The Producer Price Index for finished goods declined 0.2 percent in October, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Prices for finished goods increased 1.1 percent in September and 1.7 percent in August. At the earlier stages of processing, prices received by manufacturers of intermediate goods edged down 0.1 percent in October, and the crude goods index moved up 0.9 percent. On an unadjusted basis, the finished goods index advanced 2.3 percent for the 12 months ended October 2012, the largest rise since a 2.8-percent increase for the 12 months ended March 2012. (See table A.)
Hmmmm... The table shows a 0.4% increase in foods, offset by a 0.5% decrease in energy and a -0.2% decrease in everything else.
The decrease was led in the core by a decrease in pricing for new vehicles. That's an interesting change in trend, and may indicate that pricing power has exhausted in the vehicle space. If so the results in the car makers over the next three or so months should be apparent.
One month does not make a trend, but this is not positive.
The other interesting point is that crude goods, which had been decreasing through the "belly" of 2012, were basically flat-lined on a 12-month basis while Intermediate goods on core were flat as well.
The report is overall neutral with one cautionary note, and that is to watch the autos in December and January when the retail trade figures come out for those months to see if this bleeds through into final demand.
Where We Are, Where We're Heading (2013) - The annual 2013 Ticker
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