the key reports of this past week, retail sales for January and business inventories for December, were both released by the Census bureau on Friday...leading up to the latter, the Census released the Monthly Wholesale Trade: Sales and Inventories report for December (pdf), accounting for a third of the business inventories report's components...earlier, the BLS had released the Job Openings and Labor Turnover Survey (JOLTS) for December, while on Friday they released the Import and Export Price Indexes for January, which indicated that average import prices fell 1.1% for the second month in a row, while export prices fell 0.8% after falling 1.1% in December...
in addition, the 4th quarter Household Debt and Credit Report (pdf) was released by the New York Fed on Friday, which showed that total household indebtedness increased by $51 billion over the 4th quarter to end the year at $12.12 trillion, while 5.4% of that outstanding debt was in some stage of delinquency, the lowest rate since the second quarter of 2007...this report is a 33 page report that's mostly graphics, half of which is graphs of national credit data, while half graphs the outstanding credit data for the 10 largest states, plus Arizona and Nevada...below we have the first graphic from this 33 page graphic presentation, which shows the components of total household debt nationally for each quarter since the beginning of 2003...each bar on the graph represents a quarter of a year, and within each bar is a color coded representation of the amount of each type of debt in trillions of dollars that was outstanding at the end of that given quarter…in each bar, orange represents the amount of mortgage debt that was outstanding at the end of that quarter, violet indicates the amount of home equity loans outstanding, green is the amount of auto loans outstanding, blue is the unpaid credit card debt, red are student loans outstanding, and grey is ‘other’ debt outstanding in the quarter….we can see that the aggregate total debt outstanding has been increasing over the past two and a half years, and that student loan debt has now expanded to 10% of the total, or more than one seventh of the amount of mortgage debt...note that although mortgage debt in orange is considerably lower than at the peak, this report and its graphics do not distinguish between mortgage debt that has been paid off and mortgage debt that has been extinguished through a foreclosure or a short sale....
January Retail Sales Up 0.2% after December Sales Revised 0.2% Higher
seasonally adjusted retail sales rose 0.2% in January after retail sales for December were revised 0.2% higher, so on net this month's report handily beat expectations of a 0.1% increase...the Advance Retail Sales Report for January (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $449.9 billion, which was an increase of 0.2 percent (±0.5%) from December's revised sales of $449.1 billion and 3.4 percent (±0.7%) above the adjusted sales of January of last year...December's seasonally adjusted sales were revised from the $448.1 billion first reported to $449.1 billion, while November's sales, which were revised up to $448.6 billion from the originally reported $448.1 billion last month, were revised down to $448,376 billion with this report...estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated unadjusted sales fell 21.9%, from $514,928 million in December to $402,209 in January, while they were up just 1.4% from the $396,495 million of sales in January a year ago, so there were obviously large seasonal adjustments to both month's reports before arriving at that reported 0.2% difference...while we can't judge the economic impact of this month's report on 1st quarter GDP until the consumer price index is released next Friday, the revisions to November and December sales would add about 0.02 percentage point to the previously published figure for 4th quarter GDP...
included below is the table of monthly and yearly percentage changes in sales by business type taken from the Census pdf, which you should all be familiar with by now....the first double column below gives us the seasonally adjusted percentage change in sales for each type of retail business type from December to January in the first sub-column, and then the year over year percentage change for those businesses since last January in the 2nd column; the second pair of columns gives us the revision of last month’s December advance monthly estimates (now called "preliminary") as revised in this report, likewise for each business type, with the November to December change under "Nov 2015 revised" and the revised December 2014 to December 2015 percentage change in the last column shown...for your reference, our copy of the table of last month’s advance December estimates, before this month's revision, is here....
the first thing we see on that table is that without the sales at automobile and parts dealers, seasonally adjusted retail sales were only 0.1% higher than December, as sales at those automobile and parts dealers rose 0.6% to $95,745 million...the other large outlier is the 3.1% drop to $32,801 million in sales at gasoline stations, which we figure most if not all of was due to lower prices; take out those gasoline sales from the total, and retail sales would have risen 0.4% for the month...other than auto related sales, other types of retailers showing strength in January included non-store (mostly online) retailers, where sales rose 1.6% to $42,165 million, miscellaneous store retailers, who saw their sales rise 1.2% to $10,177 million, general merchandise stores, where sales were up 0.8% to $56,514 million, and grocery stores, where sales were also up 0.8% to $51,273 million....on the other hand, specialty shops, such as sporting goods stores and bookstores, saw their sales fall 2.1% to $7,558 million, while sales at furniture stores fell 0.5% to $8,798 million and sales at bars and restaurants also fell 0.5% to $53,528 million...but note, in the 3rd column, that each of those business types who saw sales fall in January had seen a sizable increase in December, and they are still among the leaders in year over year sales, as shown in the 4th column..
