MarketWatch 666: July’s retail sales, industrial production and new home construction; June’s business inventories, Commenter and Blogger RJS
The July report on New Residential Construction (pdf) from the Census Bureau estimated that the widely watched manual count of new housing units started in July was at a seasonally adjusted annual rate of 1,534,000, which was 7.0 percent (±8.9 percent)* below the revised June estimated annual rate of 1,650,000 housing units started, but was 2.5 percent (±10.9 percent)* above last July’s pace of 1,497,000 housing starts annually . . . the asterisks indicate that the Census does not have sufficient data to determine whether housing starts actually rose or fell from June, or even from July of a year ago, while the figures in parenthesis indicate the most likely range of the change indicated; in other words, July’s housing starts could have been up by 1.9% or down by as much as 15.9% from those of June, with even larger revisions eventually possible . . . in this report, the annual rate for June housing starts was revised up from the 1,643,000 reported last month to 1,650,000, while May starts, which were first reported at a 1,572,000 unit annual rate, were revised from last month’s initial revised figure of 1,546,000 annually to an annual rate of 1,594,000 with this report . . .
Those annual rates of housing starts reported here were extrapolated from a survey of a small percentage of US building permit offices visited by Census field agents, from which they estimated that 141,000 housing units were started in July, down from the 153,700 units started in June and the 145,700 started in May . . . of those housing units started in July, an estimated 104,200 were single family homes and 35,800 were units in structures with more than 5 units, down from the revised 111,600 single family starts in June, and down from the 41,300 units started in structures with more than 5 units in June . . .
The monthly data on new building permits, with a smaller margin of error, are probably a better monthly indicator of new housing construction trends than the volatile and broadly revised housing starts data . . . in July, Census estimated new building permits were being issued for a seasonally adjusted annual rate of 1,635,000 housing units, which was 2.6 percent (±0.9 percent) above the revised June annual rate of 1,594,000 permits, and was 6.0 percent (±0.9 percent) above the rate of building permit issuance in July a year earlier . . . the annual rate for housing permits issued in June was revised from 1,598,000 to 1,594,000 . . .
Again, these annualized estimates for new permits reported here were extrapolated from the unadjusted estimates collected by canvassing census agents, which showed permits for 139.600 housing units were issued in July, down from the revised estimate of 154,500 new permits issued in June . . . the July permits included 91,900 permits for single family homes, down from 105,100 single family permits in June, and 43,100 permits for housing units in apartment buildings with 5 or more units, down from 44,700 such multifamily permits a month earlier . . . for graphs and commentary on this report, see the following two posts by Bill McBride at Calculated Risk: Housing Starts decreased to 1.534 Million Annual Rate in July and Comments on July Housing Starts..
June Business Sales Up 1.4%, Business Inventories Up 0.8%, Higher than Estimated by the BEA
Following the release of the July retail sales report, the Census Bureau released the composite Manufacturing and Trade Inventories and Sales report for June (pdf), which incorporates the revised June retail data from that July retail report and the earlier published wholesale and factory data to give us a complete picture of the business contribution to the economy for that month . . . according to the Census Bureau, total manufacturer’s and trade sales were estimated to be valued at a seasonally adjusted $1,640.8 billion in June, up 1.4 percent (±0.3) from May’s revised sales, and up 19.9 percent (±0.5 percent) from June sales of a year earlier . . . note that total May sales were revised from the originally reported $1,615.9 billion to $1,618.5 billion, now down 0.2% from April, rather than up 0.3% as had previously been reported . . . manufacturer’s adjusted sales were up 1.6% to $498,955 million in June, and retail trade sales, which exclude restaurant & bar sales from the revised June retail sales reported earlier, were up 0.5% to $553,730 million, while wholesale trade sales rose 2.0% to $588,134 million . . .
Meanwhile, total manufacturer’s and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $2,057.4 billion at the end of June, up 0.8 (±0.1 percent)* from May, and 6.6 percent (±0.5 percent) higher than in June a year earlier . . . the value of end of May inventories was revised up from the $2,039.3 billion reported last month to $2,040.6 billion, now up 0.6% from April . . . seasonally adjusted inventories of manufacturers were estimated to be valued at $740,685 million at the end of June, 1.0% higher than those at the end of May, inventories of retailers were valued at $599,140 million, 0.3% more than in May, while inventories of wholesalers were estimated to be valued at $717,593 million at the end of June, up 1.1% from May . . .
The Key source data and assumptions that accompanied the release of the advance estimate of 2nd quarter GDP indicates that the BEA had assumed that total seasonally adjusted June manufacturing and trade inventories (on a Census basis – line 140) would increase by $13.6 billion from the previously published May figures . . . since this report shows that total June inventories increased by $16.8 billion while May inventories were revised up by $1.3 billion at the same time, that means that the advance estimate of 2nd quarter GDP underestimated end of June inventories by $4.5 billion, and with May’s revision, underestimated 2nd quarter inventories by $5.8 billion, or at an annual rate of about $23.2 billion . . . assuming there is no major change relating to the inflation adjustment on those inventories, a revision to reflect these new figures would be enough to add about 0.34 percentage points to 2nd quarter GDP when the 2nd estimate is released at the end of August . . .