r.j.'s space

Major economic reports released the past week included the Employment Situation Summary for April and the Job Openings and Labor Turnover Survey (JOLTS) for March, both from the Bureau of Labor Statistics, and three March reports that include metrics which were estimated in last week’s advance estimate of 1st quarter GDP: the Commerce Dept report on our international trade in goods and services for March, and the March report on Construction Spending (pdf) and the Full Report on Manufacturers’ Shipments, Inventories and Orders for March, both from the Census Bureau…This week also saw the release of the last regional Fed manufacturing survey for April: the Dallas Fed Texas Manufacturing Outlook Survey, covering Texas, western Louisiana and eastern New Mexico, reported their general business activity composite index was nearly unchanged at –14.5 in April, down from –14.4 in March, continuing to indicate that a majority of Texas manufacturers again reported deteriorating business conditions during April…

Privately issued reports released this week included the ADP Employment Report for April, wherein the payroll processor reported an increase of 192,000 private sector jobs in April, the light vehicle sales report for April from Wards Automotive, which estimated that vehicles sold at a 15.74 million annual rate in April, up from the 15.49 million annual sales rate in March, but down from the 15.91 million annual sales rate in April a year ago, and the February Case-Shiller Home Price Index from S&P Case-Shiller, which indicated that their index of the relative average of December, January and February home prices was 6.4% higher than their index of average prices for the same homes that sold during the same 3 month period of a year earlier..

This week also saw both of the widely followed purchasing manager’s survey from the Institute for Supply Management (ISM): the April 2023 Manufacturing Report On Business indicated that the manufacturing PMI (Purchasing Managers Index) fell to 49.2% in April, down from 50.3% in March, which means that a small plurality of purchasing manufacturing managers saw worse conditions during the month, while the April 2021 Services ISM® Report On Business reported their Services Index fell to 49.4% in April, down from 51.4% in March, indicating “contraction in April after 15 consecutive months of growth” because a fairly small plurality of service industry purchasing managers reported deterioration in various facets of their business in April…

Employers Added 175,000 Jobs in April; Unemployment Rate Rose to 3.9%

The Employment Situation Summary for April indicated that payroll job growth was below expectations, and that the unemployment rate ticked back up to match the 27 month high most recently hit in February…seasonally adjusted estimates extrapolated from the establishment survey data projected that employers added 175,000 jobs in April, the least since October, after the previously estimated payroll job increase for March was revised up from 303,000 to 315,000, while the payroll jobs increase for February was revised down from 270,000 to 236,000…including those revisions, this report thus represents a net of 153,000 more seasonally adjusted payroll jobs than were reported last month, below expectations for an increase of 210,000 jobs in this month’s report….the unadjusted data shows that there were actually 803,000 more payroll jobs extant in April than in March, as the usual seasonal job increases in sectors such as construction, services to buildings and dwellings, and leisure and hospitality were washed out by the seasonal adjustments…

Seasonally adjusted job increases in March were spread through both the goods producing and the service sectors and government, with only the mining, information, business services sectors recording very modest job losses…since the BLS summary of the job gains by sector is clear and more detailed than our usual synopsis, we’ll just quote that summary here:

  
• Total nonfarm payroll employment increased by 175,000 in April, lower than the average monthly gain of 242,000 over the prior 12 months. In April, job gains occurred in health care, in social assistance, and in transportation and warehousing. (See table B-1.)

  

• Health care added 56,000 jobs in April, in line with the average monthly gain of 63,000 over the prior 12 months. In April, employment continued to increase in ambulatory health care services (+33,000), hospitals (+14,000), and nursing and residential care facilities (+9,000).

  

• Employment in social assistance increased by 31,000 in April, led by a gain in individual and family services (+23,000). Social assistance had added an average of 21,000 jobs per month over the prior 12 months.

  

• In April, transportation and warehousing added 22,000 jobs, with gains in couriers and messengers (+8,000) and warehousing and storage (+8,000). Over the prior 12 months, employment in transportation and warehousing had shown little net change.

  

• Employment in retail trade continued to trend up in April (+20,000). Over the prior 12 months, the industry had added an average of 7,000 jobs per month. In April, employment increased in general merchandise retailers (+10,000), building material and garden equipment and supplies dealers (+7,000), and health and personal care retailers (+5,000). Electronics and appliance retailers lost 3,000 jobs.

  

• Construction employment changed little in April (+9,000), following an increase of 40,000 in March. Over the prior 12 months, construction had added an average of 22,000 jobs per month.

  

• Employment in government changed little in April (+8,000). Over the prior 12 months, government had added an average of 55,000 jobs per month. In April, local government employment was unchanged, following an increase of 51,000 in March.

  

• Employment was little changed over the month in other major industries, including mining, quarrying, and oil and gas extraction; manufacturing; wholesale trade; information; financial activities; professional and business services; leisure and hospitality; and other services.

The establishment survey also showed that average hourly pay for all employees rose by 7 cents an hour to $34.75 an hour in April, after it had increased by a revised 11 cents an hour in March; at the same time, the average hourly earnings of production and non-supervisory employees increased by 6 cents to $29.83 an hour…employers also reported that the average workweek for all private payroll employees was 0.1 hour lower at 34.3 hours in April, after a tenth of an hour increase in March, while hours for production and non-supervisory personnel fell by 0.1 hour to 33.7 hours, after also increasing in March….however, the manufacturing workweek remained unchanged at 40.0 hours, and average factory overtime also remained unchanged at 2.9 hours…

At the same time, the April household survey indicated that the seasonally adjusted extrapolation of those who reported being employed rose by an estimated 25,000 to 161,491,000, while the similarly estimated number of those counted as unemployed rose by 63,000 to 6,492,000; which together meant there was a rounded 87,000 increase in the total labor force….since the working age population had grown by 182,000 over the same period, that meant the number of employment aged individuals who were not in the labor force rose by a rounded 94,000 to 100,083,000… meanwhile, the increase of those in the labor force was not large enough, when compared to the civilian noninstitutional population, to change the labor force participation rate, as it remained at 62.7% in April….on the other hand, the increase in number employed as a percentage of the increase in the population was apparently small enough to lower the employment to population ratio, which we could think of as an employment rate, to 60.2% in April from 60.3% in March….similarly, the increase in the number unemployed was just large enough to raise the unemployment rate from 3.8% in March to match the 27 month high of 3.9% in April….meanwhile, the number who reported they were involuntarily working part time rose by 161,000 to 4,469,000 in April, which was enough to raise the alternative measure of unemployment, U-6, which includes both discouraged workers and those “employed part time for economic reasons”, from 7.3% in March to a 29 month high of 7.4% in April…

Like most reports from the Bureau of Labor Statistics, the employment situation press release itself is easy to read and understand, so you can get more details on these two reports from there…note that almost every paragraph in that release points to one or more of the tables that are linked to on the bottom of the release, and those tables are also on a separate html page here that you can open it alongside the press release to avoid the need to scroll up and down the page..

Job Openings, Hiring, Layoffs and Job Quitting All Fell in March

The Job Openings and Labor Turnover Survey (JOLTS) report for March from the Bureau of Labor Statistics estimated that seasonally adjusted job openings decreased by 325,000 to 8,488,000 in March, after February’s job openings were revised up to 8,813,000 from the originally reported 8,756,000…March’s jobs openings were also down 11.8% from the 9,623,000 job openings reported in March a year earlier, as the job openings ratio expressed as a percentage of the employed fell to 5.1% in March, down from a revised 5.3% rate in February, and down from the 5.8% rate of March a year ago…since the employment report indicated there were 6,429,000 unemployed during March, that means there were still 1.32 job openings for each person who reported they were unable to find work during the month….the construction sector, with a 182,000 job opening decrease to 274,000 openings, saw the largest percentage decrease, while job openings in information increased by 43,000 to 169,000..(details on job openings by industry and region can be viewed in Table 1)…like most BLS releases, the press release for this report is easy to understand and also refers us to the associated table for the data cited, which are linked at the end of the release…

The JOLTS release also reports on labor turnover, which consists of hires and job separations, which in turn is further divided into layoffs and discharges, those who quit, and ‘other separations’, which includes retirements and deaths….in March, seasonally adjusted new hires totaled 5,500,000, down by 281,000 from the revised 5,781,000 who were hired or rehired in February, as the hiring rate as a percentage of all employed fell to 3.5% in March from a revised 3.7% rate in February, and it was also down from the 3.8% the hiring rate in March a year ago (details of hiring by sector since November are in table 2)….meanwhile, total separations fell by 339,000 to 5,932,000 in March, as the separations rate as a percentage of the employed was unchanged at 3.8%, which was down from the separations rate of 4.1% a year ago (see table 3)…subtracting the 5,200,000 total separations from the total hires of 5,500,000 would imply an increase of 300,000 jobs in March, a bit less than the revised payroll job increase of 315,000 jobs for March reported by the April establishment survey, but still well within the expected +/-130,000 margin of error for these incomplete job samplings….

Breaking down the seasonally adjusted job separations, the BLS found that 3,329,000 of us voluntarily quit our jobs in March, down by 198,000 from the revised 3,527,000 who quit their jobs in February, while the quits rate, widely watched as an indicator of worker confidence, fell to 2.1% in March from 2.2% in February, and was down from the quits rate of 2.5% a year earlier (see details of job quitting by industry in table 4)….in addition to those who quit, another 1,526,000 were either laid off, fired or otherwise discharged in March, down by 155,000 from the revised 1,681,000 who were discharged in February, while the discharges rate fell 0.1% to 1.0% of all those who were employed during the month, which was also down from the discharges rate of 1.2% a year ago (see details of layoffs by industry in table 5)…meanwhile, other separations, which includes retirements and deaths, were at 345,000 in March, up from 332,000 in February, for an ‘other separations rate’ of 0.2%, same as in February and as in March of last year….both seasonally adjusted and the unadjusted details by industry and by region on hires and job separations, and on job quits and discharges, can be accessed using the links to tables at the bottom of the press release…

US Trade Deficit Fell 0.1% in March as Lower Exports Offset Lower Imports

Our trade deficit fell 0.1% in March, as both the value of our exports and the value of our imports decreased, but the value of our imports decreased by just a bit more…the Commerce Department’s report on our international trade in goods and services for March indicated that our seasonally adjusted goods and services trade deficit fell by $0.1 billion to $69.4 billion in March, from a February deficit that was revised from the originally reported $68.9 billion to $69.5 billion…in rounded totals, the value of our March exports fell by $5.3 billion to $257.6 billion on a $5.1 billion decrease to $174.3 billion in our exports of goods and a $0.2 billion decrease to $86.4 billion in our exports of services, while the value of our imports fell by $5.4 billion to $327.0 billion, on a $4.3 billion decrease to $263.8 billion in our imports of goods and a $1.1 billion decrease to $63.2 billion in our imports of services….export prices averaged 0.3% higher in March, which means the relative real decrease in exports for the month was greater than the nominal decrease by that percentage and thus likely decreased by around 2.3%, while import prices averaged 0.4% higher, meaning the decrease in real imports was similarly greater than the nominal decrease by that percentage, and that real imports likely fell around 2.0%…

Our exports of goods decreased $5.1 billion in March largely due to lower exports of capital goods, of industrial supplies and materials and of foods and feeds… referencing the Full Release and Tables for March (pdf), in Exhibit 7 we find that our exports of capital goods fell by $1,974 million to $51,010 million, as a $1,228 million decrease in our exports of civilian aircraft was partly offset by a $417 million increase in our exports of computer accessories. and that our exports of industrial supplies and materials fell by $1,899 million to $62,055 million, as a $880 million decrease in our exports of non-monetary gold and a $645 million decrease in our exports of petroleum products other than fuel oil were partly offset by a $604 million increase in our exports of crude oil and a $387 million increase in our exports of fuel oil…in addition, our exports of foods, feeds and beverages fell by $1,262 million to $14,065 million, led by a $618 million decrease in our exports of soybeans, and our exports of consumer goods fell by $384 million to $21,361 million as a $1,174 million increase in our exports of pharmaceutical preparations was offset by a $786 million decrease in our exports of gem diamonds and a $558 million decrease in our exports of jewelry…partly offsetting the lower exports in those end use categories, our exports of automotive vehicles, parts, and engines rose by $82 million to $13,920 million as a $346 million increase in our exports of passenger cars was partly offset by a $302 million decrease in our exports of automotive parts and accessories other than engines, chassis, or tires, while our exports of other goods not categorized by end use rose by $202 million to $7,395 million…

Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our goods imports and shows that lower imports of automotive goods and industrial supplies and materials were responsible for the March decrease in imports, but that their impact was diminished by greater imports of consumer goods….our imports of automotive vehicles, parts and engines fell by $4,666 million to $37,281 million on a $3,190 million decrease in our imports of passenger cars, an $854 million decrease in our imports of trucks, buses, and special purpose vehicles, and a $352 million decrease in our imports of automotive parts and accessories other than engines, chassis, or tires, while our imports of industrial supplies and materials fell by $1,594 million to $53,475 million led by a $493 million decrease in our imports of bauxite and aluminum and a $416 million decrease in our imports of petroleum products other than fuel oil….in addition, our imports of foods, feeds, and beverages fell by $643 million to $17,643 million on decreased imports of meat products and other foods, and our imports of other goods not categorized by end use fell by $447 million to $10,419 million…offsetting the decreased imports in those end use categories, our imports of consumer goods rose by $3,046 million to $66,796 million as a $2,496 million increase in our imports of pharmaceutical preparations, a $637 million increase in our imports of textile apparel and household goods other than those of wool or cotton, a $444 million increase in our imports of household appliances, a $369 million increase in our imports of footwear, and a $335 million increase in our imports of furniture and household goods were partly offset by a $1,702 million decrease in our imports of cellphones and a $343 million decrease in our imports of toys, games, and sporting goods, while our imports of capital goods rose by $60 million to $75,731 million as a $931 million increase in our imports of computer accessories was offset by a $740 million decrease in our imports of telecommunications equipment…

The press release for this month’s report summarizes Exhibit 19 in the full release pdf for March, which gives us surplus and deficit details on our goods trade with selected countries:

   The March figures show surpluses, in billions of dollars, with Netherlands ($5.4), South and Central America ($4.0), Hong Kong ($2.2), Australia ($1.9), Singapore ($0.8), Belgium ($0.7), United Kingdom ($0.7), and Brazil ($0.6). Deficits were recorded, in billions of dollars, with China ($24.1), European Union ($19.5), Mexico ($13.5), Vietnam ($9.0), Germany ($7.5), Ireland ($6.7), South Korea ($5.6), Taiwan ($5.3), Japan ($5.3), India ($4.0), Canada ($3.8), Italy ($3.7), Malaysia ($2.0), France ($1.7), Switzerland ($1.4), Israel ($0.7), and Saudi Arabia ($0.1).

• The deficit with China increased $2.2 billion to $24.1 billion in March. Exports decreased $0.5 billion to $12.7 billion and imports increased $1.7 billion to $36.8 billion.

    

• The deficit with the European Union increased $1.9 billion to $19.5 billion in March. Exports decreased $1.0 billion to $29.6 billion and imports increased $0.9 billion to $49.1 billion.

    

• The deficit with Mexico decreased $1.9 billion to $13.5 billion in March. Exports increased $0.3 billion to $27.9 billion and imports decreased $1.6 billion to $41.3 billion..

  

In the advance estimate of 1st quarter GDP published last week, our March trade deficit in goods was estimated based on the sketchy Advance Report on our International Trade in Goods, which was released the day before the GDP release…that report estimated that our seasonally adjusted goods trade deficit was at $91,831 million on a Census basis in March, on goods exports valued at $169,162 million and goods imports valued at $260,993 million…in Exhibit 5, this report revises that advance report and shows that our actual Census basis goods trade deficit in March was at $91,538 million, on adjusted goods exports of $169,807 million and adjusted goods imports valued at $261,345 million…at the same time, the February goods trade deficit was revised from the $90,304 million indicated in that advance report to $90,546 million…combined, those revisions from the previously published figures indicate that the nominal trade in goods deficit used in the first quarter GDP report was $51 million too high, which works out to be around $0.2 billion on an annualized basis…in the advance GDP report, it took a $0.7 billion nominal change in goods trade to move the change in GDP by 1 basis point, so it appears that the net effect of these offsetting revisions on GDP will be negligible..

Construction Spending Fell 0.2% in March after Prior Months Were Revised Lower

The Census Bureau’s report on construction spending for March (pdf) estimated that the month’s seasonally adjusted construction spending would work out to $2,083.9 billion annually if extrapolated over an entire year, which was 0.2 percent (±0.8 percent)* below the revised annualized February estimate of $2,087.8 billion, but 9.6 percent (±1.3 percent) above the estimated annualized level of construction spending in March of last year…Census also reports that for the first three months of this year, actual construction spending totaled $461.0 billion, 10.6 percent (±1.0 percent) above the $416.7 billion spent during the same three months of 2023… the annualized February construction spending estimate was revised 0.2% lower, from $2,091.5 billion to $2,087.8 billion, while the annual rate of construction spending for January was revised more than 0.4% lower, from $2,096.9 billion to $2,087.5 billion, which revised the February construction spending decrease from down 0.3% to statistically unchanged..

A further breakdown of the different subsets of construction spending is provided by a Census Bureau summary, which precedes the more detailed spreadsheets, and which we include below:

• Private Construction: Spending on private construction was at a seasonally adjusted annual rate of $1,600.8 billion, 0.5 percent (±0.7 percent)* below the revised February estimate of $1,608.5 billion. Residential construction was at a seasonally adjusted annual rate of $884.3 billion in March, 0.7 percent (±1.3 percent)* below the revised February estimate of $890.9 billion. Nonresidential construction was at a seasonally adjusted annual rate of $716.5 billion in March, 0.2 percent (±0.7 percent)* below the revised February estimate of $717.6 billion.

  

• Public Construction: In March, the estimated seasonally adjusted annual rate of public construction spending was $483.1 billion, 0.8 percent (±1.5 percent)* above the revised February estimate of $479.3 billion. Educational construction was at a seasonally adjusted annual rate of $102.7 billion, 1.0 percent (±2.0 percent)* above the revised February estimate of $101.7 billion. Highway construction was at a seasonally adjusted annual rate of $149.0 billion, 0.9 percent (±3.9 percent)* above the revised February estimate of $147.7 billion.

With the downward revisions to January and February figures, construction spending for all three months of the 1st quarter was lower than what was reported by the BEA in their advance estimate of GDP that we covered last week…as we saw above, annualized construction spending for January was revised $9.4 billion lower, and annualized construction spending for February was revised $3.7 billion lower….in reporting 1st quarter GDP, the BEA’s key source data and assumptions (xls) indicated that they had estimated March residential construction would be $3.7 billion more (at an annual rate) than that of the previously reported February figure, that annualized March nonresidential construction would be valued $4.0 billion less than that of the reported February figure, and that March public construction would increase at a $2.5 billion rate from previously reported February levels…totaling those figures, the 1st quarter GDP report used figures showing March construction spending was at an $2.2 billion annual rate higher than previously reported February levels…since this report shows that March construction spending actually fell at an $3.9 billion annual rate from February figures that were revised $3.7 billion lower, that means the total annualized construction figure used for March in the GDP report was $7.6 billion too high….averaging that overstatement with the the overstatements in the annual rates of construction spending used for January and February in the GDP report, we thus find that this report shows that construction spending was overestimated at an $6.9 billion annual rate in the 1st quarter GDP report, implying a downward revision to the related GDP components at a rate that would result in a subtraction of about 0.09 percentage points from first quarter GDP when the 2nd estimate is released on May 30th…we should caution that since our estimate is based on the aggregate change in spending, an imbalance of inflation adjustments among the revised construction components might also have a material impact on the final revision…

Value of Factory Shipments Rose 0.3% in March, Value of Factory Inventories was Unchanged

The Full Report on Manufacturers’ Shipments, Inventories, & Orders (pdf) for March from the Census Bureau reported that the seasonally adjusted value of new orders for manufactured goods increased by $9.1 billion or 1.6 percent to $584.5 billion in March, following an increase of $6.2 billion or 1.2% to $575.4 billion in February, which was revised from the increase of $8.2 billion or 1.4 percent to $576.8 billion that was reported for February last month….however, since the Census Bureau does not even collect data on new orders for non durable goods for this widely watched “factory orders report”, both the “new orders” and “unfilled orders” sections of this report are really only reliable as revised updates to the March advance report on durable goods which was released last week…on those durable goods orders revisions, the Census Bureau’s own summary, which precedes their detailed spreadsheet of the metrics included in this report, is quite clear and complete, so we’ll just quote directly from that summary here:

  
• Summary: Summary New orders for manufactured goods in March, up two consecutive months, increased $9.1 billion or 1.6 percent to $584.5 billion, the U.S. Census Bureau reported today. This followed a 1.2 percent February increase. Shipments, also up two consecutive months, increased $1.5 billion or 0.3 percent to $583.3 billion. This followed a 1.4 percent February increase. Unfilled orders, up following two consecutive monthly decreases, increased $6.1 billion or 0.4 percent to $1,397.4 billion. This followed a 0.1 percent February decrease. The unfilled orders-to-shipments ratio was 7.19, up from 7.10 in February. Inventories, up two consecutive months, increased $0.4 billion or virtually unchanged to $857.7 billion. This followed a 0.2 percent February increase. The inventories-to-shipments ratio was 1.47, unchanged from February.

  

• New orders for manufactured durable goods in March, up two consecutive months, increased $7.3 billion or 2.6 percent to $283.3 billion, unchanged from the previously published increase. This followed a 0.7 percent February increase. Transportation equipment, also up two consecutive months, led the increase, $6.9 billion or 7.8 percent to $95.9 billion. New orders for manufactured nondurable goods increased $1.9 billion or 0.6 percent to $301.2 billion.

  

• Shipments of manufactured durable goods in March, down three of the last four months, decreased $0.3 billion or 0.1 percent to $282.1 billion, down from the previously published virtually unchanged decrease. This followed a 1.1 percent February increase. Transportation equipment, also down three of the last four months, drove the decrease, $0.5 billion or 0.6 percent to $89.3 billion. Shipments of manufactured nondurable goods, up two consecutive months, increased $1.9 billion or 0.6 percent to $301.2 billion. This followed a 1.7 percent February increase. Petroleum and coal products, also up two consecutive months, led the increase, $0.8 billion or 1.2 percent to $68.7 billion.

