Privately-owned housing units authorized by building permits in October were at a seasonally adjusted annual rate of 708,00. This figure is 12 below September's rate and is 40 percent below October 2007. While it is hard to state with statistical confidence that housing starts fell further in October, the number of starts has fallen to 828,000, an estimated 38 percent below the rate a year ago.
In the current cycle, starts and permits peaked in early 2006 or the latter months of 2005, respectively. The next nail in the scaffold of housing construction data will be driven on December 16. (CEN)
Friday, November 21, 2008
Thursday, November 20, 2008
Fewer cattle on feed, more to market than last year
Cattle and calves on feed for the slaughter market totaled 10.4 million head on October 1, 2008. The inventory was 5 percent below October 1, 2007 and 9 percent below October 1, 2006. Placements in feedlots during September totaled 2.28 million, 6 percent below 2007 but 2 percent above 2006. Marketings of fed cattle during September totaled 1.81 million, 7 percent above 2007 and 3 percent above 2006.
Real earning up in October
Real average weekly earnings rose by 1.4 percent from September to October after seasonal adjustment. This increase stemmed from a 0.2 percent increase in average hourly earnings combined with a 1.2 percent decrease in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Average weekly hours were unchanged.
While an increase in real earning is never, by itself, anything other than good news, the fact that so much of the increase was due to the unsettling price declines of last month should help analysts restrain ther enthusiasm.
While an increase in real earning is never, by itself, anything other than good news, the fact that so much of the increase was due to the unsettling price declines of last month should help analysts restrain ther enthusiasm.
Prices fall on flagging energy
All four major price measurements at the Bureau of Labor Statistics fell sharply in October: Import prices were down 4.9 percent, domestic producer prices were down 2.8 percent, export prices were down 1.9 percent, and domestic consumer prices were down 1.0 percent. These are remarkably large over the month changes. Indeed, the consumer price analysis stated that this was "the largest one month decrease since publication of seasonally adjusted changes began in February 1947." The fall in the top-side PPI for finished goods was by a large margin the largest percent decline in that number in the post-WWII era (and was the second largest change in absolute value). The import price decline was put in the context of the past few months and characterized as "three of the four largest monthly declines for the index since being published monthly for the first time in December 1988."
In addition to the size of the drops, there was a common factor in the commodities leading the fall: energy, specifically petroluem products. Although energy price declines are typically thought of as good for the economy, these declines are just too big and destabilizing; especially when seen in conjunction with even modst declines in the core CPI (excludes food and energy) and non-petroleum import prices. There was an increase in the PPI for finished goods besides food and energy, but the indexes for non-food-non-enrgy goods at the intermediate and crude stages of production both fell.
In addition to the size of the drops, there was a common factor in the commodities leading the fall: energy, specifically petroluem products. Although energy price declines are typically thought of as good for the economy, these declines are just too big and destabilizing; especially when seen in conjunction with even modst declines in the core CPI (excludes food and energy) and non-petroleum import prices. There was an increase in the PPI for finished goods besides food and energy, but the indexes for non-food-non-enrgy goods at the intermediate and crude stages of production both fell.
Tuesday, November 18, 2008
Special factors boost industrial production
Total industrial production increased 1.3 percent in October after a downwardly revised decline of 3.7 percent in September. The revision to September output resulted, in part, from a larger estimate of the impact of Hurricanes Gustav and Ike on the chemical industry.
Manufacturing production, which dropped 3.7 percent in September, rose 0.6 percent in October. The output of mines advanced 6.1 percent, as most crude oil and natural gas operations in the Gulf of Mexico were brought back online after the hurricanes.
Industrial production in September and October was substantially affected by the hurricanes and a strike in the commercial aircraft industry. Excluding these special factors, total industrial production is estimated to have fallen around 2/3 percent in both September and October.
Looking at just these two relatively benign numbers gives the impression that some recession talk may have been overblown. However, note that industrial production had been slipping since January before Ike drove it over a cliff. IP is now more than 4 percent lower than it was a year ago. Similarly, the capacity utilization rate is down 4.5 percentage points over the year and has been wobbling south since July of last year.
Still, factories, mines, and utilities seemed to have been able to find the financing to rebound in October from storms and strikes; will they be able to continue in November's credit climate and forward? We'll start to find out on December 15. (FED)
Manufacturing production, which dropped 3.7 percent in September, rose 0.6 percent in October. The output of mines advanced 6.1 percent, as most crude oil and natural gas operations in the Gulf of Mexico were brought back online after the hurricanes.
