the most widely watched release of this past week was that of the July consumer price index from the BLS, while on real estate the week also saw the July report on new home construction from the Census bureau and the July report on existing home sales from the National Association of Realtors...on manufacturing, the data firm Markit released its preliminary or "flash" Manufacturing Purchasing Managers Index for August (pdf), a diffusion index which rose to 58.0 from 55.8 in July, which was its highest reading since April 2010, as new export business expanded at its fastest pace in three years, orders and new orders both increased at a faster pace than July, and employment grew at its fastest pace since March 2013...earlier, the Philadelphia Fed released their August Manufacturing Survey (pdf) covering Pennsylvania and southern New Jersey, which reported their broadest diffusion index of current activity increased from a reading of 23.9 in July to 28.0 in August, while the index for the six month outlook of manufacturing executives in their district rose to a 22 year high at at 64.4, in a diffusion index where any positive number suggests expansion...
July Regional and State Employment
this week also saw the release of the Regional and State Employment and Unemployment Summary for July, a report which further expands on the national employment situation summary of three weeks ago by breaking down the state and regional details...so while they tell us in opening that 30 states had unemployment rate increases, 8 states saw decreases, and 12 states had no change, we know that the unemployment rate data comes from the household survey with its large margin of error, and they make that point later in the report when they tell us just seven states had statistically significant monthly unemployment rate increases, led by Tennessee whose unemployment rate rose a half percent from 6.6% to 7.1%, and that the remaining 43 states and the District of Columbia had jobless rates that were not measurably different from those of a month earlier...the table with the seasonally adjusted count of the unemployed and the unemployment rate for each state is here...
as with the national report, the sections of this report that correspond to the establishment survey are more informative, in that they show the number & types of jobs added or lost in each state, ranging from the increase of 46,600 jobs in Texas and 27,600 jobs added in California, to the net decrease of 9,000 jobs in Maryland...for a breakdown of payroll employment by job type for each state over the past 3 months, and the change in employment since last July, see the following two BLS tables accompanying this release: Table 5. Employees on nonfarm payrolls by state and selected industry sector, seasonally adjusted and Table 6. Employees on nonfarm payrolls by state and selected industry sector, not seasonally adjusted ...
July Food Prices Rise 0.4% as Overall Inflation Slows to 0.1%
consumer inflation slipped to the slowest pace in 5 months in July as modest price increases in food and services offset generally lower prices for energy and other commodities...the Consumer Price Index for All Urban Consumers (CPI-U) for July from the Bureau of Labor Statistics showed that seasonally adjusted prices rose by 0.1%, down from a 0.3% increase in June, as prices for gasoline, which rose in June, fell back in July....the unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, was actually lower, falling to 238.250 in July from 238.343 in June, as overall prices normally fall slightly in July, but the index still remained 2.0% higher than the 233.596 reading from July of last year….with food price increases offsetting decreases in energy prices, core prices, which exclude those volatile components, were also up just 0.1%, as the unadjusted core index fell from 238.157 in June to 238.138 in July, while it was 1.9% ahead of its year ago level of 233.792...
the seasonally adjusted food index rose by 0.4% in July, after rising 0.1% in June, 0.5% in May and 0.4% in April, and it is now 2.5% higher than July a year ago....prices for food away from home rose 0.3% as prices for meals at full service restaurants rose 0.4% and prices at fast food restaurants were 0.3% higher, while prices for food at schools were unchanged after rising 1.3% in June, and prices for other food away from home fell 0.1%.... meanwhile, the price index for food at home rose 0.4% as no major food group fell in price....cereal and bakery products averaged 0.4% higher than in June, as a 1.2% increase in prices for rice, pasta and cornmeal and a 0.7% increase in the price of white bread was only partially offset by a 1.0% decrease in prices for sweetrolls, coffeecakes, doughnuts and a 0.6% decrease in prices for flour and prepared mixes...prices in the meats, poultry, fish, and eggs group rose 0.3% as egg prices rose 0.9% and chicken prices rose 0.5% while overall pork and seafood prices were unchanged and 0.4% lower ground beef prices partially offset a 1.6% increase in prices for beef roasts...on a year over year basis, overall beef prices still remained 10.4% higher and overall pork prices averaged 10.9% higher than last July....dairy products prices were also 0.3% higher in July than in June even though ice cream was 0.6% lower and cheese prices fell 0.2% because whole milk prices rose 0.2% and other dairy products rose 1.3%....meanwhile, the fruit and vegetable price index was unchanged in July as 1.8% lower prices for citrus fruits, 1.7% lower priced lettuce, 1.6% lower potatoes, and 1.5% lower apples were offset by 3.7% higher prices for other fresh fruit and 1.3% higher prices for frozen fruit and vegetables....however, prices for the beverage group rose 0.5% as a 1.1% increase in the price of roast coffee was partially offset by prices for non-alcoholic drinks and that were on net unchanged...in addition, prices for other foods at home rose 0.7% as butter prices were 2.8% higher, olives, pickles, and relishes rose 1.0%, and baby food rose 0.8% while peanut butter prices fell 1.9%... combined with a June increase of 4.2%, butter prices are now 16.5% higher than a year ago...
