A month after the Philly Fed surged and trounced expectations, printing at 24.3 in December, only to be subsequently revised lower to 20.8, the Philly Fed Business Outlook survey took another dip down, missing expectations of 20.8 and coming at 19.3. And as usual the real story is behind the headline, where one number continues to scream, namely the Prices Paid data, which rose from 47.9 to 54.3, the highest Priced Paid since July of 2008. Look for margin pressure to force companies to finally follow in Tiffany's example and start passing through costs to consumers broadly any minute.
From the report:
Higher Prices Are Reported
Price increases for inputs as well as firms' own manufactured goods are more widespread this month. Fifty-four percent of the firms reported higher prices for inputs, compared with 52 percent in the previous month. The prices paid index, which increased 6 points in January, has increased 42 points over the past four months. On balance, firms also reported a rise in prices for manufactured goods: More firms reported increases in prices (26 percent) than reported decreases (9 percent), and the prices received index increased 8 points, its second consecutive positive reading.
Pretty much explains why the Fed will now be forced to do everything in its power to crush commodity costs.