Retail Shines, Factory Activity Does Not: December 10 – 14

Consumers started the holiday season with gusto, while manufacturing took another break.  Here are the five things we learned from U.S. economic data released during the week ending December 14.  

#1Retail sales were solid in November. U.S. retail and food services sales totaled a seasonally adjusted $513.5 billion, according to the Census Bureau. This was up a modest 0.2 percent for the month, but one should note that the headline figures were pulled down by falling gasoline prices (sales at gas stations plummeted 2.3 percent). Net of sales at gas stations and car dealers/parts stores (where sales increased 0.2 percent), core retail sales gained 0.5 percent for the month and were up 4.6 percent over the past year. Rising during the month were sales at retailers focused on electronics/appliances (+1.2 percent), furniture (+1.2 percent), health/personal care (+0.9 percent), and groceries (+0.4 percent), and at department stores (+0.4 percent). Sales slowed at restaurants/bars (-0.5 percent), building material stores (-0.3 percent), and apparel retailers (-0.2 percent). Nonstore retailers (e.g., internet retailers) saw sales jump 2.3 percent during the month, with a year-to-year sales increase of 10.8 percent).Retail Sales 2012-2018 121418

#2Manufacturing output failed to grow for a second consecutive month. The Federal Reserve’s report on industrial production finds manufacturing output was unchanged (on a seasonally adjusted basis) in November, following a 0.1 percent drop during the prior month. Durable goods output inched up 0.2 percent, boosted by a 2.5 percent increase for primary metals. Nondurable output slowed 0.2 while that of “other manufacturing” (which includes publishing and logging) slumped 0.9 percent. Overall industrial production jumped 0.6 percent during November (its biggest gain since August) and has increased 2.5 percent over the past year. Rising during the month were output both in mining (+1.7 percent) and at utilities (+3.3 percent, boosted by cold weather driving demand for utility-delivered natural gas).

#3Job openings remained at near-record levels in October. The Bureau of Labor Statistics estimates there were 7.059 million (seasonally adjusted) available nonfarm jobs at the end of October, up 119,000 from September and 16.8 percent from the same month a year ago. Private sector job openings have risen 17.7 percent over the past 12 months to 6.489 million. The industries with the largest double-digit year-to-year percentage increases in job openings were wholesale trade (+52.0 percent), manufacturing (+27.3 percent), accommodation/food services (+26.0 percent), construction (+25.3 percent), and retail (+22.4 percent). Hiring picked up in October, rising by 196,000 to 5.892 million hires (+5.2 percent versus October 2017), with larger 12-month comparables in transportation/warehousing (+49.5 percent), retail (+14.0 percent), and manufacturing (+12.0 percent). Even though dropping by 85,000 during October, the number of people leaving their jobs was up 5.4 percent over the past year to 5.556 million. This included 3.514 million people who quit their jobs (+9.0 percent versus October 2017) and 1.691 million layoffs (-1.2 percent versus October 2017).

#4Consumer prices failed to rise in November. The Bureau of Labor Statistics reports that the Consumer Price Index (CPI) held steady during the month on a seasonally adjusted basis, the first month not to show a rise since March. Energy CPI slumped 2.2 percent as gasoline prices fell 4.1 percent. On the flip side, food CPI gained 0.2 percent, its largest single-month increase since June (boosted by higher prices for cereals/bakery and meat). Net of both energy and food, core CPI grew 0.2 percent, matching its October increase. Rising were prices for used cars/trucks (+2.4 percent), medical commodities and services (both +0.4 percent), and shelter (+0.3 percent). Prices fell for apparel (-0.9 percent) and transportation services (-0.3 percent). Both the headline and core CPI measures have risen 2.2 percent over the past year.

#5Wholesale prices also moderated in November. The Producer Price Index (PPI) for final demand grew by a seasonally adjusted 0.1 percent during the month following a 0.6 percent surge in October. At the same time, the Bureau of Labor Statistics’ core measure (netting out prices for energy, food and trade services) gained 0.3 percent, greater than October’s 0.2 percent increase. PPI for final demand goods dropped 0.4 percent, pulled down a 5.0 percent decline in energy PPI (final demand gasoline PPI: -14.0 percent). PPI for final demand food jumped 1.0 percent (pulled up by rising prices for fresh/dry vegetables). Net of energy and food, final demand goods PPI gained 0.3 percent. Final demand PPI for services also increased 0.3 percent, with rising margins at gas stations a significant factor. Final demand PPI has risen 2.5 percent over the past year (the smallest 12-month comparable since last December) while core final demand PPI has expanded 2.8 percent over the past year.

