US PPI MoM - Visual Analysis & Historical Data

US PPI Falls in December - 5th Straight Monthly Decline

 

US PPI Down by 2.2 Percent in November, Up 0.4 Percent on the Year

 

US PPI Down by a Record 2.8% in October - Core PPI up 0.4%

 

Post-release: US September PPI Down as Expected, Core PPI at 17-Year Highs

 

Post-release: PPI increased by 1.8% MoM seasonally-adjusted in June the US Labor Department reported today. This is 0.5% higher than the 1.3% rise that had been expected by economists.

On a yearly basis this takes the headline number to 9.2% well above the 8.7% that had been forecast. This is a rapid increase from the annual gain in May which hit the wire at 7.2%

The news of further increasing inflation was overshadowed by investor concerns over the credit market, in particular Fannie Mae and Freddie Mac. The US Dollar was sold off to new record lows against the Euro and 25 year lows against the Australian Dollar.

 

Post-release: The Labor Department reported today that PPI rose 1.4% MoM, 0.4% higher than economist estimates. The YoY rate now stands at 7.2%, up from the 6.8% expected. Today’s number was due to a 4.9% increase in energy prices and a 0.8% gain in food.

The Producer Price Index, which measures inflationary pressure before it reaches the consumer, posted its fastest gain since November 2007. However, the Core rate came out in line with expectations at 0.2%. The Core PPI now stands at 3.0% YoY.

Pre-release: The US Producer Price Index is expected to climb 1.0% MoM (6.8% YoY) after a modest 0.2% gain last month. The large increase is due in large part to the seasonally adjusted 10% increase in retail gasoline costs seen over the same time period. Further energy and industrial supply costs are set prop up the index when the surveyed results of purchasing managers are published.

Doubts remain as to whether consumer demand in the US is strong enough for industry to pass on higher costs to customers. Reaction to the PPI could be muted because we have already seen May’s CPI data.

 

Post-release: US Producer Prices failed to impress on Tuesday coming in at just 0.2% compared to the 0.4% expected. Over a 12-month period the inflation rate stands at 6.5%. Elsewhere the core number beat economist expectations by coming in at 0.4% with only 0.2% expected. The yearly core rate now stands at 3.0%.

Economists doubt that producer prices will have much of an effect on the more important consumer prices. There is an anticipated decrease in demand and if this is the case pipeline price pass-through will be limited. “Against a backdrop of weakening demand… consumer inflation rates, although likely to remain elevated, will not accelerate significantly.” - RBC Economist Dawn Desjardins.

Pre-release: Rising energy and food costs have the Fed worried about inflation. The risk of rising inflation has lead the market to believe that the FOMC will keep rates on hold at the June meeting.

Never the less, Producer Price Inflation is expected to moderate slightly to 0.4% MoM from an increase of 1.1% last month.

 

Post-release: The US PPI rose by more than expected in March, up 1.1% compared to the 0.6% expected. This takes the YoY figure to a massive 6.9%.

PPI was led by Energy (+2.9%) and Food (+1.2%). The energy figure is mildly significant as it shows the largest increase since last November.

The breakdown within the energy sector is as follows: diesel +15.3%, home heating oil +13.1%, residential natural gas +4.2% and gasoline +1.3%.

Elsewhere, Core PPI rose as expected by 0.2% MoM (2.7% YoY) and the Empire State Business Conditions increased unexpectedly to 0.6 from a previous reading of -22.2.

Today’s data has poured cold water on the idea that the Fed will cut interest rates by more than 0.25% at the next FOMC Meeting. However, CPI & Core CPI will be watched closely later in the week.

Pre-release: Economists are expecting a 0.6% MoM increase in US Producer Price Index this week. The April release, which reports the figure for March, is likely to be driven by further increases in energy prices. Oil, natural gas and petrol will be the driving factor behind these gains.

 

Post-release: US Wholesale inflation rose by 0.3% in February, as expected by economists. The growth has slowed slightly from the 1.0% climb seen in January but the data is unlikely to figure high on the Fed's economic radar ahead of today's Interest Rate Statement.

The PPI was held by food prices that declined across the board, with fresh and dry vegetables down 15.7%.

Pre-release: Growth in US PPI is expected to have slowed to 0.3% for February. The data will be released at 08:30 EST on Tuesday 18th March, the same day as the FOMC Interest Rate Statement.

Although the Producer Price Index is eagerly anticipated it remains to be seen whether much price volatility will be generated by the news. Short-term traders are likely to remain flat pending the Interest Statement later in the day.

The US Dollar remains pressured across the board with several Majors at key levels. Last week the USDCHF broke parity, the EURUSD closed near all-time highs and the USDJPY has had its lowest weekly close since August 1995.

 

Rising inflation puts the FOMC under increased pressure. The US is currently in the midst of a rate-tightening phase in order to stave off recession. However, the Fed must still ensure price stability which usually commands the opposite rate adjustment.

US PPI MoM Historical Data

2008

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Forecast

0.4%

0.3%

0.6%

0.4%

1.0%

1.3%

0.6%

-0.5%

-0.4%

-1.9%

-2.0%

-2.0%

Actual

1.8%

1.2%

-0.9%

-0.4%

-2.8%

-2.2%

-1.9%

2007

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Forecast

-0.6%

0.4%

0.7%

0.6%

0.6%

0.2%

0.1%

-0.2%

0.5%

0.3%

1.6%

0.2%

Actual

1.0%