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Cutback in Inventories Provides Stage for Future Growth
Manufacturing inventories were slashed by 1.0% in July, the 11th straight decline, pushing the annual decrease to 11.8%. That cutback is slightly more than economists were forecasting, but it’s a slower contraction than the revised 1.4% reduction in June.rnrnCutbacks to inventories indicate executives are clearing overhang in anticipation of soft orders, which doesn’t bode well for overall growth. However, this data is from July, while this morning’s 2.7% surge in retail sales ― the fastest pace in three years ― was for August.
New York Manufacturing Survey Beats Forecasts
Manufacturing conditions in New York once again beat expectations and showed new orders were on the rebound. The Empire State survey jumped 7 points in September to hit +18.9, the highest level since November 2007. Forecasters, surprised by last month’s ascension, were only looking for a moderate 2-point increase this month.rnrn “This is a strong print and we expect a slow upward trajectory in this indicator going forward, though likely not to the same leaps and bounds we have seen over the past two months,†commented Ian Pollick from TD Securities. rnrnNew orders advanced to +19.8 in the month,...
Surging Energy Costs Push Producer Prices Higher
The largest monthly climb in energy costs since November 2007 caused the Producer Price Index to climb 1.7% in August, a much faster rate than the +0.8% expected by markets.rnrnTo put that in perspective, the Federal Reserve’s preferred rate of inflation is 2.0% per year, a number almost reached in a single month. But fluctuations in the price of oil have caused the headline index to go on a roller coaster ride recently: prices fell 0.9% in July after increasing 1.8% in June. This month, soaring energy prices were responsible for “over 90%†of the month’s increase, as gasoline prices
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