CPI Prints At 0.1%, Below Expectations Of 0.2%, And Lower Compared To Prior; Empire Manufacturing Comes At 10.6 Versus Expectations Of 5

The two big economic numbers today were a mixed bag: CPI came in below expectations of 0.2%, at 0.1%. Core was in line with expectations of 0.1%, an improvement from the prior 0.0%. Elsewhere, the November Empire Manufacturing index climbed from the abysmal reading of -11.14 (which was largely ignored due to its outlier status), almost exclusively due to a surge in New Orders, which jumped from -24.40 to 2.6. What is troubling is that the Employment index dropped from 9.1 to -3.4, which could be a shift in diffusion indices toward a decline in employment. Then again last month despite a surge in diffusion employment strength, the NFP plunged. So in this version of bizarro world, the worse the employment index, the higher the NFP will likely be. And just as troublingly, priced paid jumped from 22.1 to 28.40: "the future prices paid index was positive and rose sharply, indicating that respondents expected input prices to accelerate." Continuing margin contraction anyone?

More from the CPI release:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent in November on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.1 percent before seasonal adjustment.

The indexes for food, energy, and all items less food and energy all increased slightly in November. The index for food at home rose in November after being unchanged in October, with the indexes for eggs and nonalcoholic beverages both rising notably. Although the index for gasoline rose, the index for household energy declined and the increase in the energy index was the smallest in five months.

The index for all items less food and energy rose in November after being unchanged the previous three months. Increases in the indexes for shelter and airline fares accounted for most of the rise, while the indexes for new vehicles, used cars and trucks, and household furnishings and operations all declined.

What is most amusing in the release is total lack of admission that food prices continue to increase courtesy of surging input costs: a concern shared even by the Empire Index respondents:

The food index rose 0.2 percent in November after a 0.1 percent increase in October. The index for food away from home rose 0.1 percent while the food at home index rose 0.3 percent. Among the six major grocery store food groups that comprise the food at home index, the index for nonalcoholic beverages posted the largest increase, at 0.8 percent. The index for meats, poultry, fish, and eggs rose 0.5 percent, due mostly to a 6.6 percent increase in the index for eggs. The index for cereals and bakery products rose 0.4 percent, and the index for other food at home advanced 0.1 percent. The index for dairy and related products, which rose 1.1 percent in October, was unchanged in November. The only major grocery store food group index to decline in November was fruits and vegetables, which fell 0.2 percent after a 0.7 percent decline in October. Within that group, the index for fresh fruits rose 2.0 percent but the fresh vegetables index fell 2.0 percent. Over the past year, the index for meats, poultry, fish, and eggs has risen 5.8 percent and the dairy and related products index has increased 3.8 percent. The other grocery store food groups posted much smaller changes.

CPI link

And the November Empire Manufacturing:

The Empire State Manufacturing Survey indicates that conditions improved in December for New York State manufacturers. After dropping sharply into negative territory in November, the general business conditions index bounced back above zero, climbing
22 points to 10.6. The new orders and shipments indexes also rose above zero, while the unfilled orders index remained negative. The inventories index was negative, indicating that inventory levels were lower over the month. The indexes for both prices paid and prices received were positive and higher than last month, suggesting that prices rose, while employment indexes were negative, indicating that employment declined. Future indexes were generally at high levels—a sign that conditions were expected to improve over the next six months. Significantly, the future prices paid index was positive and rose sharply, indicating that respondents expected input prices to accelerate.

Indexes for both prices paid and prices received were positive and higher than last month. The prices paid index rose 6 points to 28.4—a sign that input prices were accelerating; the prices received index also rose 6 points, to 3.4. The employment indexes, both negative, indicated a drop-off in employment activity in December. The index for number of employees fell 13 points to -3.4, for a cumulative decline of 25 points over the past two months. The average workweek index edged further into negative territory, reaching -14.8.

Future indexes pointed to ongoing optimism about the six-month outlook. The future general business conditions index was several points lower than last month but, at 48.9, was still close to the relatively high readings seen earlier in the year. The future new orders and shipments indexes were also relatively high, with the latter continuing a four-month streak of rising values. The future prices paid index posted a notable increase, rising 18 points to 58.0, its highest level since 2008; the upswing suggests that manufacturers expect input price increases to accelerate in the months ahead. The future prices received index also climbed. Future employment indexes were positive and little changed. The capital expenditures index held steady at 22.7, while the technology spending index rose 9 points to 19.3.

Empire Index link