According to a weekly update by the Energy Information Administration, US refineries produced 363,000 more barrels per day during the week of May 12 than in the previous week (averaging over 17.1 million barrels per day). Gasoline production decreased, with an average of 10 million barrels produced per day, while distillated fuel production increased to an average of over 5 million barrels per day. Inventories of crude oil fell 1.8 million barrels during the week of May 12 to 520.8 million barrels. This makes the sixth consecutive weekly drawdown. Refined product inventories also decreased, with gasoline down 400,000 barrels to 240.7 million, and distillated fuels down 1.9 million barrels to 146.8 million. West Texas Intermediate Crude futures prices jumped 70 cents to $49.30 per barrel after the release of the report. The EIA report was inconsistent with a report by the American Petroleum Institute that indicated stocks of crude had *increased* by 882,000 barrels.
According to the Labour Market Report from the UK's Office of National Statistics, the number of workers in Great Britain increased while unemployment fell. In the first quarter of 2017. There were 31.95 million workers with a high employment rate of 74.8%. There were 1.54 million unemployed with an unemployment rate of 4.6% and 8.83 billion economically inactive with an inactivity rate of 21.5%. Nominal average weekly earnings (including bonuses) increased by 2.4%.
A former chip manufacturing plant with over 1,000,000 sq ft of building on 210 acres in Henrico county is the site of a new QTS data center. The location was originally developed by chip maker Qimonda AG. When Qimonda filed for bankruptcy it closed the plant and laid off 1,500 people in 2009, reports Data Center Frontier(DCF).
According to DCF, the Richmond area was attractive for this hyperscale data center in part because of the new undersea internet cables linking Virginia Beach with Europe and Latin America and the Henrico County Board of Supervisors reducing the business property tax rate on data center equipment by almost 90%. The trans-Atlantic cables are owned by Microsoft and Facebook and operated by Spanish telecommunications company Telefónica SA. Mid-Atlantic Broadband links the Virginia Beach cable landing to much of Southside Virginia.
For details on “The Economic and Fiscal Contribution that Data Centers Make to Virginia” check out the Mangum Economics report for the Northern Virginia Technology Council.
According to the UK's Office for National Statistics the Consumer Price Index annual inflation rate in Great Britain was measured at 2.7% in April with a 0.5% rise in consumer prices, slightly higher increase than expected. The increase is largely attributed to the rising price of airfare, clothing, vehicle excise taxes, and electricity. In another report by the Office for National Statistics, factory output prices have continued to rise in April 2017 by 0.4%, while input prices rose 0.1%. The annual factory output inflation rate remained at 3.6% while the annual growth rate for input prices fell to 16.6% (a decrease from January's high of 19.9%).
Eurostat reported today that seasonally-adjusted GDP rose by 0.5% in both the euro area and the EU28. Annual growth measured 1.7%. Of the euro area countries, Finland reported the highest level of growth at 1.6% with Spain growing at 0.8%, Germany at 0.6%, and France at 0.3%. The Italian National Institute of Statistics reported modest growth in the Italian economy for the first quarter of 2017, underperforming most other Euro Zone countries. The country's GDP rose 0.2% in the first quarter while the annual growth dropped to 0.8% from 1%. The Italian economy is being pushed forward by domestic demand while it still struggles to gain momentum.
Housing starts in April fell by 2.6% from March and came in significantly below expectations given the relatively strong March report. Starts for single-family homes rose 0.4%, but permits and completions both fell by 4.5%. So, overall single-family home construction has been and will likely continue to be uneven. The biggest weakness in the report relates to multi-family homes where starts fell 9.2%. And while permits for multi-family dwellings rose by 1.4%, completions dropped by 17.2%.
On the brighter side, industrial production rose 1% in April. And the manufacturing sector bounced back a full 1% in April as well, more than compensating for the March contraction. That is quite a reversal for the manufacturing sector which was flat for last year. In fact, industrial production and manufacturing are showing the strongest reports in over 3 years. Production of motor vehicles, business equipment, and consumer goods were all up. However, production of high-tech products and construction supplies were down. (The report on construction supplies helps corroborate the April housing report.) Mining was up 1.2%, possibly due to regulatory changes out of Washington. Utility output was up 0.7% in April over March’s record 8.2% jump that was weather-related.
These reports combined with a number of other reports so far this month show mixed results for the US economy. Industrial production, manufacturing, and employment have shown strong indications, but retail sales, housing starts, and increases in consumer prices have indicated weakness. As housing is an important driver of economic growth and activity, the mixed news on the US economy will probably continue for the next few months.
According to a report by the Italian National Institute of Statistics, the Consumer Price Index in Italy rose by 0.4% in April. The rise resulted from increases in the price of transportation, hotels, and food service. The annual inflation rate rose to 1.9%, largely due to rises in the prices of electricity and natural gas. The increase occurred even though consumer demand has been weak, so prices are likely to rise less in future months unless household spending strengthens.
The German economy expanded by 0.6% in the first quarter of 2017 according to the Federal Statistical Office. This was slightly below expectations but still well above the 0.4% increase in the fourth quarter of 2016 and the strongest increase since the first quarter of 2016. This would suggest annual GDP growth of 1.7%. The increase in GDP resulted from increases in both domestic and foreign demand. Domestically, there was a notable increase in construction and in machinery and equipment. Household and government spending also rose. Exports increased faster than imports. This first report for 2017 indicates growth that is strong and well-balanced that is likely to continue throughout the year.
The Consumer Price Index increased 0.2% in April, the U.S. Bureau of Labor Statistics reported this morning. Over the last 12 months, the CPI rose 2.2%. This is a larger increase than the 1.7% average annual increase over the past 10 years. This indicates that inflation has definitely moved to the range targeted by the Federal Reserve.
The rising cost of housing, energy, tobacco, and food all contributed to the increase in overall inflation. Food prices rose mostly due to a sharp increase in the prices of fresh vegetables. At the same time, many prices fell in April, including those for mobile phone services, medical care, car insurance, clothing, and new and used cars and trucks.