2009 Economic Calendar
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Producer Price Index  
Released On 12/15/2009 8:30:00 AM For Nov, 2009
PriorConsensusConsensus RangeActual
PPI - M/M change0.3 %1.0 %0.5 % to 1.2 %1.8 %
PPI less food & energy - M/M change-0.6 %0.2 %0.0 % to 0.4 %0.5 %
PPI -Yr/Yr change-1.9 %2.7 %
PPI less food & energy - Yr/Yr change0.7 %1.2 %

We got the worst of both worlds for this morning's initial economic news. Producer prices surged while Empire State manufacturing fell back sharply. Energy costs jacked up the headline PPI for November but the core also rose significantly. The overall PPI jumped 1.8 percent in November after gaining 0.3 percent in October. The boost in the latest month far exceeded the market forecast for a 1.0 percent increase. The November gain was led by a 6.9 percent spike in energy and a 0.5 percent gain for food.

At the core level, the PPI rebounded 0.5 percent after a huge 0.6 percent drop in October. The market had projected a 0.2 percent rise for the latest month.

Turning to some component detail, the November jump in energy prices was led by gasoline which spurted up 14.2 percent after rising 1.9 percent the month before.

The core rate was boosted heavily by a 4.2 percent rebound in prices for light trucks, following a 5.2 percent drop in October. Also, tobacco products surged 2.2 percent in November after no change the month before.

For the overall PPI, the year-on-year rate increased to up 2.7 percent from minus 1.9 percent in October (seasonally adjusted). The core rate year-ago pace firmed to up 1.2 percent from up 0.7 percent the previous month. On a not seasonally adjusted basis for November, the year-ago gain for the headline PPI was 2.4 percent while the core was up 1.2 percent.

It is easy to jump on the worry wagon about inflation from today's report. But there should be a little caution about that. Oil prices have since come down and the jump in the core partly or mostly reflected getting back to near-term trend after October's sharp drop. The core rebound was mainly for light trucks and cigarettes. Also, today's disappointing Empire State number suggests that underlying inflation pressures are soft despite the stronger November PPI report.

Consensus Outlook
The producer price index increased 0.3 percent in October after dropping 0.6 percent the month before. The rise in the latest month was led a 1.6 percent boost in energy and a 1.6 percent gain also for food. But at the core level, the PPI rate unexpectedly dropped 0.6 percent, following a 0.1 percent dip in September. The fall at the core level was due mainly to declines in prices for light trucks and passenger cars. Looking ahead, there is still upward pressure on the headline figure from higher oil prices. Imported petroleum prices were up 6.2 percent in November. Also, seasonally adjusted spot prices for West Texas Intermediate increased 6.9 percent for the month.

The Producer Price Index (PPI) of the Bureau of Labor Statistics (BLS) is a family of indexes that measure the average change over time in the prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller. Effective with the January 2014 PPI data release in February 2014, BLS transitioned from the Stage of Processing (SOP) to the Final Demand-Intermediate Demand (FD-ID) aggregation system. The headline PPI (for Final Demand) measures price changes for goods, services, and construction sold to final demand: personal consumption, capital investment, government purchases, and exports.  Why Investors Care
It is always a good idea to look at more than a few months of data to get a sense of changes in established trends. Monthly changes in the PPI are mainly volatile because of sharp fluctuations in food and energy prices. The core PPI eliminates the sharper fluctuations.
Data Source: Haver Analytics
Yearly changes tend to smooth out more severe monthly fluctuations and give a better idea of the underlying rate of inflation. Even with the smoother trend, note that the core PPI does not fluctuate as much as the total PPI.
Data Source: Haver Analytics

2009 Release Schedule
Released On: 1/152/193/174/145/146/167/148/189/1510/2011/1712/15
Release For: DecJanFebMarAprMayJunJulAugSepOctNov

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