0 Comments 0 Recommendations
Fundamental Updates

US Data Round-up: Inflation, Production and Capital Flows

Fundamental Updates \ Nick Nasad \ 11:08 AM EST \ November 17th, 2009

Producer Prices Rise 0.3% in October, Which is Less Than Expected

US wholesale prices rose 0.3% in October, a figure that was about half the consensus forecast. The rise follows a 0.6% decline in producer prices in September. Low inflation readings will keep the pressure off the Fed in terms of raising interest rates. The rise was led by higher food and energy prices as the core rates came in far below expectations and show that underlying prices remain subdued. On the month core producer prices, which exclude food and energy, fell 0.6%, and were up only 0.7% on the year.  Commodity prices have begun to rise as the global economy begins to recover, and the greenback has been faltering, two factors that pose upside potential for inflation. Yet, the slack in the economy and low labor costs, at least to the Fed and Chairman Bernanke, imply that prices will stay in check. The Fed tends to focus on core inflation.

The data today showed that energy prices were up 1.6% in October after a 2.4% decline the previous month, while food prices climbed 1.6%.

Provided by: Bureau of Labor Statistics

Industrial Production Disappoints Forecasts, Climbs 0.1% in October

US industrial production disappointed forecasts, rising 0.1% for the month of October, after having averaged monthly gains of about 0.9% over the previous three months. Manufacturing production fell for the first time in four months, and the only area of growth in the indicator was a 1.6% increase in the output of utilities. The drop-off in manufacturing came as auto production slackened following the end of trade-in incentives. Motor vehicle and parts production fell 1.7% following an 8.1% increase the prior month. Production of consumer goods which includes automobiles, furniture and electronics dropped 1.4%.

Companies are likely not going to place too many orders as they gauge the strength of the recovery and see that consumer spending may be crimped by unemployment, which is at a 26-year high. Still, some see a recovery in fits and starts, so October may be a down month following the increase in output in the three months of the 3rd quarter. The proportion of plants in use rose to 70.7% from 70.5%, which continues the increase in the capacity utilization rate that started in July.

Provided by: Federal Reserve

Foreign Purchase of Long-Term US Equities, Notes and Bonds Rises More Than expected in September

International demand for long-term US financial assets strengthened in September as net buying of long-term equities, notes and bonds totaled $40.7 billion, a figure that was higher than expected. Countries such as Japan, the UK and China added to holdings of Treasury debt showing that international partners are sending sizable capital flows into the US. If you include short-term securities such as stock swaps, foreigners bought a net $133.5 billion, the most since October 2008. While Treasury debt and equities fared well, investors sold a net $2.9 billion of US corporate debt, the fourth straight month of selling. Foreign purchases of equities were $15.7 billion in September after net purchases of $11.1 billion in August.

Official Release: Department of Treasury

Recommend This Post

Please login to comment. Dont have an account? Register