we’ve had a full plate this week with several key monthly economic releases, as well as reports on first quarter household credit and mortgage delinquencies…in addition to the April advance report on retail sales from the Census bureau, there were the two monthly releases on April prices from the BLS, the Producer Price Index and the Consumer Price Index, all of which we’ll look at later…then for manufacturing, there was the April report on Industrial Production from the Fed, and two regional Fed Manufacturing Surveys for May; the Empire State Manufacturing Survey from the New York Fed, covering New York and part of New Jersey, which reported their general business conditions index rose to 19.0, up from 1.3 last month, indicating robust expansion by area manufacturers, and the Philadelphia Fed’s Business Outlook Survey for May (pdf), covering most of Pennsylvania, southern New Jersey, and Delaware, who saw their most inclusive diffusion index slip slightly from a reading of 16.6 in April to 15.4 in May, also indicating still strong growth, on the Fed survey scale where all positive readings indicate expansion…we also got the March report on Manufacturing and Trade Inventories and Sales (pdf) from the Census Bureau, which is covered in the media as “business inventories” and which showed a seasonally adjusted 1.0% (±0.2%) increase in sales from February and a 0.4% (±0.1%) increase in aggregate inventories for the month… 

for mortgages, we saw the release of the Mortgage Bankers Association’s (MBA) National Delinquency Survey for the 1st Quarter,  which, like the March Mortgage Monitor we reviewed last week, gives us a snapshot of mortgages that are in trouble as of the end of March, with the difference here being that the MBA seasonally adjusts mortgage delinquencies and foreclosures, and since historically the 1st quarter is the lowest for mortgage delinquencies, MBA’s 1st quarter numbers were adjusted upwards…thus, the MBA reported that 2.56% of all mortgages were in the foreclosure process at the end of the quarter, down from 2.77% at the end of the 4th quarter and down from 3.46% in foreclosure a year earlier…an additional 6.11% of home owners with a mortgage were at least one month overdue on their payments but not in foreclosure, down from a delinquency rate of 6.39% at the end of the 4th quarter and down from 7.25% who were delinquent on their mortgages at the end of the 1st quarter last year…the seriously delinquent rate, which is the percentage of mortgages that are more than 90 days overdue or in the process of foreclosure, was at 5.04%, down from 5.41% last quarter and down from 6.36% who were seriously delinquent a year ago…in contrast to this MBA report, last week the BKFS Mortgage Monitor reported an unadjusted ‘in foreclosure rate’ of 2.13% of all mortgages, a delinquency rate of 5.52%, and a serious delinquency rate of 4.52%…the MBA also reports that foreclosures were started on 0.45% of mortgages in the quarter, which would not be directly comparable to the 88,113 new foreclosures the Mortgage Monitor indicated for the month of March…the bar graph below, taken from Bill McBride’s coverage of this MBA report, is a color coded representation of the percentage of mortgages in foreclosure and delinquent since the 1st quarter of 2005….each bar shows the portion of 30 day delinquencies reported by the MBA for each quarter in violet, the percentage of 60 day delinquent mortgages for each quarter in the blue portion of each bar, the percentage of mortgages more than 90 days late in yellow, and the percentage of homes in foreclosure in each quarter in red…we can see on that graph that the percentage of mortgages in trouble peaked at 14.7% in the first quarter of 2010 and has been trending downward since, although it’s still well above the levels of the pre-crisis year of 2005, especially with regards to 90 day delinquencies and homes stuck in foreclosure… 

1st quarter 2014 MBA delinquency survey

also related to housing, we saw the April Report on New Residential Construction (pdf) released Friday by the Census Bureau, which gave us broad estimates of new housing permits, housing starts, and housing completions, based on a survey of a small percentage of permit offices visited by Census field agents…new housing starts were estimated to be at a seasonally adjusted annual rate of 1,072,000, which was 13.2 percent (±13.6%)* above the revised March estimate and 26.4 percent (±11.8%) above the rate of April a year ago…the asterisk tell us that Census is uncertain whether there was an increase or decrease in new housing starts for the month, and the figure in parenthesis indicates that there’s a 10% chance that seasonally adjusted housing starts in April could have either been more than 26.8% higher or 0.4% lower than homes started in March…new building permits have a much tighter margin of error; they were issued at a seasonally adjusted annual rate of 1,080,000 in April, 8.0% (±0.7%) above the revised March rate and 3.8% (±0.9%) above the estimate of April a year ago..

