+5.4 percent), and financial activities (+8.9 percent). Also dropping during the month was the number of people hired, declining by 218,000 to 5.710 million people (+3.7 percent versus November 2017). Industries reporting particularly large year-to-year percentage increases in hiring included wholesale trade (+31.7 percent), transportation/warehousing (+16.1 percent) health care/social assistance (+14.0 percent), financial activities (+10.9 percent), and manufacturing (+9.9 percent). 

#3Service sector activity chilled a bit as 2018 wrapped up. The NMI, the headline index from the Institute for Supply Management’s Nonmanufacturing Report on Business, shed 3.1 points to a reading of 57.5. This was the measure’s lowest reading since July but also represented the 107th consecutive month in which it was higher than 50.0 (indicative of an expanding service sector). Three of the NMI’s four components lost ground relative to November: business activity/production (down 5.3 points), supplier deliveries (down 5.0 points), and employment (off 2.1 points). Eking a small gain was the component tied to new orders, which added 2/10ths of a point. Sixteen of 18 tracked nonmanufacturing industries reported growth during December, led by arts/entertainment/recreation, transportation/warehousing, and health care/social assistance. Whereas the comments from survey respondents were “mostly optimistic about overall business conditions,” highlighted comments noted potential adverse effects resulting from the tariffs.

#4Small business owner optimism slipped again in December but remained near post-recession highs. The Small Business Optimism Index shed 4/10ths of a point during the month to a seasonally adjusted 104.4 (1986=100). Even though this was the fourth straight monthly decline, the National Federation of Independent Business’s measure has been above a reading of 100.0 for 25 consecutive months. Four of the index’s ten components improved from their November readings: plans to increase inventories (up six points), current job openings (up five points), current inventories (up four points), and plans to increase employment (up a point). Of the six declining components, the largest decreases were for expected economic conditions (off six points), whether it is a good time to expand (off five points), and plans to make capital outlays (down four points). The press release emphasized that small businesses “need workers to generate more sales, provide services, and complete projects.”

#5Consumer borrowing rose in November. The Federal Reserve estimates consumers held a seasonally adjusted $3.979 trillion in outstanding non-real estate related debt (e.g., mortgages) at the end of November. This represented an increase of $22.2 billion from October and a 4.3 percent gain over the past year. Revolving credit (e.g., credit card) expanded by $4.8 billion to $1.042 trillion (+2.2 percent versus November 2017). Nonrevolving credit balances rose by $17.3 billion in November to $2.937 trillion. Nonrevolving consumer credit balances, which includes both college and auto loans, have increased by 5.1 percent over the past 12 months.

Other U.S. economic data released over the past week:
Jobless Claims (week ending January 5, 2019, First-Time Claims, seasonally adjusted): 216,000 (-17,000 vs. previous week; +31,000 vs. the same week a year earlier). 4-week moving average: 221,750 (-9.4% vs. the same week a year earlier).
FOMC Minutes

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

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 Rise to Another Record: May 7 – 11

Employers continue having trouble filling open positions. Here are the five things we learned from U.S. economic data released during the week ending May 11.

#1Job openings hit an (at least) 17-year high during March while growth in hiring lagged. The Bureau of Labor Statistics estimates that there were a seasonally adjusted 6.550 million available jobs at the end of March, up 472,000 for the month, 16.8 percent above the year-ago count, and the most since the launch of the data series back in December 2000. Private sector employers had 5.928 million job openings, up 16.5 percent from a year earlier. Some of the largest year-to-year percentage increases in job openings were in construction (+38.5 percent), trade/transportation/utilities (+26.4 percent), retail (+24.0 percent), state/local government (+23.9 percent), professional/business services (+20.6 percent), financial activities (+17.2 percent), and leisure/hospitality (+17.0 percent). Employers had difficulty finding people to fill these positions as the 5.425 million hired workers during the month was down 86,000 from February and up a more modest 2.4 percent from a year earlier. Industries with strong year-to-year percentage gains in hiring included arts/entertainment/recreation (+26.0 percent), professional/business services (+13.5 percent), manufacturing (+12.7 percent), transportation/warehousing (+7.0 percent), and wholesale trade (+6.9 percent). 5.291 million people left their jobs during March, up 118,000 from February and 2.3 percent from a year earlier. This included 3.344 million people who quit their jobs (+6.4 percent from a year earlier) and 1.278 million people who were subject to a layoff (down 7.1 percent from March 2017).Job Openings and Hiring 2008-2018 051118

