BLS releases latest Real Earnings... August 10, 2023

The BLS has released the latest Real Earnings Report. 

Real average hourly earnings for all employees increased 0.3 percent from June to July, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This result stems from an increase of 0.4  percent in average hourly earnings combined with an increase of 0.2 percent in the Consumer Price Index for All Urban Consumers (CPI-U).

Real average weekly earnings were essentially unchanged over the month due to the change in real  average hourly earnings combined with a 0.3-percent decrease in the average workweek. 

The following graphs include data back to pre-covid. This is essential information, as Covid sent many home from the workplace, and many did not have the option of "zoom" etc. The result being many lower income wage earners got left out of the data, which distorted the information results.

As employment is near pre covid numbers, the past "few" months, compared to February, 2022, becomes a more accurate picture, imho. Additionally, these numbers are inflation adjusted, so a real increase has taken place. Not much, but that has been the story for quite a number of years.

The rundown...

While earnings have improved and employment appears solid, it does not mean storm clouds aren't gathering. Whether the glass is half full or half empty... TBD.

CPI Latest DATA results, August 10, 2023

The BLS report was released this morning and it was at consensus estimates. (historical releases)

The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.2 percent in July on a seasonally adjusted basis, the same increase as in June, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 3.2 percent before seasonal adjustment.

The index for shelter was by far the largest contributor to the monthly all items increase, accounting for over 90 percent of the increase, with the index for motor vehicle insurance also contributing. The food index increased 0.2 percent in July after increasing 0.1 percent the previous month. The index for food at home increased 0.3 percent over the month while the index for food away from home rose 0.2 percent in July. The energy index rose 0.1 percent in July as the major energy component indexes were mixed.

The rates on the graph, averaged 3.5% during that 75 year period. The past ten years averaged 2.7%, and the 10 year pre-covid rate was 1.7%. The 21st century average is 2.5%. Pick your normal.

While last month's 3.0% and this month's 3.2% are below the 75 year average, not exactly better than either of the 10 year marks, nor the 21st century average.

The past 28 months have seen food at home risen 20.4% (8.74% annualized), and the overall CPI up... 16.9% (7.24% annualized).

That is something very fresh in the minds of many Americans.

In the absolutely to early to project something, but I can't help myself category... the current outlook for C.O.L.A.

So far this month...

Time for some more graphs...

It should be noted, the July, 22 ~ December, 22 period was nearly flat. Since then, the rate of inflation has had an upward trajectory.

My personal CPI rate is better than expected. but still not pleasing to me. 

There seems to be some euphoria over today's report, which seems to be based on inflation matching consensus expectations, although a bit higher than next month.

Which brings me to expectations for the current month. Nearly everything I've read indicates a higher print for next month. I haven't read any consensus expectations, but the range is much higher. With energy prices jumping upward, as well as food prices... core will need to slow down to bring the August numbers within range of July, imho.

Gasoline consumption per latest EIA data, August 09, 2023

Gasoline prices (per AAA) rose from last report's $3.803, to $3.825. One year ago the price had fallen to $4.033, and was on its downward trajectory... into the early September lull, about $3.80. It rose a bit, then fell back to the December low.

Consumption slipped -0.3% week over week, and is +1.2% above year ago numbers. (This is a four week moving average). 

The import/export surplus of gasoline since last March 1st 2022, rose to +106.2M barrels. That is an +1.8M barrel increase over the week.

I was again overly optimistic, with a projection of -4¢~ -11¢ for the week, and the result a 2.2¢ increase.

My crystal ball was wrong, so could be wrong this time as well. Pump prices really should peak and drift -4¢ to -7¢ lower.

However, the crude and gasoline markets seem to be in a bit of hysteria at the moment. How much fear is warranted and how much is hype? I dunno.

One thing is for certain, the CPI energy index is popping for August, coupled with projected food increases and core remaining hefty. The CPI imprint for tomorrow is projected to rise above last month's annual increase... and August looks like a hard tick upward, at this point. 

Crude and Petroleum Product Inventories - August 09 2023

 Data per the EIA weekly report. 

Crude stocks rose +5.8M barrels, from last week, and is -1.9% from the 5 year seasonal average. It should be noted the 5 year average includes the abnormal 2020 and 2021 number. Otherwise, the current inventory is nearly +1.4% above normal.