Household Debt Increased by 1.1% in the First Quarter While Delinquent Loans Fell

the other quarterly report released this week was the New York Fed’s 1st Quarter Household Debt and Credit Report (pdf),which indicated that total household debt, including real estate debt, rose by $129 billion in the 1st quarter to $11.65 trillion, a 1.1% increase over the 4th quarter debt level…mortgages, the largest component of the aggregate, increased by $116 billion to $8.17 trillion, a 1.4% increase, while home equity lines of credit fell by $3 billion to $526 billion, a 0.6% drop, and non-housing debt rose by 1.4%, with increases of of $12 billion in auto loans and $31 billion in student loan balances only partially offset by declines of $24 billion in credit card balances and $3 billion in other household debt….despite increasing over the past 3 quarters, aggregate household debt still remains 8.1% below the peak of $12.68 trillion reached in the 3rd quarter of 2008…except for the initial 2 page summary, the balance of this 31 page pdf is charts and graphics, equally divided into a national chart section and charts for selected states, covering the 10 largest states by population plus the housing boom/bust states of Nevada and Arizona…the first bar chart below shows the components of total household debt nationally for each quarter since the beginning of 2003, with each bar on the graph representing a quarter of a year, and within each bar is a color coded representation of the amount in trillions of dollars of each type of debt that was outstanding at the end of that given quarter…in each bar, orange represents the amount of mortgage debt that was outstanding at the end of that quarter, violet indicates the amount of home equity loans outstanding, green is the amount of auto loans outstanding, blue is unpaid credit card debt, red are student loans outstanding, and grey is ‘other’ debt outstanding in the quarter…the graph clearly shows the jump in aggregate debt over the last 3 quarters in the 3 bars on the left, driven, and that student loan debt has now expanded to 10% of the total, or one seventh of the amount of mortgage debt…although mortgage debt is considerably lower than at the peak, we should also note that this report and its graphics does not distinguish between mortgage debt that has been paid off and mortgage debt that has been extinguished through a foreclosure or a short sale, and that there’s not a good source for such data…

1st quarter 2014 household debt components

the next bar graph following uses the same color coding for the type of loans represented as the graph above and covers the same time period; in this one, each bar has a color coded representation of the amount of newly delinquent loans by type as they first became delinquent in each quarter; here we can see a pretty clear peak with over $400 billion of household debt becoming delinquent for the first time in the last quarter of 2008; we can also see that newly delinquent student debt, or the red in each bar, has become larger as time goes on, and also clearly see how newly delinquent mortgage debt in orange dropped seasonally in the most recent quarter, just as also noted by BKFS and the MBA…

1st quarter 2014 household debt new delinquencies

April Retail Sales Increase 0.1% after February and March Sales Revised Upwards

the important story from the retail sales report for April from the Census Bureau was buried beneath the headlines of a disappointing 0.1% increase, in that March and February sales were revised upwards enough so that on net, the increase in retail sales in April actually beat expectations of a 0.4% increase over previously reported figures; there was also an annual revision based on results from the 2012 Annual Retail Trade Survey which revised totals from January 2011 through March 2014, so the final dollar totals here are not comparable to previously issued reports, but the month over month percentage changes remain generally consistent…the Advance Retail Sales Report for April (pdf) estimated that our total seasonally adjusted retail and food services sales for the month were at $434.6 billion, which was a increase of 0.1 percent (±0.5%)* from March’s revised sales of $434.2 billion, and an increase of 4.0 percent (±0.7) from April a year ago…February’s seasonally adjusted sales, originally reported at $427.2 billion, have now been revised to $427.554 billion, and the February to March percentage change was revised from +1.2 percent (±0.5) to +1.5 percent (±0.2)…thus, these revisions should boost the next estimate of 1st quarter GDP, while the tiny April sales increase therefrom bodes a slow start for the PCE contribution to second quarter growth …estimated actual sales, extrapolated from surveys of a sampling of retailers, indicate sales fell to $434,458 million in April from $439,455 million in March, with both month’s totals still well ahead of February’s revised sales of $384,985 million…

