8-15-23, Advance Retail Sales Report for July

Advance Monthly Sales for Retail and Food Services, July 2023. 

Advance estimates of U.S. retail and food services sales for July 2023, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $696.4 billion, up 0.7 percent (±0.5 percent) from the previous month, and up 3.2 percent (±0.7 percent) above July 2022. Total sales for the May 2023 through July 2023 period were up 2.3 percent (±0.4 percent) from the same period a year ago. The May 2023 to June 2023 percent change was revised from up 0.2 percent (±0.5 percent)* to up 0.3 percent (±0.2 percent).

Retail trade sales were up 0.6 percent (±0.5 percent) from June 2023, and up 2.0 percent (±0.5 percent) above last year. Nonstore retailers were up 10.3 percent (±1.6 percent) from last year, while food services and drinking places were up 11.9 percent (±2.3 percent) from July 2022.

The "but not for price changes, means not adjusted for inflation... 

While improved over last month by 0.5% when adjusted for inflation... year to year is flat.

In a previous column, I made mention of the Census Bureau's propensity to revise downward previous month's data to improve current month results. We are in the second month of previous month's data being revised upward... which is good news. May that become a trend going forward.

Non store retailers, continues to lead the pack, with Furniture and Electronics turning negative from last month. Clothing edged up from last month, with Food Services and drinking places accelerating.

What really stands out is the EX gasoline category, which rose 5.8% year over year, which is better than the CPI EX gasoline of 4.3%.

Room for optimism!

Natural Gas Inventory Report, August 11, 2023

The Energy Information Administration released their weekly report yesterday.

The Pacific Region continues to be below year ago and 5 year levels, but is slowly gaining.

Prices increased in West Coast markets, still the highest priced markets in the United States, except in Southern California where a large maintenance event concluded. The price at Sumas on the Canada-Washington border rose 37 cents from $3.72/MMBtu last Wednesday to $4.09/MMBtu yesterday, and the price at PG&E Citygate in Northern California rose 54 cents, up from $5.17/MMBtu last Wednesday to $5.71/MMBtu yesterday. 

 Select EU and UK storage...

Inventories continue to improve across the EU and UK. (100% inventory capacity is approximately a 90 day supply.)

Dutch and UK futures, surged 6% and 7% respectively over last week. February, 2024 futures, surged nearly 22% from last week.

Henry Hub futures surged 7% almost across the board.

The upward pressure stems from labor action in Australia, increased LNG demand in Asia, as well as a Norwegian pipeline tapering down to closure in early fall. The labor action had been somewhat anticipated, and certainly the latter two... were on tap. Or as Rumsfeld might have said... the labor action was a known unknown, and the latter were known knowns. 

So something else might be shaking the market.

Producer Price Index August 2023 release

The BLS has released the July Producer Price Index Report.  (historical releases) 

The Producer Price Index for final demand increased 0.3 percent in July, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices were unchanged in June and declined 0.3 percent in May. (See table A.) On an unadjusted basis, the index for final demand advanced 0.8 percent for the 12 months ended in July. 

In July, the increase in final demand prices was led by a 0.5-percent rise in the index for final demand services. Prices for final demand goods edged up 0.1 percent.

The rate of increases has somewhat slowed and selected areas are now trending downward. The PPI since start of Covid has risen 17.3%, compared to the CPI rise of 19.2%. (That is just two data points and should not be construed as any indication of some guaranteed future changes.)

Certainly improvement, but overall a "D" rating as for inflation outlook, imho. August would appear to have a further inflation uptick, from July's reports. 

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!