  

• Unfilled Orders for manufactured durable goods in March, up following two consecutive monthly decreases, increased $6.1 billion or 0.4 percent to $1,397.4 billion, unchanged from the previously published increase. This followed a 0.1 percent February decrease. Transportation equipment, up twelve of the last thirteen months, drove the increase, $6.6 billion or 0.7 percent to $903.2 billion.

  

• Inventories of manufactured durable goods in March, down following seven consecutive monthly increases, decreased $0.1 billion or virtually unchanged to $527.8 billion, unchanged from the previously published decrease. This followed a 0.2 percent February increase. Machinery, down three consecutive months, led the decrease, $0.1 billion or 0.1 percent to $95.0 billion. Inventories of manufactured nondurable goods, up two consecutive months, increased $0.5 billion or 0.2 percent to $329.9 billion. This followed a 0.3 percent February increase. Petroleum and coal products, also up two consecutive months, led the increase, $0.2 billion or 0.5 percent to $48.0 billion. By stage of fabrication, March materials and supplies decreased 0.1 percent in durable goods and increased 0.4 percent in nondurable goods. Work in process increased 0.5 percent in durable goods and decreased 0.1 percent in nondurable goods. Finished goods decreased 0.6 percent in durable goods and increased 0.1 percent in nondurable goods.

The BEA’s Key source data and assumptions (xls) for the advance estimate of first quarter GDP indicates on line 151 that they had estimated that the value of manufactured nondurable goods inventories would increase by $0.8 billion on a Census basis (ie, before price adjustments) in March, while this report obviously reports total non-durable goods factory inventories increased by $0.5 billion…the change in the value of February’s non durable goods factory inventories was revised from +$0.6 billion to +$0.9 billion…hence, the revision in February’s non-durable goods factory inventories will roughly offset the revision in March, and leave the first quarter’s inventory increase fairly close to what was shown in the GDP report…At the same time, inventories of durable goods were “unchanged from the previously published decrease.” Hence, those details suggest that no revision to 1st quarter GDP will be needed based on what is shown in this report …

  

(the above is the synopsis that accompanied my regular sunday morning news links emailing, which in turn was 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, most of which are picked from the aforementioned GGO posts, contact me…)

US oil prices finished lower for the third time in four weeks as ongoing Israeli-Hamas peace talks reduced geopolitical risks while US production and oil supplies grew more than expected…after rising 2.0% to $83.85 a barrel last week on an unexpected drop in US crude inventories and on increasing hostilities in the Middle East, the contract price for the benchmark US light sweet crude for June delivery traded lower early Monday as Israel-Hamas ceasefire talks in Cairo over the weekend reduced fears of a wider Middle East conflict, then extended its losses in afternoon trading to settle $1.22 lower at $82.63 a barrel as U.S. inflation data dimmed the prospect of imminent interest rate cuts…US oil contracts traded slightly higher in overseas trading early Tuesday, as traders weighed whether a possible cease-fire in the Middle East could help soothe political tensions in the region, but sold off midmorning after the EIA’s monthly report showed the largest monthly increase in U.S. crude oil production since October 2021, and settled 70 cents lower at $81.93 a barrel after the market was hit with another round of disappointing inflation and economic data…oil prices extended their slide in overnight trading, after the American Petroleum Institute reported a large and unexpected increase in US crude inventories, then continued to plummet on Wednesday on the EIA’s confirmation of a surprise U.S. inventory build, and over uncertainty about interest rate cuts and the future of oil demand growth, and settled $2.93 lower at $79.00 a barrel as the market continued to sell off on the prospect of a ceasefire agreement between Israel and Hamas…oil prices recovered a bit in Asian trading Thursday, supported by speculation that if WTI fell below $79, the U.S. would move to build up its strategic reserves, but erased their gains and breached their previous low after U.S. data pointed to persistent labor market strength and further cut hopes of an early decline in U.S. interest rates, before settling 5 cents lower at $78.95 a barrel as traders grew worried about a possible economic slowdown in the U.S….oil prices edged up in Asian trading on Friday on the prospect that OPEC+ would continue its output cuts, but turned south after the April ​employment report showed US job​s growth slowed more than expected while wage gains cooled, and settled 84 cents lower at $78.11 a barrel as an unexpected contraction​ary index ​f​or the U.S. service sector accelerated losses in gasoline prices and weakness in the U.S. dollar, ​and which thus left oil prices down 6.8% for the week, the steepest weekly drop in three months….

natural gas prices, on the other hand, finished higher for the second time in three weeks on ongoing production cuts, higher LNG demand, and a bullish storage report…as the price​ of the expiring contract for natural gas for May delivery was falling 7.9% to $1.614 mmBTU and hitting a 28 year low on its last day of trading last week as additions to storage came in above expectations, exacerbating the gas glut,​ the contract price for natural gas for June delivery was falling 3.3% to close the week at $1.923 per mmBTU….with the market quoting the June contract price this week, Monday saw that contract open at $1.942, two cents above Friday’s closing price, and rally from that level, as production curtailments continued and the Freeport LNG showed signs of increased  LNG demand, and settle 10.7 cents higher at $2.030 per mmBTU, boosted by a full restart of Freeport LNG’s third train, supply interruptions in the Permian Basin and expectations for a below-average storage injection…after continuing 6 cents higher early Tuesday, prices turned south and traded down more than 13 cents from the day’s high as doubts about Freeport LNG’s recovery lingered, and markets braced for bearish monetary policy news Wednesday, before settling 3.9 cents lower at $1.991 per mmBTU, as the pressure of large storage levels was offset by forecasts for more demand than was previously expected…natural gas prices opened 5 cents lower Wednesday, as traders evaluated growing LNG volumes and production cuts against high gas storage levels, and settled 5.9 cents lower at $1.932 per mmBTU on forecasts for less demand over the next two weeks than had been expected, and on an ongoing massive glut of gas in storage…but natural gas prices started Thursday 3 cents higher and quickly rose to surpass the $2.00 level, as traders anticipated a bullish weekly storage report, and continued higher after the report to settle up 10.3 cents at $2.035 per mmBTU on an ongoing drop in output and ​on forecasts for more LNG demand next week than had been expected….natural gas prices continue​d to rally on Friday, as production held at lighter levels, and forecasters continued to call for a hot summer ahead, and settled 10.7 cents higher at a 13 week high of $2.142 per mmBTU, and thus ended 11.4% higher for the week…

The EIA’s natural gas storage report for the week ending April 26th indicated that the amount of working natural gas held in underground storage rose by 59 billion cubic feet to 2,484 billion cubic feet by the end of the week, which left our natural gas supplies 436 billion cubic feet, or 21.3% above the 2,048 billion cubic feet that were in storage on April 26th of last year, and 642 billion cubic feet, or 34.9% more than the five-year average of 1,842 billion cubic feet of natural gas that had typically been in working storage as of the 26th of April over the most recent five years…the 59 billion cubic foot addition to US natural gas working storage for the cited week was more than the 55 billion cubic foot addition to storage that was forecast in a Reuters poll of analysts, but was less than the 62 billion cubic feet that were added to natural gas storage during the corresponding fourth week of April 2023, and also less than the average 72 billion cubic foot injection into natural gas storage that has been typical for the fourth week of April over the past 5 years…

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending April 26th indicated that after an increase in our oil imports and a big d​r​op in our oil exports, we had surplus oil to add to our stored commercial crude supplies for the eleventh time in fourteen weeks and for the 19th time in the past 28 weeks, as refinery throughput w​as also lower….Our imports of crude oil rose by an average of 274,000 barrels per day to an average of 6,772,000 barrels per day, after rising by an average of 36,000 barrels per day over the prior week, while our exports of crude oil fell by 1,261,000 barrels per day to 3,918,000 barrels per day, which when used to offset our imports, meant that the net of our trade in oil worked out to a net import average of 2,854,000 barrels of oil per day during the week ending April 26th, 1,535,000 more barrels per day than the net of our imports minus our exports during the prior week. At the same time, transfers to our oil supply from Alaskan gas liquids, from natural gasoline, from condensate, and from unfinished oils averaged 397,000 barrels per day, while during the same week, production of crude from US wells was unchanged at 13,100,000 barrels per day. Hence our daily supply of oil from the net of our international trade in oil, from transfers, and from domestic well production appears to have averaged a rounded total of 16,351,000 barrels per day during the April 26th reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,641,000 barrels of crude per day during the week ending April 26th, an average of 230,000 fewer barrels per day than the amount of oil that our refineries reported they were processing during the prior week, while over the same period the EIA’s surveys indicated that an average of 1,123,000 barrels of oil per day were being added to the supplies of oil stored in the US… So, based on that reported & estimated data, the crude oil figures provided by the EIA for the week ending April 26th appear to indicate that our total working supply of oil from net imports, from transfers, and from oilfield production was 413 barrels per day less than what was added to storage plus what our oil refineries reported they used during the week…To account for that difference between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a [+413,000 ] barrel per day figure onto line 16 of the weekly U.S. Petroleum Balance Sheet, in order to make the reported data for the supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus indicating there must have been an error or omission of that magnitude in the week’s oil supply & demand figures that we have just transcribed…however, since most oil traders react to these weekly EIA reports as if they were accurate, and since these weekly figures therefore often drive oil pricing (as is obvious to anyone who watches oil prices), and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it’s published, and just as it’s watched & believed to be reasonably reliable by most everyone in the industry…(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer….​and there is also an aging twitter thread from an EIA administrator addressing these ongoing weekly errors, and what they had hoped to do about it)

This week’s average 1,123,000 barrel per day increase in our overall crude oil inventories came as an average of 1,038,000 barrels per day were being added to our commercially available stocks of crude oil, while an average of 85,000 barrels per day were being added to our Strategic Petroleum Reserve, the twenty-first SPR increase in twenty-eight weeks, following nearly continuous withdrawals from the SPR over the prior 39 months… Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to 6,541,000 barrels per day last week, which was 3.6% more than the 6,315,000 barrel per day average that we were importing over the same four-week period last year. This week’s crude oil production was reported to be unchanged at 13,100,000 barrels per day because the EIA’s rounded estimate of the output from wells in the lower 48 states was unchanged at 12,700,000 barrels per day, while Alaska’s oil production was 7,000 barrels per day lower at 430,000 barrels per day, but still added the same 400,000 barrels per day to the EIA’s rounded national total as it did last week…US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure ​just matches that of our pre-pandemic production peak, ​w​hile it’s also 35.1% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021.

US oil refineries were operating at 87.5% of their capacity while processing those 15,841,000 barrels of crude per day during the week ending April 26th, down from their 88.5% utilization rate of a week earlier, and a below normal operating rate for late April, as US refineries have lagged normal operating rates since arctic cold penetrated to the Gulf Coast in mid January and froze off some operations… the 15,641,000 barrels of oil per day that were refined this week were 0.6% less than the 15,735,000 barrels of crude that were being processed daily during week ending April 28th of 2023, and 4.9% less than the 16,446,000 barrels that were being refined during the prepandemic week ending April 26th, 2019, when our refinery utilization rate was at a closer to normal 89.2%..

Even with the decrease in the amount of oil being refined this week, gasoline output from our refineries was somewhat higher, increasing by 254,000 barrels per day to 9,396,000 barrels per day during the week ending April 26th, after our refineries’ gasoline output had decreased by 275,000 barrels per day during the prior week. This week’s gasoline production was 0.2% more than the 9,378,000 barrels of gasoline that were being produced daily over week ending April 28th of last year, but 5.3% less than the gasoline production of 9,927,000 barrels per day during the prepandemic week ending April 26th, 2019….on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 271,000 barrels per day to 4,508,000 barrels per day, after our distillates output had increased by 178,000 barrels per day during the prior week. After seven production increases in the past eleven weeks, our distillates output was ​still 1.5% less than the 4,576,000 barrels of distillates that were being produced daily during the week ending April 28th of 2023, and 12.1 less than the 5,128,000 barrels of distillates that were being produced daily during the week ending April 26th, 2019…

With this week’s increase in our gasoline production, our supplies of gasoline in storage at the end of the week rose for the third time in thirteen weeks, increasing by 344,000 barrels to 227,087,000 barrels during the week ending April 26th, after our gasoline inventories had decreased by 634,000 barrels during the prior week. Our gasoline supplies rose this week even as the amount of gasoline supplied to US users rose by 195,000 barrels per day to 8,4618,000 barrels per day, because our imports of gasoline rose by 197,000 barrels per day to 977,000 barrels per day, while our exports of gasoline rose by 142,000 barrels per day to 920,000 barrels per day.…Even after thirty-four gasoline inventory withdrawals over the past fifty-four weeks, our gasoline supplies were still 1.9% above last April 28th’s gasoline inventories of 222,878,000 barrels, but were about 3% below the five year average of our gasoline supplies for this time of the year…

With this week’s decrease in our distillates production, our supplies of distillate fuels fell for the eleventh time in fifteen weeks, following eight consecutive prior increases, decreasing by 732,000 barrels to 115,850,000 barrels over the week ending April 26th, after our distillates supplies had increased by 1,614,000 barrels during the prior week. Our distillates supplies fell this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 126,000 barrels per day to 3,678,000 barrels per day, while our exports of distillates fell by 96,000 barrels per day to 1,038,000 barrels per day, ​and while our imports of distillates fell by 35,000 barrels per day to 103,000 barrels per day.…Even with 30 inventory decreases over the past fifty-three weeks, our distillates supplies at the end of the week were 5.0% above the 110,323,000 barrels of distillates that we had in storage on April 28th of 2023, but were about 7% below the five year average of our distillates inventories for this time of the year…

Finally, after the ​b​ig decrease in our exports of crude oil, our commercial supplies of crude oil in storage rose for the 17th time in twenty-six weeks and for the 24th time in the past year, increasing by 7,265,000 barrels over the week, from 453,625,000 barrels on April 19th to 460,890,000 barrels on April 26th, after our commercial crude supplies had decreased by 6,368,000 barrels over the prior week… With this week’s ​i​ncrease, our commercial crude oil inventories remained about 3% below the most recent five-year average of commercial oil supplies for this time of year, while they were also about 31% above the average of our available crude oil stocks as of the ​f​ourth weekend of April over the 5 years at the beginning of the past decade, with the big difference between those comparisons arising because it wasn’t until early 2015 that our oil inventories had first topped 400 million barrels. After our commercial crude oil inventories had jumped to record highs during the Covid lockdowns of the Spring of 2020, then jumped again after February 2021’s winter storm Uri froze off US Gulf Coast refining, but then fell due to higher exports relating to ​the onset of the Ukraine war, only to jump again following the Christmas 2022 refinery freeze offs, our commercial crude supplies as of this April 26th were 0.3% more than the 459,633,000 barrels of oil left in commercial storage on April 28th of 2023, and were 10.9% more than the 415,727,000 barrels of oil that we still had in storage on April 29th of 2022, while still 5.0% less than the 485,117,000 barrels of oil we had in commercial storage on April 30th of 2021, after refinery damage from winter storm Uri left even more crude oil remaining after 2020’s pandemic precautions had left a glut of oil unused…

This Week’s Rig Count

In lieu of a detailed report on the rig count, we are again just including a screenshot of the rig count summary from Baker Hughes…in the table below, the first column shows the active rig count as of May 3rd, the second column shows the change in the number of working rigs between last week’s count (April 26th) and this week’s (May 3rd) count, the third column shows last Friday’s April 26th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting period a year ago, which in this week’s case was the 5th of May, 2023…

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The key economic releases from the past week were the advance estimate of 1st quarter GDP and the concurrent March report on Personal Income and Spending, both from the Bureau of Economic Analysis; other widely watched releases included the March advance report on durable goods and the March report on new home sales, both from the Census bureau…also released this week was the Chicago Fed National Activity Index (CFNAI) for March, a weighted composite index of 85 different economic metrics, which increased to +0.15 in March from +0.09 in February, after February’s index was revised from the +0.05 reported in last month’s report…however, the more often cited 3 month average of that index increased to –0.19 in March from -0.28 in February, which would indicate that national economic activity has been below the historical trend over recent months, as would any negative index value…

This week also saw the release of two more regional Fed manufacturing surveys for April: the Kansas City Fed manufacturing survey for April, covering western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico, reported its broadest composite index fell to -8 in April, down from -7 in March and -4 in February, indicating that a slightly larger plurality of that region’s manufacturers were seeing worse conditions than a month ago, while the Richmond Fed Survey of Manufacturing Activity, covering an area that includes Virginia, Maryland, the Carolinas, the District of Columbia and West Virginia, reported its broadest composite index rose from −11 in March to −7 in April, conversely indicating that a smaller plurality of that region’s manufacturers were seeing worse conditions than a month ago..

1st Quarter GDP Grew at a 1.6% Rate on Increased Personal Services

Our economy grew at a 1.6% rate in the 1st quarter, considerably weaker than during the fourth quarter, as stronger growth in personal consumption of services, fixed investment, and state and local government were partly offset by reduced growth of inventories and the negative impact of higher imports… the Advance Estimate of 1st Quarter GDP from the Bureau of Economic Analysis estimated that the real output of goods and services produced in the US grew at a 1.6% annual rate from the output of the 4th quarter of 2020, when our real output grew at a 3.4% real rate…in current dollars, our first quarter GDP grew at a 4.77% annual rate, increasing from what would work out to be a $27,957.0 billion a year output rate in the 4th quarter of last year to a $28,284.5 billion annual rate in the 1st quarter of this year, with the headline 1.6% annualized rate of increase in real output arrived at after weighted annualized inflation adjustments averaging 3.1%, known in aggregate as the GDP deflator, were computed from the price changes of each of the GDP components and applied to their current dollar change….

As is usual with an advance estimate, the BEA cautions that the source data is incomplete and also subject to revisions, which have averaged +/-0.6% in either direction before the third estimate for the quarter is released, which will be about two months from now….note that March construction, March trade in services, and non-durables inventory data have yet to be reported, and that the BEA assumed a $10.5 increase in exports of services, a $4.9 billion decrease in imports of services, a $3.7 billion increase in residential construction, a $4.0 billion decrease in non-residential construction, a $2.5 billion increase in public construction, and an $0.8 billion increase in nondurable manufacturing inventories for March before they estimated 1st quarter output (see the Key source data and assumptions excel file that accompanies this report for more specific details)..

While we cover the details on the 1st quarter below, remember that the news release for the Advance Estimate reports all quarter over quarter percentage changes at an annual rate, which means that they’re expressed as a change a bit over four times of that what actually occurred over the 3 month period, and that the prefix “real” is used to indicate that each change has been adjusted for inflation using price indexes chained from 2017 prices, and then that all percentage changes in this report are calculated from those ‘2017 dollar’ figures, which would be better thought of as a quantity indexes than as any reality based dollar amounts, because the change in real GDP is not a monetary metric….

For our purposes, all the data that we’ll use in reporting the changes here comes directly from the pdf for the advance estimate of 1st quarter GDP, which we find the link to on the BEA’s GDP landing page, where you can also find links to just the tables on Excel and other technical notes….specifically, we refer to table 1, which shows the real percentage change in each of the GDP components annually and quarterly since the 2nd quarter of 2020, table 2, which shows the contribution of each of the components to the GDP growth figures for those quarters and years, table 3, which shows both the current dollar value and the inflation adjusted value in 2012 dollars of each of those components, and table 4, which shows the change in the price indexes for each of the GDP components….

Our personal consumption expenditures (PCE), which are used to compute roughly 70% of GDP, grew at an 5.99% annual rate in current dollars in the 1st quarter, which worked out to represent a real growth rate of 2.5% of consumed goods and services, after an annualized PCE price index increase averaging 3.4% was used to adjust that personal spending for changes in prices….consumer spending on durable goods shrunk at a 2.5% rate in current dollars while prices of those durable goods were on average 0.5% lower, and from that the BEA figured that the output of consumer durables shrunk at a 1.2% rate, as a decrease in real consumption of motor vehicles and parts at a 9.0% rate more than offset growth in output of furnishings, durable household equipment, and other durable goods….at the same time, the BEA found that the real output of consumer non-durable goods was unchanged in the first quarter, after an annualized 0.6% decrease in consumer spending for non-durable goods was adjusted for an average decrease in non-durable prices at a 0.6% rate, as a decrease in real consumption of gasoline and other energy goods offset higher consumption of groceries, clothing and “other” nondurable goods …meanwhile, the 9.6% nominal growth in consumer outlays for services was deflated by a 5.4% increase in prices for services to show that real output of consumer services grew at 4.0% annual rate, as real growth of health care at a 5.5% rate accounted for more almost a third of the quarter’s growth in services….as a result of those changes in growth from the 4th to the 1st quarter, the decrease in the output of durable goods subtracted 0.09 percentage points from 1st quarter GDP, the unchanged real consumption of non-durable goods had no impact on the growth of GDP, while increased consumption of services added 1.78 percentage points to the growth rate of the 1st quarter economy..

