Producer Price Index September release with August 2023 Data

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

The Producer Price Index for final demand increased 0.7 percent in August, seasonally adjusted, after rising 0.4 percent in July, the U.S. Bureau of Labor Statistics reported today. (See table A.) The August advance is the largest increase in final demand prices since moving up 0.9 percent in June 2022. On an unadjusted basis, the index for final demand rose 1.6 percent for the 12 months ended in August.

In August, 80 percent of the rise in final demand prices is attributable to a 2.0-percent jump in the index for final demand goods. Prices for final demand services advanced 0.2 percent.

The index for final demand less foods, energy, and trade services increased 0.3 percent in August, the same as in July. For the 12 months ended in August, prices for final demand less foods, energy, and trade services rose 3.0 percent, the largest advance since moving up 3.4 percent for the 12 months ended in April.

So, the story is about gasoline prices creating most of the PPI. This might be true, but the current forecast is up and not down for that commodity.

Everything is screaming some future relief, except for what drove the August PPI higher. September is shaping up as a repeat of August, imho.

Not the most scientific metric, but there is more pink than last month. Not saying inflation is about to accelerate, but not so sure that crude oil will taper off its current rise. And we should remember that yesterday's CPI report mentioned the impact of gasoline, but also indicated that energy prices were down compared to one year ago... current at 294.328, year ago at 305.372. Gasoline current... 336.979, year ago at 348.593.

So, if last month's PPI was impacted by energy and thereby distorting the number, then energy being cheaper this year than last... would indicate the YoY 1.6% is also distorted. In fact the release indicates the PPI excluding energy was 2.0%. 

That is not a bad number, imho. Things are indeed looking up... except for pump prices, which are also looking up, but not in a good way.

This Week in Petroleum Summary 9-13-2023, per EIA.GOV

Gasoline prices (per AAA) rose from last report's $3.827, to $3.848. One year ago the price had fallen to $3.707, 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 of $3.096.

Consumption edged down a bit.

Data per the EIA weekly report. 

Crude stocks increased +4.0M barrels, from last week, and is -3.6% below 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 -0.4% below that adjusted 5 year average.

Distillates inventory rose +3.9M barrels; and Gasoline inventories rose +5.6M barrels. Distillates (-10.7%,-2.0%) and Gasoline (-1.0%, -0.3%) are both below 5 year and 3 year adjusted average inventories.

The SPR increased another 290K barrels this past week. This is the 6th straight week for increases, which were the first since January, 2021.

WTI is $88.77, compared to $86.70 (+2.4%), one week ago, and $87.36, one year ago (+1.7%).

Refinery slipped on a weekly basis, but remains above year ago levels.

For anyone interested, the U.S. has exported 845M barrels of crude and petroleum products, more than imported, since March 1, 2022. That number actually decreased by 3M barrels this past week. Likely due to the massive drop in crude exports, which may be attributed to when a ship leaves port. Look out next week.

Taking that into consideration... crude stocks may wane, compared to this time last year, with current days supply at 25.2, to last year's 26.7 days.

Gasoline exports/imports were about even this past week, with the tally since March 1, 2022, being 108.4M barrels being exported over imports.

Inventories are up across the board, with refineries purring right along. Pump prices should be falling, but they aren't. All those signs are pointing to $4 a gallon.

What am I missing?

BLS Data Dump. Real Earnings - September 13, 2023

The BLS has released the latest Real Earnings Report. 

Real average hourly earnings for all employees decreased 0.5 percent from July to August, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This result stems from an increase of 0.2 percent in average hourly earnings combined with an increase of 0.6 percent in the Consumer Price Index for All Urban Consumers (CPI-U).

Real average weekly earnings decreased 0.1 percent over the month due to the change in real average hourly earnings combined with a 0.3-percent increase in the average workweek.  

Real average hourly earnings increased 0.5 percent, seasonally adjusted, from August 2022 to August 2023. The change in real average hourly earnings combined with a decrease of 0.3 percent in the average workweek resulted in a 0.3-percent increase in real average weekly earnings over this period.

The report was a bit of setback in earnings, as the hourly rate fell -5¢. It is up +2¢ somce February 2020.

Weekly earnings decline -38¢ from last month, although up +95¢ from February 2020.

The above charts include all categories of workers.

Now for the production and non supervisory...

This category saw a drop of -6¢ per hour, although still +15¢ above February 2020.

Weekly is a bit different...

2 consecutive months of decline, although not a trend at this point. Down -89¢ on the month, although still +$6.02 above February, 2020.

I do remember last month being hailed as proof of something. I forget what it was, but this month is also proof of something. Can't wait to hear the spin on this... if it even crops up in the news cycle.

That gasoline index, cited in August as being below last August... is true. Per AAA, the average for August 2022 was $3.97 and this year at $3.84. BUT, September of 2022 averaged $3.73 and thus far this month is $3.82 and current trading indicate today's national average of $3.85... is heading north of $4 very soon. 

I guess reviewing today's crude report is next on the agenda.