Other U.S. economic data released over the past week:
Jobless Claims (week ending December 8, 2018, First-Time Claims, seasonally adjusted): 206,000 (-27,000 vs. previous week; -23,000 vs. the same week a year earlier). 4-week moving average: 224,750 (-4.6% vs. the same week a year earlier).
Import prices (November 2018, All Imports, not seasonally adjusted): -1.6% vs. October 2018, +0.7% vs. November 2017. Nonfuel imports: -0.3% vs. October 218, +0.3% vs. November 2017.
Export prices (November 2017, All Exports, not seasonally adjusted): -0.9% vs. October 2018, +1.8% vs. November 2o17. Nonagricultural Exports: -1.0% vs. October 2018, +2.2% vs. November 2017.
Business Inventories (October 2018, Manufacturing and Trade Inventories, seasonally adjusted): $1.982 trillion (+0.6% vs. September 2018, +5.2% vs. October 2017).
NFIB Small Business Optimism (November 2018, Index (1986=100), seasonally adjusted): 104.8 (vs. October 2018: 107.4, vs. November 2017: 107.5.
Monthly Treasury Statement (November 2018, Federal Budget Surplus/Deficit): (first two months of FY2019) -$306.4 billion (vs. first two months of FY 2018: -$201.8 billion). 

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

October Was Better for Retailers: November 12 – 16

Retail sales regained strength in October.  Here are the five things we learned from U.S. economic data released during the week ending November 16.

#1Retail sales expanded in October following declines during the two previous months. The Census Bureau estimates U.S. retail and food services sales were at a seasonally adjusted $511.5 billion during the month, up 0.8 percent from September and 4.6 percent from a year earlier. This follows declines of 0.2 percent and 0.1 percent in August and September, respectively (both representing downward revisions from their previously reported sales levels). Much of October gain came in the form of strong sales at auto dealers/parts stores (+1.1 percent) and gas stations (+3.5 percent, mostly due to higher prices at the pump). Net of both, core retail sales gained 0.3 percent in October following a flat month in September. Core retail sales have risen 4.7 percent over the past 12 months. Experiencing sales increases were department stores (+1.3 percent) and retailers focused on building materials (+1.0 percent), electronics/appliances (+0.7 percent), apparel (+0.5 percent), sporting goods (+0.5 percent), and groceries (+0.2 percent). Sales slowed at furniture retailers (-0.3 percent) and restaurants/bars (-0.2 percent).Retail Sales 2017-8 11162018

#2Manufacturing production gains in October matched that of September. The Federal Reserve indicates that manufacturing output grew 0.3 percent on a seasonally adjusted basis during the month, matching September’s increase and just off August’s 0.4 percent gain. Production of durables increased 0.5 percent (even as that of automobiles declined 2.5 percent) while nondurables output rose 1.8 percent (boosted by chemicals, textiles, and paper). Manufacturing output has expanded 2.7 percent over the past year. Overall industrial production inched up by only 0.1 percent, its smallest gain since May (when industrial output had contracted by 0.8 percent) but still 4.1 percent ahead of the year-ago pace. Output fell at both the utilities (-0.5 percent) and mining (-0.3 percent) sectors.

#3Consumer prices firmed in October. The Consumer Price Index (CPI) rose 0.3 percent on a seasonally adjusted basis during the month, the biggest jump for the Bureau of Labor Statistics measure since January and following a more modest 0.1 percent increase in September. Energy prices gained 2.4 percent, boosted by higher prices for fuel oil (+3.7 percent), gasoline (+3.0 percent), and electricity (+2.3 percent). Food prices slipped 0.1 percent, pulled down by declines for fruits/vegetables, cereals/bakery products, and dairy goods. Net of energy and food, core CPI grew 0.2 percent, following two consecutive 0.1 percent increases. Rising were prices for used cars/trucks (+2.6 percent), shelter (+0.2 percent), medical care services (+0.2 percent), apparel (+0.1 percent), and transportation services (+0.1 percent). Headline CPI has risen 2.5 percent over the past year, while the 12-month comparable for core CPI is +2.1 percent).

