Core Prices Chill, Job Openings Grow: May 6 – 10

Core inflation was on spring break in April, except at the gas pump.  Here are the five things we learned from U.S. economic data released during the week ending May 10.

#1Core consumer inflation was restrained (again) in April. The Bureau of Labor Statistics tells us that the Consumer Price Index (CPI) grew 0.3 percent on a seasonally adjusted basis during the month, following a 0.4 percent bounce in March. Energy prices jumped 2.9 percent, led by a 5.7 percent surge in gasoline prices. Food CPI, however, slipped 0.1 percent (including a 0.5 percent drop in the prices for food consumed at home). Core CPI, which nets out energy and food, edged up 0.1 percent for the third consecutive month. Rising were prices for medical care commodities (+0.9 percent), shelter (+0.4 percent), medical care services (+0.2 percent), transportation services (+0.1 percent), and new vehicles (-0.1 percent). Prices slumped for used cars/trucks (-1.3 percent) and apparel (-0.8 percent). CPI has risen 2.0 percent over the past year while the core price measure has a 12-month comparable of +2.1 percent.

#2Wholesale prices also moderated. Final demand Producer Price Index (PPI) grew at a seasonally adjusted 0.2 percent during April, down from the 0.6 percent burst a month earlier. The Bureau of Labor Statistics’ core wholesale price measure, which removes the impact of energy, food and trade services, jumped 0.4 percent. Both the headline and core PPI measures have risen 2.2 percent over the past year. During April, wholesale energy prices rose 1.8 percent (PPI for gasoline surged 5.9 percent) while food PPI slipped 0.2 percent. Net of energy and food, PPI for core goods was unchanged for the month (the first time it failed to increase since last December).

#3 Job openings rebounded in March. The Bureau of Labor Statistics reports that there were 7.488 million job openings on the final day of March (on a seasonally adjusted basis), up 346,000 from February, reversing January’s 483,000 contraction, up 8.6 percent from a year earlier, and well ahead of the 6.211 unemployed people during the month. Industries with large percentage year-to-year increases in job openings included construction (+53.8 percent), wholesale trade (+20.9 percent), professional/business services (+18.3 percent), and manufacturing (+11.7 percent). Hiring continued to lag, however, slipping by 35,000 jobs during the month to 5.660 million (up a measly 0.6 percent from a year earlier). Job separations fell by 142,000 to 5.434 million (essentially matching the March 2018 count). Voluntarily quits were 3.3 percent ahead of their year-ago pace (to 3.409 million) while layoffs slowed 4.0 percent over the same period to 1.700 million workers.

#4The trade deficit widened slightly in March. The Census Bureau and the Bureau of Economic Analysis indicates the U.S. trade deficit expanded by $0.7 billion to a seasonally adjusted -$50.0 billion as exports grew by $2.1 billion and imports expanded by $2.8 billion. Over the past year, exports have increased by 1.3 percent while imports have risen 2.1 percent. The goods deficit grew by $0.5 billion to -$72.4 billion while the services surplus narrowed by $0.2 billion to +$22.4 billion. The U.S. had its largest goods deficits with China, the European Union, and Mexico.

#5Consumer put away their credit cards in March. The Federal Reserve estimates consumer revolving credit balances shrank by $2.2 billion during the month to a seasonally adjusted $1.057 trillion. Over the past year, revolving credit balances have grown 3.2 percent. Non-revolving credit balances, which includes college and auto loans, increased by $12.4 billion during March (and 5.6 percent over the past year) to $2.995 trillion. In total, outstanding consumer credit balances (not including mortgages and other real estate backed loans) expanded by $10.3 billion during the month to $4.052 trillion, representing a 4.9 percent since March 2018.