The change in the other components of the change in GDP is computed by the BEA in the same manner that we have just illustrated for computing real PCE; ie, the annualized increase in current dollar spending for the quarter is adjusted with the annualized inflation factor for that component, yielding the change in real units of goods or services produced during the quarter, at an annual rate……thus, after inflation adjustments, real gross private domestic investment, which had grown at a 0.7% annual rate in the 4th quarter of 2023, grew at a 3.2% annual rate from there in the 1st quarter…that was as real fixed investment grew at an 5.3% annual rate in the 1st quarter, after growing at a 3.5% rate in the 4th quarter…among fixed investments, real non-residential fixed investment grew at a 0.7% rate, as real investment in non-residential structures shrunk at a 0.1% rate and had a negligible impact on 1st quarter GDP growth, real investment in equipment grew at 2.1% rate and added 0.20 percentage points 0.10 percentage points to 1st quarter GDP, and real investment in intellectual property grew at 5.4% rate and added 0.29 percentage points to GDP….at the same time, real residential investment grew at a 13.9% rate and added 0.52 percentage points to GDP….for an easy to understand table as to what’s included in each of those GDP investment categories, see the NIPA Handbook, Chapter 6, page 3…

Meanwhile, a decrease in the growth of real inventories reduced overall gross investment and hence GDP, as real private inventories grew by an inflation adjusted $35.4 billion in the quarter, after growing at an inflation adjusted $54.9 billion in the 4th quarter…as a result, the $19.5 billion negative change in real inventory growth subtracted 0.35 percentage points from the 1st quarter’s growth rate, after a $22.9 billion decrease in real inventory growth in the 4th quarter had subtracted 0.47 percentage points from that quarter’s GDP….however, since growth in inventories would indicate that more of the goods produced during the quarter would have been left in storage or “sitting on the shelf”, the $19.5 billion decrease in their growth conversely means real final sales of GDP were actually greater by that amount, and hence real final sales of GDP grew at a 2.0% rate in the 1st quarter, down from the real final sales growth rate of 3.5% in the 4th quarter, when the decrease in inventory growth meant that the quarter’s growth in real final sales was greater than that of the quarter’s GDP…

Both real exports and real imports increased during the first quarter, but our imports increased by a quite bit more, and hence the net of our international trade was a subtraction from GDP…Our real exports of goods and services rose at a 0.9% rate in the first quarter, after rising at a 5.1% rate in the 4th quarter, while our real imports rose at a 7.2% rate in the 1st quarter, after rising at a 2.2% rate in the 4th quarter. As you’ll recall, increases in exports are added to GDP because they are part of our production that was not consumed or added to investment in our country (& hence not counted in the GDP computation elsewhere), while increases in imports subtract from GDP because they represent either consumption or investment that was included in another GDP component that shouldn’t have been, because it was not produced here. Thus the first quarter increase in real exports added 0.10 percentage points to 1st quarter GDP, after the 4th quarter increase in exports had added 0.55 percentage points to fourth quarter GDP. On the other hand, since imports subtract from GDP, their increase at a 7.2% rate subtracted 0.96 percentage points from first quarter GDP, after the 4th quarter import increase had subtracted 0.30 percentage points from that quarter’s growth.. Hence, our deteriorating trade imbalance subtracted a net of 0.86 percentage points from 1st quarter GDP, after our improving trade deficit had added 0.25 percentage points to GDP in the fourth quarter…

Finally, the total of real consumption and investment by all branches of government increased at a 1.2% annual rate in the 1st quarter, after increasing at a 4.6% rate in the 4th quarter, even though federal government consumption and investment shrunk at a 0.2% rate, as state and local consumption and investment grew at a 2.0% rate. Inflation adjusted federal spending for defense grew shrunk at a 0.6% rate and subtracted 0.02 percentage points from the 1st quarter’s GDP growth, while real non-defense federal consumption and investment grew at a 0.3% rate and added 0.01 percentage points to GDP growth….note that federal government outlays for social insurance are not included in this GDP component; rather, they are included within personal consumption expenditures only when such funds are spent on goods or services, indicating an increase in the output of goods or services….Meanwhile, state and local government investment and consumption expenditures grew at a 2.0% annual rate and added 0.22 percentage points to the growth of 1st quarter GDP, as a real increase in state and local investment at a 1.6% annual rate accounted for 0.03 percentage points of that addition to GDP…

March Personal Income Rose 0.5%, Personal Spending Rose 0.8%, PCE Price Index Rose 0.3%, Savings Rate at a 17 Month Low

Friday’s release of the March Income and Outlays report from the Bureau of Economic Analysis was concurrent with the GDP release on Thursday, and all the PCE data in the first quarter GDP report we just covered actually originated with this report…and like that GDP report, all the dollar values reported here are seasonally adjusted and at an annual rate, ie, they tell us what personal income, spending and saving would be for a year if March’s adjusted income and spending were extrapolated over an entire year…however, the percentage changes are computed monthly, from one annualized figure to the next, and in this case of this month’s report they give us the percentage change in each annualized metric from February to March….

Hence, when the opening phrase of the press release for this report tell us “Personal income increased $122.0 billion (0.5 percent at a monthly rate) in March…“, it means that the annualized figure for all types of personal income in March, $23,826.0 billion, was $122.0 billion, or almost 0.5% more than the seasonally adjusted annualized personal income figure $23,704.0 billion for February; the actual increase in personal income from February to March is not given….similarly, disposable personal income, which is income after taxes, rose by about 0.4%, from an annual rate of $20,718.9 billion in February to an annual rate of $20,822.9 billion in March…the monthly contributors to the change in personal income, which can be seen in the Full Release & Tables (PDF) for this release, are also annualized….the main contributors to the $122.0 billion annualized increase in personal income in March were a $84.9 billion annual rate of increase in income from wages and salaries, a $16.2 billion annualized increase in rental income of persons, and an $13.3 billion annualized increase in government social benefits to persons…

At the same time, seasonally adjusted personal consumption expenditures (PCE) for March, which were included in the change in PCE in the 1st quarter GDP report, rose at a $160.9 billion annual rate to a $19,350.9 billion pace of consumer spending annually, more than 0.8% above that of February’s rate, after February’s PCE rate was revised from the previously reported annual rate of $19,189.0 billion to $19,190.0 billion, a revision which was also included in the GDP report…the current dollar increase in March’s spending included a $80.6 billion annualized increase to an annualized $13,040.6 billion in spending for services, and a $80.3 billion increase to $6,310.3 billion in annualized spending for goods….total personal outlays for March, which includes interest payments and personal transfer payments in addition to PCE, rose by an annualized $172.1 billion to $20,151.9 billion, which left personal savings, which is disposable personal income less total outlays, at a $671.0 billion annual rate in March, down from the revised $739.1 billion in annualized personal savings in February…as a result, the personal saving rate, which is personal savings as a percentage of disposable personal income, fell to 3.2%, down from a revised 3.6% in February, and the lowest personal savings rate since October 2022…

While our personal consumption expenditures accounted for 68.9% of our first quarter GDP, before they were included in the measurement of the change in our output they were first adjusted for inflation, to give us the real change in consumption, and hence the real change in goods and services that were produced for that consumption…..the BEA does that by computing an average price index for all personal consumption expenditures, which is a chained price index based on 2017 prices = 100, which is then applied to the current dollar spending….from Table 5 in the pdf for this report, we find that that index rose to 122.769 in March from 122.374 in February, giving us month a over month inflation rate of 3.2278% in March, which the BEA reports as a PCE price index increase of 0.3% in their tables….at the same time, Table 7 gives us a year over year PCE price index increase of 2.7% in March, up from 2.5% in February, and a core PCE price index increase, excluding food and energy, of 2.8% for the past year, both above the Fed’s 2% inflation target….applying the March inflation adjustment to the change in March PCE shows that real PCE was up 0.514017% in March, which BEA reports as up 0.5% in their press release and in the tables, following a February real PCE increase also reported at 0.5%…note that when those PCE price indexes are applied to a given month’s annualized current dollar PCE, it yields that month’s annualized real PCE in chained 2017 dollars, which aren’t really dollar amounts at all, but merely the means that the BEA uses to compare one month’s or one quarter’s real goods and services produced to another….those results are shown in table 4 of the PDF, where the monthly figures given are identical to the quarterly figures shown in table 3 in the GDP report, and which were thus used to compute the contribution of real personal consumption of goods and services to GDP…

March Durable Goods: New Orders Up 2.6%, Shipments and Inventories Flat

The Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders for March (pdf) from the Census Bureau reported that the value of the widely watched new orders for manufactured durable goods increased by $7.3 billion or 2.6 percent to $283.4 billion in March, after February’s new orders were revised from the $277.9 billion reported last month to $276.1 billion, now only up 0.7% from January’s new orders, revised from the 1.4% increase originally reported….however, even after that revision and a 6.9% decrease in January, year to date new orders are now up by 0.3% from those of 2023…

New orders for transportation equipment led the new orders increase in March, rising $6.8 billion or 7.7 percent to $95.9 billion, on a 30.6% increase to $18,409 million in the value of new orders for commercial aircraft, a 2.8% increase to $4,746 million in the value of new orders for defense aircraft, and a 2.1% increase to $63,107 million the value of new orders for motor vehicles and parts.…excluding orders for transportation equipment, the value of other new orders rose 0.2%, while excluding just new orders for defense equipment, new orders rose 2.3%…at the same time, the value of new orders for nondefense capital goods less aircraft, a category that’s a proxy for equipment investment, rose 0.2% to $73,848 million…

Meanwhile, the seasonally adjusted value of March shipments of durable goods, which were ultimately included as inputs into various components of 1st quarter GDP after adjusting for changes in prices, fell for the third time in four months, but only by $0.1 billion to $282.4 billion, after the value of February shipments was revised from $282.7 billion to $282.5 billion, but was still up 1.2% from January….lower valued shipments of transportation equipment were responsible for the March decrease, falling by $0.5 billion or by 0.4 percent to $89.4 billion, on an 11.1% decrease to $10,770 million in the value of shipments of commercial aircraft….meanwhile, the value of shipments of nondefense capital goods less aircraft rose 0.2% to $74,464 million, after the value of February’s capital goods shipments was revised down from $74,424 million to $74,339 million…

At the same time, the value of seasonally adjusted inventories of durable goods, also a major GDP contributor, decreased by less than $0.1 billion to $527.9 billion, the 1st decrease in eight months, after the value of end of February inventories was revised from $528.7 billion to $527.9 billion, now up just 0.2% from January….lower value of inventories of electrical equipment, which were down $0.1 billion or 0.4 percent to $25.9 billion, accounted for the decrease, while inventories of transportation equipment were up $0.1 billion, or statistically unchanged at $170.0 billion, as greater inventories of aircraft were offset by a decrease in inventories of motor vehicles…

Finally, unfilled orders for manufactured durable goods, which are probably a better measure of industry conditions than the widely watched but often volatile new orders, rose for the first time in three months, increasing by $5.9 billion or 0.4 percent to $1,397.2 billion, following a 0.1% or $1.5 billion decrease to $1,391.3 billion in February, which was revised from the $0.1 billion increase to $1,392.9 billion reported a month ago….a $6.5 billion or 0.7 percent increase to $903.2 billion in unfilled orders for transportation equipment led the increase, while unfilled orders for other durable goods were down 0.1% to $494,015 million….the unfilled order book for durable goods is now 8.8% above the level of last March, with unfilled orders for transportation equipment now 15.1% above their year ago level, largely due to a 22.7% increase in the backlog of orders for commercial aircraft…

New Home Sales Reported 8.8% Higher in March on Higher Prices

The Census report on New Residential Sales for March (pdf) estimated that new single family homes were selling at a seasonally adjusted annual rate of 693,000 homes during the month, which was 8.8 percent (±17.2 percent)* above the revised February annual sales rate of 637,000, and was 8.3 percent (±19.5 percent)* above the estimated annual rate that new homes were selling at during March of last year….the asterisks indicate that based on their small sampling, Census could not tell whether March new home sales rose or fell from home sales of February, or even from the sales of March of last year, with the figures in parenthesis representing the 90% confidence range for the data in this report, which has the largest margin of error and is subject to the largest revisions of any census construction series….with this report, sales of new single family homes in February were revised from the annual rate of 662,000 reported last month to an annual rate of 637,000, and new home sales in January, initially reported at an annual rate of 661,000 and revised to a 664,000 annual rate last month, were revised up to a 671,000 a year rate with this report, while December’s annualized new home sales rate, initially reported at an annual rate of 664,000 and revised from the initial revision of 651,000 to a 652,000 a year rate last month, were revised to a 654,000 rate with this release….

The annual rates of sales reported here are seasonally adjusted after extrapolation from the estimates of canvassing Census field reps, which indicated that approximately 67,000 new single family homes sold in March, up from the estimated 57,000 new homes that sold in both February and in January….the raw numbers from Census field agents were further used to estimate that the median sales price of new houses sold in March was $430,700, up from the median sale price of $406,500 in February but down from the median sales price of $438,900 in March a year ago, while the average new home sales price was $524,800, up from the $488,600 average sales price in February, and up from the average sales price of $519,600 in March a year ago….a seasonally adjusted estimate of 477,000 new single family houses remained for sale at the end of March, which represents a 8.3 month supply at the March sales rate, down from the revised 8.4 months of new home supply in February, which was originally reported at 8.8 months of supply…for graphs and additional commentary on this report, see the following blog posts by Bill McBride at Calculated Risk: New Home Sales Increase to 693,000 Annual Rate in March and New Home Sales Increase to 693,000 Annual Rate in March; Median New Home Price is Down 13% from the Peak, which in turn links to his lengthy real estate newsletter post on the same subject…

  

(the above is the synopsis that accompanied my regular sunday morning news links emailing, which in turn was 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, most of which are picked from the aforementioned GGO posts, contact me…)

US oil prices rose for the first time in three weeks on an unexpected drop in US ​crude inventories and on increasing hostilities in the Middle East…after falling 2.9% to $83.14 a barrel last week after Iran and Israel exchanged attacks but played down the likelihood of further counter-strikes, the contract price ​for the benchmark US light sweet crude for May delivery continued to slide on the last day of trading of that cntract early Monday, as traders focused on market fundamentals, seeing little near-term risk that the Middle East conflict would widen and impact supply, then held in a narrow range in New York trading before settling down 29 cents at $82.85 a barrel​, as plentiful supplies of some of the biggest crude grades limited the conflict’s impact on oil futures, while the more actively traded contract for the benchmark US crude for June delivery settled 32 cents lower at $81.90 a barrel….now quoting that June contract as the front month oil price, oil prices trended lower on global commodities markets early Tuesday amid doubts over the prospects for demand, but traded higher and retraced some of its previous losses in New York amid supportive economic data out of Europe and a fall in the U.S. dollar index to its lowest in over a week, then rallied to settle $1.46 higher at $83.36 a barrel on hopes that weak US manufacturing data ​m​ight accelerate the timing of interest rate cuts…oil prices continued to trend higher in overnight trading, following a report from the American Petroleum Institute that U.S. crude oil and gasoline inventories had unexpectedly dropped, but shrugged off the EIA’s report of the same news on Wednesday to settle 55 cents lower at $82.81 a barrel, as worries over conflict in the Middle East eased and business activity in the United States slowed…oil prices pulled back in early trading Thursday, after a report that US GDP was much softer than expected in the first quarter, but erased the​ir early losses to settle 76 cents higher at $83.57 a barrel on worries of supply disruptions in Middle East supplies a​fter Israel stepped up airstrikes on Gaza’s Rafah and as a weaker dollar boosted commodities priced in the currency….oil prices moved higher in overseas markets early Friday on strong US demand and rising tensions in the Middle East, and later settled the US session 28 cents higher at $83.85 a barrel, as new US inflation data was broadly in line with economists’ expectations…oil prices thus finished 0.9% higher on the week, while the contract for June oil, which had ended last week priced at $82.22 a barrel, ended 2.0% higher…

meanwhile, natural gas prices finished lower for the fourth time in five weeks and hit a 28 year intraday low, after additions to storage came in above expectations, exacerbating the gas glut…after falling 1.0% to $1.752 per mmBTU last week on a massive glut of gas in storage, and on negative spot power and gas prices in the Southwest US, the contract price for natural gas for May delivery opened two cents higher on Monday, but move little after that, as competing fundamentals saw gas trade near $1.78 throughout the day, but moved higher near the close to settle up 3.9 cents at $1.791 per mmBTU, as an increase in feedgas to the Freeport LNG export plant and a drop in output outweighed lower demand forecasts for next week and a mild weather outlook…while natural gas prices opened 3 cents lower on Tuesday, they then trended higher as traders weighed the ongoing storage glut against waning production and steady LNG exports, and settled 2.1 cents higher at $1.812 per mmBTU, supported by a rebound in U.S. LNG exports and a blitz of pipeline maintenance that sent gas production estimates lower…however, natural gas prices opened five cents lower on Wednesday, as longer-term forecasts turned bearish and traders sold on rumors of export difficulties at the Freeport LNG terminal, and fell throughout the day to settle 15.9 cents lower at $1.653 per mmBTU, as operational wobbles at the Freeport LNG terminal and worries of an expected bearish government storage print on Thursday triggered another bout of selling….May natural gas then opened two cents lower on Thursday, as the week’s storage injection infused additional bearish sentiment to the market, then fluctuated within three cents of $1.63 before settling 1.5 cents lower at $1.638 per mBTU, as hefty wind generation left more gas for storage than had been expected….natural gas prices fell again Friday, with the expiring May contract touching 28 year lows below $1.50 before bouncing back to settle 2.4 cents lower at $1,614 mmBTU on its last day of trading, as the national spot price slumped 21.0 cents to 95.5 cents, its second lowest level since the 1990s, leaving the May contract price down 7.9% on the week..​.

​since i haven’t seen anyone else call that 28 year low, ​​i’ll include a graph of intraday natural gas prices over the past month from Barchart.com to show how i determined that…

each bar on th​e graph ​above represents one ​h​our’s price range for the  the contract price for natural gas for May delivery​​….as you can see, ​there were a few spikes lower on the last day of trading for that contract, which presumably occurred as someone had to sell but couldn’t find a buyer in that thin market…remember, anyone holding a commodities contract at expiration either has to supply the commodity or take delivery of it, which most in the market are not prepared to do….if you zoom in on the interactive version of this graph, you can see that natural gas contract exchanged hands at $1.482 per mmBTU at 6PM on April 25, and at $148.9 per mmBTU during the 5 AM hour….​by using the tools available on Barchart’s interactive graphs, i have examined ​intraday pricing during prior periods when natural gas prices approached $1.50 per mmBTU and couldn’t find ​a​ny other time in the past 28 years where the intraday price fell below that level; the closest was a low of $1.517 on June 25th 2020; one must go all the way back to ​​August ​1995 find a price lower, when natural gas prices fell as low as $1.39​0 sometime during the month; barchart was unable to provide an exact date and time on trades that far back..

The EIA’s natural gas storage report for the week ending April 19th indicated that the amount of working natural gas held in underground storage rose by 92 billion cubic feet to 2,425 billion cubic feet by the end of the week, which left our natural gas supplies 439 billion cubic feet, or 22.1% above the 1,986 billion cubic feet that were in storage on April 19th of last year, and 622 billion cubic feet, or 37.0% more than the five-year average of 1,711 billion cubic feet of natural gas that had typically been in working storage as of the 19th of April over the most recent five years…the 92 billion cubic foot addition to US natural gas working storage for the cited week was more than the 88 billion cubic foot addition to storage that the market was expecting, and more than the 77 billion cubic feet that were added to natural gas storage during the corresponding third week of April 2023, and also more than the average 59 billion cubic foot injection into natural gas storage that has been typical for the third week of April over the past 5 years…

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending April 19th indicated that after another increase in our oil exports and a d​e​crease in ​the oil suppl​i​es that the EIA could not account for, we needed to pull oil out of our stored commercial crude supplies for the third time in thirteen weeks and for the 9th time in the past 27 weeks, as field production and refinery throughput were little changed….Our imports of crude oil rose by an average of 36,000 barrels per day to an average of 6,497,000 barrels per day, after rising by an average of 27,000 barrels per day over the prior week, while our exports of crude oil rose by 453,000 barrels per day to a 2024 high average of 5,179,000 barrels per day, which when used to offset our imports, meant that the net of our trade in oil worked out to a net import average of 1,318,000 barrels of oil per day during the week ending April 19th, 417,000 fewer barrels per day than the net of our imports minus our exports during the prior week. At the same time, transfers to our oil supply from Alaskan gas liquids, from natural gasoline, from condensate, and from unfinished oils averaged 399,000 barrels per day, while during the same week, production of crude from US wells was unchanged at 13,100,000 barrels per day. Hence our daily supply of oil from the net of our international trade in oil, from transfers, and from domestic well production appears to have averaged a rounded total of 1​4,817,000 barrels per day during the April 19th reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,871,000 barrels of crude per day during the week ending April 19th, an average of 42,000 fewer barrels per day than the amount of oil that our refineries reported they were processing during the prior week, while over the same period the EIA’s surveys indicated that an average of 796,000 barrels of oil per day were being pulled out of the supplies of oil stored in the US… So, based on that reported & estimated data, the crude oil figures provided by the EIA for the week ending April 19th appear to indicate that our total working supply of oil from net imports, from transfers, from oilfield production and from storage was 257 barrels per day less than what our oil refineries reported they used during the week…To account for that difference between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a [+257,000 ] barrel per day figure onto line 16 of the weekly U.S. Petroleum Balance Sheet, in order to make the reported data for the supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there was an error or omission of that magnitude in the week’s oil supply & demand figures that we have just transcribed…Moreover, since 1,166,000 barrels of oil supply per day could not be accounted for in the prior week’s EIA data, that means there was a 909,000 barrel per day difference between this week’s oil balance sheet error and the EIA’s crude oil balance sheet error from a week ago, and hence the changes to supply and demand from that week to this one that are indicated by this week’s report are off by that much, and therefore useless…however, since most oil traders react to these weekly EIA reports as if they were accurate, and since these weekly figures therefore often drive oil pricing (as is obvious to anyone who watches oil prices), and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it’s published, and just as it’s watched & believed to be reasonably reliable by most everyone in the industry…(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer….there is also an aging twitter thread from an EIA administrator addressing these ongoing weekly errors, and what they had hoped to do about it)

This week’s average 796,000 barrel per day decrease in our overall crude oil inventories came as an average of 910,000 barrels per day were being pulled out of our commercially available stocks of crude oil, while an average of 113,000 barrels per day were being added to our Strategic Petroleum Reserve, the twentieth SPR increase in twenty-seven weeks, following nearly continuous withdrawals over the prior 39 months… Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports slipped to 6,503,000 barrels per day last week, which was 1 barrel per day more than the 6,502,000 barrel per day average that we were importing over the same four-week period last year. This week’s crude oil production was reported to be unchanged at 13,100,000 barrels per day because the EIA’s rounded estimate of the output from wells in the lower 48 states was unchanged at 12,700,000 barrels per day, while Alaska’s oil production was 6,000 barrels per day higher at 437,000 barrels per day, but still added the same 400,000 barrels per day to the EIA’s rounded national total as it did last week…US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure matches that of our pre-pandemic production peak, and is also 35.1% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021.