the seasonally adjusted energy price index was 0.3% lower in July as prices for energy commodities fell 0.3% while the index for energy services fell 0.4%...the decrease in energy commodity prices was anchored by a a 0.3% drop in the price of gasoline, the largest component, while fuel oil prices fell 0.7% and prices for other fuels, including propane, kerosene and firewood averaged a 2.7% increase….within energy services, the index for utility gas service fell for the 3rd consecutive month, as it was down another 0.4% after falling 2.6% in June and 1.7% in May, while the electricity price index fell 0.3% in July after rising 0.2% in June...
looking at the seasonally adjusted core components of the CPI, we find that the supergrouping of commodities less food and energy commodities was unchanged in July, while overall services less energy services saw a 0.1% increase....the index for shelter, which is almost 32% of the CPI, rose 0.3%, with rent of shelter rising 0.3%, homeowner's equivalent rent rising 0.3%, prices for lodging away from home rising 0.2%, while water & sewer bills rose 0.6% and the cost of household operations rose 0.4%....meanwhile, household furnishings and supplies, the commodity component of housing, fell 0.4% with prices for bedroom furniture, living room furniture, kitchen and dining room furniture, cookware and tableware, and window coverings all seeing prices decrease more than 1.3% in July.....the price index for apparel, now up three months in a row, rose 0.2% in July as a 2.2% increase in footwear prices and an 0.8% in prices for men's clothing was partially offset by a 1.0% decrease in women & girls apparel, with women's outwear seeing prices fall 4.6% while their prices since last July were still up 12.3%....the aggregate index for medical care increased by 0.2% as medical care commodities rose 0.3% after being up 0.7% in June on another 0.5% increase in prescription drug prices, while medical care services rose by 0.1% overall as 0.5% increases in both inpatient hospital services and outpatient hospital services was offset by a 0.5% drop in prices for eyeglasses and eyecare, 0.2% lower prices for physicians' services and 0.2% lower costs for health insurance...while the transportation composite index showed a 0.3% decrease, that index includes gasoline, which fell 0.3%; transportation commodities less fuel prices, however, were 0.1% higher, as prices for new cars and trucks rose 0.3%, prices for used cars & trucks fell 0.3%, and the price of tires rose 0.2%...however, the transportation services index fell 0.2% on a 2.1% drop in prices for car and track rentals while airfares were 0.4% higher than in June... meanwhile, the recreation index fell 0.1% as recreation commodities fell 0.8% on another 1.9% decrease in TV prices, while prices for audio equipment fell 3.0%, prices for photographic equipment fell 1.9%, prices for discs & tapes & similar media fell 1.5%, and prices for pets and pet products fell 0.9%, while recreation services rose 0.2% as a 2.0% decrease in rental of video and audio media was more than offset by 0.6% higher club fees, 0.8% higher theater and concert ticket prices, and 0.4% higher film processing......finally, the aggregate education and communication index was unchanged as education and communication commodities fell 0.2%, mostly on a 1.0% decline in prices for personal computers and peripheral equipment, while education and communication services rose 0.1% on a 0.4% increase in elementary and high school tuition and fees and a 0.4% increase in postage and delivery services....other than the aforementioned increases in food prices and women's outerwear, the only other line item among CPI components that showed an annual price change greater than 10% was televisions, which are now 15.0% cheaper than they were a year earlier...
our FRED graph below shows the monthly change in each of the major component indexes of the CPI over the past year, with increases in prices above the dark “0” line and price decreases below it...each group of 7 color coded bars represents one month of CPI component changes, where blue shows the monthly change in the price index for food and beverages; red shows the change in the price index for all housing components, which includes rent, homeowners equivalent rent, utilities, insurance & household maintenance; mauve shows the percentage change for apparel prices, orange shows the change in the index for medical care, light green shows the change in the transportation composite, obviously volatile as it includes gasoline, while dark green shows the monthly change in the price index for education and communication and light blue shows the change in the recreation price index…this graph can also be viewed as an interactive, wherein you can expand the view to show price changes in each of these indexes going back to 1947...