Industrial production in September and October was substantially affected by the hurricanes and a strike in the commercial aircraft industry. Excluding these special factors, total industrial production is estimated to have fallen around 2/3 percent in both September and October.
Looking at just these two relatively benign numbers gives the impression that some recession talk may have been overblown. However, note that industrial production had been slipping since January before Ike drove it over a cliff. IP is now more than 4 percent lower than it was a year ago. Similarly, the capacity utilization rate is down 4.5 percentage points over the year and has been wobbling south since July of last year.
Still, factories, mines, and utilities seemed to have been able to find the financing to rebound in October from storms and strikes; will they be able to continue in November's credit climate and forward? We'll start to find out on December 15. (FED)
Friday, November 14, 2008
Import export prices down
The U.S. Import Price Index fell for the third consecutive month, decreasing 4.7 percent in October and 10.6 percent over the past three months. Export prices declined 1.9 percent in October, the third consecutive monthly decrease.
The declines in import prices have been driven by petroleum prices; oil prices plunged 16.7 percent in October after decreasing 10.2 percent and 9.7 percent, respectively, in September and August. However, non-petroleum import prices also have declined for three consecutive months.
On the export price side, the 1.9 percent drop in October was the largest over-the-month decline reported in the nearly-20-year history of the monthly measure. The price index for agricultural exports fell 8.7 percent in October, the second decline in the past three months. The October drop was led by falling prices for soybeans, corn, and wheat.
Nonagricultural prices fell for the third consecutive month, declining 1.2 percent in October following decreases of 0.9 percent and 0.7 percent, respectively, in September and August. The October decline was the largest one-month drop for the index and was led by a drop in export prices for nonagricultural industrial supplies and materials including fuels, metals, and chemicals. The next international price report will be released December 11. (BLS)
U.S. retail and food services sales for October were $363.7 billion, a decrease of 2.8 percent from the previous month and 4.1 percent (±0.7%) below October 2007. Total sales for the August through October 2008 period were down 1.3 percent from the same period a year ago.
Business volume--the combined value of distributive trade sales and manufacturers’ shipments--for September was $1,164.3 billion, down 2.0 percent from August. Inventories edged down and the total business inventories/sales ratio at the end of September was 1.29. the I/S ratio has risen for the past 3 months. The retail sales advance for November and the business sales and inventories report for October are scheduled to be released December 12. (CEN)
The cumulative interpretation of these three reports is of weakening economic activity, both in terms of volume, and in terms of pricing power. While falling oil prices may be of some help to consumers, the overall declines in prices paid to exporters are worrisome. Likewise, declines in business sales, although perhaps also reflecting some pricing weakness, are not a good sign.
The declines in import prices have been driven by petroleum prices; oil prices plunged 16.7 percent in October after decreasing 10.2 percent and 9.7 percent, respectively, in September and August. However, non-petroleum import prices also have declined for three consecutive months.
On the export price side, the 1.9 percent drop in October was the largest over-the-month decline reported in the nearly-20-year history of the monthly measure. The price index for agricultural exports fell 8.7 percent in October, the second decline in the past three months. The October drop was led by falling prices for soybeans, corn, and wheat.
Nonagricultural prices fell for the third consecutive month, declining 1.2 percent in October following decreases of 0.9 percent and 0.7 percent, respectively, in September and August. The October decline was the largest one-month drop for the index and was led by a drop in export prices for nonagricultural industrial supplies and materials including fuels, metals, and chemicals. The next international price report will be released December 11. (BLS)
U.S. retail and food services sales for October were $363.7 billion, a decrease of 2.8 percent from the previous month and 4.1 percent (±0.7%) below October 2007. Total sales for the August through October 2008 period were down 1.3 percent from the same period a year ago.
Business volume--the combined value of distributive trade sales and manufacturers’ shipments--for September was $1,164.3 billion, down 2.0 percent from August. Inventories edged down and the total business inventories/sales ratio at the end of September was 1.29. the I/S ratio has risen for the past 3 months. The retail sales advance for November and the business sales and inventories report for October are scheduled to be released December 12. (CEN)
The cumulative interpretation of these three reports is of weakening economic activity, both in terms of volume, and in terms of pricing power. While falling oil prices may be of some help to consumers, the overall declines in prices paid to exporters are worrisome. Likewise, declines in business sales, although perhaps also reflecting some pricing weakness, are not a good sign.
