Autos Fuel Retail Sales, Prices Firm: September 9 – 13

Consumers were buying vehicles in August. Here are the five things we learned from U.S. economic data released during the week ending September 13.

#1Auto sales outpaced an otherwise modest retail sales report for August. The Census Bureau reports that retail and food services sales totaled $526.1 billion, up 0.4 percent from July and 4.1 percent from a year earlier. Sales at auto dealers and parts stores jumped 1.8 percent while those at gas stations fell 0.9 percent (due to lower prices at the pump). Net of both, core retail sales grew a tepid 0.1 percent following a 0.9 percent surge in July (12-month comparable: +4.2 percent). Sales rose during the month at building material/garden stores (+1.4 percent), sporting goods/hobby retailers (+0.9 percent), and health/personal care stores (+0.7 percent). Sales slumped, however, at department stores (-1.1 percent), furniture retailers (-0.5 percent), and grocery stores (-0.3 percent).

#2Core consumer prices rose for a third straight month in August. The Consumer Price Index (CPI) grew 0.1 percent on a seasonally adjusted basis for the third time over the past four months, per the Bureau of Labor Statistics. Energy CPI fell 1.9 percent (pulled down by a 3.5 percent drop in gasoline prices) while food CPI held steady. Net of both, core CPI grew 0.3 percent for a third consecutive month. Rising were prices for used cars/trucks (+1.1 percent), medical care services (+0.9 percent), transportation services (+0.4 percent), medical care commodities (+0.3 percent), apparel (+2.2 percent), and shelter (+0.2 percent). Prices slipped 0.1 percent for new vehicles. While headline CPI has grown by “only” 1.7 percent over the past year, the core measure of consumer prices has climbed 2.4 percent over the same 12 months.

#3And wholesale prices firmed too. The Bureau of Labor Statistics indicates that the Producer Price Index (PPI) for final demand increased 0.1 percent on a seasonally adjusted basis in August after rising 0.2 percent in July. The core measure—PPI net of energy, food, and trade services—jumped 0.4 percent after slipping 0.1 percent during the prior month. PPI for final demand goods dropped 0.5 percent, pulled down by declines for both energy (-2.5 percent—gasoline prices plummeted 6.6 percent) and food (-0.6 percent). Core goods PPI was unchanged for the month. PPI for final demand services grew 0.3 percent—but more notable was the core measure (which nets out trade services and transportation/warehousing) growing 0.5 percent. Over the past year, headline PPI has risen 1.8 percent while the 12-month comparable for the core wholesale prices was +1.9 percent.

#4The number of job openings pulled back slightly, but workers continued to quit their jobs. The Bureau of Labor Statistics estimates that there were a seasonally adjusted 7.217 million open jobs on the final day of July. While still near the historical high for the data series, this was off 31,000 from June and 3.0 percent from a year earlier. While both construction (+18.8 percent) and manufacturing (+7.0 percent) had sizable year-to-year percentage increases in job openings, other industries reported negative 12-month comparables: financial activities (-15.3 percent), retail trade (-15.2 percent), and accommodation/food services (-10.2 percent). Hiring picked up during July, rising by 237,000 to 5.953 million (+2.1 percent versus July 2018). 5.759 million people departed their jobs during the same month, up 246,000 from June and 1.5 percent ahead of the year-ago pace. This included 3.592 million people who voluntarily quit their jobs (up 130,000 for the month and 4.3 percent from July 2018), a signal suggesting Americans remain confident about the labor market. 1.799 million left their jobs due to a layoff, up 88,000 for the month but down 3.2 percent from a year earlier.

#5The federal budget deficit crossed the trillion dollar threshold, and the fiscal year is not even over yet. The Department of the Treasury reports that the U.S. government has collected $3.088 trillion in receipts through the first 11 months of FY2019, up 3.5 percent from the same 11-month period last year. Expenditures, however, have grown 7.0 percent over the same period to $4.155 trillion. The resulting budget deficit of $1.067 trillion was 18.9 percent ahead of that from the first 11 months of FY2018. Year-to-date individual income tax revenues were 0.9 percent ahead of that a year earlier while corporate tax receipts have expanded 4.5 percent. Among the notable gainers in expenditures were defense (+9.0 percent), debt service (+9.0 percent), and health & human services (+8.4 percent)