US oil refineries were operating at 88.5% of their capacity while processing those 15,871,000 barrels of crude per day during the week ending April 12th, up from their 88.1% utilization rate of a week earlier, but still a below normal operating rate for early April, as US refineries have lagged normal operating rates since arctic cold penetrated to the Gulf Coast in mid January and froze off some operations… the 15,871,000 barrels of oil per day that were refined this week were 0.2% more than the 15,833,000 barrels of crude that were being processed daily during week ending April 21st of 2023, but 4.3% less than the 16,583,000 barrels that were being refined during the prepandemic week ending April 19th, 2019, when our refinery utilization rate was at a closer to normal 90.1%..

With the decrease in the amount of oil being refined this week, gasoline output from our refineries was somewhat lower, decreasing by 275,000 barrels per day to 9,142,000 barrels per day during the week ending April 19th, after our refineries’ gasoline output had decreased by 25,000 barrels per day during the prior week. This week’s gasoline production was 8.7% less than the 10,016,000 barrels of gasoline that were being produced daily over week ending April 21st of last year, and 6.5% less than the gasoline production of 9,781,000 barrels per day during the prepandemic week ending April 19th, 2019….on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 178,000 barrels per day to 4,779,000 barrels per day, after our distillates output had decreased by 38,000 barrels per day during the prior week. After seven production increases in the past ten weeks, our distillates output was 2.4% more than the 4,669,000 barrels of distillates that were being produced daily during the week ending April 21st of 2023, but 6.3% less than the 5,064,000 barrels of distillates that were being produced daily during the week ending April 19th, 2019…

With this week’s decrease in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the tenth time in twelve weeks, decreasing by 634,000 barrels to 226,743,000 barrels during the week ending April 19th, after our gasoline inventories had decreased by 1,154,000 barrels during the prior week. Our gasoline supplies fell by less this week because the amount of gasoline supplied to US users fell by 239,000 barrels per day to 8,423,000 barrels per day, and because our imports of gasoline rose by 71,000 barrels per day to 780,000 barrels per day, and because our exports of gasoline fell by 48,000 barrels per day to 778,000 barrels per day.…Even after thirty-four gasoline inventory withdrawals over the past fifty-three weeks, our gasoline supplies were still 2.5% above last April 21st’s gasoline inventories of 221,136,000 barrels, but were about 4% below the five year average of our gasoline supplies for this time of the year…

With this week’s increase in our distillates production, our supplies of distillate fuels rose for fourth time in fourteen weeks, following eight consecutive prior increases, increasing by 1,614,000 barrels to 116,582,000 barrels over the week ending April 19th, after our distillates supplies had decreased by 2,760,000 barrels during the prior week. Our distillates supplies rose this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 114,000 barrels per day to 3,552,000 barrels per day, and because our exports of distillates fell by 344,000 barrels per day to 1,134,000 barrels per day, while our imports of distillates fell by 11,000 barrels per day to 138,000 barrels per day.…Even with 30 inventory decreases over the past fifty-three weeks, our distillates supplies at the end of the week were 4.5% above the 111,513,000 barrels of distillates that we had in storage on April 21st of 2023, but were about 7% below the five year average of our distillates inventories for this time of the year…

Finally, after the increase in our exports of crude oil, our commercial supplies of crude oil in storage fell for the 9th time in twenty-six weeks and for the 27th time in the past year, decreasing by 6368,000 barrels over the week, from 459,993,000 barrels on April 12th to 453,625,000 barrels on April 19th, after our commercial crude supplies had increased by 2,735,000 barrels over the prior week… With this week’s decrease, our commercial crude oil inventories fell to about 3% below the most recent five-year average of commercial oil supplies for this time of year, while they were still about 30% above the average of our available crude oil stocks as of the third weekend of April over the 5 years at the beginning of the past decade, with the big difference between those comparisons arising because it wasn’t until early 2015 that our oil inventories had first topped 400 million barrels. After our commercial crude oil inventories had jumped to record highs during the Covid lockdowns of the Spring of 2020, then jumped again after February 2021’s winter storm Uri froze off US Gulf Coast refining, but then fell due to higher exports relating to the Ukraine war, only to jump again following the Christmas 2022 refinery freeze offs, our commercial crude supplies as of this April 19th were still 1.6% less than the 460,914,000 barrels of oil left in commercial storage on April 21st of 2023, but were 9.5% more than the 414,424,000 barrels of oil that we still had in storage on April 22nd of 2022, while still 8.0% less than the 493,107,000 barrels of oil we had in commercial storage on April 23rd of 2021, after refinery damage from winter storm Uri left even more crude oil remaining after 2020’s pandemic precautions had left a glut of oil unused…

This Week’s Rig Count

In lieu of a detailed report on the rig count, we are again just including a screenshot of the rig count summary from Baker Hughes…in the table below, the first column shows the active rig count as of April 26th, the second column shows the change in the number of working rigs between last week’s count (April 19th) and this week’s (April 26th) count, the third column shows last week’s April 19th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting period a year ago, which in this week’s case was the 28th of April, 2023…

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Major monthly reports released this past week included the Retail Sales report for March and the associated Business Sales and Inventories report for February, both from the Census Bureau, the March report on Industrial Production and Capacity Utilization from the Fed, the March report on New Residential Construction from the Census bureau, and the Existing Home Sales Report for March from the National Association of Realtors (NAR)….In addition, the week also saw the release of the Regional and State Employment and Unemployment Report for March from the Bureau of Labor Statistics, a report which breaks down the two employment surveys from the monthly national jobs report by state and region …while the text of that report provides a useful summary of the state and regional data, the serious statistical aggregation can be found in the tables linked at the end of the report, where one can find the civilian labor force data and the change in payrolls by industry for each of the 50 states, the District of Columbia, Puerto Rico, and the Virgin Islands..

This week also saw the release of the first two regional Fed manufacturing surveys for April: the Empire State Manufacturing Survey from the New York Fed, which covers all of New York state, one NYC suburban county in Connecticut, Puerto Rico and northern New Jersey, reported their headline general business conditions index rose from -20.9 in March to -14.3 in April, which would indicate that the ongoing contraction of First District manufacturing was less widespread than a month earlier……meanwhile, the Philadelphia Fed Manufacturing Survey, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest diffusion index of manufacturing conditions rose from +3.2 in March to +15.5 in April, its third consecutive positive reading and the highest one since April 2022, which they report was as “almost 38 percent of the firms reported increases in general activity this month, while 22 percent reported decreases; 40 percent reported no change”….notice that +15.5 is the difference between those reporting increases and those reporting decreases, which is how these diffusion indices are computed

Retail Sales Rose 0.7% in March, PCE Goods would Add ~92 Basis Points to Q1 GDP

Seasonally adjusted retail sales increased by 0.7% in March, after retail sales for January and February were revised higher…the Advance Retail Sales Report for March (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $709.6 billion during the month, which was up by 0.7 percent (±0.5%) from February’s revised sales of $704.5 billion, and 4.0 percent (±0.5 percent) above the adjusted sales in March of last year… February’s seasonally adjusted sales were revised from $700.7 billion to $704.5 billion, while January’s sales were revised from $696.7 billion to $697.954 billion; as a result, the percent change from January to February was revised from up 0.6 percent (±0.5 percent) to up 0.9 percent (±0.2 percent)…..estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated sales actually rose 10.1%, from $647,464 million in February to $712,659 million in March, while they were up just 2.4% from the $695,933 million of sales in March of a year ago…

Included below is the table of the monthly and yearly percentage changes in retail sales by business type taken from the March Census Marts pdf….the first double column of this table shows us the seasonally adjusted percentage change in sales for each kind of business from the February revised figure to this month’s March “advance” report in the first sub-column, and then the year over year percentage sales change since last March in the 2nd column; the second double column pair below gives us the revision of the February advance estimates (now called “preliminary”) as of this report, with the new January to February percentage change under “Jan 2024 r” (revised) and the February 2023 to February 2024 percentage change as revised in the 2nd column of that pair…(for your reference, our copy of this same table from the advance February estimate, before this month’s revisions, is here)…. lastly, the third pair of columns shows the percentage change of the first 3 months of this year’s sales (January, February and March) from the preceding three months of the 4th quarter (October thru December) and from the same three months of the 1st quarter of a year ago….as you can see from that fifth column, overall retail sales for the 1st quarter of 2023 were roughly 0.4% lower than the 4th quarter of 2021, which implies that nominal personal consumption of goods for the 1st quarter will be down by roughly the same amount, before any inflation adjustments…

To compute March’s real personal consumption of goods data for national accounts from this March retail sales report, the BEA will initially use the corresponding price changes from the March consumer price index, which we just reviewed… to estimate what they will find, we’ll first separate out the volatile sales of gasoline from the other totals…from the third line on the above table, we can see that March retail sales excluding the 2.1% price-related increase in sales at gas stations were up by 0.6%….then, by subtracting the dollar values representing the 0.5% increase in grocery & beverage sales and the 0.4% increase in food services sales out from that total, we find that core retail sales were up by almost 0.7% for the month…since the March CPI report showed that the the composite price index of all goods less food and energy goods was 0.2% lower in March, we can thus estimate that real retail sales excluding food and energy will have increased around 0.9%…however, the actual adjustment in national accounts for each of the types of sales shown above will vary by the change in the related price index…for instance, while nominal sales at clothing stores were 1.6% lower in March, the apparel price index was 0.7% higher, which means that real sales of clothing likely fell around 2.3%… similarly, while sales at health and personal care stores were 0.4% higher, the price index for medical care commodities was 0.2% higher, which suggests real sales of drugs and health products were only up by around 0.2%….

In addition to figuring those core retail sales, we should also adjust food and energy retail sales for their price changes separately, just as the BEA will do…the March CPI report showed that the food price index was 0.1% higher in March, as the price index for food purchased for use at home was unchanged while the index for food bought away from home was 0.3% higher, as prices at fast food outlets rose 0.3% while prices at full service restaurants rose 0.2%…hence, since there was no change in average prices at food and beverage stores, the change in real sales of food and beverages would be equal to their nominal sales change, or up around 0.5%…meanwhile, the 0.4% increase in nominal sales at bars and restaurants, once adjusted for 0.3% higher prices, suggests that real sales at bars and restaurants only rose around 0.1% during the month…and while sales at gas stations were up 2.1%, there was a 1.7% increase in the price of gasoline during the month, which would suggest that real sales of gasoline were up about 0.4%, with a caveat that gasoline stations do sell more than gasoline, products which should not be adjusted with gasoline prices…reweighing and averaging the real sales changes that we have thus estimated back together, and excluding food services, we can then estimate that the income and outlays report for March will show that real personal consumption of goods rose by nearly 0.8% in March, after rising by a revised 0.6% in February but after falling by a revised 1.1% in January…at the same time, the 0.1% increase in real sales at bars and restaurants would boost March real personal consumption of services by a small fraction of a percent…

Now that we have estimates of the percentage change in PCE goods for all three months of the first quarter, we can also estimate the contribution that PCE goods will make to 1st quarter GDP…. the February income and outlays report gives the change in real PCE goods for the 4th quarter months as down 0.2% in October, up 0.4% in November, and up 0.7% in December…based on the revisions to retail sales in the March retail report, we now estimate real PCE goods for January at –1.1%, PCE goods for February at +0.6%, and PCE goods for March at +0.8%…to simplify our calculations, we’ll now convert those percentage changes in PCE goods into an index, and set October with an index value of 1.000…thus Nov = 1.0040, Dec = 1.0110, Jan = .9999, Feb = 1.0059, and March = 1.0139.…hence, to estimate the growth rate of 1st quarter PCE goods, we have this calculation ((( .9999 + 1.0059 + 1.039) / 3) / ((1.0000+ 1.0040 + 1.0110)/ 3)) ^ 4 = 1.040126.…that means that PCE goods rose at about a 4.01% annual rate in the 1st quarter…since PCE goods has usually been around 23% of GDP, that means that the contribution of PCE goods to first quarter GDP should be around 0.92 percentage points…

Industrial Production Rose 0.4% in March on Higher Auto Output and Cooler Weather

The Fed’s G17 release on Industrial production and Capacity Utilization for March indicated that industrial production rose 0.4% in March after rising by a revised 0.4% in February, but after falling by a revised 0.8% in January, which left production unchanged from December and from a year ago… the industrial production index, with the benchmark set for average 2017 production to be equal to 100.0, rose to 102.7 in March from 102.3 in February, which was revised but essentially unchanged.…however, the January index was revised down from 102.2 to 101.8, the December index was revised down from 102.7 to 102.6, and the November index was revised down from 103.0 to 102.9…after those revisions and the March increase, US industrial production was down at a 1.8% annual rate for the first quarter as a whole…

The manufacturing index, which accounts for around 77% of the total IP index, rose 0.5% to 99.9 in March from 99.4 in February, which had previously been reported at 99.2…at the same time, the January manufacturing index was revised from 98.4 to 98.2, and the December manufacturing index was revised from 99.5 to 99.4….after those revisions, the manufacturing index now sits 0.8% above its year ago level, while first quarter manufacturing fell at a 0.1% annual rate from that of the 4th quarter of 2022….meanwhile, the mining index, which includes oil and gas well drilling, fell 1.4%, from 117.3 in February to 115.7 in March, after the February mining index was revised down from last month’s reported 119.2, which left the mining index 2.0% below where it was a year earlier…finally, the utility index, which typically fluctuates due to deviations from normal temperatures, rose by 2.0% from our warmer than normal February, from 101.4 to 103.5, after February’s utility index had fallen 7.6% from our cold January…including this month’s revisions, the utility index is now 3.1% below that of a year ago, mostly because last March’s temperatures averaged colder than normal…

This report also includes capacity utilization data, which is expressed as the percentage of our plant and equipment that was in use during the month…seasonally adjusted capacity utilization for total industry rose to 78.4% in March from 78.2% in February, which was revised down from the 78.3% utilization reported a month ago…capacity utilization of NAICS durable goods production facilities rose from a revised 75.1% in February to 75.2% in March on a 3.1% increase in automotive production, while capacity utilization for non-durables producers was up from 79.0% to 79.5%…capacity utilization for the mining sector fell to 91.0% in March from 92.3% in February, which had been reported as 93.8% last month, while utilities were operating at 69.1% of capacity during March, up from 67.9% in February, after February’s utility utilization was revised up from the previously reported 67.8%%….for more details on capacity utilization by type of manufacturer, see Table 7: Capacity Utilization: Manufacturing, Mining, and Utilities, which shows the historical capacity utilization figures for a dozen types of durable goods manufacturers, 8 classifications of non-durable manufacturers, mining, utilities, and capacity utilization for a handful of other special categories..

February Business Sales Rose 1.6%, Business Inventories Rose 0.4%

After the release of the March retail sales report, the Census Bureau also released the composite Manufacturing and Trade, Inventories and Sales report for February (pdf), which incorporates the revised February retail data from that March retail report and the earlier published February wholesale and factory data to give us a complete picture of the business contribution to the economy for that month….note that wholesale sales and inventories were revised on March 27th, which thus significantly revised the figures that were reported a month ago, even before the usual revisions to the prior month’s data that accompany this report….

According to the Census Bureau, total manufacturer’s and trade sales were estimated to be valued at a seasonally adjusted $1,866.5 billion, up 1.6% (±0.2 percent)* from January, and up 1.0 percent (±0.4 percent) from sales of February last year…January’s sales were revised from the originally reported $1,833.3 billion to $1,836.0 billion, now a 1.0% decrease from December, vs the 1.3% decrease previously reported….the seasonally adjusted value of manufacturer’s sales rose 1.4% to $581,575 million in February; retail trade sales, which exclude restaurant & bar sales from the revised February retail sales reported earlier, were 1.0% higher at $611,172 million, while wholesale sales rose 2.3% to $673,736 million…

Meanwhile, total manufacturer’s and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $2,567.5 billion at the end of February, up 0.4 percent (±0.1%) from the end of January, and 1.0 percent (±0.4 percent) higher than in February a year earlier…at the same time, the value of end of January inventories was revised from the $2,555.0 billion reported last month to $2,556.1 billion, still shown as statistically unchanged from December….seasonally adjusted inventories of manufacturers were estimated to be valued at $857,734 million, up 0.3% from January, while inventories of retailers were valued at $808,724 million, 0.6% higher than January, and inventories of wholesalers were estimated to be valued at $901,082 million at the end of February, 0.5% higher than in January…

For GDP purposes, all those inventories, including retail, are adjusted for inflation with appropriate component price indices of the producer price index for February, which was up by 1.2% for finished goods…two weeks ago, we looked at real factory inventories with price adjustments for goods at various stages of production, and judged that the inflation adjusted decrease in real factory inventories would first subtract the factory inventories 4th quarter increase and then also the first quarter decrease from the growth rate of first quarter GDP….then last week, we similarly judged to that the decrease in real wholesale inventories would reverse the 4th quarter increase and also subtract both January’s and February’s real decreases from 1st quarter GDP…Since the nominal value of retail inventories for February has now been shown to be 0.6% higher, real retail inventories for the month, after the 1.2% finished goods price adjustment, thus would have thus decreased by 0.6% from January, after a 0.5% increase in that month…therefore, what is thus far a small real retail inventory decrease in the 1st quarter would also have a negative impact on 1st quarter GDP, first by reversing the relatively sharp 4th quarter increase, then by also subtraction the small real decrease in real retail inventories we have so far in the first quarter…

Housing Starts Down 14.7% in March; Building Permits 4.3% Lower

The March report on New Residential Construction (pdf) from the Census Bureau estimated that new housing units were being started at a seasonally adjusted annual rate of 1,321,000 in March, 14.7 percent (±9.9 percent) below the revised estimated annual rate of 1,549,000 starts in February, and 4.3 percent (±9.4 percent)* below last March’s annual rate of 1,380,000 starts….the asterisk indicates that the Census does not have sufficient data to determine whether housing starts actually rose or fell from a year ago, with the figures in parenthesis representing the most likely range of the change indicated. In other words, March housing starts could have been up by 5.1% from those of a year ago, or down by a much as 13.7%, with revisions of a greater magnitude in either direction still possible…in this report, the annual rate for February housing starts was revised from the 1,521,000 reported last month to 1,549,000, while January starts, which were first reported at a 1,331,000 annual rate, were revised from last month’s initial revised figure of 1,374,000 annually to a 1,375,000 annual rate with this report….

These annual rates of housing starts reported here were extrapolated from a survey of a small percentage of US building permit offices visited by canvassing Census field agents, which estimated that 110,900 housing units were started in March, up from the 110,300 units that were started in February and the 97,900 units that were started in January….of those housing units started in March, an estimated 87,100 were single family homes and 23,000 were units in structures with more than 5 units, up from the revised 81,700 single family starts in February but down from the 27,200 units started in structures with more than 5 units in February…

The monthly data on new building permits, with a smaller margin of error, are usually a better monthly indicator of new housing construction trends than the volatile and often revised housing starts data…in March, Census estimated new building permits for housing units were being issued at a seasonally adjusted annual rate of 1,458,000, which was 4.3 percent below the revised February rate of 1,523,000 permits, bit was 1.5 percent above the rate of building permit issuance in March a year earlier…the annual rate for housing permits issued in February was revised up from the originally reported 1,518,000..