Other U.S. economic data released over the past week:
Jobless Claims (week ending May 4, 2019, First-Time Claims, seasonally adjusted): 228,000 -2,000 vs. previous week; +17,000 vs. the same week a year earlier). 4-week moving average: 220,250 (+2.3% vs. the same week a year earlier).
Wholesale Trade (March 2019, Inventories of Merchant Wholesalers, seasonally adjusted): $669.8 billion (-0.1% vs. February 2019, +6.7% vs. March 2018).
Monthly Treasury Statement (First 7 Months of FY2019, Federal Government Budget Deficit): -$530.9 billion (+37.8% vs. First 7 Months of FY2018).
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Gas Prices Rise, Core Prices Held in Check: April 8 – 12

Prices rose at the gas pump in March but moderated elsewhere. Here are the five things we learned from U.S. economic data released during the week ending April 12.

#1Headline consumer prices rose in March, core prices not so much. The Consumer Price Index (CPI) jumped 0.4 percent on a seasonally adjusted basis, per the Bureau of Labor Statistics. This was the biggest single-month increase for CPI in 14 months, leaving the measure up 1.9 percent over the past year. Energy CPI surged 3.5 percent as gasoline prices swelled 6.5 percent. Food prices gained 0.3 percent, including a 0.4 percent bounce in the price of food at home. Net of energy and food, core CPI inched up a modest 0.1 percent and has risen 2.0 percent over the past year. Prices increased during March for shelter (+0.4 percent), new vehicles (+0.4 percent), and medical care services (+0.3 percent). Falling were prices for apparel (-1.9 percent) and used cars/trucks (-0.4 percent).

#2Wholesale prices also jumped in March. The Bureau of Labor Statistics indicates that final demand Producer Price Index (PPI) grew a seasonally adjusted 0.6 percent, its largest one-month increase since last October. Core final demand PPI, which removes the impact of energy, food, and trade services, was unchanged, however. Sixty percent of the rise in headline PPI was because of the 16.0 percent surge in wholesale gasoline prices. Final demand energy PPI rose 5.6 percent while that for foods grew a far more modest 0.3 percent. Trade services PPI—measuring retailer and wholesaler margins—jumped 1.1 percent for its biggest gain since last October. Over the past year, headline final demand PPI has risen 2.2 percent while the 12-month comparable for the core measure was +2.0 percent. 

#3The number of job openings contracted (yet remained near record highs) in February. The Bureau of Labor Statistics reports there were a seasonally adjusted 7.087 million nonfarm job openings on the final day of February, down 538,000 from January but still 8.5 percent ahead of the February 2018 count. Among the industries showing the most substantial year-to-year percentage increases in job opening were construction (+44.4 percent), professional/business services (+24.9 percent), manufacturing (+9.4 percent), and health care/social assistance (+8.5 percent). Hiring also pulled back slightly, dropping by 133,000 to 5.696 million (up 1.8 percent versus February 2018). Industries with the most significant 12-month percentage gains in hires were transportation/warehousing (+8.9 percent), wholesale trade (+7.5 percent), retail (+6.8 percent), and health care/social assistance (+5.7 percent). 5.556 million people left their jobs in February, essentially matching the 5.532 million that had done so in January and up 5.4 percent from a year earlier. Versus the previous year, the number of people who quit their job rose 9.6 percent to 3.480 million while the count of workers laid off was off 1.2 percent to 1.742 million

#4New factory orders fell for the fourth time in five months in February. The Census Bureau estimates new orders for manufactured goods declined 0.5 percent during the month to a seasonally adjusted $497.5 billion. Durable goods orders slumped 1.6 percent while those for nondurable goods gained 0.6 percent. New orders net of transportation goods increased 0.3 percent while those of civilian non-aircraft capital goods (a proxy for business investment) slipped 0.1 percent. Shipments grew for the first time in five months with a 0.4 percent gain to $505.5 billion, with increases of 0.2 percent and 0.6 percent for durable and nondurable goods, respectively. The value of unfilled orders fell for the fourth time in five months, off 0.3 percent to $1.178 trillion while inventories widened for the 27th time in 28 months (up 0.3 percent to $687.8 billion).

#5Small business owner sentiment held steady in March. The Small Business Optimism Index, from the National Federation of Independent Business, eked out a 1/10th of a point increase during the month to a seasonally adjusted reading of 101.8 (1986=100). While 2.9 points below its March 2018 reading, the index has been above a reading of 100.0 for 27 consecutive months. Four of the index’s ten components improved from their February readings (led by measures tracking both current job openings and plans to increase employment) while three declined in March (including a four-point drop for current inventories). The press release said the measures indicate the U.S. economy will enjoy “solid growth… with no signs of a recession in the near term.”

