U.S. Gasoline Prices Remain High; Crude Oil Costs Strengthen

Gasoline prices, at $2.84 per gallon last week (10.1% y/y), were unchanged from the prior week and have been roughly steady since May. Haver Analytics constructs factors to adjust for the marked seasonal variation in prices. The seasonally-adjusted gasoline price rose w/w to $2.76 per gallon from $2.73.

West Texas Intermediate crude oil prices increased last week to $70.29 per barrel (40.2% y/y) as they closed in on the $73.71 peak reached early in July. Yesterday, the price rose to $72.08. Brent crude oil prices were little changed w/w at  $78.64 (40.4% y/y) per barrel last week. The price was $81.33 yesterday.

Natural gas prices improved to $2.99/mmbtu (-3.2% y/y) last week. The price was $3.04 yesterday.

In the four-weeks ending September 21, gasoline demand increased 2.0% y/y; total petroleum product demand rose 4.9% y/y. Gasoline inventories strengthened 8.3% y/y, but inventories of all petroleum products declined 4.3% y/y due to a one-quarter decline in residual fuel oil inventories. Crude oil input to refineries strengthened 14.7% y/y in the last four weeks.

These data are reported by the U.S. Department of Energy. The price data can be found in Haver's WEEKLY and DAILY databases. Greater detail on prices, as well as the demand, production and inventory data, along with regional breakdowns, are in OILWKLY.

Consumer confidence improved this month to its firmest level since October 2000. The Conference Board Consumer Confidence Index during August jumped 4.3% (10.8% y/y) to 133.4 from 127.9 in July, initially reported as 127.4. The August level exceeded expectations for 127.0 in the Action Economics Forecast Survey. The level of confidence had been moving sideways since November until this latest rise. The indexes in the report are based on 1985=100. During the past 10 years, there has been a 68% correlation between the level of consumer confidence and the y/y change in real PCE.

The present conditions component increased 3.7% (16.0% y/y) to 172.2, its highest level since December 2000. The expectations reading gained 5.1% (5.8% y/y) to 107.6, a six-month high.

Business conditions were viewed as "good" by a strengthened 40.3% of respondents, but viewed as "bad" by just 9.1%. Jobs were viewed as "plentiful" by an increased 42.7% of respondents in August. Jobs were viewed as "hard to get" by a lessened 12.7%, the fewest since March 2001. The net jobs assessment reading increased to +30.0, a 17-year high. Over that time period, the differential has been 95% correlated to the unemployment rate.

Expectations for business conditions improved m/m as 24.3% of respondents thought that conditions would improve. That was still down, however, from a 26.9% high in March 2017. Income was expected to increase in six months by a sharply higher 25.5%, up from 19.7% just three months ago. Expectations that there would be more jobs in six months was little changed at 21.7% of respondents, up from a 14.5% low during all of 2016.

The expected inflation rate in twelve months declined m/m to 4.8%, its lowest level since April. It was down from the 5.0% July high. The percentage expecting higher interest rates over the next twelve months fell to 69.4%. Those looking to buy a home in the next six months improved sharply m/m to 6.0%.

Confidence amongst respondents under age 35 years backpedaled slightly from the highest level since May of last year. For those aged 35-54 years, confidence surged to an 18-year high. And for those over 55 years of age, confidence also improved strongly.

The Consumer Confidence data is available in Haver's CBDB database. The total indexes appear in USECON, and the market expectations are in AS1REPNA.

The Federal Reserve Bank of Philadelphia reported that its Nonmanufacturing Business Index of current conditions at the company level increased to 46.8 during September, the highest reading since February 2015. A lessened 40 percent of respondents reported an increase in current activity but a fewer three percent reported a decline.

The expectations index at the company level for September rose to 50.7, but only partially reversed its July decline. Sixty-two percent of respondents reported improved expectations while 12 percent indicated a decline.

The component series were mixed. The new orders index fell to the lowest level since April yet remained sharply improved y/y. The sales or revenue index increased, however, to the highest level since February 2015. The inventory index increased to the highest point since December 2016. The unfilled orders index also improved m/m, but remained sharply below its high six months ago.

On the labor front, the number of full-time permanent employees index recorded another record high. Thirty-six percent of companies added jobs while four percent indicated reduction. The index of part-time/temporary employment recovered its July decline and continued its upward trend. The average workweek reading continued to trend sideways as it fell m/m. The index of wage & benefit costs eased m/m, but remained near the record high.

The index of prices paid declined to the lowest level since April, but remained up sharply from its June 2017 low. A lessened 30% of respondents paid higher prices while three percent paid less. The prices received index rebounded sharply and neared the highest level in three years.x

The index for capital spending on equipment and software declined following its surge to a record high. The capital expenditures for facilities index increased to the highest level since January.

The Philadelphia Fed figures are diffusion indexes which are calculated by subtracting the percent of respondents reporting poorer business conditions from those reporting improvement. So, readings above zero indicate more positive than negative responses. These indexes have a good correlation with growth in the series covered. The data are available in Haver's SURVEYS database.