The Producer Price Index for finished goods fell 0.8 percent in November, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Prices for finished goods decreased 0.2 percent in October and rose 1.1 percent in September. At the earlier stages of processing, prices received by manufacturers of intermediate goods declined 1.2 percent in November, and the crude goods index edged up 0.1 percent. On an unadjusted basis, the finished goods index advanced 1.5 percent for the 12 months ended November 2012, the smallest increase since a 0.5-percent rise for the 12 months ended July 2012. (See table A.)
Ah, a look inside tells the tale -- the bottom line is that it's all energy. Foods were up 1.%; ex-food and energy the index was up 0.1%, or basically flat.
Of course nobody actually eats anything, right?
Within the internals trend shifts are evident in energy prices, which is good (they're coming down) but the paradox is that this usually signals internal economic weakness.
The interesting internal trend here is the compression of margins in the food category, which now has been going on since July. This too is an indicator of economic weakness.
There's nothing that stands out in this report, other than those two markers -- but they are simply further confirmation of the regional fed indices that I've been warning about since the summer.
