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November PPI, NFIB Business Optimism, Oct. JOLTS

December 12, 2017
By Robert A. Dye, Ph.D., Daniel Sanabria

Business Optimism Surges as Congress Takes on Tax Reform, Fed Changes Leadership

  • The Producer Price Index for Final Demand increased by 0.4 percent in November.
  • The National Federation of Independent Business’-Small Business Optimism Index surged in November.
  • The Job Openings and Labor Turnover Survey for October showed an increase in hiring. 

The Producer Price Index for Final Demand increased by 0.4 percent for the third consecutive month in November. Rising energy prices pushed the headline index up in November. The energy sub-index gained 4.6 percent in November as rising crude oil prices pushed refined product prices higher. The transportation and warehousing sub-index was also warm, increasing by 0.6 percent, its third consecutive noticeable monthly gain. The headline PPI for Final Demand is now up 3.1 percent over the previous twelve months. Often this would activate inflation warnings, but downstream prices remain under control for now. The proliferation of choices that consumers have with online shopping may be helping to keep consumer prices in check even with upstream price pressure. The core PPI for Final Demand (less food, energy and trade) also increased by 0.4 percent in November, and is up by 2.4 percent over the previous 12 months. The Consumer Price Index for November will be released tomorrow morning.

The National Federation of Independent Business’s Small Business Optimism index surged in November to 107.5. This is the second-highest reading posted in the 44-year history of the index, coming close to the all-time high of 108.0 from July 1983. Most index components were positive in November, including planned job openings over the next three months, indicating good potential for ongoing hiring. The strong reading in the Small Business Optimism Index for November cannot be directly linked with events in Washington, D.C., but it does coincide both with progress on tax reform and with Jay Powell’s nomination as the next chairman of the Federal Open Market Committee. 

The October Job Openings and Labor Turnover Survey showed an increase in the hiring rate back to 3.8 percent, matching the high point for this business cycle. The job openings rate ticked down slightly, to 3.9 percent, still a good number. The quits rate remained high at 2.2 percent. This is a positive economic indicator showing that workers have confidence in their ability to find another job. The JOLTS data from October and the NFIB survey from November are supportive of ongoing moderate-to-strong job growth through the fourth quarter. 

Market Reaction: U.S. equity markets opened with gains. The yield on 10-Year Treasury bonds increased to 2.41 percent. NYMEX crude oil is down to $57.65/barrel. Natural gas futures are down to $2.71/mmbtu.To subscribe to our publications or for questions, contact us at ComericaEcon@comerica.com. Archives are available at http://www.comerica.com/insights. Follow us on Twitter:@Comerica_Econ.The articles and opinions in this publication are for general information only, are subject to change, and are not intended to provide specific investment, legal, tax or other advice or recommendations.  The information contained herein reflects the thoughts and opinions of the noted authors only, and such information does not necessarily reflect the thoughts and opinions of Comerica or its management team.  We are not offering or soliciting any transaction based on this information.  We suggest that you consult your attorney, accountant or tax or financial advisor with regard to your situation.  Although information has been obtained from sources we believe to be reliable, neither the authors nor Comerica guarantee its accuracy, and such information may be incomplete or condensed.  Neither the authors nor Comerica shall be liable for any typographical errors or incorrect data obtained from reliable sources or factual information. 

For a PDF version of this report click here: PPI _12122017.

The articles and opinions in this publication are for general information only, are subject to change, and are not intended to provide specific investment, legal, tax or other advice or recommendations. The informationcontained herein reflects the thoughts and opinions of the noted authors only, and such information does not necessarily reflect the thoughts and opinions of Comerica or its management team. We are not offering or solicitingany transaction based on this information. We suggest that you consult your attorney, accountant or tax or financial advisor with regard to your situation. Although information has been obtained from sources we believe to bereliable, neither the authors nor Comerica guarantee its accuracy, and such information may be incomplete or condensed. Neither the authors nor Comerica shall be liable for any typographical errors or incorrect data obtainedfrom reliable sources or factual information.