Again, these annualized estimates for new permits reported here were extrapolated from the unadjusted estimates collected monthly by canvassing census agents, which showed permits for roughly 123,500 housing units were issued in March, up from the revised estimate of 119,100 new permits issued in February…of those permits issued in March, 84,300 were permits for single family homes and 34,800 were permits for units in structures of more than 5 units, up from the 79400 single family permits issued in February, but down from the February’s 35600 permits for units in structures of more than 5 units…

For graphs and commentary on this report, see the following posts by Bill McBride at Calculated Risk: Housing Starts Decreased to 1.321 million Annual Rate in March and Single Family Starts Up 22% Year-over-year in March; Multi-Family Starts Down Sharply, which in turn links to his Real Estate Newsletter post on the same subject…

Existing Home Sales Fell 4.3% in March on Prices 4.8 Higher than a Year Ago

The National Association of Realtors (NAR) reported that existing home sales fell at a 4.3% rate from February to March after seasonal adjustment, projecting that 4.19 million existing homes would sell over an entire year if the March home sales pace were extrapolated over that year, a pace that was also 3.7% below the annual sales rate projected for March of a year ago….February homes sales, indicated at a 4.38 million annual rate, were revised but unchanged from the report of a month ago….the NAR also reported that the median sales price for all existing-home types was at $393,500 in March, which was 4.8% higher than in March a year earlier, and which they report is “the ninth consecutive month of year-over-year price gains.“, even though it’s only the second month over month price increase in those mine months….the NAR press release, which is titled “Existing-Home Sales Descended 4.3% in March“, is in easy to read plain English, so if you’re interested in a regional breakdown, or the details on housing inventories, cash sales, distressed sales, first time home buyers, etc, you can easily find them in that press release…as sales of existing properties do not add to our national output, neither these home sales nor the prices for which these homes sell are included in GDP, except insofar as real estate, local government and banking services are rendered during the selling process…

Since this report is entirely seasonally adjusted and at a not very informative annual rate, we usually look at the raw data overview (pdf) to see what actually happened during the month….the unadjusted data estimates that roughly 324,000 homes sold in March, up 19.6% from the 271,000 homes that sold in February, but down 9.7% from the 359,000 homes that sold in March of last year, so we can see that it was the effect of a large springtime seasonal adjustment that caused the headline to show a decrease from February….that same pdf indicates that the median home selling price for all housing types rose by 2.5%, from a revised $383,800 in February to $393,500 in March, and was up 4.8% from $375,300 in March of 2023, with regiona median home prices ranging from $292,600 in the Midwest to $603,000 in the West…..for both seasonally adjusted and unadjusted graphs and additional commentary on this report, again see the following posts from Bill McBride at Calculated Risk: NAR: Existing-Home Sales Decreased to 4.19 million SAAR in March and NAR: Existing-Home Sales Decreased to 4.19 million SAAR in March; Median House Prices Increased 4.8% Year-over-Year, which serves as a link to his free Real Estate Newsletter coverage of this report…

  

(the above is the synopsis that accompanied my regular sunday morning news links emailing, which in turn was 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, most of which are picked from the aforementioned GGO posts, contact me…)

US oil prices fell for a second straight week, following a four week run up on increasing hostilities in the Middle East & Eastern Europe, after Iran and Israel exchanged attacks on each other’s territories but played down the likelihood of further counter-strikes…after falling 1.4% to $85.66 a barrel last week as ongoing ceasefire talks between Israel and Hamas in Egypt tempered the geopolitical risk premium underlying oil price strength, the contract price of the benchmark US light sweet crude for May delivery fell from a five week high in late weekend trading, after most of the 300 drones and missiles fired at Israel by Iran on Saturday were intercepted and did no damage. then moved lower in Monday as the risk premium associated with Iran’s threats eased after Iran said it considers its retaliation to be over, but pared those losses after Reuters reported that Israel’s Netanyahu had summoned his war cabinet for the second time in less than 24 hours and settled 25 cents, or 0.3% lower, at $85.41 a barrel, as strong retail sales increased the likelihood that US interest rates would remain higher for longer and reduce demand for oil…oil prices rose in Asian trading early Tuesday amid unresolved tensions in the Middle East and better-than-expected economic data from China, the world’s largest oil importer, and opened higher in New York, but gave up their gains and sold off to a low of $84.05 by mid-morning, as lowered geopolitical tensions allowed the market to retrace its previous rise, but partly recovered to settle just 5 cents lower at $85.36 a barrel as disappointing domestic economic data ​o​ffset Mideast supply fears…oil prices declined during early Asian trade Wednesday, following the late Tuesday release of American Petroleum Institute data reflecting bearish demand in the US, then extended their decline in US trading after the EIA confirmed the unexpected build in U.S. crude inventories, and settled $2.67 lower at $82.69 a barrel after Fed chair Powell stated that monetary policy needs to be restrictive for longer due to recent stronger-than-expected inflation readings….oil prices fell for a fourth day in overseas markets Thursday, following data indicating weak oil demand in the US, the world’s largest oil consumer, and the growing opposition to the conflict in Palestine. but bounced off March lows in US trading to settle 4 cents higher at $82.73 a barrel, even as the international benchmark Brent and oil product prices remained in negative territory for the fourth consecutive session….oil prices spiked by over 4% in global markets on Friday after Israel carried out a series of strikes on Iran, including a site near their nuclear facilities, but backed off the highs in the New York session to settle 41 cents higher at $83.14 a barrel, after Tehran played down the incident and said it did not plan to retaliate​, and ​thus left oil prices down 2.9% on the week..

meanwhile, natural gas prices finished lower for the third time in four weeks, weighed down by a massive glut of gas in storage, and by negative spot power and gas prices in the Southwest US, where producers have been paying to have their natural gas disposed of…after falling 0.8% to $1.770 per mmBTU last week as producers exited the winter with almost 39% more gas in storage than normal for ​that time of year, the contract price for natural gas for May delivery opened six cents lower on Monday, on the lack of technical and fundamental support, and then fell steadily after ​bouncing to an intraday high of $1.746 at 10:00AM to settle 7.9 cents lower at $1.691 per mmBTU, on light seasonal demand, soft export data, and bullish production estimates….natural gas prices trended lower through midday Tuesday due to weak fundamentals, but spiked to an intraday high of $1.802 at 2:05PM after TC Energy reported “an incident” on their Nova Gas Transmission Ltd. (NGTL) system in Alberta, before retreating to settle 4.1 cents ​h​igher at $1.732 per mmBTU after TC Energy reported the affected section of the pipeline had been isolated and shut down..natural gas prices opened two cents lower and slid from the opening on Wednesday as TC Energy was able to contain the ruptured pipeline and fire, avoiding any material disturbances to operations, but mounted a recovery into the afternoon to close 2.0 cents lower on Wednesday at $1.712 per mmBTU on mild weather forecasts, an earlier drop in feedgas to LNG export plants​, and worries about the huge surplus of gas in U.S. storage…natural gas prices moved up early Thursday as traders assessed a mixed weather outlook against lighter production readings, then jumped after the EIA reported an injection of natural gas into storage that was in line with expectations and settled 4.5 cents higher at $1.757 mmBTU​, on forecasts for cooler weather next week than had been expected​, and on an increase in the amount of gas flowing to LNG export plants, including Freeport…after volatile trading on Friday, natural gas prices finished little changed​, slipping a half cent to $1.752 per mmBTU, as bullish forecasts for cooler weather next week and a continued drop in output offset bearish negative spot power and gas prices in the Southwest and a massive oversupply of gas in storage, and thus settled 1.0% lower for the week…

The EIA’s natural gas storage report for the week ending April 12th indicated that the amount of working natural gas held in underground storage rose by 50 billion cubic feet to 2,333 billion cubic feet by the end of the week, which left our natural gas supplies 424 billion cubic feet, or 22.2% above the 1,909 billion cubic feet that were in storage on April 12th of last year, and 622 billion cubic feet, or 36.4% more than the five-year average of 1,711 billion cubic feet of natural gas that had typically been in working storage as of the 12th of April over the most recent five years…the 50 billion cubic foot addition to US natural gas working storage for the cited week was in line with the 50 billion cubic foot addition to storage that analysts in a Reuters poll had forecast, but it was less than the 61 billion cubic feet that were added to natural gas storage during the corresponding second week of April 2023, and less than the average 61 billion cubic foot injection into natural gas storage that has been typical for the second week of April over the past 5 years…

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending April 12th indicated that despite a big jump in our oil exports, we again had surplus oil to add to our stored commercial crude supplies for the tenth time in twelve weeks and for the 18th time in the past 26 weeks, essentially due to a big jump in oil supply that the EIA could not account for….Our imports of crude oil rose by an average of 27,000 barrels per day to an average of 6,461,000 barrels per day, after falling by an average of 183,000 barrels per day over the prior week, while our exports of crude oil jumped by 2,018,000 barrels per day to average 4,726,000 barrels per day, which when used to offset our imports, meant that the net of our trade in oil worked out to a net import average of 1,735,000 barrels of oil per day during the week ending April 12th, 1,991,000 fewer barrels per day than the net of our imports minus our exports during the prior week. At the same time, transfers to our oil supply from Alaskan gas liquids, from natural gasoline, from condensate, and from unfinished oils averaged 395,000 barrels per day, while during the same week, production of crude from US wells was unchanged at 13,100,000 barrels per day. Hence our daily supply of oil from the net of our international trade in oil, from transfers, and from domestic well production appears to have averaged a rounded total of 15,130,000 barrels per day during the April 12th reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,913,000 barrels of crude per day during the week ending April 12th, an average of 131,000 more barrels per day than the amount of oil that our refineries reported they were processing during the prior week, while over the same period the EIA’s surveys indicated that an average of 483,000 barrels of oil per day were being added to the supplies of oil stored in the US… So, based on that reported & estimated data, the crude oil figures provided by the EIA for the week ending April 12th appear to indicate that our total working supply of oil from net imports, from transfers, and from oilfield production was 1,166,000 barrels per day less than what what was added to storage plus our oil refineries reported they used during the week…To account for that difference between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a [+1,166,000 ] barrel per day figure onto line 16 of the weekly U.S. Petroleum Balance Sheet, in order to make the reported data for the supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there was an error or omission of that magnitude in the week’s oil supply & demand figures that we have just transcribed…Moreover, since 518,000 barrels of oil demand per day could not be accounted for in the prior week’s EIA data, that means there was a 1,684,000 barrel per day difference between this week’s oil balance sheet error and the EIA’s crude oil balance sheet error from a week ago, and hence the changes to supply and demand from that week to this one that are indicated by this week’s report are off by that much, and therefore nonsense…however, since most oil traders react to these weekly EIA reports as if they were accurate, and since these weekly figures therefore often drive oil pricing (as is obvious to anyone who watches oil prices), and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it’s published, and just as it’s watched & believed to be reasonably reliable by most everyone in the industry…(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer….there is also an aging twitter thread from an EIA administrator addressing these ongoing weekly errors, and what they had hoped to do about it)

This week’s average 483,000 barrel per day increase in our overall crude oil inventories came as an average of 391,000 barrels per day were being added to our commercially available stocks of crude oil, while an average of 93,000 barrels per day were being added to our Strategic Petroleum Reserve, the nineteenth SPR increase in twenty-six weeks, following nearly continuous withdrawals over the prior 39 months… Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports slipped to 6,437,000 barrels per day last week, which was 0.7% more than the 6,390,000 barrel per day average that we were importing over the same four-week period last year. This week’s crude oil production was reported to be unchanged at 13,100,000 barrels per day because the EIA’s rounded estimate of the output from wells in the lower 48 states was unchanged at 12,700,000 barrels per day, while Alaska’s oil production was 5,000 barrels per day lower at 431,000 barrels per day, but still added the same 400,000 barrels per day to the EIA’s rounded national total as it did last week…US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure matches that of our pre-pandemic production peak, and is also 35.1% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021.

US oil refineries were operating at 88.3% of their capacity while processing those 15,913,000 barrels of crude per day during the week ending April 12th, down from their 88.3% utilization rate of a week earlier, and a below normal operating rate for early April, as US refineries have lagged normal operating rates since arctic cold penetrated to the Gulf Coast in mid January and froze off some operations… the 15,913,000 barrels of oil per day that were refined this week were 0.4% more than the 15,844,000 barrels of crude that were being processed daily during week ending April 14th of 2023, but 1.0% less than the 16,078,000 barrels that were being refined during the prepandemic week ending April 12th, 2019, when our refinery utilization rate was also at a below normal 87.7%..

Even with the increase in the amount of oil being refined this week, gasoline output from our refineries was a bit lower, decreasing by 25,000 barrels per day to 9,417,000 barrels per day during the week ending April 12th, after our refineries’ gasoline output had decreased by 538,000 barrels per day during the prior week. This week’s gasoline production was 0.6% less than the 9,475,000 barrels of gasoline that were being produced daily over week ending April 14th of last year, and 5.1% less than the gasoline production of 9,917,000 barrels per day during the prepandemic week ending April 12th, 2019….at the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 38,000 barrels per day to 4,601,000 barrels per day, after our distillates output had increased by 33,000 barrels per day during the prior week. Even after seven production increases in the past nine weeks, our distillates output was 3.1% less than the 4,750,000 barrels of distillates that were being produced daily during the week ending April 14th of 2023, and 4.6% less than the 4,823,000 barrels of distillates that were being produced daily during the week ending April 12th, 2019…

With this week’s decrease in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the ninth time in eleven weeks, decreasing by 1,154,000 barrels to 227,377,000 barrels during the week ending April 12th, after our gasoline inventories had increased by 715,000 barrels during the prior week. Our gasoline supplies fell this week because the amount of gasoline supplied to US users rose by 50,000 barrels per day to 8,662,000 barrels per day, and as our imports of gasoline fell by 21,000 barrels per day to 709,000 barrels per day, while our exports of gasoline fell by 152,000 barrels per day to 826,000 barrels per day.…After thirty-two gasoline inventory withdrawals over the past fifty-two weeks, our gasoline supplies were still 1.7% above last April 14th’s gasoline inventories of 223,544,000 barrels, but were about 4% below the five year average of our gasoline supplies for this time of the year…

With this week’s decrease in our distillates production, our supplies of distillate fuels fell for tenth time in thirteen weeks, following eight consecutive prior increases, decreasing by 2,760,000 barrels to 114,968,000 barrels over the week ending April 12th, after our distillates supplies had increased by 1,659,000 barrels during the prior week. Our distillates supplies fell this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 681,000 barrels per day to 3,666,000 barrels per day, even as our exports of distillates fell by 102,000 barrels per day to 1,478,000 barrels per day, while our imports of distillates fell by 14,000 barrels per day to 149,000 barrels per day.…Even with 30 inventory decreases over the past fifty-two weeks, our distillates supplies at the end of the week were 2.6% above the 112,090,000 barrels of distillates that we had in storage on April 14th of 2023, but were about 7% below the five year average of our distillates inventories for this time of the year…

Finally, even after our exports of crude oil jumped by nearly 75%, our commercial supplies of crude oil in storage rose for the 18th time in twenty-six weeks and for the 25th time in the past year, increasing by 2,735,000 barrels over the week, from 457,258,000 barrels on April 5th to 459,993,000 barrels on April 12th, after our commercial crude supplies had increased by 5,841,000 barrels over the prior week… With this week’s increase, our commercial crude oil inventories increased to about 1% below the most recent five-year average of commercial oil supplies for this time of year, while they were about 32% above the average of our available crude oil stocks as of the second weekend of April over the 5 years at the beginning of the past decade, with the big difference between those comparisons arising because it wasn’t until early 2015 that our oil inventories had first topped 400 million barrels. After our commercial crude oil inventories had jumped to record highs during the Covid lockdowns of the Spring of 2020, then jumped again after February 2021’s winter storm Uri froze off US Gulf Coast refining, but then fell due to higher exports relating to the Ukraine war, only to jump again following the Christmas 2022 refinery freeze offs, our commercial crude supplies as of this April 12th were still 1.3% less than the 465,968,000 barrels of oil left in commercial storage on April 14th of 2023, but were 9.1% more than the 421,753,000 barrels of oil that we still had in storage on April 15th of 2022, while still 6.7% less than the 493,017,000 barrels of oil we had in commercial storage on April 16th of 2021, after refinery damage from winter storm Uri left even more crude oil remaining after 2020’s pandemic precautions had left a glut of oil unused…

This Week’s Rig Count

In lieu of a detailed report on the rig count, we are again just including a screenshot of the rig count summary from Baker Hughes…in the table below, the first column shows the active rig count as of April 19th, the second column shows the change in the number of working rigs between last week’s count (April 12th) and this week’s (April 19th) count, the third column shows last week’s April 12th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting period a year ago, which in this week’s case was the 21st of April, 2023…

DUC well report for March

Monday of the past week saw the release of the EIA’s Drilling Productivity Report for April, which included the EIA’s March data on drilled but uncompleted (DUC) oil and gas wells in the 7 most productive shale regions (click tab 3)….that data showed an increase in uncompleted wells nationally for the first time in 13 months and for just the 4th time out of the past 46 months, as drilling of new wells increased while completions of drilled wells decreased in March, even as both​ still remained well below the average pre-pandemic levels….for the 7 sedimentary regions covered by this report, the total count of DUC wells increased by 9 wells, rising from a revised 4,513 DUC wells in February to 4,483 DUC wells in March, which was also 16.1% fewer DUCs than the 5,387 wells that had been drilled but remained uncompleted as of the end of March of a year ago…this month’s DUC increase occurred as 868 wells were drilled in the seven regions that this report covers (representing 87% of all U.S. onshore drilling operations) during March, up by 4 from the 864 wells that were drilled in February, while 859 wells were completed and brought into production by fracking them, down from the 866 well completions seen in February, and down from the 1,050 completions seen during March of last year….at the March completion rate, the 4,522 drilled but uncompleted wells remaining at the end of the month represents a 5.3 month backlog of wells that have been drilled but are not yet fracked, up from the 5.2 month DUC well backlog of a month ago, and up from the eight year low of 4.6 months of January 2023, on a completion rate that is still more than 20% below 2019’s pre-pandemic average…

the drilled but uncompleted well count in the Appalachian region, which includes the Utica shale, was up by 7 from a month earlier, rising from 813 DUC wells at the end of February to 820 DUC wells at the end of March, as 83 new wells were drilled into the Marcellus and Utica shales during the month, while 76 of the already drilled wells in the region were fracked..

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Major monthly reports released this past week included the March Consumer Price Index, the March Producer Price Index, and the March Import-Export Price Index, all from the Bureau of Labor Statistics, and the February report on Wholesale Trade, Sales and Inventories from the Census Bureau….meanwhile, a report released by the Fed late Friday of last week that we neglected to note then was the Consumer Credit Report for February, which indicated that overall consumer credit, a measure of non-real estate debt, expanded by a seasonally adjusted $14.1 billion, or at a 3.4% annual rate, as non-revolving credit expanded at a 0.9% annual rate to $3,712.4 billion and revolving credit outstanding grew at a 10.7% rate to $1,338.7 billion…

CPI Rose 0.4% in March on Higher Rent, Energy, and Insurance

The consumer price index was 0.4% higher in March, as higher prices for rent, gasoline, utilities, car insurance, medical care services including health insurance, transportation services, clothing, and internet services were just partly offset by lower prices for new & used vehicles, appliances, telephone hardware including smartphones, and recreational goods…the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that the weighted average of seasonally adjusted prices of consumer goods and services was 0.4% higher in March, after being 0.4% higher in February, 0.3% higher in January, 0.2% higher in December, 0.2% higher in November, 0.1% higher in October, 0.4% higher in September, after rising by 0.5% in August, by 0.2% in July, by 0.2% in June, by 0.1% in May, by 0.4% in April, and by 0.1% in March of last year….

The unadjusted CPI-U index, which was originally set to have prices of the 1982 to 1984 period equal to 100, rose from 310.326 in February to 312.332 in March, which left it statistically 3.47738% higher than the index reading of 301.836 in March of last year, which is reported as a 3.5% year over year increase, up from the 3.2% year over year increase reported for February, with such widely cited year over year figures often telling us more about last year’s CPI changes than this years…with higher energy prices partly offset by flat prices for food, seasonally adjusted core prices, which exclude food and energy, were also up by 0.4% for the month, as the unadjusted core price index rose from 315.419 to 317.088, which left the core index 3.80128% ahead of its year ago reading of 305.476, which is reported as a 3.8% year over year increase, the same year over year core price increase that was reported in February, but well below the 6.6% annual increase reported for September 2022, which had been the largest annual increase in core prices in forty years..

The volatile seasonally adjusted energy price index rose 1.1% in March, after rising by 2.3% in February, but after falling by 0.9% in January, by 0.2% in December, by 1.6% in November and by 2.1% in October, but after rising by 1.2% in September, rising by 4.4% in August, and being unchanged in July, and is now 2.1% higher than in March of a year ago….the price index for energy commodities was 1.5% higher in March, while the price index for energy services was 0.7% higher, after it had risen by 0.8% in February….the energy commodity index was up 1.5% on a 1.7% increase in the price of gasoline and despite a 1.3% decrease in the price of fuel oil, as prices for other energy commodities, including propane, kerosene, and firewood, were on average 1.3% lower…within energy services, the price index for utility gas service was unchanged in March after rising 2.3% in February, but is still 3.2% lower than it was a year ago, while the electricity price index rose 0.9% in March after rising 0.8% in February… energy commodities are now averaging 0.9% higher than their year ago levels, with gasoline prices averaging 1.3% higher than they were a year ago, while the energy services price index is now up 3.1% from last March, as electricity prices are averaging 5.0% higher than a year ago…

Meanwhile, the seasonally adjusted food price index was 0.1% higher in March, after being unchanged in February, being 0.4% higher in January, 0.2% higher in December, 0.2% higher in November, 0.3% higher in October, 0.2% higher in September, 0.2% higher in August, and 0.2% higher in July, as the price index for food purchased for use at home was unchanged, after being unchanged in February, after being 0.4% higher in January, 0.1% higher in December, unchanged in November, and 0.3% higher in October, while the price index for food bought to eat away from home was 0.3% higher, as average prices at fast food outlets rose 0.3%, average prices at full service restaurants rose 0.2%, and prices of other food away from home averaged 0.6% higher…

In the food at home categories, the price index for cereals and bakery products was 0.9% lower, as bread prices fell 0.9%, the price index for breakfast cereal fell 1.6%, the price index for cakes, cupcakes, and cookies fell 1.0%, the price index for frozen and refrigerated bakery products, pies, tarts, turnovers fell 1.8% and the price index for rice, pasta, and cornmeal was 0.6% lower…on the other hand, the price index for the meats, poultry, fish, and eggs food group was 0.9% higher, as the price index for pork rose 1.1%, the price index for poultry rose 1.5%, and egg prices were 4.6% higher….however, the seasonally adjusted price index for dairy products was 0.1% lower, even as average milk prices rose 0.1%, as the price index for cheese and related products fell 0.3% and the price index for ice cream and related products was 0.5% lower….meanwhile, the fruits and vegetables price index was 0.1% higher, as the price index for fresh fruits rose 0.3% and canned fruit and vegetables prices averaged 0.6% higher….in addition, the beverages price index was 0.3% higher, as the price index for carbonated drinks rose 0.3%, the price index for noncarbonated juices and drinks was 0.6% higher, and the price index for coffee was 0.3% higher….lastly, the price index for the ‘other foods at home’ category was 0.5% lower, as the price index for sugar and sweets fell 0.8%, the price index for salad dressing fell 1.2%, the price index for peanut butter fell 2.4%, the price index for butter and margarine fell 2.7%, the price index for soups fell 0.9%, and the price index for salt and other seasonings and spices was 2.2% lower…

Among the seasonally adjusted core components of the CPI, which rose by 0.4% in March , after rising 0.4% in February, by 0.4% in January, by 0.3% in December, by 0.3% in November, by 0.2% in October, by 0.3% in September, by 0.2% in August, and by 0.2% in July, the composite price index of all goods less food and energy goods was 0.2% lower in March, while the more heavily weighted composite for all services less energy services was 0.5% higher….