BLS Data Dump. CPI - September 13, 2023

First up is the BLS Report for CPI...(historical releases)

The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.6 percent in August on a seasonally adjusted basis, after increasing 0.2 percent in July, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 3.7 percent before seasonal adjustment.

The index for gasoline was the largest contributor to the monthly all items increase, accounting for over half of the increase. Also contributing to the August monthly increase was continued advancement in the shelter index, which rose for the 40th consecutive month. The energy index rose 5.6 percent in August as all the major energy component indexes increased. The food index increased 0.2 percent in August, as it did in July. The index for food at home increased 0.2 percent over the month while the index for food away from home rose 0.3 percent in August. 

Depending on which consensus forecast you use, this was either slightly above or slighty below.

It was slightly below my chosen group. I had mentioned +0.8% increase, versus +0.6% actual. Both the month to month and annual were slightly below my chosen group's forecast. +3.8% versus +3.7%.

The actual readings.

Then there is my personal results, which is important to me. +0.4% M/M and +1.8% Annual.

Now for the C.O.L.A projections...

I can nearly predict the C.O.L.A will be +3.2%. This is based on the expecation the minimum September number would be 301.829 (+0.09%) and the maximum being 302.704 (+0.038%). Given current forecasts, the September numbers should be in this range. 

Considering that the C.O.L.A is nearly set at 3.2%, it is time to look at impact on old folks, such as myself. While mine edged up this month, the R-CPI-E, is well above the 3.2% C.O.L.A. at 4.2%. R-CPI-E stands for Research CPI Experimental, not the retired cpi elderly, that some people think. However, it was experimental research targeting 62 year olds and over. 

For years the Medicare B standard rates were announced in November. Last year the Biden Adminstration had it announced almost simultaneously with the C.O.L.A. While the Biden White House ballyhooed the 8.7% C.O.L.A. as an achievement, then quickly caught flak for taking credit for inflation, they were able to rejoice in the Medicare B standard rates falling. 

With the likelihood of Medicare B standard rates being raised... Gee, I wonder when that announcement will come?

With the headline CPI being 3.2% in July, and currently 3.7% for August, the September forecast of 3.6% will come out... just as that likely 3.2% C.O.L.A. is announced.

This is called a political dilemma.

Of course, no one is mentioning the real earnings report, which I will delve into next.

Natural Gas Summary... Week Ending 9-08-2023

The Energy Information Administration released their weekly report.

The Pacific Region continues to be slightly ahead of year ago numbers, but still below the 5 year average, although still improving.

The South Central Region continued the slide against year ago levels, but is still above 5 year average.

EIA.GOV, via SNL Energy

Now for a look at The European Union and United Kingdom.

[The reason for this observation is LNG, which has introduced the prospect of U.S. Natural Gas prices being affected by global demand for LNG. The EU and UK serve as a benchmark for these demand issues.]

Data from the Aggregated Gas Storage Inventory report...

Data per AGIS

The UK continues to reduce inventory, while Austria and Belgium slipped from last report.

Overall, NatGas prices slipped compared to last week.

This Week in Petroleum Summary 9-07-2023, per EIA.GOV

Gasoline prices (per AAA) slipped from last report's $3.827, to $3.803. One year ago the price had fallen to $3.764, with today's price now +1.0% above year ago.

Consumption of gasoline continues to edge up +0.3% over last week, and 2.4% above one year ago level. 

Data per the EIA weekly report. 

Crude stocks slid another -6.3M barrels, from last week, and is -4.6% below 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 -0.8% below that adjusted 5 year average.

Distillates inventory rose +679K barrels; and Gasoline inventories slipped about -2.7M barrels. Distillates (-12.3%,-3.0%) and Gasoline (-3.3%, -2.2%) are both below 5 year and 3 year adjusted average inventories.

The SPR increased another 800K barrels this past week. This is the 5th straight week for increases, which are the first since January, 2021.

WTI is $86.70, compared to $81.74 (+6.1%), one week ago, and $83.07, one year ago (+4.4%).

Refinery edged up on a weekly basis, and is slightly above above year ago levels

For anyone interested, the U.S. has exported 848M barrels of crude and petroleum products, more than imported, since March 1, 2022. It jumped +18M barrels this past week. (Distillates account for approximately 77%.

Overall, crude stocks are beginning to wane, compared to this time last year, with days supply at 25.0, to last year's 26.4 days.

Gasoline exports/imports were about even this past week, with the tally since March 1, 2022, being 108.4M barrels being exported over imports.

Next Wednesday will be the August CPI release. With the motor fuel index jumping nearly 7% in August, expect the report to say something like half of the increase being energy. Having said that... +0.8% could be a month to month increase for the overall. 

In any case, stock up on dramamine to offset the enormous spin about to take place. /s

EU & UK NatGas Inventory Report, September 01, 2023

Data from the Aggregated Gas Storage Inventory report...

While up in most areas of Europe, Austria -.01%, Czech Republic -.02%, and the UK down -1.63%.

Pricing finds the U.S. back to normal, with the EU and the UK still elevated, as will likely continue for quite a period of time.