Other U.S. economic data released over the past week:
Jobless Claims (week ending April 6, 2019, First-Time Claims, seasonally adjusted): 196,000 (-8,000 vs. previous week; -31,000 vs. the same week a year earlier; fewest since October 4, 1969). 4-week moving average: 207,000 (-7.6% vs. the same week a year earlier).
Import Prices (March 2019, All Imports, not seasonally adjusted): +0.6% vs. February 2019, Unchanged vs. March 2018. Nonfuel Imports: -0.2% vs. February 2019, -0.8% vs. March 2018.
Export Prices (March 2019, All Exports, not seasonally adjusted):  +0.7% vs. February 2019, -2.3% vs. March 2018. Nonagricultural Exports: +0.7% vs. February 2019, +1.0% vs. March 2018.
Monthly Treasury Statement (March 2019, Budget Deficit): First Six Months of FY2019: -$691.2 trillion (vs. First Six Months of FY2018: $599.7 billion).
FOMC Minutes

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

Retailers and Manufacturers Started 2019 in Different Directions: March 11 – 15

Retail sales improved in January but manufacturing output struggled in February. Here are the five things we learned from U.S. economic data released during the week ending March 15.  

#1Retail sales modestly rebounded in January. The Census Bureau estimates U.S. retail and food services sales grew 0.2 percent during the month to a seasonally adjusted $504.4 billion. This compares favorably to December’s 1.6 percent sales slump (revised from a previously reported 1.2 percent drop) and places sales 2.3 percent ahead of January 2018 levels. Sales fell a sharp 2.4 percent at auto dealers/parts stores and 2.0 percent at gas stations. Net of sales at auto dealers/parts stores and gas stations, core retail sales jumped 1.2 percent following a 1.6 percent drop in December and have grown 3.2 percent since January 2018. Growing during the month were sales at sporting goods/hobby retailers (+4.8 percent), building material/garden stores (3.3 percent), health/personal care stores (+1.6 percent), grocery stores (+1.2 percent), general merchandisers (+0.8 percent), and restaurants/bars (+0.7 percent). Sales declined at stores focused on apparel (-1.3 percent), furniture (-1.2 percent), and electronics/appliances (-0.3 percent).

#2Manufacturing production dropped for the second straight month in February. The Federal Reserve reports the manufacturing output fell 0.4 percent on a seasonally adjusted basis, following a 0.5 percent drop in January. Durable goods production slipped 0.1 percent (matching the modest decline in motor vehicle production) while nondurable goods output declined 0.7 percent as production fell for petroleum/coal products, apparel, and printing. Overall industrial production increased 0.1 percent as the manufacturing slowdown was counterbalanced by increased utilities (+3.7 percent) and mining (+0.3 percent) output. Over the past year, manufacturing output has grown a modest 1.0 percent while overall industrial production has risen 3.5 percent. 

#3Employers continued struggling to fill open jobs during January. There were a seasonally adjusted 7.581 million open nonfarm jobs at the end of January, up 102,000 from December and 15.0 percent above year-ago levels. Further, the Bureau of Labor Statistics’ count of open positions was well above the 6.535 million people who had reported being unemployed during the same month. Among the industries reporting large year-to-year percentage increases in job openings were wholesale trade (+32.5 percent), construction (+23.3 percent), health/social assistance (+21.0 percent), professional/business services (+19.5 percent), accommodation/food services (+19.1 percent), and financial activities (+15.3 percent). Lagging behind the growth in new job openings was hiring, which grew by 84,000 to 5.801 million workers. This was 5.0 percent ahead of the January 2018 pace of hiring. 5.550 million people left their jobs in January, up 81,000 for the month and 4.4 percent from a year earlier. Indicative of confident workers, 3.490 million quit their jobs voluntarily (+15.5 percent versus January 2018) while the count of people laid off—1.723 million—was 10.9 percent year-ago layoff activity