Other U.S. economic data released over the past week:
Jobless Claims (week ending September 7, 2019, First-Time Claims, seasonally adjusted): 204,000 (-15,000 vs. previous week; -4,000 vs. the same week a year earlier). 4-week moving average: 212,500 (+0.3% vs. the same week a year earlier).
Import Prices (August 2019, All Imports, not seasonally adjusted): -0.5% vs. July 2019, -2.0% vs. August 2018; Nonfuel Imports: Unchanged vs. July 2019, -1.0% vs. August 2018.
– Export Prices (August 2019, All Exports, not seasonally adjusted): -0.6% vs. July 2019, -1.4% vs. August 2018; Nonagricultural Exports: -0.4% vs.
NFIB Small Business Optimism (August 2019, Index (1986=100), seasonally adjusted): 103.1 (vs. July 2019: 104.7, August 2018: 108.8).
University Surveys of Consumers (September 2019-preliminary, Index of Consumer Sentiment (1966Q1=100), seasonally adjusted): 92.0 (vs. August 2019: 89.8, vs. September 2018: 100.1).
Business Inventories (July 2019, Manufacturers’ and Trade Inventories, seasonally adjusted): $2.043 trillion (+0.4% vs. June 2019, +4.8% vs. July 2018).
Consumer Credit (July 2019, Outstanding Consumer (non-real estate-backed) Loan Balances, seasonally adjusted): $4.123 trillion (+$23.3 billion vs. June 2019, +5.2% vs. July 2018).

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

Open Jobs Remained Open in June: August 5 – 9

Employers continued to seek workers, but producer prices and service sector growth both staggered. Here are the five things we learned from U.S. economic data released during the week ending August 9.

#1Job openings continued to outpace the number of unemployed Americans in June. The Bureau of Labor Statistics tells us that there were a seasonally adjusted 7.348 million jobs available on the final day of June. While this was a decline of 36,000 from May and 0.6 percent from a year earlier, job openings remained near record-high levels. Further, job openings well outpaced the 5.975 million unemployed people the BLS had reported previously. Compared to a year earlier, industries reporting substantial percentage increases in open jobs included government (+12.2 percent), construction (+7.4 percent), manufacturing (+5.9 percent), professional/business services (+4.6 percent), and health care/social assistance (+3.5 percent). Hiring slowed by 58,000 to 5.702 million jobs (-2.2 percent versus June 2018). Also taking a step back was the number of people separated from their jobs: 5.481 million (down 76,000 from May and 1.5 percent from a year earlier). Voluntarily quits were up 2.4 percent from a year earlier to 3.478 million while layoff activity was off 7.7 percent from the year-ago pace (at 1.702 million).Job Openings and Unemployed 2014-9 080919.png

#2Core wholesale prices contracted in July. Final demand producer price index (PPI) grew a seasonally adjusted 0.2 percent during the month, its largest single-month gain since April. But much of the increase in the Bureau of Labor Statistics measure resulted from a 5.2 percent jump in wholesale gasoline prices. Netting out the impact of gains in energy goods (+2.3 percent), foods (+0.2 percent), and trade services (+0.2 percent), core PPI fell 0.1 percent during the month, its first decline in nearly four years (October 2015). Final demand PPI for goods grew 0.4 percent following two consecutive declines while final demand for PPI for services gained 0.2 percent. The 12-month comparables for both headline PPI and core PPI were +1.7 percent, lowest levels for each since late 2016 or early 2017.

#3Expansion in the service sector mellowed in July. The NMI, the headline index from the Institute for Supply Management’s Nonmanufacturing Report on Business, shed 1.4 points during the month to a reading of 53.7. While this was the 114th straight month in which the NMI was above a reading of 50.0 (indicative of an expanding service sector), it was its lowest reading since August 2016. Of the NMI’s four components, two pulled back in July: business activity/production (down 5.1 points) and new orders (down 1.7 points). While the employment component added 1.2 points during the month, the supplier deliveries component held steady. Thirteen of 18 tracked nonmanufacturing industries report growth, led by accommodation/food services, professional/scientific/technical services, and real estate. The press release noted “concerns related to tariffs and employment resources.”

#4Consumers took on more debt in June, all nonrevolving. The Federal Reserve reports that outstanding consumer credit balances grew by $14.6 billion during the month to a seasonally adjusted $4.102 trillion (+5.3 percent versus June 2018). Outstanding balances of nonrevolving credit (e.g., auto loans, college loans) widened by $14.7 billion to $3.031 trillion (+5.6 percent versus June 2018). Revolving credit balances (e.g., credit cards), however, contracted by $0.1 billion to $1.072 trillion (+4.6 percent versus June 2018).

#5Wholesale inventories held steady in June. The Census Bureau estimates merchant wholesalers’ inventories were at a seasonally adjusted $679.7 billion. While essentially matching May’s reading, this represented a 7.6 percent increase over the past year. Inventories of durable goods expanded by 0.3 percent, with increases of at least one percent for computer equipment, furniture, and lumber. Nondurables inventories shrank 0.4 percent, pulled down by sizable for drugs and chemicals. The inventory-to-sales ratio of 1.36 was unchanged from May but was up 10-basis points from a year earlier.