Thursday, November 13, 2008
Trade deficit narrows slightly in September
Total exports of $155.4 billion and imports of $211.9 billion in September resulted in a goods and services deficit of $56.5 billion, down from $59.1 billion in August. September exports were $9.9 billion less than August exports while September imports were $12.5 billion less than August imports. This is generally good news, however that both exports and imports declined says little we'd like to hear about demand.
Over the past year, there was relatively little change in the trade deficit, but both exports and imports had risen. In September 2008, the goods and services deficit increased $1.0 billion from September 2007. Exports were up $12.6 billion, or 8.8 percent, and imports were up $13.6 billion, or 6.9 percent.
The next goods and services trade release will be on December 11. (BEA/CEN)
Over the past year, there was relatively little change in the trade deficit, but both exports and imports had risen. In September 2008, the goods and services deficit increased $1.0 billion from September 2007. Exports were up $12.6 billion, or 8.8 percent, and imports were up $13.6 billion, or 6.9 percent.
The next goods and services trade release will be on December 11. (BEA/CEN)
Tuesday, November 11, 2008
Agricultural price pressures ease?
With the deference due a non-specialist, I have the following take on what's important in yesterday's agricultural supply and demand reports:
U.S. wheat supply and use projections are mostly unchanged this month (November). The all wheat season-average farm price is projected at $6.55 to $7.15 per bushel, down on both ends of the range from last month's $6.60to $7.40 per bushel. Price prospects for the remainder of the marketing year are dampened by rising world supplies and continued declines in futures and cash prices.
Global 2008/09 wheat production is projected at a record 682.4million tons, up 2.2 million from last month. Increases for EU-27 and Russia more than offset reductions for Argentina,Australia, and China.
The November NASS Crop Production report lowers forecast U.S. corn production 13 million bushels. Corn exports, however, are lowered 50 million bushels reflecting slower export sales and shipments and increased foreign competition. Ending stocks are raised 36 million bushels. The season-average farm price is projected at $4.00 to $4.80 per bushel, down on each end of the range from the previous $4.25 to $5.25 per bushel. Declines in futures and cash prices continue to reduce projections for the 2008/09 season-average prices received by producers.
Rising world coarse grain supplies and reduced prospects for global feeding are also expected to dampen U.S. feed grain prices. The season-average farm price for sorghum is projected at $3.40 to $4.20 per bushel, down from $3.70 to $4.70 per bushel. Price projections are also lowered for barley and oats, but by lesser amounts. In addition, global coarse grain supplies are projected 5.6 million tons higher this month with beginning stocks raised 4.1 million tons and production raised 1.5 million tons.
U.S. wheat supply and use projections are mostly unchanged this month (November). The all wheat season-average farm price is projected at $6.55 to $7.15 per bushel, down on both ends of the range from last month's $6.60to $7.40 per bushel. Price prospects for the remainder of the marketing year are dampened by rising world supplies and continued declines in futures and cash prices.
Global 2008/09 wheat production is projected at a record 682.4million tons, up 2.2 million from last month. Increases for EU-27 and Russia more than offset reductions for Argentina,Australia, and China.
The November NASS Crop Production report lowers forecast U.S. corn production 13 million bushels. Corn exports, however, are lowered 50 million bushels reflecting slower export sales and shipments and increased foreign competition. Ending stocks are raised 36 million bushels. The season-average farm price is projected at $4.00 to $4.80 per bushel, down on each end of the range from the previous $4.25 to $5.25 per bushel. Declines in futures and cash prices continue to reduce projections for the 2008/09 season-average prices received by producers.
Rising world coarse grain supplies and reduced prospects for global feeding are also expected to dampen U.S. feed grain prices. The season-average farm price for sorghum is projected at $3.40 to $4.20 per bushel, down from $3.70 to $4.70 per bushel. Price projections are also lowered for barley and oats, but by lesser amounts. In addition, global coarse grain supplies are projected 5.6 million tons higher this month with beginning stocks raised 4.1 million tons and production raised 1.5 million tons.
Friday, November 7, 2008
Employment situation deteriorates further
The number of jobs on establishment payrolls fell by 240,000 in October, and the unemployment rate rose from 6.1 to 6.5 percent. October's drop in payroll employment followed declines of 127,000 in August and 284,000 in September, as revised. Employment has fallen by 1.2 million in the first 10 months of 2008; over half of the decrease has occurred in the past 3 months.