Among the goods components of the core price index, which will be used by the Bureau of Economic Analysis to adjust October’s retail sales for inflation in national accounts data, the price index for household furnishings and supplies was 0.1% lower, as the price index for floor coverings fell 0.9%, the price index for laundry equipment fell 1.2%, and the minor appliance index was 1.9% lower….on the other hand, the apparel price index was 0.7% higher on a 2.6% increase in the price index for women’s outerwear, a 2.4% increase in the price index for women’s dresses, a 5.9% increase in the price index for girls’ apparel, and a 1.1% increase in the price index for men’s footwear…. however, the price index for transportation commodities other than fuel was was 0.5% lower, as average prices for new vehicles was 0.2% lower, the price index for used cars and trucks was 1.1 lower, and the price index for vehicle parts and equipment other than tires was also 1.1% lower….meanwhile, the price index for medical care commodities was 0.2% higher as prescription drug prices rose 0.3%, nonprescription drug prices fell 1.1%, and the price index for medical equipment and supplies was 0.6% higher…on the other hand, the recreational commodities index was 0.5% lower, as the price index for televisions fell 1.1%, the price index for toys fell 1.7%, the price index for audio equipment fell 2.4%, the price index for sporting goods including bicycles fell 1.6%, and the price index for newspapers and magazines was 1.0% lower… in addition, the education and communication commodities index was 1.2% lower on a 0.9% decrease in the price index for educational books and supplies, and a 1.8% decrease in the price index for telephone hardware, calculators, and other consumer information items.…lastly, a separate price index just for alcoholic beverages was 0.1% higher, while the price index for ‘other goods’ was 0.2% higher on a 0.2% increase in the price index for cosmetics, perfume, bath, nail preparations and implements and a 0.7% increase in the price index for cigarettes…

Within core services, the price index for shelter was 0.4% higher, as rents rose 0.5%, homeowner’s equivalent rent was 0.4% higher, prices for lodging away from home at hotels and motels were 0.1% higher, the price index for water, sewers and trash collection was 0.3% higher, and household operation costs were 0.8% higher on a 0.9% increase in prices for domestic services….at the same time, the price index for medical care services was 0.6% higher, as the price index for care of invalids and elderly at home rose 5.9%, the price index for outpatient hospital services rose 1.3%, and the price index for health insurance was 1.2% higher….moreover, the transportation services price index was 1.5% higher, as the price index for motor vehicle maintenance and repair rose 1.7%, the price index for parking fees and tolls rose 1.3%, and the price index for motor vehicle insurance rose was 2.8% higher…in addition, the recreation services price index was 0.1% higher, as the price index for veterinarian services rose 2.5%, and the price index for video discs and other media was 14.7% higher…at the same time, the price index for education and communication services was 0.2% higher, as the price index for postage and delivery services rose 0.4%, the price index for elementary and high school tuition and fees rose 0.3, and the price index for internet services and electronic information providers was 0.8% higher…lastly, the index for other personal services rose 0.8%, as the price index for funeral expenses rose 1.7%, and the price index for checking account and other bank services was 1.4% higher..

NB: a note on reporting consumer prices: most of the media, and even some economists, have been reporting the change in consumer inflation as a change from annual figures of one month to the next…that’s a misleading and sometimes nonsensical way of reporting it, because it often tells you more about what the inflation figures were during the same month of a year ago than in the current month…by way of illustrating the problem, let’s imagine that CPI figures in 2023 started with a 0.6% increase in January, then were unchanged in February, increased 0.6% again in March, then were unchanged again in April 2023, then rose 0.6% again in May of 2023, then continued alternating between rising 0.6% and being unchanged each month over the rest of the year…in 2024, however, we will say that inflation leveled off at a 0.3% increase every month in our hypothetical example…both years would show a 3.6% annual gain, maybe closer to 3.7% with compounding…but those who report inflation as a change between the annual figures would have reported inflation at 3.3% in January 2024 (because the January 2023 increase had dropped out of the comparison), then would have reported a 3.6% increase in February, then a 3.3% increase in March, and would report a 3.6% increase again in April, even if month over month inflation for 2024 stays unchanged at 0.3%…

Producer Prices Rose 0.2% in March on Higher Foods & Transportation Services

The seasonally adjusted Producer Price Index (PPI) for final demand rose 0.2% in March, as the price index for finished wholesale goods fell 0.1% while the price index for final demand for services was 0.3% higher…that March increase followed a 0.6% PPI increase in February, when the price index for wholesale goods rose 1.2% and the price index for final demand for services was 0.3% higher, a 0.4% PPI increase in January, when the price index for finished wholesale goods fell 0.1%, while the price index for final demand for services was 0.6% higher; a 0.1% PPI decrease in December, when the index for prices of wholesale goods was 0.2% lower and the price index for final demand for services was 0.1% lower; a 0.1% PPI increase in November, when the average of prices for wholesale goods was 0.2% lower, while the price index for final demand for services was 0.2% higher; and an unrevised 0.3% PPI decrease in October, when the weighted average of prices for wholesale goods was 1.2% lower while the price index for final demand for services was 0.1% higher, and an unrevised 0.2% increase in September, when the weighted average of prices for wholesale goods was 0.9% higher and the price index for final demand for services was 0.1% lower….on an unadjusted basis, producer prices are 2.1% higher than a year ago, while the core producer price index, which excludes food, energy and trade services, was up 0.2% for the month, and is still 2.8% higher than it was a year ago…

As noted, the producer price index for final demand for goods was 0.1% lower in March, after being 1.2% higher in February, 0.1% lower in January, 0.1% lower in December, 0.2% lower in November, 1.2% lower in October. 0.9% higher in September, 1.7% higher in August, and 0.2% higher in July, and is now up 0.8% from a year ago….the final demand goods price index was down 0.1% in January as the price index for wholesale energy goods was 1.6% lower, after it had risen 4.1% in February, after falling 1.1% in January, by 0.8% in December, ny 2.0% in November, and falling by 6.4% in October, while the price index for wholesale foods was 1.0% higher, after rising 1.1% in February, but after falling 0.3% in January, being unchanged in December and after rising 0.7% in November, while the index for final demand for core wholesale goods (excluding food and energy) was 0.1% higher, after being 0.3% higher in February…

Wholesale energy prices were down 1.6% in February on a 3.6% decrease in wholesale prices for gasoline, a 6.6% decrease in wholesale prices for diesel fuel, and a 1.2% decrease in wholesale prices for residential natural gas, while the final demand for food price index was 0.8% higher on a 14.1% increase in the wholesale price index for processed young chickens, a 15.3% increase in the wholesale price index for fresh and dry vegetables, a 1.9% increase in the wholesale price index for finfish and shellfish, and a 2.5% increase in the wholesale price index for grains….among core wholesale goods, the wholesale price index for home electronic equipment rose 1.9%, the wholesale price index for sporting and athletic goods increased 2.0%, the wholesale price index for communication and related equipment rose 1.0%, and wholesale price index for metal cutting machine tools was 0.9% higher…

Meanwhile, the price index for final demand for services was 0.3% higher in February, after being 0.3% higher in February, 0.5% higher in January, after being unchanged in December, 0.2% higher in November, 0.1% higher in October, but 0.1% lower in September, 0.2% higher in August, and 0.8% higher in July, and is now 2.8% higher than a year ago…the price index for final demand for trade services r0se 0.3%, the price index for final demand for transportation and warehousing services rose 0.8%, and the core index for final demand for services less trade, transportation, and warehousing services was 0.2% higher….

Among trade services, seasonally adjusted margins for computer hardware, software, and supplies retailers rose 12.5%, margins for fuels and lubricants retailers rose 2.5%, margins for apparel retailers rose 1.9%, and margins for professional and commercial equipment wholesalers rose 8.3%, but margins for automobile retailers fell 5.8% and margins for TV, video, and photographic equipment and supplies retailers were 6.7% lower….among transportation and warehousing services, average margins for airline passenger services rose 2.2% and margins for truck transportation of freight rose 0.4%….among the components of the core final demand for services index, the price index for deposit services (partial) rose 2.7%, the price index for securities brokerage, dealing, investment advice, and related services rose 3.1%, the price index for passenger car rental rose 4.2%, and the price index for gaming receipts (partial) increased 2.5%…

This report also showed the price index for intermediate processed goods was 0.5% lower in March, after being 1.5% higher in February, 0.1% lower in January, 0.4% lower in December, 0.7% lower in November and 1.0% lower in October, but after rising 0.5% in September and by 2.0% in August….the price index for intermediate energy goods fell 1.5% in March as refinery prices for gasoline fell 3.6%, refinery prices for jet fuel fell 6.0%, the price index for industrial electric power fell 1.4%, the price index for commercial electric power fell 1.4%, and the price index for natural gas to electric utilities fell 6.4%… on the other hand, the price index for intermediate processed foods and feeds rose 0.6%, as the producer price index for processed poultry rose 10.7%, the producer price index for meats rose 0.8%, the producer price index for refined sugar and byproducts rose 0.8%, and the producer price index for dairy products rose 0.9%….however, the core price index for intermediate processed goods less food and energy goods was 0.4% lower, as the producer price index for plastic resins and materials fell 1.9%, the producer price index for steel mill products fell 7.8%, and the producer price index for air conditioning and refrigeration equipment fell 1.0%, while the producer price index for heating equipment rose 1.8%….average prices for intermediate processed goods are still 1.7% lower than in March 2023, the thirteenth consecutive year over year decrease, and are thus way down from their 26.6% year over year increase of November 2021, which had been a 46 year high…

Meanwhile, the price index for intermediate unprocessed goods fell 1.9% in March, after falling 0.7% in February, rising 1.4% in January, falling 4.1% in December, falling 2.1% in November and by 1.6% in October, after rising 2.9% in September, 2.1% in August and 2.5% in July….that was as the March price index for crude energy goods fell 6.9%, as crude oil prices fell 0.8%, unprocessed natural gas prices fell 37.0%, and coal prices were 1.9% lower…however, the price index for unprocessed foodstuffs and feedstuffs was 2.2% higher, on a 4.6% increase in producer prices for slaughter hogs, a 7.7% increase in producer prices for slaughter cattle, a 4.1% increase in producer prices for raw milk, and an 4.1% increase in producer prices for corn…meanwhile, the index for core raw materials other than food and energy materials was 0.2% higher on a 8.2% increase in the price index for nonferrous metal ores, a 5.0% increase in the price index for copper base scrap, and a 5.0% increase in the price index for recyclable paper….this raw materials price index is still 7.1% lower than a year ago, the fourteenth negative print after twenty-seven consecutive year over year increases, which came after the annual change on this index had been negative from the beginning of 2019 through October of 2020…

Lastly, the price index for services for intermediate demand was 0.2% higher in March, after being unchanged in February, 0.7% higher in January, 0.4% higher in December, and 0.5% higher in November, but after being unchanged in October, 0.3% higher in September, 0.1% lower in August, and 0.7% higher in July….the price index for intermediate trade services was unchanged, as margins for intermediate metals, minerals, and ores wholesalers rose 2.8% and margins for intermediate chemicals and allied products wholesalers rose 0.8%, but margins for machinery and equipment parts and supplies wholesalers fell 1.2% and margins for intermediate hardware, building material, and supplies retailers fell 1.4%….at the same time, the index for transportation and warehousing services for intermediate demand was also unchanged, as the intermediate price index for arrangement of freight and cargo fell 5.1%, but the intermediate price index for transportation of passengers rose 2.2%, and the intermediate price index for water transportation of freight was 1.1% higher…meanwhile, the core price index for intermediate services other than trade, transportation, and warehousing services was 0.3% higher, as the intermediate price index for securities brokerage, dealing, investment advice, and related services rose 3.1%,, the intermediate price index for investment banking rose 7.6%, the intermediate price index for deposit services (partial) rose 2.77%, and the intermediate price index for passenger car rental rose 4.5%…over the 12 months ended in March, the year over year price index for services for intermediate demand is now 3.6% higher than it was a year ago, the forty-second consecutive annual increase in this index, after it briefly turned negative year over year at the onset of the pandemic, from April to August of 2020, even as it is still much lower than the record 9.5% year over year increase indicated for July 2021…

February Wholesale Sales Up 2.3%, Wholesale Inventories Up 0.5%

The February report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at “$673.7 billion, up 2.3 percent (±0.4 percent) from the revised January level and .. up 0.8 percent (±1.1 percent)* from the revised February 2023 level”… the December 2023 to January 2024 percent change in sales was revised from the preliminary estimate of down 1.7 percent (±0.4 percent) to $663.9 billion a decrease of 1.8 percent (±0.5 percent) in conjunction with an annual revision of previously published data based on the results of the 2022 Annual Wholesale Trade Survey, and then was further revised to a decrease of 1.4% with this report….as an intermediate activity, wholesale sales are not included in GDP except insofar as they are a trade service, since the traded goods themselves do not represent an increase in the output of the goods sold….

On the other hand, the monthly change in private inventories is a major factor in GDP, as additional goods in a warehouse or on a store shelf represent goods that were produced but not sold, and this February report estimated that wholesale inventories were valued at $901.1 billion at month end, an increase of 0.5 percent (+/-0.4%) from the revised January level but 1.5 percent t (±0.9 percent) lower than February a year ago, with the January preliminary inventory estimate revised from the advance estimate of down 0.3 percent (±0.2 percent) to $895.1 billion to a decrease of 0.2 percent (±0.2 percent) to $896.5 billion, also reflecting both the annual revision and revisions included in this report….

For national accounts, the wholesale inventories reported here will be adjusted the February producer price indices…with notable exceptions such as inventories of farm products, chemicals and petroleum, we’ve previously estimated that wholesale inventories appear to be roughly 70% finished goods….with the February producer price index for finished goods up by 1.2% while the producer price indexes for intermediate goods & raw goods were 1.5% higher and 0.7% higher respectively, we can thus figure that February’s real wholesale inventories would have probably decreased by about 0.5%…since real wholesale inventories were up modestly the 4th quarter, February’s wholesale inventories real decrease will reverse that 4th quarter increase and also subtract both January’s and February’s real decreases from 1st quarter GDP…

  

(the above is the synopsis that accompanied my regular sunday morning news links emailing, which in turn was 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, most of which are picked from the aforementioned GGO posts, contact me…)  

across the board inventory build despite distillates exports at an 18 month high on a 1.134 million barrel per day drop in demand for fuel

US oil prices fell for the first time in five weeks as ongoing ceasefire talks between Israel and Hamas in Egypt tempered the geopolitical risk premium underlying recent oil price strength….after rising 4.5% to a five month high of $86.91 a barrel last week on threats to supply from increasing hostilities in eastern Europe and the Middle East, the contract price for the benchmark US light sweet crude for May delivery fell nearly 3% in the opening minutes on Monday, after Israel reduced its troops in Gaza and sent a team to Egypt for talks with Hamas ahead of the Eid holidays, but recovered from a morning low of $84.69 to settle down just 48 cents at $86.43 a barrel, as the ceasefire talks between Israel and Hamas had reduced somewhat the geopolitical risk premium.…oil prices continued to trend lower in overnight trading amid ongoing talks for a ceasefire in Gaza, but rallied mid-morning after the commander of Iran’s navy said it could close the Strait of Hormuz, if deemed necessary. but faded again late to settle $1.20 lower at $85.23 a barrel as traders kept their eyes on the talks for a Gaza ceasefire….oil prices moved higher overnight after Israel’s Foreign Minister stated that Israel would attack Iran, if Iran attacked its territory in retribution for Israel’s deadly attack on its consulate in Syria, then slid back to unchanged early Wednesday morning after a hotter than expected consumer price report took demand-seducing rate-cuts off the table, then fell further after EIA data showed crude oil and fuel inventories swelled by much more than​ was expected on weak demand and lower oil exports, but rebounded to settle 98 cents higher at $86.21 a barrel after an Israeli airstrike killed the three adult sons and four grandchildren of Hamas political leader Ismail Haniyeh, clouding the prospect for a ceasefire between Israel and the militant group…oil prices rose in early Asian trading Thursday, on forecasts for strong demand in the US, the world’s biggest oil consumer, and rising concerns over global oil supply routes in the Middle East, but erased those gains early in the New York session, weighed down by the expectations that the Fed would not cut interest rates until September, instead of sooner, following a third consecutive higher than expected consumer inflation reading, and settled $1.19 lower at $85.02 a barrel, as weak domestic demand for fuel and concern over the effect of inflation on consumer spending prompted a pullback…however, oil prices surged 2% in early trading Friday, on intelligence reports suggesting that Iran would attack Israel within 48 hours, but pared those early gains to settle 64 cents higher at $85.66 a barrel, with trading shaped by the push-and-pull of U.S. macroeconomic indicators on the one​ h​and and the escalating rhetoric between Israel and Iran on the other…oil prices thus finished 1.4% lower for the week, after nearing a six-month high early in the week on concern that Iran would retaliate for a Israeli attack on Iran’s embassy in Damascus…

meanwhile, natural gas prices finished lower for the 2nd time in three weeks, as producers exited the winter with almost 39% more gas in storage than normal at this time of year… after rising 1.2% to $1.785 per mmBTU last week as ​more natural gas producers restrained their output, the contract price for natural gas for May delivery opened two cents higher on Monday and rose gradually throughout the ​s​ession, as production figures remained modest and weather forecasts were neutral, and settled 5.9 cents higher at $1.844 per mmBTU, amid expectations for a seasonally modest storage injection, as lower production offset the impact of mild spring weather…natural gas prices opened 4 cents higher on Tuesday, supported by maintenance-induced declines in production, but failed to maintain momentum and settled just 2.8 cents higher at $1.872 per mmBTU​, as speculation about potential disruptions to LNG exports out of Corpus Christi tempered early gains…natural gas prices opened 4 cents higher again on Wednesday on continued maintenance-induced production declines and on strong LNG export demand, but again backed off the early highs to settle 1.3 cents higher at $1.885 per mmBTU, with price gains limited by the huge amount of surplus of gas in storage and negative spot power and gas prices in parts of Texas, California and Arizona over recent weeks….natural gas prices opened 6 cents lower on Thursday, as traders apparently anticipated a bearish storage report, and continued falling to settle down 12.1 cents at a two week low of $1.764 per mmBTU following a larger-than-expected inventory increase and forecasts for benign weather and weak demand ahead….natural gas prices held near that level in Friday’s trading, on worries about a huge storage surplus and forecasts for lower demand over the next two weeks than previously expected, and settled six-tenths of a cent higher at $1.770 per mmBTU, and thus ended 0.8% lower for the week..

The EIA’s natural gas storage report for the week ending April 5th indicated that the amount of working natural gas held in underground storage rose by 24 billion cubic feet to 2,283 billion cubic feet by the end of the week, which left our natural gas supplies 435 billion cubic feet, or 23.5% above the 1848 billion cubic feet that were in storage on April 5th of last year, and 633 billion cubic feet, or 38.4% more than the five-year average of 1,650 billion cubic feet of natural gas that ​h​ad typically ​been in working storage as of the 5th of April over the most recent five years…the 24 billion cubic foot addition to US natural gas working storage for the cited week was more than the 15 billion cubic foot addition that the market was expecting, and it was also more than the 11 billion cubic feet that were added to natural gas storage during the corresponding first week of April 2023, while it matched the average 24 billion cubic foot injection into natural gas storage that has been typical for the first week of April over the past 5 years…

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending April 5th indicated that after a big drop in our oil exports, we again had surplus oil to add to our stored commercial crude supplies for 9th time in eleven weeks and for the 17th time in the past 25 weeks, despite a big jump in demand ​for oil that the EIA could not account for….Our imports of crude oil fell by an average of 183,000 barrels per day to an average of 6,434,000 barrels per day, after falling by an average of 85,000 barrels per day over the prior week, while our exports of crude oil fell by 1,314,000 barrels per day to average 2,708,000 barrels per day, which when used to offset our imports, meant that the net of our trade in oil worked out to a net import average of 3,726,000 barrels of oil per day during the week ending April 5th, 1,131,000 more barrels per day than the net of our imports minus our exports during the prior week. At the same time, transfers to our oil supply from Alaskan gas liquids, from natural gasoline, from condensate, and from unfinished oils averaged 393,000 barrels per day, while during the same week, production of crude from US wells was unchanged at 13,100,000 barrels per day. Hence our daily supply of oil from the net of our international trade in oil, from transfers, and from domestic well production appears to have averaged a rounded total of 17,219,000 barrels per day during the April 5th reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,782,000 barrels of crude per day during the week ending April 5th, an average of 115,000 fewer barrels per day than the amount of oil that our refineries reported they were processing during the prior week, while over the same period the EIA’s surveys indicated that an average of 919,000 barrels of oil per day were being added to the supplies of oil stored in the US… So, based on that reported & estimated data, the crude oil figures provided by the EIA for the week ending April 5th appear to indicate that our total working supply of oil from net imports, from transfers, and from oilfield production was 518,000 barrels per day more than what what was added to storage plus our oil refineries reported they used during the week…To account for that difference between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a [-518,000] barrel per day figure onto line 16 of the weekly U.S. Petroleum Balance Sheet, in order to make the reported data for the supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there was an error or omission of that magnitude in the week’s oil supply & demand figures that we have just transcribed…Moreover, since 360,000 barrels of oil suppl​y per day could not be accounted for in ​t​he prior week’s EIA data, that means there was a 878,000 barrel per day difference between this week’s oil balance sheet error and the EIA’s crude oil balance sheet error from a week ago, and hence the changes to supply and demand from that week to this one that are indicated by this week’s report are off by that much, and therefore ​useless…however, since most oil traders react to these weekly EIA reports as if they were accurate, and since these weekly figures therefore often drive oil pricing (as is obvious to anyone who watches oil prices), and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it’s published, and just as it’s watched & believed to be reasonably reliable by most everyone in the industry…(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer….there is also an aging twitter thread from an EIA administrator addressing these ongoing weekly errors, and what they had hoped to do about it)

This week’s average 919,000 barrel per day increase in our overall crude oil inventories came as an average of 834,000 barrels per day were being added to our commercially available stocks of crude oil, while an average of 85,000 barrels per day were being added to our Strategic Petroleum Reserve, the eighteenth SPR increase in twenty-five weeks, following nearly continuous withdrawals over the prior 39 months… Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to 6,508,000 barrels per day last week, which was 4.8% more than the 6,208,000 barrel per day average that we were importing over the same four-week period last year. This week’s crude oil production was reported to be unchanged at 13,100,000 barrels per day because the EIA’s rounded estimate of the output from wells in the lower 48 states was unchanged at 12,700,000 barrels per day, while Alaska’s oil production was 5,000 barrels per day higher at 436,000 barrels per day, but still added the same 400,000 barrels per day to the EIA’s rounded national total as it did last week…US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure matches that of our pre-pandemic production peak, and is also 35.1% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021.