December Wholesale Sales Down 0.3%; Wholesale Inventories Down 0.1%
both wholesale sales and wholesale inventories were lower in December, roughly in line with expectations...the December report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at $440.0 billion, down 0.3 percent (+/-0.9%) from the revised November level, and 4.5 percent (+/-1.4%) lower than wholesale sales of December 2014... the November preliminary estimate was revised down $1.3 billion or 0.3 percent, leaving November's sales 1.3% below the October level... December wholesale sales of durable goods rose 0.3 percent (+/-1.1%)* from November but were still down 3.0 percent (+/-2.1%) from a year earlier, with a 2.5% increase in wholesale sales of automotive products and a 2.4% increase in wholesale sales of lumber and other construction materials carrying the sector gain for the month...wholesale sales of nondurable goods were down 0.9 percent (+/-1.1%) from November and were down 5.9 percent (+/-1.8%) from last December, with wholesale sales of clothing and wholesale sales of petroleum and petroleum products both down 4.5%, the latter due at least in part due to lower prices...as an intermediate activity, wholesale sales are not included in GDP except insofar as they are a trade service, since the traded goods themselves do not represent an increase in the output of the goods sold....
on the other hand, the monthly change in private inventories is a major factor in GDP, as additional goods on the shelf represent goods that were produced but not sold, and this December report estimated that wholesale inventories were valued at $582.0 billion at month end, a decrease of 0.1 percent (+/-0.4%)* from the revised November level but 1.9 percent (+/-1.6%) higher than December a year ago, with the November preliminary estimate revised downward a statistically insignificant $0.1 billion...inventories of durable goods were down 0.3 percent (+/-0.5%)* from November but were up 0.5 percent (+/-1.8%)* from a year earlier, with inventories of metals and minerals down 4.4% mostly on lower commodity prices...meanwhile, the value of wholesale inventories of nondurable goods was up 0.1 percent (+/-0.7%)* from November and was up 4.1 percent (+/-2.1%) from last December, as the value of wholesale inventories of petroleum and petroleum products fell 7.8% on lower prices and dragged the gross value of non-durable inventories down with it..
when computing 4th quarter GDP two weeks ago, the BEA assumed an increase in non-motor-vehicle merchant wholesale inventories for December, from the November wholesale inventory valued at $582.9 billion that had been reported at that time...November inventory figures have now been revised down a bit, and December wholesale inventories were down to $582.0 billion from that...thus, we'd have to say that the BEA overestimated 4th quarter wholesale inventories by at least $1.0 billion wherein the $16.9 billion slower real inventory growth had already subtracted 0.45% from the 4th quarter's growth rate....just extrapolating from that, then, we could estimate that this new wholesale inventory data for December would subtract at least 0.03 percentage points from reported 4th quarter growth, and maybe more...
December Business Inventories Up Just 0.1%, Implies 58 Basis Point Downward Revision to GDP
following the release of the retail sales report, the Census Bureau released the composite Manufacturing and Trade Inventories and Sales report for December (pdf), which incorporates the revised December retail data and gives us a complete picture of the business contribution to the economy for that month...according to the Census Bureau, total manufacturer's and trade sales were estimated to be valued at a seasonally adjusted $1,302.3 billion in December, down 0.6 percent (±0.3%) from November's revised sales, and down 2.7 percent (±0.5%) from December sales of a year earlier...note that total November sales were also revised down by more than 0.2%, from $1,313.5 billion to $1,310.6 billion....manufacturer's sales fell by 1.4% from November to $467,021 million in December, retail trade sales, which exclude restaurant & bar sales from the revised December retail sales reported earlier, were virtually unchanged at $395,292 million, while wholesale sales fell 0.3% to $440,020 million...