BLS, the agency that issues the Employment Situation, started chacterizing employment as trending down with the release of March data (and stopped referring to employment trending up with the release of November 2007 data). However, if one looks more broadly at the labor market, signs of softening could be seen somewhat earlier. A proprietary composite index of five broad labor market indicators peaked in October 2006 and could have been recognized as having turned down by the first few months of 2007.
Our labor market index fell 2.1 percent in October to 88.0 (2007=100). All five components of the index contributed to the decline. The unemployment rate was the largest downward influence on the index, followed in order by the portion of the labor force unemployed 15 weeks or more, goods-producing employment, the employment-to-population ratio, and the index of aggregate weekly hours.
The Employment Situation for November 2008 is scheduled to be released on Friday, December 5. (BLS)
BLS, the agency that issues the Employment Situation, started chacterizing employment as trending down with the release of March data (and stopped referring to employment trending up with the release of November 2007 data). However, if one looks more broadly at the labor market, signs of softening could be seen somewhat earlier. A proprietary composite index of five broad labor market indicators peaked in October 2006 and could have been recognized as having turned down by the first few months of 2007.
Our labor market index fell 2.1 percent in October to 88.0 (2007=100). All five components of the index contributed to the decline. The unemployment rate was the largest downward influence on the index, followed in order by the portion of the labor force unemployed 15 weeks or more, goods-producing employment, the employment-to-population ratio, and the index of aggregate weekly hours.
The Employment Situation for November 2008 is scheduled to be released on Friday, December 5. (BLS)
Thursday, November 6, 2008
The preliminary seasonally-adjusted annual rates of productivity growth in the third quarter were 1.3 percent in the business sector and 1.1 percent in the nonfarm business sector. In both sectors, productivity gains were the result of hours at work falling faster than output, and were smaller than in the first two quarters of 2008.
Business sector output per hour grew at a seasonally adjusted annual rate of 1.3 percent in the third quarter of 2008 as output decreased 1.5 percent and hours worked fell 2.8 percent. Productivity increased 1.1 percent in the nonfarm business sector in the third quarter of 2008; output and hours fell 1.7 percent and 2.7 percent, respectively. The decline in nonfarm output was the largest since third-quarter 2001, and the drop in hours was the largest since the first quarter of 2002.
Productivity reports are generally thought to be more oriented to long-term analysis than to flashy interpretation of cyclical developments. However, the switch from output growth to decline, which we first picked up in the GDP report on October 3, had some impact here. The swing in nonfarm output growth rate was fully 4.5 percentage points, far larger than the decline in hours. Hours, on a more pessimistic note, have declined in six of the past seven quarters, with the most recent cuts characterized as the "largest since the first quarter of 2002." The next update on productivity will be the revised version of these data on December 3. (BLS)
Business sector output per hour grew at a seasonally adjusted annual rate of 1.3 percent in the third quarter of 2008 as output decreased 1.5 percent and hours worked fell 2.8 percent. Productivity increased 1.1 percent in the nonfarm business sector in the third quarter of 2008; output and hours fell 1.7 percent and 2.7 percent, respectively. The decline in nonfarm output was the largest since third-quarter 2001, and the drop in hours was the largest since the first quarter of 2002.
Productivity reports are generally thought to be more oriented to long-term analysis than to flashy interpretation of cyclical developments. However, the switch from output growth to decline, which we first picked up in the GDP report on October 3, had some impact here. The swing in nonfarm output growth rate was fully 4.5 percentage points, far larger than the decline in hours. Hours, on a more pessimistic note, have declined in six of the past seven quarters, with the most recent cuts characterized as the "largest since the first quarter of 2002." The next update on productivity will be the revised version of these data on December 3. (BLS)
Tuesday, November 4, 2008
November 4, 2008
This Web log will contain short reports driven largely by the outputs of the Federal statistical system's Principal Federal Economic Indicators. This post contains today's report on manufacturing orders and inventories and my "practice rounds."
New orders for manufactured goods were down for the second consecutive month in September, decreasing 2.5 percent to $432.0 billion, according to the Census Bureau. Shipments also declined for the second consecutive month, decreasing 2.8 percent to $432.9 billion. This followed a 3.7 percent August decrease. Unfilled orders, which had increased in thirty-one of the last thirty-two months, rose 0.4 percent to $829.5 billion.
