– by a New Deal Democrat
Real manufacturing and trade sales are one of the 4 monthly matching indicators most closely monitored by the NBER to determine whether the economy is in an expansion or recession. Since the reporting of this series is very behind (by 2 months), I developed several containers to calculate it in a more timely manner.
The first downside to the envelope method is simply averaging industrial production and actual retail sales. The latter is about 1/3 of the actual measure of real business sales, and the former is a proxy for sales to manufacturers and wholesalers (what it omits is the manufacturer’s stock and the wholesaler’s share). It’s not as accurate on a monthly basis, but it generally shows the right trend.
With both real retail sales and industrial production for March reported this morning, we have our first estimate of March real business sales, which suggests they are more likely to have declined than not, with an estimate of – 0.6%. Note that February is also estimated to be down -0.4% by this method:
The second method, which is much more accurate on a monthly basis (usually within +/-0.3%) as well as the trend, is to take the total business sales (which were reported this morning) and apply a simple average deflator value of PPI for goods, intermediate and finished goods as well as CPI. Since total sales decreased very slightly on a nominal basis (less than -0.1%) for February, but the average deflator was negative, this suggests that real manufacturing and trade sales actually increased in February by +0. 2%:
If this is true, it would mean that this important matching indicator made a new high in February:
But according to the first estimation method above, it may have declined in March.