#4Inflation measures remained under control in February. The Bureau of Labor Statistics reports the Consumer Price Index (CPI) grew 0.2 percent on a seasonally adjusted basis during the month, its first increase since October. Pulling up the headline number were 0.4 percent gains for both food and energy. The latter included the first increase in gasoline prices since October (+1.5 percent). Net of food and energy, core CPI advanced 0.1 percent, its smallest increase since last August. While prices for shelter and apparel each grew 0.3 percent, falling were prices for medical care commodities (-1.0 percent), used cars/trucks (-0.7 percent), new vehicles (-0.2 percent), and transportation services (-0.1 percent). Over the past year, CPI has risen 1.5 percent while the core measure has a 12-month comparable of +2.1 percent.

Meanwhile, the Producer Price Index (PPI) for final demand grew for the first time in four months with a 0.1 percent seasonally adjusted increase in February, per the Bureau of Labor Statistics. The core measure of wholesale prices, which removes the impact of energy, food and trade services, also grew 0.1 percent for the month. Energy prices increased for only the third time in eight months with a 1.8 percent gain (including a 3.3 percent advance in wholesale gasoline prices). PPI for final demand food slumped 0.3 percent. PPI for final demand goods gained 0.4 percent while that for final demand services was unchanged. Final demand PPI has risen 1.9 percent, the first time since June 2017 in which the 12-month comparable has fallen under two percent. The core measure for wholesale prices has grown 2.3 percent over the past year.

#5Durable goods orders grew for a third straight month in January. The Census Bureau tells us that new orders for manufactured durable goods grew 0.4 percent to a seasonally adjusted $255.3 billion. Transportation goods orders rose 1.2 percent, with increases for civilian (+15.9 percent) and defense aircraft (+4.5 percent) and a 1.0 percent slowdown in motor vehicle orders. Net of transportation goods, durable goods orders slipped 0.1 percent. Rising were orders for computers (+7.6 percent), communications equipment (+3.8 percent), electrical equipment/appliances (+1.7 percent), and machinery (+1.4 percent). New orders for primary metals slumped 1.5 percent. New orders for civilian non-aircraft capital goods—a proxy for business investment—gained 0.8 percent.

Other U.S. economic data released over the past week:
Jobless Claims (week ending March 9, 2019, First-Time Claims, seasonally adjusted): 229,000 (+6,000 vs. previous week; +3,000 vs. the same week a year earlier). 4-week moving average: 223,750 (+0.4% vs. the same week a year earlier).
Import Prices (February 2019, All Imports, not seasonally adjusted): +0.6% vs. January 2019, -1.3% vs. February 2018. Nonfuel Imports: Unchanged vs. January 2019, -0.6% vs. February 2018.
Export Prices (February 2019, All Exports, not seasonally adjusted): +0.6% vs. January 2019, +0.3% vs. February 2018. Nonagricultural Exports: +0.7% vs. January 2019, +0.3% vs. February 2018.
State Employment (January 2019, Nonfarm Payrolls, seasonally adjusted): Vs. December 2018: Payrolls grew in 13 states and were essentially unchanged in 37 states and the District of Columbia. Vs. January 2018: Payrolls grew in 26 states and were essentially unchanged 24 states and the District of Columbia.
New Home Sales (January 2019, New Homes Sold, seasonally adjusted annualized rate): 607,000 (-6.9% vs. December 2018, -4.1% vs. January 2018).
Business Inventories (December 2018, Manufacturers’ and Trade Inventories, seasonally adjusted): $1.995 trillion (+0.6% vs. November 2018, +4.8% vs. December 2017).
Small Business Optimism Index (February 2019, Index (1986=100), seasonally adjusted): 101.7 (vs. January 2019: 101.2, vs. February 2018: 107.6).
Construction Spending (January 2019, Value of Construction Put in Place, seasonally adjusted annualized rate): $1.279 trillion (+1.3% vs. December 2018, +0.3% vs. January 2018).
University of Michigan Surveys of Consumers (March 2019-preliminary, Index of Consumer Sentiment (100=1966Q1), seasonally adjusted): 97.8 (vs. February 2019: 93.8, vs. March 2018: 101.4).

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