#2Consumer prices grew at a moderate rate in April. The Bureau of Labor Statistics reports that the Consumer Price Index (CPI) increased 0.2 percent on a seasonally adjusted basis during the month, up from a 0.1 percent decline in March and leaving the measure 2.5 percent ahead of its year-ago mark. Energy prices rebounded 1.4 percent during April following a 2.8 percent pullback in March (gasoline prices increased 3.0 percent). Food prices grew at their fastest rate in 13 months with a 0.3 percent advance (fruits/vegetables, eggs, beer, and dairy products leading the way). Net of energy and food, core CPI saw its smallest gain since last November with a 0.1 percent increase. Helping keep the core measure in check were declining prices for used cars/trucks (-1.6 percent), new vehicles (-0.5 percent), transportation services (-0.4 percent), and medical care commodities (-0.2 percent). Rising were prices for shelter (+0.3 percent), apparel (+0.3 percent) and medical care services (+0.2 percent).

#3Lower food prices lead to the smallest increase in wholesale prices of the year. The final demand measure of the Producer Price Index (PPI) grew a seasonally adjusted 0.1 percent during April following a 0.3 percent increase in March, per the Bureau of Labor Statistics. The core measure of wholesale prices—final demand PPI net of energy, food, and trade services—increased 0.1 percent following three monthly 0.4 percent gains. Final demand prices were unchanged during April as energy prices edge up 0.1 percent and food prices fell 1.1 percent (including a 17.8 percent drop in vegetable prices). Core final demand goods prices (net of energy and food) grew 0.3 percent for the third time in four months. Final demand PPI for services gained 0.2 percent, reflecting a 0.2 percent gain in trade services PPI and a 0.6 percent jump in transportation/warehousing prices. Over the past year, final demand PPI has grown 2.6 percent while the core measure (net of energy, food, and trade services) has increased 2.5 percent.

#4Small business owner confidence held firm in April. The Small Business Optimism Index eked out a 1/10th of a point gain to a seasonally adjusted reading of 104.8 (1986=100). This was the 17th consecutive month in which the National Federation of Independent Business’s measure was above a reading of 100. Four of ten index components gained during the month: earnings trends (up three points), plans to make capital outlays (up three points), current inventories (up two points), and expected real sales. Three measures declined from their March readings: plans to increase employment (down four points), expected economic conditions (down two points), and whether it is a good time to expand (off a single point). The press release claims that “[n]ever in the history of this survey have we seen profit trends so high.”

#5Consumers took on debt at a slower pace in March. The Federal Reserve reports that outstanding consumer credit balances (net of mortgages and other real estate backed debt) grew by $11.7 billion during the month to a seasonally adjusted $3.875 trillion. This was smaller than the $13.6 billion advance during February and left outstanding debt balances up 5.0 percent over the past year. Revolving credit balances (e.g., credit cards) contracted by $2.6 billion to $1.027 trillion (+4.8 percent versus March 2017). Nonrevolving credit balances (including college and auto loans) increased by $14.2 billion to $2.848 trillion. This represented a 5.1 increase from the same month a year earlier.

Other U.S. economic data released over the past week:
Jobless Claims (week ending May 5, 2018, First-Time Claims, seasonally adjusted): 211,000 (Unchanged vs. previous week; -26,000 vs. the same week a year earlier). 4-week moving average: 216,000 (-11.7% vs. the same week a year earlier).
Import Prices (April 2018, All Imports, not seasonally adjusted): +0.3% vs. March 2018, +3.3% vs. April 2017. Nonfuel Imports: +0.2% vs. March 2018, +1.8% vs. April 2017.
Export Prices (April 2018, All Exports, not seasonally adjusted): +0.6% vs. March 2018, +3.8% vs. April 2017. Nonagricultural Exports: +0.7% vs. March 2018, +4.0% vs. April 2017.
U. of Michigan Consumer Sentiment (May 2018-preliminary, Index of Consumer Sentiment, seasonally adjusted): 98.8 (vs. April 2018: 98.8, vs. May 2017: 97.1).
Wholesale Inventories (March 2018, Inventories of Merchant Inventories, seasonally adjusted): $627.4 billion (+0.3% vs. February 2018, +5.5% vs. March 2017).
Monthly Treasury Statement (April 2018, Federal Government Budget Surplus/Deficit): +$214.3  Billion (vs. April 2017: +$176.3 billion).  The deficit over 1st 7 months of FY2018: -$385.4 billion (vs. 1st 7 months of FY2017: -$344.4 billion).
Senior Loan Officer Opinion Survey (April 2018).

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