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consumer price index

Consumer Prices Were Unchanged in November

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The Bureau of Labor Statistics said that the consumer price index was unchanged in November, pulling back a little after increasing by 0.2 percent in October. The easing in pricing pressures for the month mainly reflected lower gasoline prices, which were down 2.4 percent in November and have declined 24.1 percent year-over-year. Along those lines, the average price of regular conventional gasoline decreased from $2.166 at the end of October to $1.974 a gallon at the end of November, according to the Energy Information Administration (EIA). (It continued to fall since then, averaging $1.953 per gallon on December 14.) To put that in perspective, that is one dollar less per gallon than one year ago. Read More

Growth in Consumer Prices Slowed a Bit in July

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The Bureau of Labor Statistics said that the consumer price index edged up 0.1 percent in July, slowing from the 0.4 percent and 0.3 percent paces observed in May and June, respectively. The easing in the growth of consumer prices stemmed largely from slower energy price increases, which rose 0.1 percent in July after jumping 4.3 percent and 1.7 percent in May and June.

The energy picture was more mixed than the headline figure appears. Gasoline prices increased by 0.9 percent for the month, down from much larger gains in the prior two months. Along those lines, the average price of regular conventional gasoline was $2.605 per gallon on July 27, up from $2.451 a gallon on April 27, according to the Energy Information Administration (EIA). Despite those gains, gasoline prices remain 22.4 percent lower today than one year ago. At the same time, fuel oil (down 3.4 percent), electricity (down 0.6 percent) and piped-in natural utility gas service (down 1.4 percent) helped to ease the recent increases in gasoline costs. Read More

Monday Economic Report – March 30, 2015

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Here is the summary for this week’s Monday Economic Report: 

As we have seen in past weeks, economic data continue to reflect dampened activity in the early months of 2015 as a result of a number of significant headwinds. These challenges range from weak economic growth abroad, to a significantly strengthened U.S. dollar, to the sharp drop in crude oil prices. Weather and the West Coast ports slowdown have also been relevant factors in some of the softness that we have seen in the reports released since December. As a result, the first quarter is likely to grow around 1.8 percent. This would be less than the 2.2 percent growth rate in real GDP seen during the fourth quarter. Nonetheless, I am predicting 2.8 percent growth in real GDP in 2015, reflecting a slight deceleration in my outlook for the year. The expectation is that we will see some rebounds moving forward, with manufacturers continuing to be more upbeat about the coming months, even with some challenges likely to continue. Read More

Monday Economic Report – March 2, 2015

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Here is the summary for this week’s Monday Economic Report: 

While manufacturers remain mostly optimistic in their outlook, we have seen softness in a number of recent economic indicators. Slower economic growth internationally, a stronger U.S. dollar, reduced crude oil prices and the West Coast ports slowdown have been cited as reasons for this weaker-than-desired performance. Along those lines, real GDP growth in the fourth quarter was revised lower, down from 2.6 percent to 2.2 percent. In addition, surveys from the Dallas, Kansas City and Richmond Federal Reserve Banks all reflected decelerated levels of new orders and exports. Most notably, Texas manufacturers have been adversely impacted by the sharp drop in petroleum prices, dampening demand throughout the energy supply chain and for the larger regional economy. Yet, even in the Dallas report, respondents continued to be more positive than negative in their expectations for sales, production, employment and capital spending over the next six months. Read More

Consumer Prices Fell Once Again on Lower Gasoline Costs

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The Bureau of Labor Statistics said that the consumer price index (CPI) fell 0.7 percent in January. This mirrored producer price index (PPI) data released the week before. More importantly, consumer prices have decreased 0.2 percent over the past 12 months, the first negative year-over-year pace since October 2009. Of course, this downward shift in inflation has been spurred by lower gasoline prices, which fell 18.7 percent in January alone. Indeed, the average price of regular gasoline declined from $3.639 a gallon during the week of June 23 to $1.982 a gallon the week of January 26, according to the Energy Information Administration. (It has begun to rise a bit since then, with an average of $2.256 per gallon this week.) Read More

Lower Gasoline Costs Send Consumer Prices Lower for the Second Month

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The consumer price index fell for the second straight month in December, down 0.4 percent, according to the Bureau of Labor Statistics. This was widely anticipated, particularly given the sharp decline in gasoline prices, which fell 9.4 percent for the month. Indeed, the index for gasoline fell 22.4 percent in the second half of 2014. This mirrored data from the Energy Information Administration, which reported that the average price of regular conventional gasoline this week is $2.07 per gallon, down from $3.64 a gallon during the week of June 23, 2014. This has helped to bring headline inflation down significantly, with consumer prices up just 0.7 percent year-over-year, off from 2.1 percent six months ago. Read More

