Recent Updates

  • US: Home Builders (Dec), Empire State Manufacturing Survey (Dec)
  • Canada: Intl Transactions in Securities (Oct)
  • Taiwan: Motor Vehicle Registration, RMB Business Statistic (Nov)
  • Albania: Foreign Trade Prelim (Nov)
  • Turkey: NCI Index (Dec)
  • Finland: International Reserves (Nov)
  • Sweden: Construction Cost Index (Nov)
  • Norway: Internatioal Trade (Nov)
  • Lebanon: Central Bank Balance Sheet (Dec-Prelim)
  • more updates...

Economy in Brief

U.S. PPI Fell Again, Core Pricing Power Strong Again
by Tom Moeller November 18, 2008

U.S. finished producer prices during October matched Consensus expectations and fell 2.8% following their 0.4% drop during September.

A 12.8% decline in energy prices (+5.5% y/y) was due to a 24.9% plunge in gasoline prices, but gasoline prices were still up 3.2% y/y. Additionally, home heating oil prices fell by 9.6% (+24.2% y/y). Natural gas prices fell for the third consecutive month but, again, a 5.9% gain left them still up 10.4% y/y. Residential electric power costs slipped 0.5% (+5.8% y/y).

Less food & energy, prices rose 0.4% for the second consecutive month and that compared to a Consensus expectation for a 0.1% uptick. Core pricing indeed has firmed. The y/y gain in the core PPI of 4.4% was the strongest since late-1989. Prices of core finished consumer goods rose 0.3% last month and that was enough to lift the y/y gain to 4.6%, its strongest since 1989. Durable consumer goods prices rose 0.4% (3.0% y/y) on the strength of higher furniture prices which increased 5.4% y/y after a 1.3% gain last year. Additionally, appliance prices firmed and posted a 2.9% y/y rise following the 1.1% increase during 2007. Core nondurable goods prices also strengthened and rose 0.3% last month. Their 5.8% y/y gain was the fastest since early 1999. Prices for capital equipment also firmed. A 0.5% rise during October was the second in a row and it raised the y/y rise to 4.4%, the strongest since 1989.

Finished consumer food prices reversed their September gain and fell 0.2%. However, they still have been strong. Rising 6.6% y/y food prices about matched last year's gain which was up from a 0.7% uptick during 2006. Meat prices have been firm as have been bakery product prices.

Intermediate goods prices fell 3.9% as energy prices dropped. However, excluding food & energy a 1.7% m/m fall still left these prices up 9.7% y/y which remained near the strongest since 1980.

The crude materials PPI crashed 18.6% (-1.4% y/y) due to a 24.9% drop in energy prices (-1.7% y/y). Crude food prices fell 11.1% and that was enough to lower the y/y gain to -1.3% y/y. Less food & energy crude prices fell 17.0% and that pushed the y/y gain into negative territory for the first time since 2005.

This morning's testimony by Fed Chairman Ben S. Bernanke is available here.

Producer Price Index (%) October September Y/Y 2007 2006 2005
Finished Goods -2.8 -0.4 5.1 3.9 3.0  4.9 
  Core 0.4 0.4 4.4 1.9 1.5 2.4
Intermediate Goods -3.9 -1.2 15.3 4.1 6.4  8.0
  Core -1.7 -0.3 9.7 2.8 6.0  5.5
Crude Goods -18.6 -7.9 -1.4 12.1 1.4 14.6
  Core -17.0 -9.4  -3.1 15.6 20.8 4.9
large image