The unfilled orders-to-shipments ratio was unchanged from 5.50 in August. The inventories-to-shipments ratio was 1.29, up from 1.26 in August. These analytic ratios indicate that as of September, there was a 5-and-a-half month backlog of work (a fairly high level relative to the past several years) and that inventories, which have been drifting up since mid-2006, were still below the average of the past decade and a half. Before taking too much comfort from these ratios, consider that the very timely ISM Reoprt on Business for October showed big movements the wrong way -- inventories up and backlogs down. The official October orders data will start coming out on November 26 with the advance report on durables. (Census)
November 3, 2008
Construction was put in place during September 2008 at a seasonally-adjusted annual rate of $1,060.1 billion, about unchanged from the rate in August. Over the year, the rate of construction put in place fell by 6.6 percent. During the first 9 months of this year, construction spending amounted to $807.3 billion, 6.2 percent below the $860.5 billion for the same period in 2007. Residential construction, which accounts for about a third of the value put in place, accounted for the entire net decline. Aggregate nonresidential construction was unchanged over the month. Given the high level of housing inventory, the residential sector may be sluggish for some time. The next bolus of data will be released December 1. (Census)
October 31, 2008
Total compensation costs for civilian workers increased 0.7 percent, seasonally adjusted, from June to September 2008, the same as the increases for the last two quarters. Both components of compensation registered increases that were the same as the previous quarter; wages and salaries rose 0.7 percent and benefits rose 0.6 percent. The next Employment Cost Index (ECI) release will be on January 30, 2009.(BLS)
Personal income increased $24.5 billion, or 0.2 percent, and disposable personal income (DPI) increased $25.7 billion, or 0.2 percent, in September. Personal consumption expenditures (PCE) decreased $33.6 billion, or 0.3 percent. In August, personal income increased $44.8 billion, or 0.4 percent, DPI decreased $107.7 billion, or 1.0 percent, and PCE increased $4.5 billion, or less than 0.1 percent, based on revised estimates.
Excluding the rebate payments under the Economic Stimulus Act of 2008, DPI increased $30.3 billion, or 0.3 percent in September, and increased $44.0 billion, or 0.4 percent in August. Real DPI increased 0.1 percent in September, in contrast to a decrease of 1.0 percent in August. Real PCE decreased 0.4 percent, in contrast to an increase of less than 0.1 percent.
The more sobering paragraph of this report concerned wages and salaries, "Private wage and salary disbursements increased $0.3 billion in September, compared with an increase of $24.1 billion in August. Goods-producing industries' payrolls decreased $4.0 billion, in contrast to an increase of $5.1 billion; manufacturing payrolls decreased $2.6 billion, compared with a decrease of $1.3 billion. Services-producing industries' payrolls increased $4.3 billion, compared with an increase of $19.0 billion. Government wage and salary disbursements increased $4.0 billion, compared with an increase of $4.6 billion." The next report on personal income will be released November 26. (BEA)
October 30, 2008
(Note: In a very random way I discovered that the "overhang" in housing inventory I alluded to on October 28 amounts to about a million units. Amazing what you pick up when the filters are set.)
In today's news, the Bureau of Economic Analysis released its advance estimates of gross domestic product and its growth. Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- decreased at an annual rate of 0.3 percent in the third quarter of 2008, (that is, from the second quarter to the third quarter). In the second quarter, real GDP increased 2.8 percent. Most of the major components contributed to the downturn in real GDP growth in the third quarter. The largest contributors were a sharp downturn in PCE for nondurable goods, a smaller decrease in imports, a larger decrease in PCE for durable goods, and a deceleration in exports. Notable offsets were an upturn in inventory investment and an acceleration in federal government
spending. (BEA)
Doesn't take much analysis to figure that a negative number here isn't much good. Perhaps BEA will be able to stop highlighting the question they have been getting about why GDP statistics were telling a different story for the first half of 2008 than some other statistics such as employment. It may be noteworthy that one of the "positive" offsets in the third quarter was an increase in inventory, a development that firms often counter by reduced production in subsequent quarters. BEA's next GDP reprt will be an update of these third quater numbers on November 25.