Other U.S. economic data released over the past week:
Jobless Claims (week ending August 3, 2019, First-Time Claims, seasonally adjusted): 209,000 (-8,000 vs. previous week; -6,000 vs. the same week a year earlier). 4-week moving average: 212,250 (-1.7% vs. the same week a year earlier).
Senior Loan Officer Opinion Survey

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

Mixed Inflation Numbers: July 8 – 12

Core consumer prices rose, but core wholesale prices did not. Here are the five things we learned from U.S. economic data released during the week ending July 12.

#1Core inflation firmed in June. Consumer Price Index (CPI) gained 0.1 percent on a seasonally adjusted basis during the month, per the Bureau of Labor Statistics. Growth in the headline CPI measure was modest as energy prices fell 2.3 percent (including gasoline CPI dropping 3.6 percent) and food prices held steady. Core CPI, which removes the impact of energy and food, jumped 0.3 percent, its most significant single-month increase since January 2018. Rising were prices for used cars/trucks (+1.6 percent), apparel (+1.1 percent), medical care services (+0.4 percent), shelter (+0.3 percent), and new vehicles (+0.1 percent). Over the past year, CPI has risen 1.6 percent while the core measure of consumer prices has a 12-month comparable of +2.1 percent.Consumer Prices 2017-9 071319

#2…While wholesale prices did not. The Producer Price Index (PPI) for final demand inched up by a seasonally adjusted 1/10th of a percentage point during June, matching its May increase. The core wholesale price measure, which nets out foods, energy, and trade services, was unchanged after having jumped 0.4 percent during the two prior months. PPI for final demand goods dropped for a second consecutive month with a 0.2 percent decline. Energy PPI plummeted 3.1 percent, pulled down by plunging wholesale gasoline prices (-5.0 percent), while food PPI grew 0.6 percent (corn prices: +19.9 percent). PPI for final demand services increased 0.4 percent, boosted by trade services PPI (i.e., margins at retailers and wholesalers) jumping 1.3 percent. Over the past year, final demand PPI has grown 1.7 percent (its smallest 12-month comparable since January 2017) while the year-to-year change in core wholesale prices was +2.1 percent.

#3Job openings softened (slightly) in May, hiring more so. The Bureau of Labor Statistics estimates there were a seasonally adjusted 7.323 million job openings at the end of May, off 49,000 from the previous month but up 2.8 percent from a year earlier and keeping it very near the data series high. Industries with sizeable year-to-year percentage increases in job openings included construction (+32.3 percent), accommodation/food services (+8.6 percent), manufacturing (+8.3 percent), and professional/business services (+7.1 percent). Hiring slowed 4.4 percent during May to 5.725 million workers (-2.3 percent vs. May 2018). Also falling were the number of people leaving their job as separations decreased by 192,000 to 5.495 million (May 2018: 5.495 million). The number of people quitting their job—3.425 million—was up 2.5 percent from a year earlier while those affected by a layoff—1.760 million—was down 2.8 percent from May 2018.

#4Small business owner sentiment took a step back in June. The Small Business Optimism Index from the National Federation of Independent Business lost 1.7 points during the month to a seasonally adjusted reading of 103.3. This followed a 1.5 point gain during the prior month. Only three of the index’s ten components advanced during the month: current inventories, expected credit conditions, and plans to increase inventories. Falling during June were index components linked to earnings trends, whether it was a good time to expand, real sales expectations, plans to make capital outlays, plans to increase employment, and current job openings. The press release noted increased “uncertainty” on weighing on business owner sentiment.

#5The U.S. budget deficit continued to track well ahead of last year’s pace. The Bureau of the Fiscal Service reports that the U.S. government had collected $2.609 trillion over the first nine months of FY2019, a 2.7 percent increase over the comparable nine months during the prior fiscal year. Meanwhile, outlays totaled $3.356 trillion during those same nine months, 6.7 percent ahead of the previous year’s total. As a result, the U.S. government has run up a budget deficit totaling -$747.1 billion from the period of October 2018 to June 2019, well ahead of the year-to-date deficit for the first nine months of FY18 of -$607.1 billion. The Bureau currently forecasts a budget deficit for FY19 of -$1.092 trillion

Other U.S. economic data released over the past week:
Jobless Claims (week ending July 6, 2019, First-Time Claims, seasonally adjusted): 209,000 (-13,000 vs. previous week; -3,000 vs. the same week a year earlier). 4-week moving average: 219,250 (-0.7% vs. the same week a year earlier).
FOMC MinutesConsumer Credit (May 2019, Outstanding Consumer Credit (not mortgages) Balances, seasonally adjusted): $4.088 trillion (+$17.1 billion vs. April 2019, +5.2% vs. May 2018).
Wholesale Trade (May 2019, Inventories of Merchant Wholesalers, seasonally adjusted): $679.1 billion (+0.4% vs. April 2019, +7.7% vs. May 2018).

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