meanwhile, total manufacturer's and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $1,813.1 billion at the end of December, up 0.1 percent (±0.1%)* from November and 1.7 percent (±0.6%) higher than in December a year earlier...the value of end of November inventories was also revised up by less than 0.1%, from the $1,809.8 billion reported last month to $1,810,442 million with this report...seasonally adjusted inventories of manufacturers were estimated to be valued at $642,317 million, 0.2% more than in November, inventories of retailers were valued at $588,845 million, 0.4% greater than November, while inventories of wholesalers were estimated to be valued at $581,979 million at the end of December, down 0.4% from November...
last week we reviewed factory inventories as compared to BEA estimates and judged that their level reported then would have little impact of revisions to 4th quarter GDP...however, in computing 4th quarter GDP, the BEA assumed an increase inventories in merchant wholesale and retail industries other than motor vehicles (pdf) for December at a $26.5 billion annual rate, which would work out to an increase of about $2.2 billion for the month...this report shows retail inventories ex-autos up 0.2%, or a bit over $0.8 billion, whereas the wholesale inventories we reviewed earlier showed total inventories down almost $0.8 billion despite a $168 million increase in automotive products inventories...so it appears that the BEA overestimated December and end of quarter wholesale and retail inventories by nearly $2.4 billion, which would work out to a decrease at $9.5 billion annual rate from previously published figures, which would in turn would result in a subtraction of about 0.58 percentage points from 4th quarter GDP...
December Job Openings, Hiring and Job Quitting Up; Layoffs Down
the Job Openings and Labor Turnover Survey (JOLTS) report for December from the Bureau of Labor Statistics estimated that seasonally adjusted job openings rose by 261,000, from 5,346,000 in November to 5,607,000 in December, after November's job openings were revised down, from 5,431,000 to 5,346,000, 3,000 lower than October's....December jobs openings were 15.0% higher than the 4,877,000 job openings reported in December a year ago, as the job opening ratio expressed as a percentage of the employed rose to 3.8% in December from 3.6% in November and from 3.4% a year ago...moreover, the greatest increase in job openings were in manufacturing, where openings rose 86,000 to 365,000, and construction, where job openings rose 69,000 to 207,000, while openings in the broad-professional and business services category decreased by 47,000 to 1,039,000 (see table 1 for more details)...like most BLS releases, the press release for report is easy to read understand and also refers us to the associated table for the data cited, linked at the end of the release...
the JOLTS release also reports on labor turnover, which consists of hires and job separations, which in turn is further divided into layoffs and discharges, those who quit, and 'other separations', which includes retirements and deaths....in December, seasonally adjusted new hires totaled 5,361,000, up 105,000 from the revised 5,256,000 who were hired or rehired in November, as the hiring rate as a percentage of all employed remained unchanged at 3.7%, which was also unchanged from the hiring rate in December a year earlier (details of hiring by industry since June are in table 2)....meanwhile, total separations rose by 110,000, from 4,962,000 in November to 5,072,000 in December, as the separations rate as a percentage of the employed was unchanged at 3.5%, which was also unchanged from the separations rate of 3.5% a year ago (see table 3)...subtracting the 5,072,000 total separations from the total hires of 5,361,000 would imply an increase of 289,000 jobs in December, a bit higher than the revised payroll job increase of 262,000 for December reported by the January establishment survey last week, not an unusual difference and within the expected +/-115,000 margin of error in these incomplete samplings...
breaking down the seasonally adjusted job separations, the BLS finds that 3,055,000 of us voluntarily quit their jobs in December, the most in 9 years, and up 196,000 from the revised 2,859,000 who quit their jobs in November, while the quits rate, widely watched as an indicator of worker confidence, rose from 2.0% to 2.1% of total employment (see details in table 4)....in addition to those who quit, another 1,607,000 were either laid off, fired or otherwise discharged in December, down 81,000 from the revised 1,686,000 who were discharged in November, which lowered the discharges rate from 1.2% to 1.1 of all those who were employed during the month....meanwhile, other separations, which includes retirements and deaths, were at 411,000 in December, down from 417,000 in November, for an 'other separations' rate of 0.3%, which was also unchanged....both seasonally adjusted and unadjusted details by industry and by region on hires and job separations, and on job quits and discharges can be accessed using the links to tables at the bottom of the press release...