October 29, 2008
New orders for manufactured durable goods in September increased $1.6 billion or 0.8 percent to $207.8 billion. This was the fourth increase in the last five months and followed a 5.5 percent August decrease. Excluding transportation, new orders decreased 1.1 percent. Excluding defense, new orders decreased 0.6 percent. Shipments of manufactured durable goods increased in September by $0.4 billion or 0.2 percent to $208.8 billion. This followed a 4.2 percent
August decrease. Inventories of manufactured durable goods were $340.2 billion in September, up $1.2 billion or 0.4 percent over August.
Which is real? The big decline in new orders in August, or the modest increases on either side of it? Note that the August decline was revised down a full percentage point in two steps from its original 4.5 percent, so was probably not a statistical fluke. The issue is whether or not
it was a one-off affair linked to the financial problems that have overtaken all economic activity and discourse. The next peek at new orders is the preliminary report on all manufacturing due out November 4.
October 28, 2008
For all the excitement about mortgage foreclosures, home ownership rates have held up pretty well in the first three quarters of 2008. According to the Census Bureau, the overall ownership rate of 67.9 percent "for the current quarter [III] was not statistically different from the third quarter 2007 rate (68.2 percent) or the rate last quarter (68.1 percent)." The most recent crest in home ownership seems to have occured in the middle of 2004, when the seasonally-adjusted home ownership rate was a little over 69 percent.
The Census Bureau also reported that vacancy rates were pretty much unchanged in the third quarter as well. Vacancy rates, however, have been drifting up since the mid-to-late1990s in the case of owned-home vacancies and the late 1970s in rental properties. Any interpretation of these data is difficult, even, I am sure, for specialists. My general impression is that, at most, we can say on the economic side is that, according to this report, the inventory situation--as measured by vacancy rates-- in housing stocks has not gotten any worse over the past month or year. How bad an inventory situation todays rates indicate, I am not sure; rental vacancies have backed a bit off recent highs while the homeowner vacancy rate remains elevated over historical levels.
On the sociological side, the homeownwership rate has not slipped so much as to suggest that any mass depossession of owner-occupied housing has yet occurred. It would be interesting to see the dynamic flows that underlie the topside stability; and we still have next quarter's
data coming on February 3, 2009.
New orders for manufactured goods were down for the second consecutive month in September, decreasing 2.5 percent to $432.0 billion, according to the Census Bureau. Shipments also declined for the second consecutive month, decreasing 2.8 percent to $432.9 billion. This followed a 3.7 percent August decrease. Unfilled orders, which had increased in thirty-one of the last thirty-two months, rose 0.4 percent to $829.5 billion.
The unfilled orders-to-shipments ratio was unchanged from 5.50 in August. The inventories-to-shipments ratio was 1.29, up from 1.26 in August. These analytic ratios indicate that as of September, there was a 5-and-a-half month backlog of work (a fairly high level relative to the past several years) and that inventories, which have been drifting up since mid-2006, were still below the average of the past decade and a half. Before taking too much comfort from these ratios, consider that the very timely ISM Reoprt on Business for October showed big movements the wrong way -- inventories up and backlogs down. The official October orders data will start coming out on November 26 with the advance report on durables. (Census)
November 3, 2008
Construction was put in place during September 2008 at a seasonally-adjusted annual rate of $1,060.1 billion, about unchanged from the rate in August. Over the year, the rate of construction put in place fell by 6.6 percent. During the first 9 months of this year, construction spending amounted to $807.3 billion, 6.2 percent below the $860.5 billion for the same period in 2007. Residential construction, which accounts for about a third of the value put in place, accounted for the entire net decline. Aggregate nonresidential construction was unchanged over the month. Given the high level of housing inventory, the residential sector may be sluggish for some time. The next bolus of data will be released December 1. (Census)
October 31, 2008
Total compensation costs for civilian workers increased 0.7 percent, seasonally adjusted, from June to September 2008, the same as the increases for the last two quarters. Both components of compensation registered increases that were the same as the previous quarter; wages and salaries rose 0.7 percent and benefits rose 0.6 percent. The next Employment Cost Index (ECI) release will be on January 30, 2009.(BLS)
Personal income increased $24.5 billion, or 0.2 percent, and disposable personal income (DPI) increased $25.7 billion, or 0.2 percent, in September. Personal consumption expenditures (PCE) decreased $33.6 billion, or 0.3 percent. In August, personal income increased $44.8 billion, or 0.4 percent, DPI decreased $107.7 billion, or 1.0 percent, and PCE increased $4.5 billion, or less than 0.1 percent, based on revised estimates.