Distillates inventory slid -1.7M barrels; and Gasoline inventories fell about -2.7M barrels. Distillates (-15.2%,-4.4%) and Gasoline (-5.5%, -3.2%) are both below 5 year and 3 year adjusted average inventories.

The SPR increased 995K barrels this past week. The first real increase since early January, 2021.

WTI is $83.77, compared to $79.45 (+5.4%), one week ago, and $90.47, one year ago(-7.4%).

Refinery output remained steady on a weekly basis, and is slightly above above year ago levels

For anyone interested, the U.S. has exported 795.2M barrels of crude and petroleum products, more than imported, since March 1, 2022. It jumped 2.0M barrels this past week.

Overall, crude stocks remain somewhat healthy, compared to this time last year, with days supply at 26.6, to last year's 26.3 days.

One noticeable shift in this week's report, was the rather dramatic drop... in crude exports. This may have just been a timing issue. That would account for about half of the crude inventory increase, as well as another near 1M barrel increase in SPR.

If it is a timing issue, then the expectation would be for a drop in crude inventory for next week, which may explain the rapid rise in WTI crude price today.

For some reason, there is concern about the future of crude inventories, and may be warranted, but historically... the inventory is well above average, both numerically and in days supply.

Puzzling!

Natural Gas Inventory Report, August 4, 2023

The Energy Information Administration released their weekly report yesterday.

Nor surprising, the Pacific region still lags, but the South Central joined the hit parade this week, although the latter is well ahead of previous year storage percentages.

In California, natural gas consumption in the electric power sector fell 9% (0.3 Bcf/d) week over week, according to data from S&P Global, despite continuing high temperatures that resulted in 137 CDDs, or 34 CDDs above normal in the Riverside Area, outside of Los Angeles.

Select EU and UK storage...

Total EU rose to 86.31%, from last week's 84.49%. This number seems sufficient, but represents about a 94 day supply across the EU. This can vary widely, due to availability, consumption. etc. 

The UK, which relies on a steady supply, with limited storage... is currently at about a 4 day supply. Any disruption to their supply, would be immediate.

This can be seen in the current pricing versus the 12 month futures high. 

A quick snapshot of pricing in prior periods, compared to now. (All converted to USD exchange rates at date specified.)

It is a guessing game, as to direction, with no one really able to predict the weather, consumption, geopolitics, etc. At this point in time... rather stable, imho.

Gasoline consumption per latest EIA data, August, 2023

Gasoline prices (per AAA) rose from last report's $3.687, to $3.803. One year ago the price had fallen to $4.189, and was on its downward trajectory... into the early September lull, about $3.80. It rose a bit, then fell back to the December low.

Consumption slipped -0.8% week over week, and is +3.7% above year ago numbers. (This is a four week moving average). 

The import/export surplus of gasoline since last March 1st 2022, fell to +104.4M barrels. That is an -889K barrel decrease over the week.

I was again overly optimistic, with a projection of +5¢ for the week, and the result being much higher.

I do, however, think the recent runup has nearly run its course. So here goes a brave prediction... pump prices should steady and begin to fall in the -4¢ to -11¢ range.

Okay, it may be wishful thinking, but the cards that kept telling me there was upward bias, (although missing the extent), are now telling me... pump prices will ease off. 

Crude and Petroleum Product Inventories - August 02 2023

Data per the EIA weekly report. 

Crude stocks fell a whopping -17M barrels, from last week, and is -2.8% from the 5 year seasonal average. It should be noted the 5 year average includes the abnormal 2020 and 2021 number. Otherwise, the current inventory is nearly +1.1% above normal.

Distillates inventory slid -796K barrels; and Gasoline inventories increased about +1.5M barrels. Distillates (-14.2%,-3.4%) and Gasoline (-5.3%, -3.3%) are both below 5 year and 3 year adjusted average inventories.

The SPR has remained stable for 3 weeks.

WTI is $79.45, compared to $78.94 (+06%), one week ago, and $89.74, one year ago(-9.9%).

Refinery output improved on a weekly basis, and has edged above year ago levels

For anyone interested, the U.S. has exported 793M barrels of crude and petroleum products, more than imported, since March 1, 2022. It jumped nearly 22.0M barrels this past week.

Overall, crude stocks remain somewhat healthy, compared to this time last year, with days supply at 26.6, to last year's 26.3 days.

Is it a rinse and repeat of April? At that time, the crude prices jumped and many reasons were given... yet prices fell back. This time the same reasons were given for the rise, but the prices are slipping. 

How much is hype and how much is real?