as usual, we’ll include below a picture of the table of monthly and yearly percentage changes in sales by business type from the Census pdf, so we can take a look at what types of sales drove the changes …the first double column gives us the percentage change in sales for each type of retail business type from March to April in the first sub-column, and then the year over year percentage change for those businesses since last April in the 2nd column; the second pair of columns gives us the revision of March’s advance estimates (now called “preliminary”) as of this report, likewise for each business type, with the February to March percentage change under “Feb 2014 revised” and the revised March 2013 to March 2014 percentage change in the last column shown…our picture of what those March percentages looked like before month’s this revision is here, and since there were significant changes, we’ll review those after we look at the new April estimates…

April 2014 retaul table

as you can see from the first column in the above table, an 0.6% increase to $87,084 million in April automotive sales were the major factor in the small seasonally adjusted gain eked out for the month, as without motor vehicle & parts revenues, total retail sales fell by a statistically insignificant $76 million to $347,487 million…similarly, for year over year sales in the second column, vehicle and parts dealers sales were up 9.8%, while all other retail sales had an annual increase of just 2.7%….other business types that saw above trend sales increases in April included clothing stores, where sales were up 1.2% to $21,080 million, gas stations, where sales rose 0.8% to $45,475 million, specialty shops, such as sporting goods, book and music stores, whose sales rose 0.7% to $7,134 million; drug stores, where sales were up 0.6% to $24,367 million, and  building material and garden supply stores, where sales rose 0.4% to $26,463 million…meanwhile, businesses that saw retail sales fall in April included electronic and appliance stores, where sales were off 2.3% to $8,678 million, miscellaneous store retailers, whose sales also fell 2.3% to $9,726 million, nonstore, or mostly online sales, where sales were off 0.9% to $39,293 million, bars and restaurants, where sales were also off 0.9% to $46,390 million, and furniture stores, where sales were off 0.6% to $8,265 million…

as we mentioned, there were also significant revisions to originally reported March sales for most business types…by far the largest revision was seen in sales at electronic and appliance store sales, which were originally reported as shrinking 1.6% and have been revised to a 2.2% increase over February’s sales….automotive sales were also one of the major revisions to March retail sales, as sales at vehicle and parts dealers, which were originally reported to have increased 3.1% over February, are now revised to an increase of 3.6% to $86,605 million…other significant revisions to March sales changes include sales at bars and restaurants, which were first reported with a 1.1% increase, are now seen 1.9% over February’s sales; furniture stores, originally reported as up 1.0%, are now revised to a 1.7% gain; sales at miscellaneous store retailers, which were first reported with an increase of 1.3%, are now revised to have increased by 2.0%,  sales of non-store online retailers, reported up 1.7%, have been revised to an increase of  2.4%, drugs store sales, originally reported as having risen 0.3%, are now seen as up 0.7%, and March sales at gas stations, reported as down 1.3% in the advance report, have been revised to down 1.0%…on the other hand, March sales at building materials and garden supply stores, which were first reported to have increased 1.8%, are now seen up just 1.0%, and specialty stores, sales including sales at sporting goods, book and music stores, were originally reported up 0.3% over February, and have revised to have seen sales 0.9% lower….