Housing Starts and Building Permits Increase in July
the Census report on New Residential Construction for July (pdf) gives us broad estimates of new housing permits, new housing starts, and housing completions based on a survey of a small percentage of permit offices visited by Census field agents, and is widely watched and reported on for new housing starts....in July, starts on new housing units were estimated to be at a seasonally adjusted annual rate of 1,093,000, which was 15.7 percent (±10.9%) above the revised June estimate of 945,000 annually, and 21.7 percent (±10.7%) above the annual rate of 898,000 housing starts estimated in July a year ago...the numbers in parenthesis means that Census is 90% confident that housing units started in July were at a seasonally adjusted rate between 4.8% and 26.5% greater than the pace in June, and between 11.0% and 32.4% greater than the pace of a year ago...the unadjusted estimates from which those annual rates were extrapolated indicated an estimated 101,000 total units were started in July, up from 90,500 in June, with 61,600 of those single family dwellings...meanwhile, construction was started on 38,200 apartment units in buildings with 5 or more units, a 25 year high for apartment unit starts, with the caveat that the margin of error on that apartment data is ± 33.8%...with this release, previously reported single family starts in June were revised up from 58,500 to 62,200 while units started in buildings with more than 5 units were revised from 25,700 to 26,600...
the monthly data on new building permits have a much narrower margin of error that new housing starts and hence are probably a better monthly indicator of new construction trends than the volatile and often revised starts data... in July, Census estimated new permits were issued at a seasonally adjusted annual rate of 1,052,000, which was 8.1 percent (±1.8%) above the revised June annual rate of 973,000 and 7.7 percent (±1.8%) above the 977,000 annual rate estimated for new permits in July of last year...those estimates were extrapolated from the unadjusted estimate of 97,100 new permits issued in July, which was up from the estimated 92,300 permits issued in June...of those units permitted in June, 61,000 (±1.1%) were for single family homes, and 33,200 (±1.0%) represented permits for housing units in building with 5 or more units...our FRED graph on this report below, which can also be viewed as an interactive at the FRED site, shows the seasonally adjusted annual rate of housing units started in thousands monthly in blue, and the annual rate of housing units authorized by building permits monthly in red since 2000…note that the number in thousands shown monthly for both metrics is an estimate of how many units would be permitted or started over an entire year if that month’s pace were continued over 12 months…
Existing Homes Selling at a 5.15 Million a Year Clip in July
according to the July report on existing home sales from the National Association of Realtors, 5.15 million homes would sell annually if July's seasonally adjusted home sales were extrapolated at the same rate over an entire year; those adjusted sales were up 2.4% from the downwardly-revised seasonally adjusted annual rate of 5.03 million completed home transactions in June, but still 4.3% below the 5.38 million-unit annual sales rate of July last year...before the seasonal adjustment and conversion to an annualized figure, an estimated 494,000 homes sold in July, down 2.4% from the estimated 506,000 homes that sold in June, and down 4.8% from the estimated 519,000 homes that sold in July a year ago...while seasonally adjusted data indicates that homes sales increased in every region of the country except the Northeast, where they were statistically unchanged, the unadjusted data (pdf) indicates that homes sales were down in every region of the country except the Northeast, where they were up 14.3%...
the median home selling price for all housing types was $222,900 in July, up 0.4% from the downwardly revised median price of $222,000 in June and 4.9% higher than the $212,400 median sales price in July of last year, in home price data that is not seasonally adjusted…the average home sales price was $268,700, up from $268,100 in June and $259,000 in July a year ago, with regional average home prices ranging from $342,800 in the West to an average of $210,200 for homes sold in the Midwest...foreclosed homes, which sold for an average of 20% below the price of similar homes in their market, accounted for 8% of June sales, while short sales, at 3% of the total, were discounted by an average of 11%...sales of distressed properties were the lowest portion in 6 years; foreclosed homes, which sold for an average of 20% below the price of similar homes in their market, accounted for 6% of July sales, while short sales, at 3% of the total, were discounted by an average of 14%.....the pie graph below, taken from an NAR graphic summary of July data, shows the percentage of homes sold in in July in each of several prices ranges; while it’s obvious most homes were sold for below $250,000, those selling for over $500,000 still accounted for a substantial 12% of all sales..
the median time on the market for all homes was 48 days in July, up from 44 days in June, and up from a median of 42 days on the market in July a year ago…those who bought houses with cash accounted for 29% of transactions in July, down from 32% of sales in June and the lowest percentage of all cash transactions for any month since January 2013...those identified by realtors as investors accounted for 16% of all transactions, unchanged from May and also unchanged from the 16% investor share of sales a year earlier...the percentage of first time home buyers rose for the second month in a row to 29% in July, from 28% in June, as interest rates for a 30 year mortgage averaged 4.13% in July, down from 4.16% in June; and the lowest average mortgage interest rate in 14 months...an inventory of 2.37 million existing homes remained available for sale at the end of July, which would be a 5.5-month supply of unsold homes at the July sales pace, unchanged from June but up from 2.24 million, or a 5.0 month supply in July a year earlier...
(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links that accompanies these commentaries, most from the aforementioned GGO posts, contact me…)