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Economy in Brief
U.S. Consumer Credit Outstanding Declines in January
Consumers reduced credit balances further in January...
U.S. Trade Deficit Widens to $68.2 Billion in January
The U.S. trade deficit in goods and services widened to $68.2 billion in January...
German Order Growth Gets Back in Gear Despite the Headwinds
German order growth is back in gear with total orders rising by 1.4% m/m in January...
U.S. Factory Orders & Shipments Rise Again in January
Manufacturing activity is strengthening. Factory orders rose 2.6% (2.8% y/y) in January...
U.S. Initial Unemployment Insurance Claims Rise Just 9,000
Initial claims for unemployment insurance rose modestly by 9,000 to 745,000 in the week ended February 27...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Tom Moeller November 15, 2005
The overall Producer Price Index rose another 0.7% last month on top of the 1.9% September spike. The latest by far exceeded Consensus expectations for no change in prices.
The strength last month was led by a 12.3% (50.4% y/y) rise in home heating oil prices and a 12.7% (38.9% y/y) jump in natural gas which more than offset the 3.3% (+40.3% y/y) decline in gasoline.
Price inflation at the so called "core" level nevertheless eased a bit last month as a 0.3% decline in prices less food & energy reversed all of the prior month's gain. Consensus expectations for a 0.2% increase.
Core finished consumer goods prices fell 0.2% (+2.0% y/y). Durable goods prices dropped 0.9% (+0.2% y/y) led by a 3.0% (-2.1% y/y) decline in passenger car prices as well as weakness in prices for home electronics (-2.0% y/y), carpets (+6.1% y/y) and home appliances (+1.7% y/y). Core consumer nondurable goods prices rose 0.2% (3.5% y/y) for the second consecutive month.
"Spillover" effects from the past strength in oil prices continued to be evident at the earlier stages of processing. Intermediate goods prices jumped 3.0% on top of the 2.5% September surge while core intermediate goods prices repeated their 1.2% spike of the prior month.
Crude energy prices gained 12.4% (69.4% y/y) as natural gas prices soared an unadjusted 20.3% (120.4% y/y). The gain lifted overall crude prices 6.7% though core crude prices reversed some of their September strength with a 1.2% decline. During the last thirty years "core" crude prices have been a fair indicator of industrial sector activity with a 48% correlation between the six month change in core crude prices and the change in factory sector industrial production.
Producer Price Index | Oct | Sept | Y/Y | 2004 | 2003 | 2002 |
---|---|---|---|---|---|---|
Finished Goods | 0.7% | 1.9% | 5.9% | 3.6% | 3.2% | -1.3% |
Core | -0.3% | 0.3% | 2.0% | 1.5% | 0.2% | 0.1% |
Intermediate Goods | 3.0% | 2.5% | 10.5% | 6.6% | 4.6% | -1.5% |
Core | 1.2% | 1.2% | 4.3% | 5.7% | 2.0% | -0.5% |
Crude Goods | 6.7% | 10.2% | 31.5% | 17.5% | 25.1% | -10.6% |
Core | -1.2% | 5.3% | 0.9% | 26.6% | 12.4% | 3.8% |