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Producer Prices Rise More Than Expected; Rent Increases Trump Energy Drag
Across the board, Producer Prices printed hotter than expected. PPI ex food and energy rose 0.3% MoM - the biggest jump since November, however, Final Demand PPI YoY remains negative for the 7th month in a row.
According to the BLS, in July, the increase in the final demand index can be traced to prices for final demand services, which climbed 0.4 percent. In contrast, the index for final demand goods edged down 0.1 percent.
Most notably, however, over 40% of the July increase in the index for final demand services is attributable to prices for guestroom rental, which jumped 9.9%: is the Fed about the realize, with a 5 year delay, the epic rental bubble they have blown?
The bottom line - there is enough here for the doves and the hawks, though the headline data definitely gives The Fed ammo to hike in September.
Hotter than expected PPI ex food and energy MoM:
Final Demand YoY remains weak, driven by ongoing defaltion in energy prices:
With energy weighing down goods demand, and guestroom rental surging in services.
More details from the report:
Final demand services: The index for final demand services moved up 0.4 percent in July, the largest rise since a 0.6-percent increase in October 2014. In July, 60 percent of the broad-based advance can be traced to a 0.4-percent rise in the index for final demand services less trade, transportation, and warehousing. Margins for final demand trade services also climbed 0.4 percent, and the index for final demand transportation and warehousing services moved up 0.2 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.)
Product detail: Over 40 percent of the July increase in the index for final demand services is attributable to prices for guestroom rental, which jumped 9.9 percent. The indexes for automotive fuels and lubricants retailing; health, beauty, and optical goods retailing; securities brokerage, dealing, investment advice, and related services; computer hardware, software, and supplies retailing; and transportation of passengers (partial) also moved higher. Conversely, margins for apparel, footwear, and accessories retailing declined 4.2 percent. The indexes for loan services (partial) and truck transportation of freight also fell. (See table 4.)
Final demand goods: The index for final demand goods edged down 0.1 percent in July after rising 0.7 percent in June. The decrease is mostly attributable to a 0.6-percent decline in prices for final demand energy. The index for final demand foods inched down 0.1 percent, and prices for final demand goods less foods and energy were unchanged.
Product detail: A major factor in the July decrease in prices for final demand goods was the index for residential natural gas, which declined 2.4 percent. Prices for chicken eggs, home heating oil, pork, and nonferrous metals also moved lower. In contrast, the index for gasoline advanced 1.5 percent. Prices for corn, motor vehicles, and basic organic chemicals also increased.
The USD strenghtened modestly in kneejerk response but it does not appear this will hold.
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They could not triple adjust the data in time for release?
Official inflation in US for 2014 was 0.8%. The Chapwoood Index inflation was 9.7%. So that provided an 8.9% real GDP boost to US growth in 2014.
This is caused by the FED, the culprit in all of America's woes. They have debased the currency to such a degree that life will become impossible in the US until there's a crash of such proportion that it might degenerate into a revolution.>>>
https://biblicisminstitute.wordpress.com/2015/08/14/when-money-is-the-pr...
It's Qualitative Easing in denial by the Fed, and they STILL don't understand why.
… must you ALWAYS use
that word “TRUMP” ?
The Fed and BLS cannot allow the official CPI and therefore the COLA ever rise again. They would go moar broker paying out the increased benefits due to SS recipients, etc.
Been usin it since Lehman.
--S.M.Art Ash
".............,Sandy. lay it on me, I'm popping smoke................."
https://www.ar15.com/archive/topic.html?b=1&f=5&t=1335419
The Feral Reserve will raise rates soon no matter what.
Say what? What else you got that's getting old??
Time to raise rates....but it is probably too late.
Is the title of this article a reference to The Donald?
That's why I clicked on it.
hawks, lulz, there ain't no hawks. the fed gangsters are all billionaire sucking maggots.
Sure, very serious and sober sounding Yellen to raise rates from 0% to 0.25%, followed by panic and collapsing stocks and 401K/IRA "net worth", followed by a return to ZIRP and QE4 at next meeting. All by design.
Seven years of ZIRP and $11 Trillion of debt heroin injected into Wall Street is all you need to know.
This will create additional problems for an already weak economy. Increasing rents draws additional funds from paychecks, instantly reducing purchasing power of working people and consumers. It is impossible for the US economy to improve without increased purchasing power of working people (read more disposable income). This cannot happen when > 90% of “new” jobs are Temp positions- low pay, no benefits, zero job security.
The Fed has made a mockery of inflation by chaining higher prices in one thing with lower prices on something else. The Fed will look at rent prices and conclude that people will need to start buying houses instead. Thus their decisions on rates will be driven by whether they want to help people buy houses or to hinder them because of this great pent up demand.