April CPI up 0.3% as Prices Increase Across the Board

the April Consumer Price Index for All Urban Consumers (CPI-U) from the Bureau of Labor Statistics indicated that seasonally adjusted prices rose by 0.3%, the most in ten months, on widespread price increases in almost every sector…the unadjusted CPI-U, which was set with prices of the 1982  to 1984 period equal to 100, rose from 236.293 in March to 237.072 in Apriland was 1.95% above the 232.531 reading of a year earlier….the Core CPI, which tracks prices for all items except volatile food an energy prices, rose 0.2% for the month, with none of its major component price indexes showing a decrease in April…at 237.509, it is remarkably close to the CPI-U even after 20 years of price changes, andup 1.83% from a year earlier…since there was an increase in prices on most of the goods sold at retail in April greater than the increase in retail sales, it implies a negative real change in personal consumption expenditures for durable and non-durable goods for the month, subtracting from the change in real GDP…similarly, in conjunction with this report, the BLS released the April report on real earnings, which indicated that since average hourly earnings were unchanged for the month, real inflation adjusted earnings fell by 0.3% in April, bringing real hourly wages to their first annual decline since October 2012

April saw the first increase in overall energy prices since January as components of the seasonally adjusted price energy index, which increased by 0.3% for the month and was up 3.3% for the year, were mixed; prices for energy commodities were 1.9% higher on a 2.3% increase in gasoline prices, the largest component, while prices for fuel oil fell 3.0% and prices for other fuels (propane, kerosene, firewood, et al) fell by 7.7%…meanwhile, prices for energy services fell by 1.9% on electricity prices that were 2.6% lower, while utility natural gas rose 0.3% and was up 11.8% since last April, the only energy component with a double digit year over year change..

the seasonally adjusted food price index rose 0.4% in April, the same increase it posted in February and March, and is now 1.9% more than it was a year earlier….prices for food away from home rose 0.3% as meals at full service restaurants were 0.1% higher, prices at fast food restaurants rose 0.4% and prices for food at schools and workplaces rose 1.1%….meanwhile, the price index for food at home rose 0.4% with meat prices leading the increase…prices in the meats, poultry, fish, and eggs group rose 1.5% for the month as beef prices rose 3.0% and pork prices rose 4.1% on 4.9% higher prices for bacon and 6.5% more expensive pork chops, while poutry prices fell 1.6% and seafood prices were unchanged…for the year, beef roasts were 12.7% higher, beef steaks were up 12.1%, ground beef was up 10.0% and pork chops were 11.3% more than a year ago…prices for dairy products were up 0.5% in April as cheese prices rose 1.6% while milk prices rose 0.3% and ice cream prices were unchanged…prices for the fruits and vegetable group were up 0.7% on a 3.9% rise in citrus fruit prices and a 5.0% rise in the prices of lettuce…while citrus prices are now 21.3% above year earlier levels, prices for lettuce remained 9.1% below their prices of last April….prices for cereal and bakery goods group, on the other hand, were unchanged in April and 0.1% below a year ago as flour fell 1.6% for the month, cookies fell 1.3%, and rice and pasta prices were 1.2% lower, while white bread rose 2.2% but was down 0.3% year over year…meanwhile, prices in the beverage group fell 0.1% as carbonated drinks, non-carbonated juices, and coffee prices all fell 0.1%, while over the year beverage prices fell 2.0% with coffee prices 4.5% lower…lastly, prices for other foods at home fell 0.2% as prices for sugar, artificial sweeteners, candy and chewing gum all fell 1.3% while prices for frozen and freeze dried prepared foods rose 0.9%…