US oil refineries were operating at 88.3% of their capacity while processing those 15,782,000 barrels of crude per day during the week ending April 5th, down from their 88.6% utilization rate of a week earlier, and a below normal operating rate for early April, as US refineries have lagged normal operating rates since arctic cold penetrated to the Gulf Coast in mid January​ and froze off some operations… the 15,782,000 barrels of oil per day that were refined this week were 1.7% more than the 15,585,000 barrels of crude that were being processed daily during week ending April 7th of 2023, but 2.0% less than the 16,100,000 barrels that were being refined during the prepandemic week ending April 5th, 2019, when our refinery utilization rate was also at a below normal 87.5%..

With the decrease in the amount of oil being refined this week, gasoline output from our refineries was somewhat lower, decreasing by 538,000 barrels per day to 9,442,000 barrels per day during the week ending April 5th, after our refineries’ gasoline output had increased by 767,000 barrels per day during the prior week. This week’s gasoline production was 1.2% less than the 9,557,000 barrels of gasoline that were being produced daily over week ending April 7th of last year, and 7.1% less than the gasoline production of 10,169,000 barrels per day during the prepandemic week ending April 5th, 2019….on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 33,000 barrels per day to 4,639,000 barrels per day, after our distillates output had decreased by 208,000 barrels per day during the prior week. After seven production increases in the past eight weeks, our distillates output was 1.2% more than the 4,583,000 barrels of distillates that were being produced daily during the week ending April 7th of 2023, but 7.9% less than the 5,038,000 barrels of distillates that were being produced daily during the week ending April 5th, 2019…

Even with this week’s decrease in our gasoline production, our supplies of gasoline in storage at the end of the week rose for the second time in ten weeks, increasing by 715,000 barrels to 228,531,000 barrels during the week ending April 5th, after our gasoline inventories had decreased by 4,256,000 barrels during the prior week. Our gasoline supplies rose this week because the amount of gasoline supplied to US users fell by 624,000 barrels per day to 8,612,000 barrels per day, and because our imports of gasoline rose by 242,000 barrels per day to 730,000 barrels per day, while our exports of gasoline rose by 115,000 barrels per day to 978,000 barrels per day.…After thirty-one gasoline inventory withdrawals over the past fifty-two weeks, our gasoline supplies were still 2.8% above last April 7th’s gasoline inventories of 222,245,000 barrels, but were about 3% below the five year average of our gasoline supplies for this time of the year…

With this week’s increase in our distillates production, our supplies of distillate fuels rose for 3rd time in twelve weeks, following eight consecutive prior increases, increasing by 1,659,000 barrels to 117,728,000 barrels over the week ending April 5th, after our distillates supplies had decreased by 1,268,000 barrels during the prior week. Our distillates supplies rose this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 510,000 barrels per day to 2,985,000 barrels per day, and because our imports of distillates rose by 59,000 barrels per day to 163,000 barrels per day, even as our exports of distillates rose by 184,000 barrels per day to an eighteen month high of 1,580,000 barrels per day.…Even with 30 inventory decreases over the past fifty-two weeks, our distillates supplies at the end of the week were 4.7% above the 112,445,000 barrels of distillates that we had in storage on April 7th of 2023, but were about 5% below the five year average of our distillates inventories for this time of the year…

Finally, after our exports of crude oil dropped by nearly a third, our commercial supplies of crude oil in storage rose for the 17th time in twenty-six weeks and for the 24th time in the past year, increasing by 5,841,000 barrels over the week, from 451,417,000 barrels on March 29th to 457,258,000 barrels on April 5th, after our commercial crude supplies had increased by 3,210,000 barrels over the prior week… With this week’s increase, our commercial crude oil inventories remained about 2% below the most recent five-year average of commercial oil supplies for this time of year, but were 31.8% above the average of our available crude oil stocks as of the first weekend of April over the 5 years at the beginning of the past decade, with the big difference between those comparisons arising because it wasn’t until early 2015 that our oil inventories had first topped 400 million barrels. After our commercial crude oil inventories had jumped to record highs during the Covid lockdowns of the Spring of 2020, then jumped again after February 2021’s winter storm Uri froze off US Gulf Coast refining, but then fell due to higher exports relating to the Ukraine war, only to jump again following the Christmas 2022 refinery freeze offs, our commercial crude supplies as of this April 5th were still 2.8% less than the 470,549,000 barrels of oil left in commercial storage on April 7th of 2023, but were 10.9% more than the 412,371,000 barrels of oil that we still had in storage on April 8th of 2022, while still 8.2% less than the 498,313,000 barrels of oil we had in commercial storage on April 9th of 2021, after refinery damage from winter storm Uri left even more crude oil remaining after 2020’s pandemic precautions had left a glut of oil unused…

This Week’s Rig Count

In lieu of a detailed report on the rig count, we are again just including a screenshot of​ the rig count summary from Baker Hughes…in the table below, the first column shows the active rig count as of April 12th, the second column shows the change in the number of working rigs between last week’s count (April 5th) and this week’s (April 12th) count, the third column shows last week’s April 5th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting period a year ago, which in this week’s case was the 14th of April, 2023…

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Major monthly economic reports released during the past week included the Employment Situation Summary for March and the Job Openings and Labor Turnover Survey (JOLTS) for February, both from the Bureau of Labor Statistics, the Commerce Department report on our International Trade for February, and the February report on Construction Spending and the Full Report on Manufacturers’ Shipments, Inventories and Orders for February, both from the Census Bureau..

Privately issued reports released this week included the ADP Employment Report for March, wherein the payroll processor estimated that private payrolls increased by 184,000, the light vehicle sales report for March from Wards Automotive, which estimated that vehicles sold at a 15.49 million annual rate in March, down from the 15.81 million annual sales rate in February, but up from the 14.89 million annual sales rate reported for March a year earlier, and both of the widely followed purchasing manager’s survey from the Institute for Supply Management (ISM): the March Manufacturing Report On Business indicated that the manufacturing PMI (Purchasing Managers Index) rose to 50.3% in March, up from 47.8% in February, which suggests that a small plurality of manufacturing purchasing managers saw better conditions during March for the first time in 17 months, while the March 2023 Services Report On Business reported their Services Index fell to 51.4%, down from 52.6% in February, also indicating that a small plurality of service industry purchasing managers reported expansion in various facets of their business in March…

Employers Added 303,000 Jobs in March, Unemployment Rate Fell to 3.8%

The Employment Situation Summary for March reported a payroll job increase that was well above expectations, and that both the labor force participation rate and the employment rate rose 0.2%, while the unemployment rate fell 0.1%….seasonally adjusted estimates extrapolated from the establishment survey data projected that employers added 303,000 jobs in March, after the previously estimated payroll job increase for January was revised was revised up by 27,000, from 229,000 to 256,000, while the payroll jobs increase for February was revised down by 5,000, from 275,000 to 270,000…so including those revisions, this report thus represents a total of 325,000 more seasonally adjusted payroll jobs than were reported last month…..the unadjusted data shows that there were actually 659,000 more payroll jobs extant in March than in February, as the usual seasonal job increases in sectors such as construction, administrative and waste services, and in leisure and hospitality were washed out by the seasonal adjustments…

Seasonally adjusted job increases in March were spread through both the goods producing and the service sectors and government, with only non-durable goods manufacturing showing a modest 4,000 job loss…since the BLS summary of the job gains by sector is clear and more detailed than our usual synopsis, we’ll just quote that summary here:

• Total nonfarm payroll employment rose by 303,000 in March, higher than the average monthly gain of 231,000 over the prior 12 months. In March, job gains occurred in health care, government, and construction. (See table B-1.)
• Health care added 72,000 jobs in March, above the average monthly gain of 60,000 over the prior 12 months. In March, job growth continued in ambulatory health care services (+28,000), hospitals (+27,000), and nursing and residential care facilities (+18,000).
• In March, employment in government increased by 71,000, higher than the average monthly gain of 54,000 over the prior 12 months. Over the month, employment increased in local government (+49,000) and federal government (+9,000).
• Construction added 39,000 jobs in March, about double the average monthly gain of 19,000 over the prior 12 months. Over the month, employment increased in nonresidential specialty trade contractors (+16,000).
• Employment in leisure and hospitality trended up in March (+49,000) and has returned to its pre-pandemic February 2020 level. Over the prior 12 months, job growth in the industry had averaged 37,000 per month.
• Employment in the other services industry continued its upward trend in March (+16,000). The industry had added an average of 8,000 jobs per month over the prior 12 months. Employment in other services remains below its February 2020 level by 40,000, or 0.7 percent.
• Employment in social assistance continued to trend up in March (+9,000), below the average monthly gain of 22,000 over the prior 12 months.
• In March, employment was little changed in retail trade (+18,000). A job gain in general merchandise retailers (+20,000) was partially offset by job losses in building material and garden equipment and supplies dealers (-10,000) and in automotive parts, accessories, and tire retailers (-3,000).
• Employment showed little or no change over the month in other major industries, including mining, quarrying, and oil and gas extraction; manufacturing; wholesale trade; transportation and warehousing; information; financial activities; and professional and business services.

The establishment survey also showed that average hourly pay for all employees rose by 12 cents an hour to $34.69 an hour in March, after it had increased by 5 cents an hour in February; at the same time, the average hourly earnings of production and non-supervisory employees increased by 7 cents to $29.79 an hour…employers also reported that the average workweek for all private payroll employees increased by 0.1 hour to 34.4 hours in March, after a 0.1 hour decrease in February, while hours for production and non-supervisory personnel was up by 0.1 hour to 33.9 hours….meanwhile, the manufacturing workweek was unchanged at 40.0 hours, while average factory overtime was down a tenth of an hour to 2.9 hours…

At the same time, the March household survey indicated that the seasonally adjusted extrapolation of those who reported being employed rose by an estimated 498,000 to 161,466,000, while the similarly estimated number of those counted as unemployed fell by 29,000 to 6,429,000; which together meant there was a 469,000 increase in the total labor force…since the working age population had grown by 173,000 over the same period, that meant the number of employment aged individuals who were not in the labor force fell by a rounded 296,000 to 99,989,000…meanwhile, the increase of those in the labor force was large enough, when compared to the civilian noninstitutional population, to increase the labor force participation rate from 62.5% in February to 62.7% in March….likewise, the increase in number employed as a percentage of the increase in the population was enough to raise the employment to population ratio, which we could think of as an employment rate, by 0.2%, from 60.1% in February to 60.3% in March….at the same time, the modest decrease in the number unemployed, combined with the increase in the labor force, was apparently just large enough to lower the unemployment rate by 0.1%, from 3.9% in February to 3.8% in March….meanwhile, the number who reported they were involuntarily working part time fell by 68,000 to 4,308,000 in March, even though the alternative measure of unemployment, U-6, which includes those “employed part time for economic reasons”, remained unchanged at 7.3% in March..

Like most reports from the Bureau of Labor Statistics, the employment situation press release itself is easy to read and understand, so you can get more details on these two reports from there…note that almost every paragraph in that release points to one or more of the tables that are linked to on the bottom of the release, and those tables are also on a separate html page here that you can open it alongside the press release to avoid the need to scroll up and down the page..

Hiring, Layoffs, and Job Quitting were Higher in February; Job Openings were Little Changed

The Job Openings and Labor Turnover Survey (JOLTS) report for February from the Bureau of Labor Statistics estimated that seasonally adjusted job openings increased by 8,000, from 8,748,000 in January to 8,756,000 in February, after January’s job openings were revised down by 115,000 from the originally reported 8,863,000…February’s jobs openings were still 11.1% lower than the 9,849,000 job openings reported for February a year ago, as the job opening ratio expressed as a percentage of the employed was unchanged at 5.3% in February, but was down from the 6.0% rate of February a year ago… the information sector, with a 85,000 job opening decrease to 117,000 openings, saw the largest percentage decrease, while job openings in finance and insurance increased by 126,000 to 491,000 (details on job openings by industry and region can be viewed in Table 1)…like most BLS releases, the press release for this report is easy to understand and also refers us to the associated table for the data cited, which are linked at the end of the release…

The JOLTS release also reports on labor turnover, which consists of hires and job separations, which in turn is further divided into layoffs and discharges, those who quit, and ‘other separations’, which includes retirements and deaths….in February, seasonally adjusted new hires totaled 5,818,000, up by 120,000 from the revised 5,698,000 who were hired or rehired in January, as the hiring rate as a percentage of all employed rose from 3.6% in January to 3.7% in February, but was still down from the 3.9% hiring rate in February a year earlier (details of hiring by sector since November and for a year ago are in table 2)….meanwhile, total separations rose by 110,000, from 5,449,000 in January to 5,559,000 in February, as the separations rate as a percentage of the employed was unchanged at 3.5% in February, but was down from the 3.8% separations rate in February a year ago (see details in table 3)…subtracting the 5,559,000 total separations from the total hires of 5,818,000 would imply an increase of 259,000 jobs in February, a bit less than the revised payroll job increase of 270,000 for February reported in the March establishment survey later in the week, but still well within the expected +/-130,000 margin of error for these extrapolated reports…

Breaking down the seasonally adjusted job separations, the BLS found that 3,484,000 of us voluntarily quit our jobs in February, up by 38,000 from the revised 3,446,000 who quit their jobs in January, while the quits rate, widely watched as an indicator of worker confidence, remained unchanged at 2.2% of total employment, while it was down from the quits rate of 2.6% year earlier (see details in table 4)….in addition to those who quit, another 1,724,000 were either laid off, fired or otherwise discharged in February, up by 128,000 from the revised 1,596,000 who were discharged in January, as the discharges rate rose from 1.0% to 1.1% of all those who were employed during the month, and it was also up from the 1.0% discharges rate of a year earlier….meanwhile, other separations, which includes retirements and deaths, were at 351,000 in February, down from 407,000 in January, for an ‘other separations rate’ of 0.2%, down from the 0.3% rate in January, but the same as in February of last year….both seasonally adjusted and unadjusted details by industry and by region on hires and job separations, and on job quits and discharges can be accessed using the links to tables at the bottom of the press release…

US Trade Deficit Rose 1.9% in February on Higher Imports of Cellphones

Our trade deficit rose 1.9% in February, as both the value of our exports and the value of our imports increased, but the value of our imports increased by more than the value of our exports did….the Commerce Department report on our international trade in goods and services for February indicated that our seasonally adjusted goods and services trade deficit rose by a rounded $1.3 billion to a rounded $68.9 billion in February, from a January deficit that was revised up to $67.6 billion from the $67.4 billion reported a month ago…in rounded figures, the value of our February exports rose by a rounded $5.9 billion to $251.2 billion on a $5.0 billion increase to $176.7 billion in our exports of goods, and an $0.8 billion increase to $86.4 billion in our exports of services, while the value of our imports rose $7.1 billion to $331.9 billion on a $4.7 billion increase to $268.1 billion in our imports of goods, and a $2.4 billion increase to $63.8 billion in our imports of services….export prices averaged 0.3% higher in February, which means part of the increase in the nominal value of our exports for the month was price related, and that our real exports likely rose on the order of 2.0%, while import prices also averaged 0.8% higher, meaning that part of increase in imports was also price related, and that real imports probably only rose about 1.4%

The $5.0 billion increase in the value of our February exports of goods resulted from higher exports of industrial supplies and materials, of foods, feeds, and beverages, and of capital goods, which were partly offset by lower exports of automotive products…referencing the Full Release and Tables for February (pdf), in Exhibit 7 we find that our exports of industrial supplies and materials rose by $2,923 million to $64,073 million on a $1,097 million increase in our exports of crude oil, a $600 million increase in our exports of non-monetary gold, and a $432 million increase in our exports of natural gas liquids, which were partly offset by a $552 million decrease in our exports of natural gas, and that our exports of foods, feeds and beverages rose by $1,706 million to $15,471 million, led by a $989 million increase in our exports of soybeans… in addition, our exports of capital goods rose by $1,480 million to $52,969 million on a $1,420 million increase in our exports of civilian aircraft and a $337 million increase in our exports of computers, which were partly offset by a $529 million decrease in our exports of industrial machinery not otherwise itemized, and our exports of consumer goods rose by $148 million to $21,750 million as a $663 million decrease in our exports of pharmaceutical preparations was offset by a $553 million increase in our exports of gem diamonds, while our exports in other goods not categorized by end use rose by $40 million to $7,188 million…partly offsetting the increases in those end use categories, our exports of automotive vehicles, parts, and engines fell by $1,287 million to $13,853 million, led by a $866 million decrease in our exports of new and used passenger cars..

Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our imports of goods and shows that higher imports of consumer goods, of foods, feeds, and beverages, and of automotive products were largely responsible for the $4.7 billion increase in our February goods imports, even as imports in all categories rose….our imports of consumer goods increased by $1,605 million to $63,751 million as a $1,350 million increase in our imports of a cell phones, a $430 million increase in our imports of furniture and related household goods, and a $381 million increase in our imports of textile apparel and household goods other than those of wool or cotton were partly offset by a $1,256 million decrease in our imports of pharmaceutical preparations, and a $364 million decrease in our imports of artwork and other collectibles. while our imports of foods, feeds, and beverages rose by $1300 million to $18,283 million, on increases in imports of every food category, led by a $539 million increase in imports of foods other than those itemized separately….in addition, our imports of automotive vehicles, parts and engines rose by $1,066 million to $41,946 million on a $467 million increase in our imports of automotive parts and accessories other than engines, chassis, and tires, and our imports of capital goods rose by $679 million to $75,685 million as a $1,611 million increase in our imports of computers and a $394 million increase in our imports of telecommunications equipment were partly offset by a $534 million decrease in our imports of computer accessories and a $532 million decrease in our imports of semiconductors…lastly, our imports of industrial supplies and materials rose by $128 million to $55,077 million as a $572 million increase in our imports of petroleum products other than fuel oil and a $308 million increase in our imports of bauxite and aluminum were partly offset by a $512 million decrease in our imports of organic chemicals and a $420 million decrease in our imports of copper, while our imports of other goods not categorized by end use fell by $18 million to $10,867 million…

The press release for this month’s report summarizes Exhibit 19 in the full release pdf for February, which gives us surplus and deficit details on our goods trade with selected countries:

The February figures show surpluses, in billions of dollars, with South and Central America ($5.5), Netherlands ($4.3), Hong Kong ($2.8), Australia ($1.6), United Kingdom ($0.8), Belgium ($0.6), Brazil ($0.6), Switzerland ($0.4), and Saudi Arabia (less than $0.1). Deficits were recorded, in billions of dollars, with China ($21.9), European Union ($17.6), Mexico ($15.3), Vietnam ($9.6), Germany ($7.6), Japan ($6.2), Ireland ($5.3), South Korea ($5.2), Canada ($5.1), India ($4.4), Taiwan ($4.2), Italy ($3.4), Malaysia ($2.4), France ($0.8), Singapore ($0.3), and Israel ($0.3).

• The balance with Switzerland shifted from a deficit of $1.5 billion in January to a surplus of $0.4 billion in February. Exports increased $0.7 billion to $3.6 billion and imports decreased $1.2 billion to $3.2 billion.
• The deficit with Japan decreased $1.1 billion to $6.2 billion in February. Exports increased $0.1 billion to $6.4 billion and imports decreased $1.0 billion to $12.6 billion.
• The deficit with Mexico increased $2.7 billion to $15.3 billion in February. Exports increased $0.4 billion to $27.6 billion and imports increased $3.1 billion to $43.0 billion.

To gauge the impact of January and February trade data on the eventual 1st quarter GDP growth figures, we use exhibit 10 in the full pdf for this report, which gives us monthly goods trade figures by end use category and in total, already adjusted for inflation in chained 2017 dollars, the same inflation adjustment that’s used by the BEA to compute trade figures for GDP, with the only difference being that the amounts in this report are not annualized….from that table, we can figure that the 4th quarter’s real exports of goods averaged 143,572.7 million monthly in chained 2017 dollars, while inflation adjusted 1st quarter goods exports were at 144,853 million and 147,842 million for January and February respectively in that same 2017 dollar quantity index representation…averaging January’s and February’s goods exports and then computing the annualized change between that average and the average of the fourth quarter, we find that the 1st quarter’s real exports of goods are running at a 7.96% annual rate above those of the 4th quarter, or at a pace that would add about 0.58 percentage points to 1st quarter GDP….. in a similar manner, we find that our 4th quarter real imports of goods averaged 227,978.3 million monthly in chained 2017 dollars, while inflation adjusted January and February imports were at 230,845 million and 234,855 million respectively, after that same 2017 chained dollars inflation adjustment…that would indicate that so far in the 1st quarter, our real imports of goods have increased at a 8.83% annual rate from those of the 4th quarter…since increases in imports subtract from GDP because they represent the portion of consumption or investment that occurred during the quarter that was not produced domestically, their increase at a 8.83% rate would subtract about 0.96 percentage points from 1st quarter GDP….hence, if the average trade deficit in goods of the two months reported here is continued in March, the net effect of our international trade in goods will be to subtract around 0.38 percentage points from 1st quarter GDP…

Note that we have not computed the impact of the usually less volatile change in services here because the Census does not provide inflation adjusted data on those, but that the $0.6 billion increase in exports of services vs the $2.4 billion increase in imports of services suggests that February’s trade in services would also be a subtraction from 1st quarter GDP, after a near balance in the change in January’s exports and imports in services suggested that the impact of that month’s services trade on GDP would be negligible…

Construction Spending Fell 0.3% in February after January & December Figures Were Revised Lower

The Census Bureau’s report on February construction spending (pdf) reported that “Construction spending during February 2024 was estimated at a seasonally adjusted annual rate of $2,091.5 billion, 0.3 percent (±0.8 percent)* below the revised January estimate of $2,096.9 billion. The February figure is 10.7 percent (±1.3 percent) above the February 2023 estimate of $1,889.6 billion. During the first two months of this year, construction spending amounted to $298.1 billion, 11.9 percent (±1.3 percent) above the $266.5 billion for the same period in 2023. “…the January annualized spending estimate was revised less than 0.3% lower, from the $2,102.4 billion reported a month ago to $2,096.9 billion, while December’s construction spending was revised down by more than 0.2%, from $2,105.8 billion to $2,101.042 billion annually, which together meant that the December to January construction spending change remained as a decrease of 0.2%….meanwhile, December’s annualized spending decrease would mean we’ll see a downward revision of about 1 basis point to 4th quarter GDP when the annual revisions are released later this summer…

A further breakdown of the different subsets of construction spending are provided by a Census summary, which precedes the detailed spreadsheets, is included below:

• Private Construction – Spending on private construction was at a seasonally adjusted annual rate of $1,617.1 billion, virtually unchanged from (±0.7 percent)* the revised January estimate of $1,616.8 billion. Residential construction was at a seasonally adjusted annual rate of $901.1 billion in February, 0.7 percent (±1.3 percent)* above the revised January estimate of $894.5 billion. Nonresidential construction was at a seasonally adjusted annual rate of $716.0 billion in February, 0.9 percent (±0.7 percent) below the revised January estimate of $722.3 billion.
• Public Construction – In February, the estimated seasonally adjusted annual rate of public construction spending was $474.4 billion, 1.2 percent (±1.5 percent)* below the revised January estimate of $480.1 billion. Educational construction was at a seasonally adjusted annual rate of $100.5 billion, 1.8 percent (±2.0 percent)* below the revised January estimate of $102.3 billion. Highway construction was at a seasonally adjusted annual rate of $147.3 billion, 1.6 percent (±4.8 percent)* below the revised January estimate of $149.7 billion.