#4Small business owners remained chipper about business conditions in October. The Small Business Optimism Index from the National Federation of Independent Business lost a half point during the month to land at a seasonally adjusted 107.4 (1986=100). Even with the decline, the measure of small business owners’ sentiment was 3.8 points above its year-ago reading and places the index above a reading of 100 for 23 consecutive months. Only one of the index’s ten components improved during the month: plans to expand inventories. Taking a step back during October were index components related to whether it is a good time to expand, earning trends, plans to increase employment, expected sales, and current inventories.

#5The U.S. government ran up a huge budget deficit during the first month of FY2019. The Bureau of the Fiscal Service reports that U.S. government receipts totaled $252.7 billion in October (+7.4 percent versus October 2017) while outlays were $353.2 billion (+18.3 percent versus October 2017). The resulting deficit of -$100.5 billion was 59.0 percent larger than that of October 2017. Among the areas driving the rise in expenditures were Social Security, interest payments on the debt, defense, and Veteran Affairs. Note that the timing of receipts and spending can vary sharply month-to-month and some of the difference with year-to-year comparisons may reflect when certain days fall on the calendar (e.g., a certain day is on a weekend).

Other U.S. economic data released over the past week:
Jobless Claims (week ending November 10, 2018, First-Time Claims, seasonally adjusted): 216,000 (+2,000 vs. previous week; -34,000 vs. the same week a year earlier). 4-week moving average: 215,250 (-9.8% vs. the same week a year earlier).
State Employment (October 2018, Nonfarm Employment, seasonally adjusted): Payrolls grew in 9 states and were essentially unchanged in 41 states and the District of Columbia vs. September 2018. Payrolls grew in 36 states and were essentially unchanged in 14 states and the District of Columbia vs. September 2018.
Import Prices (October 2018, All Imports, not seasonally adjusted): +0.5% vs. September 2018, +3.5% vs. October 2017. Nonfuel Imports: +0.2% vs. September 2018, +0.7% vs. October 2017.
Export Prices (October 2018, All Exports, not seasonally adjusted): +0.4% vs. September 2018, +3.1% vs. October 2017. Nonagricultural Exports: +0.5% vs. September 2018, +3.9% vs. October 2017
Business Inventories (September 2018, Manufacturer’s and Trade Inventories, seasonally adjusted): $1.968 trillion (+0.3% vs. August 2018, +4.4% vs. September 2017).
Senior Loan Officer Opinion Survey (October 2018) 

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

A Record Number of Job Openings: October 15 – 19

Employers continued to have difficulty filling job openings in August. Here are the five things we learned from U.S. economic data released during the week ending October 19.

#1The number of job openings jumped to another record high in August. Nonfarm employers had a seasonally adjusted 7.136 million job openings on the final day of August, up 59,000 for the month and 18.1 percent from a year earlier. (By comparison, there were 6.234 million people unemployed during the same month.) Among the industries that the Bureau of Labor Statistics reported having the biggest year-to-year percentage gains in job openings were construction (+38.6 percent), financial activities (+28.7 percent), wholesale trade (+19.6 percent), accommodation/food services (+19.4 percent), retail (+18.0 percent), and manufacturing (+17.3 percent). Employers continued to struggle in filling these jobs as 5.784 million people were hired during August. While lagging the number of job openings, the number of people hired was up 71,000 for the month and 5.0 percent from August 2017. Industries with the greatest year-to-year percentage increases in hiring were retail (+18.6 percent), wholesale trade (+10.9 percent), and accommodation/food services (+6.2 percent). 5.706 million people left their jobs during August, up 110,000 for the month and 6.8 percent from a year earlier. 3.577 million workers voluntarily departed their jobs during the month, 12.7 percent ahead of a year-ago and indicative of workers confident about their job marketplace. Layoffs affected 1.622 million people, down 10.1 percent from the count of 12 months earlier.JOLTS August 18 101918

#2Manufacturing output grew modestly in September. The Federal Reserve reports that manufacturing output grew 0.2 percent on a seasonally adjusted basis during the month, following matching 0.3 percent gains in both July and August. Manufacturing output has increased 3.5 percent over the past 12 months. Durable goods manufacturing jumped 0.6 percent (led by motor vehicles, wood products, primary metals, and aerospace). Nondurable goods output slipped 0.1 percent, pulled down by textiles and apparel. Overall industrial production gained 0.3 percent in September and has risen 5.1 percent over the past year. Mining output jumped 0.5 percent for the month and 13.4 percent since September 2017, boosted by continued strength in both oil and gas extraction. Output at utilities was unchanged during September but has a 12-month comparable of +5.4 percent over the past year.

