{"id":286,"date":"2014-08-15T18:11:29","date_gmt":"2014-08-15T22:11:29","guid":{"rendered":"http:\/\/naroffeconomics.com\/?p=286"},"modified":"2014-08-15T18:11:29","modified_gmt":"2014-08-15T22:11:29","slug":"july-industrial-production-and-producer-prices","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=286","title":{"rendered":"July Industrial Production and Producer Prices"},"content":{"rendered":"

KEY DATA:<\/strong> IP: +0.4%; Manufacturing: +1%; PPI: +0.1%; Goods less Food and Energy: +0.2%<\/p>\n

IN A NUTSHELL:<\/strong>\u00c2\u00a0\u00c2\u00a0\u00e2\u20ac\u0153With manufacturers ramping up production, it is clear the economy is accelerating, but it is doing so without any major inflation pressures.\u00e2\u20ac\u009d<\/em><\/strong><\/p>\n

WHAT IT MEANS:<\/strong>\u00c2\u00a0Consumers may not be spending a whole lot of money but that doesn\u00e2\u20ac\u2122t seem to matter to manufacturers.\u00c2\u00a0 Production surged in July<\/em><\/strong> and the increases were across the board.\u00c2\u00a0 Every durable goods and five of the eight nondurable goods sectors raised output levels.<\/em><\/strong>\u00c2\u00a0\u00c2\u00a0 On the consumer side, vehicle assemblies jumped 13% <\/em><\/strong>as sales remain strong.\u00c2\u00a0 But it wasn\u00e2\u20ac\u2122t just what\u00e2\u20ac\u2122s left of Detroit.\u00c2\u00a0 Output of electronics, appliances and furniture also increased solidly.<\/em><\/strong>\u00c2\u00a0 Even clothing production was up! There were some soft spots, such as food and energy, but that doesn\u00e2\u20ac\u2122t change the picture.\u00c2\u00a0 Business goods production rose as a lot more business equipment and construction supplies were churned out.\u00c2\u00a0 The manufacturing capacity utilization rate hit its highest level since February 2008.\u00c2\u00a0 <\/em><\/strong><\/p>\n

While production may be jumping, costs are not.\u00c2\u00a0 The Producer Price Index rose modestly in July, helped along by a shape drop in energy costs.<\/em><\/strong>\u00c2\u00a0 Services costs rose a touch faster but than goods prices but they are still not rising sharply.\u00c2\u00a0 There appears to be only one area where wholesale costs are worrisome: Consumer foods.<\/em><\/strong>\u00c2\u00a0 Finished consumer food goods jumped one percent in July and are up nearly six percent over the year.\u00c2\u00a0 Those increases show up in the supermarket and with wages largely flat, households will have less left over after buying food to purchase other goods.<\/p>\n

MARKETS AND FED POLICY IMPLICATIONS:<\/strong> Rising output and modest inflation pressures: Who could ask for anything more?\u00c2\u00a0 <\/em><\/strong>The increase in production is the result of improving economic conditions and that implies hiring should continue to improve and the unemployment rate decline.\u00c2\u00a0 Those are necessary conditions to shift the excess of supply in the labor market to an excess of demand and ultimately higher wages.\u00c2\u00a0 With producer costs tame, inflation should also continue to be fairly modest, allowing purchasing power to rise once compensation gains pick up.<\/em><\/strong>\u00c2\u00a0 The Fed members who want to keep holding the economy\u00e2\u20ac\u2122s hand will look at the tame inflation numbers and say that policy can remain untouched.\u00c2\u00a0 The inflation hawks will say the industrial production gains argue that conditions are changing and the Fed needs to get out in front of any potential inflation pressures.\u00c2\u00a0 In other words, nothing will change at the Fed.\u00c2\u00a0 These reports, coupled with geopolitical pressures subsiding, at least a little, should put some smiles back on investors\u00e2\u20ac\u2122 faces.<\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA: IP: +0.4%; Manufacturing: +1%; PPI: +0.1%; Goods less Food and Energy: +0.2% IN A NUTSHELL:\u00c2\u00a0\u00c2\u00a0\u00e2\u20ac\u0153With manufacturers ramping up production, it is clear the economy is accelerating, but it is doing so without any major inflation pressures.\u00e2\u20ac\u009d WHAT IT MEANS:\u00c2\u00a0Consumers may not be spending a whole lot of money but that doesn\u00e2\u20ac\u2122t seem to … Continue reading July Industrial Production and Producer Prices<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,16,14],"tags":[],"class_list":["post-286","post","type-post","status-publish","format-standard","hentry","category-economic-indicators","category-industrial-production","category-producer-price-index"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/286","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=286"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/286\/revisions"}],"predecessor-version":[{"id":287,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/286\/revisions\/287"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=286"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=286"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=286"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}