Consumer Inflation Eased Slightly in July, but with Prices Up 2 Percent in the Past 12 Months

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The Bureau of Labor Statistics said that consumer prices increased 0.1 percent in July, its slowest pace in 6 months. Nonetheless, food prices continue to rise, up 0.4 percent in July. The price of food purchased for the home has risen 2.2 percent year-to-date, or 2.5 percent in the past 12 months. The bulk of this increase has come from meats, eggs, shellfish and fresh produce. For instance, consumers have spent 9.3 percent more year-over-year on meats (e.g., beef and veal, pork, poultry and fish and seafood), with an increase of 0.4 percent for the month, mirroring the headline figure.

In contrast, energy prices have eased, mirroring producer price data released last week. Consumers have benefited from lower prices for natural gas and petroleum. For instance, the cost of West Texas intermediate crude oil declined from a recent peak of $107.95 per barrel on June 20 to $98.23 on July 31. The consumer price index data suggest that energy prices fell 0.3 percent in July. At the same time, energy expenses have risen 1.2 percent over the past 12 months, largely from higher costs for the home.

Excluding food and energy, consumer prices were up 0.1 percent, matching the increase seen the month before. Higher prices for apparel, medical care, new motor vehicles and shelter were somewhat offset by reduced costs for transportation services and used cars and trucks.

Overall, the consumer price index rose 2.0 percent from July 2013 to July 2014, its fourth straight month with an inflation rate of 2.0 percent or more. With that said, it represents an easing from the 2.1 percent paces seen in May and June. The core inflation rate – which excludes food and energy – has been 1.9 percent for three consecutive months.

While core pricing pressures have accelerated from earlier in the year, they appear to be stabilizing somewhat this summer. That should be good news for the Federal Reserve, which has targeted 2.0 percent in its stated goals. Still, the Federal Open Market Committee will closely watch to see how pricing pressures develop in the coming months, particularly as it prepares to start normalizing short-term rates in early 2015.

Chad Moutray is the chief economist, National Association of Manufacturers. 

Monday Economic Report – June 23, 2014

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Here are the files for this week’s Monday Economic Report:

The Federal Reserve Bank downgraded its estimates of growth for 2014, with real GDP growth of 2.1 percent to 2.3 percent. This was down from its March projection of 2.8 percent to 3.0 percent, largely due to weaknesses in the first quarter. Nonetheless, the Federal Reserve still projects a pickup in activity during the second half of the year that will continue into 2015, with an unchanged outlook of 3.0 percent to 3.2 percent growth next year. The unemployment rate is anticipated to fall to 6.0 percent by year’s end and as low as 5.4 percent in 2015.

With that in mind, the Federal Open Market Committee (FOMC) observed that “growth in economic activity has rebounded in recent months,” even as it cited continued slack in the labor market. The FOMC continued to taper its asset purchases, down from $45 billion per month to $35 billion, and it mostly reiterated its intent to keep a highly accommodative monetary policy stance for the foreseeable future. Short-term interest rates are expected to start rising at some point next year. Yet, there is renewed chatter among “inflation hawks” about increased pricing pressures of late. Core consumer prices, which exclude food and energy costs, rose 1.95 percent over the past 12 months, its fastest year-over-year pace in 19 months. While inflation still appears to be in check, the recent run-up in costs has fueled a debate about whether short-term rates might need to increase sooner than conventional wisdom might suggest.

For manufacturers, activity continues to recover from winter-related softness at the beginning of the year. Manufacturing production has risen 2.8 percent since January’s decline, with 3.6 percent growth over the past 12 months. Capacity utilization for the sector increased to 77.0 percent in May, its highest level since March 2008. Similarly, manufacturers in the New York and Philadelphia Federal Reserve districts reported strong growth in their respective June surveys. More importantly, respondents were mostly optimistic about future activity. More than half of those taking each survey said they anticipate increased new orders over the next six months. The Philadelphia Federal Reserve report also noted that 73.9 percent of its manufacturers predicted increased production in the second half of this year, with nearly 48 percent forecasting output growth of more than 4 percent.