Excluding the rebate payments under the Economic Stimulus Act of 2008, DPI increased $30.3 billion, or 0.3 percent in September, and increased $44.0 billion, or 0.4 percent in August. Real DPI increased 0.1 percent in September, in contrast to a decrease of 1.0 percent in August. Real PCE decreased 0.4 percent, in contrast to an increase of less than 0.1 percent.
The more sobering paragraph of this report concerned wages and salaries, "Private wage and salary disbursements increased $0.3 billion in September, compared with an increase of $24.1 billion in August. Goods-producing industries' payrolls decreased $4.0 billion, in contrast to an increase of $5.1 billion; manufacturing payrolls decreased $2.6 billion, compared with a decrease of $1.3 billion. Services-producing industries' payrolls increased $4.3 billion, compared with an increase of $19.0 billion. Government wage and salary disbursements increased $4.0 billion, compared with an increase of $4.6 billion." The next report on personal income will be released November 26. (BEA)
October 30, 2008
(Note: In a very random way I discovered that the "overhang" in housing inventory I alluded to on October 28 amounts to about a million units. Amazing what you pick up when the filters are set.)
In today's news, the Bureau of Economic Analysis released its advance estimates of gross domestic product and its growth. Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- decreased at an annual rate of 0.3 percent in the third quarter of 2008, (that is, from the second quarter to the third quarter). In the second quarter, real GDP increased 2.8 percent. Most of the major components contributed to the downturn in real GDP growth in the third quarter. The largest contributors were a sharp downturn in PCE for nondurable goods, a smaller decrease in imports, a larger decrease in PCE for durable goods, and a deceleration in exports. Notable offsets were an upturn in inventory investment and an acceleration in federal government
spending. (BEA)
Doesn't take much analysis to figure that a negative number here isn't much good. Perhaps BEA will be able to stop highlighting the question they have been getting about why GDP statistics were telling a different story for the first half of 2008 than some other statistics such as employment. It may be noteworthy that one of the "positive" offsets in the third quarter was an increase in inventory, a development that firms often counter by reduced production in subsequent quarters. BEA's next GDP reprt will be an update of these third quater numbers on November 25.
October 29, 2008
New orders for manufactured durable goods in September increased $1.6 billion or 0.8 percent to $207.8 billion. This was the fourth increase in the last five months and followed a 5.5 percent August decrease. Excluding transportation, new orders decreased 1.1 percent. Excluding defense, new orders decreased 0.6 percent. Shipments of manufactured durable goods increased in September by $0.4 billion or 0.2 percent to $208.8 billion. This followed a 4.2 percent
August decrease. Inventories of manufactured durable goods were $340.2 billion in September, up $1.2 billion or 0.4 percent over August.
Which is real? The big decline in new orders in August, or the modest increases on either side of it? Note that the August decline was revised down a full percentage point in two steps from its original 4.5 percent, so was probably not a statistical fluke. The issue is whether or not
it was a one-off affair linked to the financial problems that have overtaken all economic activity and discourse. The next peek at new orders is the preliminary report on all manufacturing due out November 4.
October 28, 2008
For all the excitement about mortgage foreclosures, home ownership rates have held up pretty well in the first three quarters of 2008. According to the Census Bureau, the overall ownership rate of 67.9 percent "for the current quarter [III] was not statistically different from the third quarter 2007 rate (68.2 percent) or the rate last quarter (68.1 percent)." The most recent crest in home ownership seems to have occured in the middle of 2004, when the seasonally-adjusted home ownership rate was a little over 69 percent.
The Census Bureau also reported that vacancy rates were pretty much unchanged in the third quarter as well. Vacancy rates, however, have been drifting up since the mid-to-late1990s in the case of owned-home vacancies and the late 1970s in rental properties. Any interpretation of these data is difficult, even, I am sure, for specialists. My general impression is that, at most, we can say on the economic side is that, according to this report, the inventory situation--as measured by vacancy rates-- in housing stocks has not gotten any worse over the past month or year. How bad an inventory situation todays rates indicate, I am not sure; rental vacancies have backed a bit off recent highs while the homeowner vacancy rate remains elevated over historical levels.
On the sociological side, the homeownwership rate has not slipped so much as to suggest that any mass depossession of owner-occupied housing has yet occurred. It would be interesting to see the dynamic flows that underlie the topside stability; and we still have next quarter's
data coming on February 3, 2009.
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