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.

A Mixed Holiday Gift Bag for Retailers: What We Learned During the Week of January 9 – 13

December was only merry for some retail sectors, but small business owners did grow more confident. Here are the 5 things we learned from U.S. economic data released during the week ending January 13.

#12016 ended well for some but not all retailers. The Census Bureau estimates retail and food services sales increased 0.6% during December to a seasonally adjusted $469.1 billion. This was 4.1% above the year ago sales pace and was thanks partially to a 2.4% surge in sales at auto dealers and part stores. When you remove activity at auto dealers and parts stores, sales edged up only 0.2% (+3.4% vs. December 2015). Retail sales grew during the month at gas stations (+2.0%, thanks to higher prices at the pump), furniture stores (+0.5%), building material/garden stores (+0.5%), health & personal care stores (+0.3%), and sporting goods/hobby retailers (+0.2%). Sales slumped 0.6% at department stores while electronics/appliance retailers suffered a 0.5% sales decline. Restaurants and bars also saw sales dropping 0.8% during December. One bright spot was at nonstore retailers (e.g., internet sellers), where sales jumped 1.3% during the month and were 13.2% above the December 2015 pace. To get a sense of the health of the 2016 holiday season: retail sales between October and December were 4.1% above that for the same 3 months in 2015. Retail sectors with the largest year-to-year holiday sales comparisons were nonstore retailers (+12.8%), health/personal care (+6.6%), auto dealers/parts stores (+5.2%), and building materials/garden (+4.3%). Less merry during the holiday season were department stores (-7.6%), electronics/appliance stores (-3.7%), and sporting goods/hobby retailers (-2.1%).retail-sales-december-2016-011317

#2Both the count of job openings and the pace of hiring increased slightly in November. The Bureau of Labor Statistics estimates that there were a seasonally adjusted 5.522 million job openings at the end of November, up 71,000 for the month and 6.2% above the November 2015 reading. Industries with the largest year-to-year percentage gains in job openings included construction (+82.2%), manufacturing (+36.1%), retail trade (+23.9%), mining (+13.3%), and government (+12.5%). Employers hired 5.219 million people during November, a 59,000 increase in hiring for the month but 0.6% below its year ago reading. Industries with the largest year-to-year percentage gains in hiring included transportation/warehousing (+14.5%), government (+6.3%), and leisure/hospitality (+4.9%). Separations increased by 62,000 during the month to 5.028 million (+1.4% vs. November 2015). Voluntary quits were 8.4% above their November 2015 level, suggesting workers were confident about their job prospects. Over the same 12-month period, the count of layoffs had declined 3.8%.

#3Wholesale prices continued to heat up in December. Per the Bureau of Labor Statistics, the final demand Producer Price Index (PPI) grew 0.3% on a seasonally adjusted basis during the month following a 0.4% gain in November. The measure has increased 1.6% over the past 12 months. The index same measure net of energy, food, and trade services grew at a more modest 0.1% (+1.7% vs. December 2015). Final demand PPI jumped 0.7% (its largest increase since last June) sparked by a 2.6% gain in energy PPI and a 0.7% bounce in food PPI. In the case of the former, wholesale gasoline prices surged 7.8%. Net of both energy and food, final demand PPI for core goods gained 0.3% during December. Meanwhile, PPI for demand services inched up 0.1%

#4Small business owner confidence surged in December. Matching gains in consumer sentiment and perhaps reflecting the political preferences of the survey’s sponsor, the Small Business Optimism Index jumped 7.4 points during the month to a seasonally adjusted reading of 105.8 (1986 = 100). The last time the National Federation Independent Business measure had been this high was back in 2004. 7 of 10 index components improved from the November readings, led by large gains for indices tracking expected economic conditions (up 38 points to +5), expected real sales (up 20 points to +31), whether “it is a good time to expand” (up 12 points to +23), and whether it is “a good time to make capital outlays” (up 5 points to +29). Only 2 of the index components declined during the month: current job openings (off 2 points to +29) and expected credit conditions (off a point to -6). The press release says that the findings indicate that “[s]mall business is ready for a breakout” as nearly half of the gain in the index due to expectations for “better business conditions” because of the election.

#5Consumer credit balances expanded by $24.6 billion during November. The Federal Reserve reports that outstanding consumer credit balances (net of mortgages and other real estate-backed loans totaled $3.750 trillion, up 6.3 from a year earlier. The expansion of revolving credit (e.g., credit cards) balances sped up during the month—they increased $11.0 billion during November following a $2.4 billion gain in October. The $992.4 billion total was 6.4% above its November 2015 reading. Nonrevolving credit balances grew by $13.5 billion during the month to $2.758 trillion (+6.2% vs. November 2015).

Other U.S. economic data released over the past week:
Jobless Claims (week ending January 7, 2017, First-Time Claims, seasonally adjusted): 247,000 (+10,000 vs. previous week; -33,000 vs. the same week a year earlier). 4-week moving average: 256,500 (-7.7% vs. the same week a year earlier).
University of Michigan Index of Consumer Sentiment (January 2017-preliminary, Index (1966Q1 = 100, seasonally adjusted): 98.1 (-0.1 vs. December 2016, +6.1 vs. January 2016).
Business Inventories (November 2016, Manufacturing & Trade Inventories, seasonally adjusted): $1.828 trillion (+0.7% vs. October 2016, +1.5% vs November 2015).
Import Prices (December 2016, seasonally adjusted): +0.4% vs. November 2016, +1.8% vs. December 2015. Nonfuel imports: -0.2% vs. November 2016, -0.1% vs. December 2016.
Export Prices (December 2016, seasonally adjusted): +0.3% vs. November 2016, +1.1% vs. December 2015.

