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.
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