#3September was a weak month for retail sales. The Census Bureau estimates U.S. retail and food services sales inched up 0.1 percent during the month to a seasonally adjusted $509.0 billion. Even with the modest increase during September, sales have grown 4.7 percent over the past year. Sales at auto dealers/parts stores jumped 0.8 percent while gas station sales slowed 0.8 percent. Net of both, core retail sales were unchanged during September but have expanded 5.0 percent over the past 12 months. Sales improved during the month at retailers focused on furniture (+1.1 percent), electronics/appliances (+0.9 percent), sporting goods/hobbies (+0.7 percent), apparel (+0.5 percent), and building materials (+0.1 percent). Sales slumped, however, at restaurants/bars (-1.8 percent), department stores (-0.8 percent), and grocery stores (-0.1 percent).

#4Existing home sales sputtered again in September. The National Association of Realtors reports that sales of previously owned homes fell 3.4 percent during the month to a seasonally adjusted annualized rate of 5.15 million homes. This was not only a 4.1 percent drop from the same month a year earlier, it also was the measure’s seventh consecutive decline and the slowest pace of existing home sales in nearly three years. Sales failed to increase in all four Census regions, although transaction volume managed to hold even with August levels in the Midwest. All four Census regions had negative 12-month comparables: West (-12.2 percent), Northeast (-5.6 percent), Midwest (-1.5 percent), and the South (0.5 percent). A part of the problem remained a lack of homes on the market—there were 1.88 million homes available for sale at the end of September, down 1.6 percent from August but up 1.1 percent from a year earlier. This was the equivalent to a paltry 4.4 month supply of homes. The resulting median sales price has risen 4.2 percent over the past year to $258,100. NAR’s press release also ties recent sales weakness to “a decade’s high mortgage rates” that it says were “preventing consumers from making quick decisions on home purchases.”

#5The U.S. budget deficit surged 17.0 percent during the just-completed fiscal year. The U.S. Treasury Department reports that the federal government collected $3.329 trillion in receipts during the just completed FY2018, up 0.4 percent from FY2018. Outlays, however, jumped 3.2 percent during the same 12 months to $4.108 trillion. The resulting budget deficit of -$778.996 billion represented a 17.0 percent jump from FY2017. A closer look at receipts finds individual tax collections surged 6.1 percent during FY2018 while corporate tax receipts plummeted 31.1 percent. The U.S. government had accumulated a total debt of $21.460 trillion by September 30, 2018.

Other U.S. economic data released over the past week:
Jobless Claims (week ending October 13, 2018, First-Time Claims, seasonally adjusted): 210,000 (-5,000 vs. previous week; -20,000 vs. the same week a year earlier). 4-week moving average: 211,750 (-13.9% vs. the same week a year earlier).
Housing Market Index (October 2018, Index (>50= Greater Percentage of Homebuilders Viewing Housing Market as “Good,” seasonally adjusted): 68 (vs. September 2018: 67, vs. October 2017: 68).
Housing Starts (September 2018, Starts, seasonally adjusted annualized rate): 1.201 million units (-5.3% vs. August 2018, +3.7% vs. September 2017).
State Employment (September 2018, Nonfarm Payrolls, seasonally adjusted): Payrolls declined significantly vs. July 2018 in 3 states and were essentially unchanged in 47 states and the District of Columbia. Payrolls grew significantly vs. August 2017 in 37 states.
Treasury International Capital Flows (August 2018, Net Foreign Purchases of U.S. Securities, not seasonally adjusted): +$77.1 billion (vs. July 2018: +$32.4 billion, vs. August 2017: +$40.6 billion).
FOMC minutes

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