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Industrial Production eased by 0.1 percent in January, but vehicle assemblies were up.

January PPI, Industrial Production, Feb. UI Claims, Regional Feds, NAH

February 15, 2018
By Robert A. Dye, Ph.D., Daniel Sanabria

Upstream Prices Warmed Up in January, Home Builders Expectations Strong

  • The Producer Price Index for Final Demand increased by 0.4 percent in January.
  • Industrial Production eased by 0.1 percent in January, but vehicle assemblies were up.
  • Initial Claims for Unemployment Insurance increased by 7,000 for the week ending February 10.


The Producer Price Index for Final Demand increased by 0.4 percent in January, consistent with the 0.5 percent increase we saw yesterday in the January Consumer Price Index. Just as we saw in the CPI, energy prices drove the January PPI up. The PPI’s energy sub-index was up by 3.4 percent for the month. This will reverse in February, following crude oil prices down. Most other major components of the PPI were also warm in January, showing month-to-month gains over 0.2 percent. The index for Final Demand Services gained 0.3 percent. The core measure of PPI for Final Demand, all items less food, energy and trade, was up by 0.4 percent in January. Headline PPI has been running warm, above 2 percent year-over-year growth, for much of the last 12 months. The 12-month change in the PPI for Final Demand was 2.7 percent in January. So far, warm producer prices have not pushed core CPI growth above 2 percent year-over-year.

U.S. industrial production eased slightly in January, down 0.1 percent. Manufacturing output was unchanged for the month. Total vehicle assemblies (autos plus light and heavy trucks) increased in January to a strong 11.27 million unit annual rate. Mining output fell by 1.0 percent. This seems at odds with reports of increasing U.S. crude oil production at year-end 2017. However, the Energy Information Agency has not yet published its January crude oil production numbers. Utilities output was up by 0.6 percent for the month.

Initial claims for unemployment insurance increased by 7,000 for the week ending February 10, to hit 230,000. Continuing claims gained 15,000 to hit 1,942,000 for the week ending February 3. Both increases represent inconsequential gains to very low levels. 

The Federal Reserve Bank of New York’s Empire State Manufacturing Survey for February showed continued good manufacturing conditions. The General Business Conditions Index ticked down to a still -positive 13.1. The Philadelphia Fed’s Current Activity Index for its Manufacturing Business Outlook Survey increased slightly, to 25.8 in February, indicating good manufacturing conditions in the third Federal Reserve District. 

According to the National Association of Home Builders, builder confidence stayed strong in February as its headline index was unchanged at 72. Future sales expectations hit a post-recession high despite the recent upward movement in home mortgage rates.

Market Reaction: U.S. equity markets opened with gains. The yield on 10-Year Treasury bonds eased to 2.89 percent. NYMEX crude oil is down to $60.03/barrel. Natural gas futures are up to $2.60/mmbtu.

For a PDF version of this report click here: PPI_02152018.

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