among the seasonally adjusted price changes to core CPI components, the cost of shelter, the largest CPI component, rose by 0.2% in April and was up 2.8% for the year as rents rose 0.3%, homeowner’s equivalent rent rose 0.2% and prices for lodging away from home rose 0.4%…apparel prices, meanwhile, were the only core component unchanged in April as a 1.0% decline in prices for men’s clothing, a 0.5% decrease in prices for women’s clothing and a 0.2% decrease in footwear prices offset increases of 2.8% in boy’s clothing and 5.1% in girl’s apparel…. the aggregate index for medical care was up 0.3% as medical commodities rose 0.3% on 0.4% higher nonprescription drug prices and 0.6% higher prices for medical supplies, while medical services were up 0.3% on a 0.5% increase in prices for hospital services…web wide anecdotes about rising insurance premiums don’t show up in the data, however, as the health insurance price component was down 0.2% for both the month and for the year…the seasonally adjusted transportation index indicated a 1.1% price increase in April, but that index includes gasoline; however, the transportation commodity index excluding fuel still rose 0.3% as used car prices rose 0.5% and new car & truck prices rose 0.3%, while the transportation services index rose 0.7% on 2.6% higher airfares, partially offset by 1.8% lower car and truck rentals….in addition, the recreation price index rose 0.2% as recreation commodities were unchanged as 1.6% higher prices for newspapers and magazines and 0.8% higher sporting goods prices were offset by 1.8% lower TV prices and 2.2% lower prices for toys, while prices for recreational services rose 0.3% on a 1.8% higher rentals for video discs and similar media, a 0.9% increase in prices for film processing and a 0.4% increase in pet services… and in the last major component, the aggregate education and communication index rose 0.2% as prices for education and communication commodities rose 0.2% on an 0.8% increase in prices for college textbooks which was partially offset by a 0.2% decrease in personal computer prices, while education and communication services rose 0.2% on a 0.4% increase in college tuitions, a 0.4% increase in internet service charges, which were partially offset by 0.7% lower prices for delivery services…outside of the previously mentioned food and energy components, the only line item among CPI components that showed a one year price change greater than 10% was televisions, which were 11.8% cheaper than last April…

meanwhile, the report on the Producer Price Index for April, which as of this year now includes prices for services, and construction sold for personal consumption, capital investment, government purchases, and export in addition to reporting the standard change in selling prices received by producers for finished, intermediate and raw goods, indicated that the seasonally adjusted composite producer price index for final demand rose by 0.6% for the month after rising 0.5% in March and was now 2.1% above year earlier levels…the index for final demand for services, led by a 1.4% jump in final demand trade, rose 0.6% in April after a 0.7% increase in March, while the price index for final demand goods was also up 0.6% after being unchanged the previous month…..the major factor in the goods increase was a 2.7% increase in the index for final demand for foods, with an 8.4% jump in wholesale meat prices accounting for over one-third of the increase in the final demand goods index…among the largest price gainers, wholesale egg prices rose 15.1% in April and were 44.3% ahead of last year’s prices, while wholesale pork prices rose 20.6% and were up 40.3% for the year…core producer prices for final demand goods, which exclude producer prices for food and energy, rose 0.3% in April after a 0.1% increase in March, as prices for final demand energy inched up 0.1%….meanwhile, index for processed goods for intermediate demand was unchanged in April after a 0.2% decline in March, while the index for unprocessed goods for intermediate demand rose 0.4 percent in April after slipping 0.1% in March…prices for processed foods and feeds rose by 2.6%, while prices for all other processed materials fell 0.1%, and unprocessed foodstuffs and feedstuffs rose 3.6% while unprocessed nonfood materials fell 1.6%, led by a 12% decrease in prices for unprocessed natural gas…

April Industrial Production Falls 0.6% on Manufacturing Slowdown and Return to Normal Weather

the Fed’s G17 report on Industrial production and Capacity Utilization for April, which reports industrial production by industry and by market group as index values based on 2007 production equal to 100.0 and monthly and annual percentage changes in that index, indicated that total industrial production fell by 0.6% in April as the industrial production index fell to 102.7 from an all time high of 103.3 in March, but was still 3.5% ahead of the year earlier reading of 99.3%…the largest component of the overall index, the manufacturing index, unexpectedly fell 0.4% in April, while the March increase in manufacturing was revised from 0.5% to 0.7%, and at 98.6 was 2.9% ahead of a year earlier..the major drag to April’s production was a 5.3% decline in the utility index, which was to be expected, since as we pointed out a month ago, utility output had been growing at an unsustainable double digit annual rate over the preceding 6 months due to abnormal demand resulting from aberrant weather patterns…at 102.0, the utility index is now 0.2% below last year’s 102.2 reading…meanwhile, production at ‘mines’, which includes oil & gas output, increased by 1.4% in April, after a 2.0% increase in March while the mining index at 126.7 was 8.3% higher than a year earlier..

