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Running tab of macro indicators: 11 out of 20
The number of new jobless claims rose by 9,000 to 244,000 during the week ending 9 July. Continued claims fell (by 41,000) to 1.33 million for the week ending 2 July. The insured unemployment rate for the week ending July 2 was 0.9%, slightly lower than the prior week (1.0%).
Headline retail and food services sales rose 1.0% in June and were up 8.4% Y/Y on a nominal basis. Excluding motor vehicles and gasoline stations, core retail sales were $482.8 billion, up slightly (0.7%) from the previous month but up nearly 7% compared to June 2021. Because the Census data on retail sales is published on a nominal basis, the impact of inflation is not captured. After factoring in inflation, sales have been much weaker. On a Y/Y basis, the largest gains were in miscellaneous store retailers (15.1%) and food service & drinking places (13.4%), slightly offset by a 9.1% decline in electronics & appliance retailers. Sales at gasoline stations were up 3.6% compared to May and up 49.1% compared to June of last year.
Consumer prices continued to accelerate in June with a 1.3% gain from May, higher than expected. The strongest gains were again in energy prices (especially consumer-facing gasoline) which accounted for half the increase. Food prices also continued to move higher. Core consumer prices were up 0.7% in June, following 0.6% gains the previous two months. While almost all major component indexes increased over the month, the largest contributors were the indexes for shelter, used cars and trucks, medical care, motor vehicle insurance, and new vehicles. Compared to a year ago, headline consumer prices were up 9.1% Y/Y while core prices were up by 5.9% Y/Y. There was some solace in that it was the third month in a row that the Y/Y comparison in core consumer prices has eased, suggesting some cooling. Import prices also rose again in June, up by 0.2%, the smallest monthly gain this year. The gain was led by higher prices for imported fuels. Prices for nonfuel imports eased for a second month in a row, down 0.5%. The dollar has risen sharply in recent months, making imports less expensive in dollar terms. Export prices rose by 0.7% with gains in prices for non-agricultural exports offsetting declines in agricultural export prices.
Producer prices continued to move higher in June, up 1.1% following an upwardly-revised 0.9% gain in May. The index for final demand goods moved up 2.4 percent in June, primarily attributable to a 10.0% jump in prices for final demand energy. Prices for goods excluding food and energy rose 0.5%, the slowest monthly gain since December. Prices for final demand services rose 0.4%, a slightly lower pace than the previous month. Much of the increase can be attributed to an 0.8% increase in trade service. Compared to a year ago, headline producer prices were up 11.3%, up from last month’s 10.% increase, while core producer prices were up 6.4% Y/Y, a slight improvement compared to last month.
The nominal value of combined business inventories continued to expand in May, up 1.4% with gains across all major segments of the supply chain. For a second month, the largest gains were in wholesale inventories. Combined business sales rose 0.7%. Compared to a year ago, business inventories were up 17.7% Y/Y while sales were up by 14.4% Y/Y. The inventories-to-sales ratio rose to 1.30 in May, up from 1.29 in April. A year ago, the ratio was 1.27.
Industrial production stumbled in June, falling 0.2% as higher output from the mining sector was unable to offset declines in manufacturing and utility output. Manufacturing output fell 0.5% for a second month in a row. The largest declines in output were in printing, primary metals, motor vehicles, machinery, petroleum products and textiles. Output expanded in several industries, including electrical equipment, apparel, wood products, and miscellaneous durable goods. Capacity utilization fell by 0.3 points to 80.0%. A year ago, capacity utilization was 77.7%. Industrial capacity expanded by 1.1% compared to a year ago.
Oil prices eased this week as recession fears rose and reports that several Chinese cities are under lockdown. Natural gas prices moved higher as forecasted hot weather and production declines. The combined oil and gas rig count was up by 2 to 750 during the week ending 7/8.
For the business of chemistry, the indicators still bring to mind a green banner for basic and specialty chemicals.
Chemical producer prices continued to increase for a 25th consecutive month in June, up by 1.2%, with gains across all segments except for agricultural chemicals. The largest gains were in prices for coatings and synthetic rubber. Compared to a year ago, chemical prices were up by 18.3% Y/Y (3MMA), the lowest Y/Y comparison in a year. Chemical import prices also moved higher, up by 0.5% in June and were up 18.6% Y/Y.
Chemical production fell 0.3% in June following flat growth in May. There were sequential gains in the production of agricultural chemicals, organic chemicals, synthetic rubber, manufactured fibers, coatings, adhesives, and other specialty chemicals. Production of inorganic chemicals and resins were lower. Chemical capacity utilization fell by 0.4 points to 82.9%. Note: The June data reflects the annual benchmark revision that the Fed makes to its industrial production data.
According to data released by the Association of American Railroads, chemical railcar loadings were down 11.3% for the week ending 9 July. Loadings were down 3.3% Y/Y, up 4.6% YTD/YTD and have been on the rise for only 5 of the last 13 weeks. The 13-week moving average was flat on a Y/Y basis, the lowest level since May 2021.
U.S. chemicals trade was up in May with exports rising and imports falling. Exports were up 2.3% during May with gains across all categories except bulk petrochemicals and intermediates, other basic chemicals, and adhesives and sealants. Imports were down (-2.8%) across most categories; coatings went up the most. Year-to-date comparisons for 2022 versus 2021 are still incredibly strong with chemical exports up 22% and imports up 36%.
The banner colors represent observations about the current conditions in the overall economy and the business chemistry. For the overall economy we keep a running tab of 20 indicators. The banner color for the macroeconomic section is determined as follows:
Green – 13 or more positives Yellow – between 8 and 12 positives Red – 7 or fewer positives
For the chemical industry there are fewer indicators available. As a result we rely upon judgment whether production in the industry (defined as chemicals excluding pharmaceuticals) has increased or decreased three consecutive months.
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