The latest Producer Price Index (PPI) for the month of February is out this morning ahead of the opening bell, and pre-market indexes seem to like it. A headline month-over-month print of +0.8% came in 10 basis-points (bps) below expectations and 20 bps beneath the initially reported +1.0% for January. The all-time high was a year ago January, +1.2%.
The “core” read — stripping out volatile food and energy prices — was well below estimates: +0.2% versus +0.6% expected, and well off the July 2021 high +1.0% on core. Ex-food, energy and transportation was also +0.2%, and it was estimated to also come in at +0.6%. In a sense, this is good news: everyone knows oil prices have spiked, but on the producer level, not much month-over-month inflation beyond it is evident in last month’s read.
Year over year numbers tell a different story, and one more in line with expectations: +10.0% headline PPI is a new high going back to record-keeping adjustments in 2010. The core print year over year is +8.4%, a tick below the +8.5% high we saw in December of last year. Ex-food, energy and transport reached +6.6% last month, down from the +7.0% reads we saw in November and December last year, and down from the +6.9% from January.
Thus, even before the Fed moves on interest rates tomorrow — the latest Federal Open Market Committee (FOMC) meeting, with its statement released Wednesday afternoon, followed by a Fed Chair Jay Powell press conference — we see inflation ebbing a bit on the PPI side. Last week’s Consumer Price Index (CPI) headline year-over-year was +7.9% — a new high and a sign that prices for consumers have continued to climb as of a month ago.
The March read on the Empire State Manufacturing Survey posted a big disappointment this morning: -11.8% on the headline, below an expected print of around +6% and the worst we’ve seen since May 2020 — still in the early months of the pandemic. Unfilled orders and delivery times both rose notably, while new orders and shipments declined only slightly. We’ll see in future months if this was a blip on the screen or a condition of something more serious.
In any case, the Dow more than doubled between pre- and post-PPI numbers, now trading +170 points at this hour. The Nasdaq had been +60 points ahead of the report and zoomed up to +130, and the S&P 500 moved from 10 points up to +25. Oil prices continue to tumble: WTI is -7% at this hour, while Brent crude is -6.5% so far this morning. We also have just one more day to wait for the Fed decision to raise interest rates, which will be a good starting point for assessing where our economy — and the market — is.
Image: Shutterstock
February PPI Lower-Than-Expected
The latest Producer Price Index (PPI) for the month of February is out this morning ahead of the opening bell, and pre-market indexes seem to like it. A headline month-over-month print of +0.8% came in 10 basis-points (bps) below expectations and 20 bps beneath the initially reported +1.0% for January. The all-time high was a year ago January, +1.2%.
The “core” read — stripping out volatile food and energy prices — was well below estimates: +0.2% versus +0.6% expected, and well off the July 2021 high +1.0% on core. Ex-food, energy and transportation was also +0.2%, and it was estimated to also come in at +0.6%. In a sense, this is good news: everyone knows oil prices have spiked, but on the producer level, not much month-over-month inflation beyond it is evident in last month’s read.
Year over year numbers tell a different story, and one more in line with expectations: +10.0% headline PPI is a new high going back to record-keeping adjustments in 2010. The core print year over year is +8.4%, a tick below the +8.5% high we saw in December of last year. Ex-food, energy and transport reached +6.6% last month, down from the +7.0% reads we saw in November and December last year, and down from the +6.9% from January.
Thus, even before the Fed moves on interest rates tomorrow — the latest Federal Open Market Committee (FOMC) meeting, with its statement released Wednesday afternoon, followed by a Fed Chair Jay Powell press conference — we see inflation ebbing a bit on the PPI side. Last week’s Consumer Price Index (CPI) headline year-over-year was +7.9% — a new high and a sign that prices for consumers have continued to climb as of a month ago.
The March read on the Empire State Manufacturing Survey posted a big disappointment this morning: -11.8% on the headline, below an expected print of around +6% and the worst we’ve seen since May 2020 — still in the early months of the pandemic. Unfilled orders and delivery times both rose notably, while new orders and shipments declined only slightly. We’ll see in future months if this was a blip on the screen or a condition of something more serious.
In any case, the Dow more than doubled between pre- and post-PPI numbers, now trading +170 points at this hour. The Nasdaq had been +60 points ahead of the report and zoomed up to +130, and the S&P 500 moved from 10 points up to +25. Oil prices continue to tumble: WTI is -7% at this hour, while Brent crude is -6.5% so far this morning. We also have just one more day to wait for the Fed decision to raise interest rates, which will be a good starting point for assessing where our economy — and the market — is.