in addition to the breakdown of industrial production into those three industry groups, this release also reports on industrial production by market group…among final products and nonindustrial supplies, which fell by 0.8% in April, seasonally adjusted production of consumer goods fell 1.3% after a revised 0.5% increase in March…production of durable goods was statistically unchanged as a 0.2% decrease in the heavily weighted automotive products sector offset production increases of 0.4% in consumer electronics and 0.8% in appliances, furniture and carpeting…meanwhile, production of non-durable goods fell 1.7% as output of consumer energy products fell 5.5% and non-energy non durables fell 0.3%…of the latter, output of chemical products fell 1.0%, paper products production fell 0.9%, while food and tobacco production rose 0.2%.and clothing production was unchanged…since last April, production of durable goods had increased by 5.6% led by a 7.4% increase in automotive production, production of non-durable goods rose 1.6% on an 8.0% increase in clothing output, while output of consumer energy products increased 2.0%..

seasonally adjusted production of business equipment fell 0.5% in April after rising by a revised 1.0% in March as production of information processing equipment fell 0.6% and production of industrial equipment fell 1.3% while production of transit equipment rose 1.4%…for the year ending April, output of business equipment rose by 4.1%, as output of both industrial production and information processing equipment rose 4.1% while production of transit equipment rose 3.9%…meanwhile, production of defense and space equipment rose by 0.6% in April and grew by 3.6% over the year…in addition, production of supplies for use in construction were unchanged for the month and up 3.5% for the year, while production of business supplies fell by 0.7% in April, reducing annual growth to 2.4%…meanwhile, production of raw and intermediate materials that would input into other production processes fell by 0.3% In April with output of consumer parts, equipment parts, textiles and paper all falling by more than 0.3%, while output of chemicals rose 0.2%…

with industrial production down, capacity utilization, which is the percentage of our plant and equipment that was in use during the month, also fell, from 79.3% in March to 78.6% in April…76.4% of our manufacturing capacity was in use during March, down from 76.9% in March and up less than a percent from the 75.8% factory operating rate of a year earlier…meanwhile, capacity utilization by the ‘mining’ industry rose from 88.9% to 89.7% as the oil and gas industry continues to add capacity, while the operating rate for utilities fell from 84.7% to 80.1%…over the last year, manufacturers added 2.1% to their plant capacity, the mining industry saw capacity grow by 4.8%, and utilities expanded their plant base by 0.7%….our FRED graph for this report below shows the percentage of capacity utilization for total industry monthly since 2007 in pink, while it shows the the seasonally adjusted industrial production index values for all industry in black, the manufacturing production index in blue, the utility production index in green, and the mining production index in red from the beginning of the index year of 2007, at which time they were all benchmarked to equal 100.0… you can also view this as an interactive graph at FRED, where you can track the monthly changes in these indexes by dragging your cursor across the graph…

April 2014 industrial production

last, on Friday the Bureau of Labor Statistics released the April Regional and State Employment and Unemployment Summary, which basically takes the same data that we saw in the national employment report two weeks ago and breaks it down by state and region…so while 43 states reportedly had a lower unemployment rate than March, we already know that wasn’t because the unemployed found jobs; rather the decrease in the unemployment rate resulted from the 806,000 who quit looking for work, leaving nearly a million more of us not counted when tallying up April the unemployment rate than those not counted in March….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 of jobs added or lost in each state, with Illinois being the biggest loser in the later category with 6,800 less jobs than in March, while Texas added 64,100 payroll slots in April…for a breakdown of payroll employment by job type for each state over the past 3 months, and the change since last April, 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

(the above are the comments that accompanied my regular sunday morning links emailing, synopses which in turn were 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…)