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

Retail Sales Bounce Back, Federal Budget Deficit Expands: What We Learned During the Week of October 10 – 14

Retail sales rebounded in September while the federal budget expanded by a third during FY2016. Here are the 5 things we learned from U.S. economic data released during the week ending October 14.

#1Retail sales bounced back in September. The Census Bureau puts the value of retail and food services sales at a seasonally adjusted $459.8 billion, up 0.6% for the month and 2.7% above the year ago pace. This followed a 0.2% slowdown in August. Sales at auto dealers (and parts stores) gained 1.1% during the month. Net of auto dealers and parts stores, retail sales gained 0.5% during the month and 2.7% from a year earlier. Sales grew at a number of different retail segments, led by a 2.4% jump at gas stations (reflective of gasoline prices not falling as much as they typically do in September). Other retail sectors enjoying sales increases were sporting goods/hobby stores (+1.4%), building material retailers (+1.4%), furniture stores (+1.1%), restaurants/bars (+0.8%), and grocery stores (+0.2%). But other retailers were not as fortunate. Sales fell at electronics/appliance stores (-0.9%), department stores (-0.7%), and health/personal care retailers (-0.5%). Nonstore retailers (e.g., internet retailers) saw sales grow 0.3% during the month, putting activity 10.6% above their year ago pace.retail-sales-september16-101416

#2While the number of job openings fell during August, the pace of hiring held steady. The Bureau of Labor Statistics estimates that there were a seasonally adjusted 5.443 million job openings at the end of August, down 388,000 from July and its lowest point in 8 months. Even with the decline, the count of job openings was 2.5% above that from a year earlier. Roughly 57% of the drop in job openings was centered in professional/business services, although a number of other industries suffered significant declines too (including, wholesale trade, manufacturing, construction, and the government). On the flip side, the largest year-to-year percentage gains in job openings were in construction (+21.9%), transportation/warehousing/utilities (+21.0%), and retail (+9.3%). Nonfarm employers hired 5.210 million people during August, down 48,000 from July but up 3.0% from a year earlier. Industries with the largest 12-month percentage gains in hiring including professional/business services (+10.4%), mining/logging (+7.4%), government (+5.1%), financial activities (+4.9%), and manufacturing (+4.5%). Separations slipped by 37,000 to 4.954 million (essentially unchanged from August 2015). Of this, the count of people who voluntarily quit their jobs was up 5.1% from a year earlier while the pace of layoffs was 6.5% below that of August 2015.

#3Wholesale prices rose at their fastest pace since June, but year-to-year gains remain in check. The Producer Price Index (PPI) for final demand goods and services grew 0.3% during September and were 0.7% above prices in September 2015. The Bureau of Labor Statistics also reports that its core measure for final demand PPI (net of energy, food, and trade services) increased 0.3% during the month and was 1.5% above its year ago levels. PPI for final demand goods jumped 0.7%, which included gains of 2.5% and 0.7% for energy and food goods. A 5.3% increase in gasoline prices boosted the former while higher prices for fresh and dry vegetables pulled up the latter. Net of energy and food, PPI for core final demand goods increased 0.3%. PPI for final demand services inched up 0.1% despite a 0.4% decline in the price measure for trade services (which tracks retailer and wholesaler margins).

#4The U.S. budget deficit grew by a third during FY 2016. The Treasury Department’s Bureau of the Fiscal Service reports that the budget deficit for the just completed FY2016 was -$587.4 billion, up from the $439.1 billion deficit during FY2015 (+33.8%). The deficit equaled 3.2% of the GDP, up from 2.5% for FY2015. Receipts totaled $3.249 trillion for the full year, a mere 0.5% increase from FY2015. What did grow significantly were outlays—FY2016’s total of $3.854 trillion was 4.9% above the previous fiscal year’s spending. The biggest sources of spending increases were in Health & Human Services, the Social Security Administration, Veteran Affairs, and on the interest paid to service Treasury debt securities.

#5Small business owner confidence slipped slightly during September. The National Federation of Independent Business’ Small Business Optimism Index lost 3/10ths of a point to a seasonally adjusted 94.1 (1986 = 100). This was down 1.9 points from a year earlier, keeping the index in the low-to-mid 90s range that where it has been every month since the winter of 2015 and more or less over the past few years. Just 4 of the index’s 10 components improved during the month, led by a robust 12 point jump in the measure for expected economic conditions. Also improving from August were indices for expected real sales, earnings trends, and plans to add workers. Falling were indices for plans to increase inventories, current job openings, current inventories, expected credit conditions, whether it is a good time expand, and plans to make capital outlays. The press release lays blame for the weakened sentiment on the “divisive” presidential election that “offers little promise of a bipartisan effort” to solve critical issues.

Other data released over the past week that you might find of interest:
Jobless Claims (week ending October 8, 2016, First-Time Claims, seasonally adjusted): 246,000 (Unchanged vs. previous week; -16,000 vs. the same week a year earlier). 4-week moving average: 249,250 (-7.4% vs. the same week a year earlier).
FOMC minutes
Import Prices (September 2016, not seasonally adjusted): +0.1% vs. August 2016, -1.1% vs. September 2015. Nonfuel imports: unchanged vs. August 2016, -0.7% vs. September 2015.
Export Prices (September 2016, not seasonally adjusted): +0.3% vs. August 2016, -1.5% vs. September 2015.
University of Michigan Index of Consumer Sentiment (October 2016-preliminary, Index (1966Q1=100), seasonally adjusted): 87.9 (-3.3 points vs. September 2016, -2.1 points vs. October 2015).
Business Inventories (August 2016, Manufacturers’ and Trade Inventories, seasonally adjusted): $1.817 trillion (+0.2% vs. July 2016, +0.7% vs. August 2015).

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