Meanwhile, the housing market has provided mixed progress so far this year, even as we remain cautiously optimistic about future months. New housing starts decreased from an annualized 1,071,000 units in May to 1,001,000 in June. Despite the decline, it was the second straight month that starts have exceeded 1 million units, and the underlying trend remains positive. April’s figure was an outlier, with the year-to-date average being 969,000. As such, we continue to make slow-but-steady progress. At the same time, housing permits also declined, but single-family permitting increased from 597,000 units at the annual rate to 619,000, the fastest pace since November. This could be a sign that residential construction will accelerate in the months ahead. I still believe we will reach 1.1 million housing starts by year’s end. Moreover, homebuilder confidence was also higher for the month.

This week, we will get additional data on the health of the housing and manufacturing sectors. The Kansas City and Richmond Federal Reserve Banks will unveil their latest surveys, and Markit will release Flash Purchasing Managers’ Index (PMI) data for China, Japan, the Eurozone and the United States. We hope they will continue to reflect rebounding activity in the United States, and analysts will be closely following the June Chinese PMI data to see if the sector expands for the first time in 2014. The other key number to watch will be the second revision of real GDP for the first quarter. The consensus estimate is for the decline in output to exceed 1.5 percent, worse than the 1.0 percent decrease in the first revision. Other highlights include new data on consumer confidence, durable goods orders and shipments, existing and new home sales and personal income and spending.

Chad Moutray is the chief economist, National Association of Manufacturers. 

Consumer Prices Continue to Rise in May, Core Inflation Nears 2 Percent

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The Bureau of Labor Statistics reported the consumer prices increased 0.4 percent in May, their strongest monthly gain since February 2013. Food and energy costs both accelerated in May, helping to push the overall consumer price index higher. The cost of energy soared 0.9 percent for the month, accelerating on rising electricity (up 2.3 percent) and gasoline (0.7 percent) expenses. The jump in electricity prices followed a 2.6 percent decline the month before; on a year-over-year basis, electricity costs have risen modestly, up 3.6 percent.

Meanwhile, food prices continue to move rise, up 0.5 percent in May and 1.8 percent over the past five months. The increase was mainly attributable to increased costs for meats, seafood, eggs, dairy, and vegetables. Outside of food and energy, the largest increases were for apparel, lodging away from home, housing, transportation services, medical care, and new vehicles.

The consumer price index has risen 2.1 percent over the past 12 months, up significantly from the 1.1 percent pace seen just 3 months ago in February. Core inflation – which excludes food and energy costs – was up 1.95 percent year-over-year, up from 1.8 percent the month before. As such, core pricing pressures have neared the 2 percent threshold set by the Federal Reserve Board, and May’s year-over-year pace was the highest level in 19 months.

With the Federal Open Market Committee (FOMC) meeting the next couple days, the fact that inflation has accelerated will no-doubt be a relevant conversation, particularly for hawks on the committee. At least for now, pricing pressures appear to be in-check, hovering around the Fed’s stated target. Yet, the Fed will also keep a close eye on it to see if core pricing pressures continue to accelerate in the months ahead. My guess is that they will stabilize somewhat, and some of the current pressures are transitory in the short-term.

Chad Moutray is the chief economist, National Association of Manufacturers. 

Consumer Prices Pick Up in April, with Core Inflation Rising to Its Fastest Pace in 13 Months

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The Bureau of Labor Statistics reported that consumer prices rose 0.3 percent in April. Of particular note, food prices have increased by 0.4 percent for three straight months, with the year-over-year pace for food purchases rising from 1.1 percent in January to 1.9 percent in April. We saw similar impacts from rising food costs in yesterday’s producer price index release. The greatest monthly gains in the food segment were meats, poultry, fish and eggs (up 1.5 percent), fruits and vegetables (up 0.7 percent), and dairy products (up 0.5 percent).

Meanwhile, energy prices had declined in February and March after weather-related increases in December and January (stemming from additional home heating costs). Energy costs increased 0.3 percent in April, but remain only marginally higher than where they were in December despite the recent volatility. Increased gasoline prices (up 2.3 percent) more than offset reduced electricity costs (down 2.6 percent).

Outside of food and energy, core inflation was up 0.2 percent. There were higher costs for housing, medical care, new and used vehicles, recreation, and transportation services. On a year-over-year basis, core inflation rose 1.8 percent between April 2013 and April 2014, up from 1.6 percent the month before. This represented the fastest pace for core inflation since March 2013. Nonetheless, it remains below the Federal Reserve’s key threshold of keeping core pricing pressures below 2 percent, which it has done now on the consumer level since February 2013.

Chad Moutray is the chief economist, National Association of Manufacturers.