As you can gather from that summary, construction spending data is used as the source for 3 subcomponents of GDP; investment in private non-residential structures, investment in residential structures, and into government investment outlays, for both state and local and Federal governments…however, getting an accurate read on the impact of February’s construction spending reported in this release on 1st quarter GDP is difficult because all figures given here are in nominal dollars and as you know, data used to compute the change in GDP must be adjusted for changes in price to determine the actual change in construction put in place….there are multiple prices indexes for different types of construction listed in the National Income and Product Accounts Handbook, Chapter 6 (pdf), so in lieu of trying to adjust the figures for all of those types of construction separately, we’ve opted to just use the producer price index for final demand construction as an inexact shortcut to make the needed price adjustment and come up with an approximate estimate…

That price index showed that aggregate construction costs were unchanged in February, after they had increased by 0.2% in January, and were unchanged in December and fell by 0.1% in November…on that basis, we can estimate that February construction costs were about 0.2% more than those of December, also 0.2% more than those of November, and roughly 0.1% more than those of October, and of course roughly the same as those of January….we’ll then use those relative price change percentages to inflate the lower cost spending figures for each of the 4th quarter months vis a vis February, which is arithmetically the same as adjusting higher priced January and February construction spending downward, for purposes of comparison…

This report gives annualized construction spending in millions of dollars for the 4th quarter months as $2,101,042 in December, $2,082,923 in November, and $2,058,903 in October, while annualized construction spending was at $2,091,511 in February and $2,096,922 in January….thus to compare January’s nominal construction spending of $2,096,922 and February’s figure of $2,091,511 to “inflation adjusted” figures of the fourth quarter, our computation looks like this: ((2,091,511 + 2,096,922 * 1.000 ) / 2 ) / ((2,101,042 * 1.002 + 2,082,923 * 1.002 + 2,058,903 * 1.001) / 3) = 1.00469427, which tells us that real construction spending over January and February has risen by 0.47% from that of the 4th quarter period, or that it was up at a 1.89% annual rate…then, to figure the potential effect of that change on GDP, we take the difference between the 4th quarter inflation adjusted average and that of January’s & February’s adjusted spending as a fraction of 4th quarter GDP, and find that 1st quarter construction spending is rising at a rate that would add about 0.09 percentage points to 1st quarter GDP, an estimate which assumes there would be little change in real construction in March over the January & February average…

February Factory Shipments Rose 1.4%, Factory Inventories were 0.3% Higher

The Full Report on Manufacturers’ Shipments, Inventories, & Orders (pdf) for February from the Census Bureau reported that the seasonally adjusted value of new orders for manufactured goods increased by $8.2 billion or 1.4 percent to $576.8 billion, the first increase in three months, following a revised 3.8% decrease to $568.6 billion in January, which was originally reported as a 3.6 percent decrease to $569.7 billion a month ago….however, since the Census Bureau does not even collect data on new orders for non durable goods for this widely watched “factory orders report”, both the “new orders” and “unfilled orders” sections of this report are really only accurate as revised updates to the February advance report on durable goods, which was released last week…on those durable goods revisions, the Census Bureau’s own summary, which precedes their detailed spreadsheet of the metrics included in this report, is quite clear and complete, so we’ll just quote directly from that summary here:

• Summary: New orders for manufactured goods in February, up following two consecutive monthly decreases, increased $8.2 billion or 1.4 percent to $576.8 billion, the U.S. Census Bureau reported today. This followed a 3.8 percent January decrease. Shipments, also up following two consecutive monthly decreases, increased $8.0 billion or 1.4 percent to $581.6 billion. This followed a 0.8 percent January decrease. Unfilled orders, up eleven of the last twelve months, increased $0.1 billion or virtually unchanged to $1,392.8 billion. This followed a virtually unchanged January decrease. The unfilled orders to-shipments ratio was 7.10, down from 7.17 in January. Inventories, up following two consecutive monthly decreases, increased $2.3 billion or 0.3 percent to $857.7 billion. This followed a 0.1 percent January decrease. The inventories-to-shipments ratio was 1.47, down from 1.49 in January.
• New orders for manufactured durable goods in February, up following two consecutive monthly decreases, increased $3.5 billion or 1.3 percent to $277.7 billion, down from the previously published 1.4 percent increase. This followed a 6.9 percent January decrease. Transportation equipment, also up following two consecutive monthly decreases, led the increase, $2.9 billion or 3.3 percent to $90.4 billion. New orders for manufactured nondurable goods increased $4.7 billion or 1.6 percent to $299.0 billion.
• Shipments of manufactured durable goods in February, up following two consecutive monthly decreases, increased $3.3 billion or 1.2 percent to $282.6 billion, unchanged from the previously published increase. This followed a 0.7 percent January decrease. Transportation equipment, also up following two consecutive monthly decreases, drove the increase, $3.5 billion or 4.0 percent to $89.8 billion. Shipments of manufactured nondurable goods, up following four consecutive monthly decreases, increased $4.7 billion or 1.6 percent to $299.0 billion. This followed a 0.8 percent January decrease. Petroleum and coal products, also up following four consecutive monthly decreases, led the increase, $4.0 billion or 6.3 percent to $67.8 billion.
• Unfilled orders for manufactured durable goods in February, up eleven of the last twelve months, increased $0.1 billion or virtually unchanged to $1,392.8 billion, unchanged from the previously published increase. This followed a virtually unchanged January decrease. Transportation equipment, up fourteen of the last fifteen months, drove the increase, $0.6 billion or 0.1 percent to $898.0 billion.
• Inventories of manufactured durable goods in February, up seven consecutive months, increased $1.7 billion or 0.3 percent to $528.7 billion, unchanged from the previously published increase. This followed a 0.1 percent January increase. Transportation equipment, also up seven consecutive months, led the increase, $1.2 billion or 0.7 percent to $170.1 billion. Inventories of manufactured nondurable goods, up following four consecutive monthly decreases, increased $0.6 billion or 0.2 percent to $329.1 billion. This followed a 0.6 percent January decrease. Petroleum and coal products, also up following four consecutive monthly decreases, led the increase, $0.4 billion or 0.9 percent to $47.7 billion. By stage of fabrication, February materials and supplies increased 0.2 percent in durable goods and decreased 0.8 percent in nondurable goods.

To gauge the effect of February’s dollar valued factory inventories on 1st quarter GDP, they must first be adjusted for changes in price with appropriate components of the producer price index….by stage of fabrication, the value of finished goods inventories increased 0.3% to $297,937 million; the value of work in process inventories increased 0.7% to $247,477 million, and the value of materials and supplies inventories decreased by 0.2% to $312,320 million…at the same time, the producer price index for February indicated that prices for finished goods increased 1.2%, that prices for intermediate processed goods were 1.6% higher, and that prices for unprocessed goods were on average 1.2% higher, even as core raw materials averaged a 1.9% price decrease….assuming similar valuations for like inventories, that would suggest that February’s real finished goods inventories were around 0.9% smaller than January’s, that real inventories of intermediate processed goods were also about 0.9% smaller, and that real raw material inventory inventories were likely about 1.4% lower, with a caveat that crude oil prices are overweighed in the PPI when compared to their 5% of factory inventories …since this report thus indicates a decrease of about 1.1% in real factory inventories, following a 0.2% decrease in January, and since there was a modest increase in real factory inventories in the 4th quarter, any 1st quarter decrease in real factory inventories would first subtract that 4th quarter increase and then also the first quarter decrease from the growth rate of first quarter GDP…

(the above is the synopsis that accompanied my regular sunday morning news links emailing, which in turn was 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, most of which are picked from the aforementioned GGO posts, contact me…)

US oil prices rose every day this week and ended at a new five month high ​o​n ​threats to supply from increasing hostilities in eastern Europe and the Mideast….after rising 3.2% to a 5 month high of $83.17 a barrel last week on stronger than expected US economic data and ​on expectations that OPEC would leave its production cuts in place, the contract price for the benchmark US light sweet crude for May delivery rallied almost 2% early Monday on expectations of increas​ed oil demand following the release of supportive economic news from the U.S. and China, but reversed part of those early gains to settle 54 cent higher at $83.71 a barrel as traders figured that stronger US manufacturing data would reduce the chances of a meaningful Fed rate cut​…oil prices continued on their upward trend on Tuesday amid a new wave of attacks on Russian and Ukrainian energy facilities, and escalating tensions in the Middle East, and settled $1.44 cents higher at a new 5 month high of $85.15 a barrel after Iran vowed to take revenge on Israel for an airstrike that killed two top generals at the Iranian embassy compound in Damascus, raising the specter of a broader war…oil prices edged higher early Wednesday after OPEC+ ministers affirmed the current supply cuts would continue and after the American Petroleum Institute reported across the board draws from oil & product supplies, then pulled back after the EIA reported a surprise crude inventory build, but still settled the session 28 cents higher at another 5 month high of $85.43 a barrel as trader concerns about supply disruptions due to conflict in the Middle East offset the bearish jump in U.S. crude oil inventories…oil prices fell on the EIA’s report of sluggish US fuel demand in early Asian trading Thursday, then moved mostly sideways for much of the US session as they slipped back below the $85 level as caution over US jobs data and interest rates weighed against OPEC’s output cuts and geopolitical tensions, but rallied late in the afternoon session to close $1.16 higher at another 5 month high of $86.59 a barrel on news that Israeli embassies across the U.S. had been placed on high alert due to increasing threats of an Iranian attack on Israeli diplomats….oil prices surged more than $1 a barrel in overseas markets on Friday as traders watched for a possible direct military conflict between Israel and Iran that could further tighten supplies, but pared those early gains to settle up 32 cents at a 24 week high of $86.91 a barrel as better than expected ​US jobs ​d​ata w​as bullish for oil demand but potentially bearish for interest rate cuts by the Fed later this year, and thus finished 4.5% higher on the week…

natural gas prices rose for the 2nd time in three weeks, or for the first time in four weeks, depending on whether one counts a switch to quoting a higher priced contract as a rise in prices, as Reuters and most of the media does, or not, as we would favor…after falling 2.7% to $1.763 per mmBTU while natural gas quotes were 6.3% higher on the switch from the April contract last week, the contract price for natural gas for May delivery opened nearly six cents higher on Monday and rose all morning, as analysts pointed to lower production as the impetus for the ​e​arly rally, but slipped in afternoon trading to settle 7.4 cents higher at a three-week high of $1.837 per mmBTU, as gas well output dropped and forecasts were lifted for demand next week…but natural gas prices opened 5 cents lower on Tuesday, knocked back down overnight by weakening LNG exports and weak heating demand, and fell to the day’s low of $1.778 within minutes, before mounting a steady advance to settle 2.5 cents higher at another three week high of $1.862 per mmBTU, as producers continued to cut output, even as price gains were limited by lowered forecasts for demand this week…while natural gas prices opened 3 cents higher on Wednesday, prices soon backed off, as declines in production could no longer buoy a market with such saturated storage levels, and ​May natural gas settled 2.1 cents lower at $1.841 per mmBTU as the reported decline in output was less than traders had been expecting…the May contract then traded sideways near $1.835 leading up ​t​o the weekly storage report release on Thursday, then moved lower as the report hit the wire, as updated forecasts for reduced heating demand in the coming weeks added to the market’s existing bearish sentiment, and settled 6.7 cents lower at $1.774 per mmBTU, after the EIA’s storage report confirmed lofty supply levels…natural gas prices clawed back some of their losses in early trading Friday, as traders continued to mull a mix of restrained production, mild weather and plump inventories, but a serious rally could not be sustained and gas settled 1.1 cents higher at $1.785 per mmBTU, but still managed to eke out a 1.2% gain on the week…

The EIA’s natural gas storage report for the week ending March 29th indicated that the amount of working natural gas held in underground storage fell by 37 billion cubic feet to 2,259 billion cubic feet by the end of the week, which left our natural gas supplies 422 billion cubic feet, or 23.0% above the 1837 billion cubic feet that were in storage on March 29th of last year, and 633 billion cubic feet, or 38.9% more than the five-year average of 1,626 billion cubic feet of natural gas that were typically in working storage as of the 29th of March over the most recent five years…the 37 billion cubic foot withdrawal from US natural gas working storage for the cited week was less than the 41 billion cubic foot withdrawal that the market was expecting, while it was more than the 29 billion cubic feet that were pulled from natural gas storage during the corresponding third week of March 2023, and was quite a bit more than the average 1 billion cubic foot withdrawal from natural gas storage that has been typical for the same last week of March over the past 5 years…

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending March 29th indicated that ​after small decreases in our oil exports​ and ​in our refinery throughput, we again had surplus oil to add to our stored commercial crude supplies for 8th time in ten weeks and for the 16th time in the past 24 weeks, as even the oil supplies that the EIA could not account for we​re little changed….Our imports of crude oil fell by an average of 85,000 barrels per day to an average of 6,618,000 barrels per day, after rising by an average of 424,000 barrels per day over the prior week, while our exports of crude oil fell by 159,000 barrels per day to average 4,022,000 barrels per day, which when used to offset our imports, meant that the net of our trade in oil worked out to a net import average of 2,596,000 barrels of oil per day during the week ending March 29th, 74,000 more barrels per day than the net of our imports minus our exports during the prior week. At the same time, transfers to our oil supply from Alaskan gas liquids, from natural gasoline, from condensate, and from unfinished oils averaged 384,000 barrels per day, while during the same week, production of crude from US wells was unchanged at 13,100,000 barrels per day. Hence our daily supply of oil from the net of our international trade in oil, from transfers, and from domestic well production appears to have averaged a rounded total of 16,080,000 barrels per day during the March 29th reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,897,000 barrels of crude per day during the week ending March 29th, an average of 35,000 fewer barrels per day than the amount of oil that our refineries reported they were processing during the prior week, while over the same period the EIA’s surveys indicated that a rounded average of 543,000 barrels of oil per day were being added to the supplies of oil stored in the US… So, based on that reported & estimated data, the crude oil figures provided by the EIA for the week ending March 29th appear to indicate that our total working supply of oil from net imports, from transfers, and from oilfield production was 360,000 barrels per day less than what what was added to storage plus our oil refineries reported they used during the week…To account for that difference between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a +360,000] barrel per day figure onto line 16 of the weekly U.S. Petroleum Balance Sheet, in order to make the reported data for the supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there was an error or omission of that magnitude in the week’s oil supply & demand figures that we have just transcribed…Even so, since most oil traders react to these weekly EIA reports as if they were accurate, and since these weekly figures therefore often drive oil pricing, and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it’s published, and just as it’s watched & believed to be reasonably reliable by most everyone in the industry…(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….(note there is also an aging twitter thread from an EIA administrator addressing these ongoing weekly errors, and what they had hoped to do about it)

This week’s average 543,000 barrel per day increase in our overall crude oil inventories came as an average of 459,000 barrels per day were being added to our commercially available stocks of crude oil, while an average of 84,000 barrels per day were being added to our Strategic Petroleum Reserve, the seventeenth SPR increase in twenty-four weeks, following nearly continuous withdrawals over the prior 39 months… Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to 2,272,000 barrels per day last week, which was 0.9% more than the 6,214,000 barrel per day average that we were importing over the same four-week period last year. This week’s crude oil production was reported to be unchanged at 13,100,000 barrels per day because the EIA’s rounded estimate of the output from wells in the lower 48 states was unchanged at 12,700,000 barrels per day, while Alaska’s oil production was also unchanged at 432,000 barrels per day and added the same 400,000 barrels per day to the EIA’s rounded national total as it did last week…US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure matches that of our pre-pandemic production peak, and is also 35.1% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021.

US oil refineries were operating at 88.6% of their capacity while processing those 15,897,000 barrels of crude per day during the week ending March 29th, down from their 88.7% utilization rate of a week earlier, but ​a nearly normal operating rate for late March, after ​refineries recover​e​d from damage caused by the arctic cold that penetrated to the Gulf Coast in mid January… the 15,897,000 barrels of oil per day that were refined this week were 1.8% more than the 15,615,000 barrels of crude that were being processed daily during week ending March 31st of 2023, and 0.3% more than the 15,849,000 barrels that were being refined during the prepandemic week ending March 29th, 2019, when our refinery utilization rate was at a below normal 86.4%..

Even with the decrease in the amount of oil being refined this week, gasoline output from our refineries was quite a bit higher, increasing by 767,000 barrels per day to 9,980,000 barrels per day during the week ending March 29th, after our refineries’ gasoline output had decreased by 435,000 barrels per day during the prior week. This week’s gasoline production was 1.3% more than the 9,851,000 barrels of gasoline that were being produced daily over week ending March 31st of last year, and 1.7% more than the gasoline production of 9,813,000 barrels per day during the prepandemic week ending March 29th, 2019….on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 208,000 barrels per day to 4,606,000 barrels per day, after our distillates output had increased by 124,000 barrels per day during the prior week. Even after six production increases in the past 7 weeks, our distillates output was 2.8% less than the 4,740,000 barrels of distillates that were being produced daily during the week ending March 31st of 2023, and 5.4% less than the 4,870,000 barrels of distillates that were being produced daily during the week ending March 29th, 2019…

Even with this week’s increase in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the eighth time in nine weeks, decreasing by 4,256,000 barrels to 227,816,000 barrels during the week ending March 29th, after our gasoline inventories had increased by 1,299,000 barrels during the prior week. Our gasoline supplies fell this week because the amount of gasoline supplied to US users jumped by 521,000 barrels per day to 9,236,000 barrels per day, and because our exports of gasoline rose by 77,000 barrels per day to 863,000 barrels per day, and because our imports of gasoline fell by 34,000 barrels per day to 488,000 barrels per day.…​B​ut even after thirty-two gasoline inventory withdrawals over the past fifty-two weeks, our gasoline supplies were still 2.4% above last March 31st’s gasoline inventories of 222,575,000 barrels, but ​were about 3% below the five year average of our gasoline supplies for this time of the year…

With this week’s decrease in our distillates production, our supplies of distillate fuels fell for 8th time in ten weeks, following eight consecutive prior increases, decreasing by 1,268,000 barrels to 116,069,000 barrels over the week ending March 29th, after our distillates supplies had decreased by 1,185,000 barrels during the prior week. Our distillates supplies fell again this week even though the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 533,000 barrels per day to 3,495,000 barrels per day, because our exports of distillates rose by 276,000 barrels per day to 1,396,000 barrels per day, and because our imports of distillates fell by 61,000 barrels per day to 104,000 barrels per day…Even with 30 inventory decreases over the past fifty-two weeks, our distillates supplies at the end of the week were 2.7% above the 113,051,000 barrels of distillates that we had in storage on March 31st of 2023, but were about 7% below the five year average of our distillates inventories for this time of the year…

Finally, after supply and demand metrics for US oil were little changed this​ past week, our commercial supplies of crude oil in storage rose for the 17th time in twenty-six weeks and for the 24th time in the past year, increasing by 3,210,000 barrels over the week, from 448,207,000 barrels on March 22nd to 451,417,000 barrels on March 29th, after our commercial crude supplies had increased by 3,165,000 barrels over the prior week… With this week’s increase, our commercial crude oil inventories remained about 2% below the most recent five-year average of commercial oil supplies for this time of year, but were roughly 33% above the average of our available crude oil stocks as of the last weekend of March over the 5 years at the beginning of the past decade, with the big difference between those comparisons arising because it wasn’t until early 2015 that our oil inventories had first topped 400 million barrels. After our commercial crude oil inventories had jumped to record highs during the Covid lockdowns of the Spring of 2020, then jumped again after February 2021’s winter storm Uri froze off US Gulf Coast refining, but then fell in the wake of the Ukraine war, only to jump again following the Christmas 2022 refinery freeze offs, our commercial crude supplies as of this March 29th were still 3.9% less than the 469,952,000 barrels of oil left in commercial storage on March 31st of 2023, but 9.5% more than the 412,371,000 barrels of oil that we still had in storage on April 1st of 2022, while still 9.4% less than the 498,313,000 barrels of oil we had in commercial storage on April 2nd of 2021, after refinery damage from winter storm Uri left even more crude oil remaining after 2020’s pandemic precautions had left a lot of oil unused…

This Week’s Rig Count

In lieu of a detailed report on the rig count, we are again just including a screenshot of the rig count summary from Baker Hughes…note that since last week’s rig count was released a day early, ahead of the Good Friday holiday, this week’s report thus covers ​8 days…in the table below, the first column shows the active rig count as of April 5th, the second column shows the change in the number of working rigs between last week’s count (March 28th) and this week’s (April 5th) count, the third column shows last week’s March 28th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting period a year ago, which in this week’s case was the 7th of April, 2023…

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