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The U.S. Bureau of Labor Statistics reported the Producer Price Index for final demand, which measures prices businesses receive for their final goods and services increased a seasonally adjusted 0.8% in November. On an unadjusted basis, the final demand index rose 9.6% for the 12 months ending in November, this is the largest increase since the government began calculating in 2010. The reading follows an 8.8% increase for October. The PPI started the year off with a 12-month price growth of 1.6%. The price of services increased 0.7% in November, with hotel rates, securities brokerage, airline travel, and freight all contributing. The price of goods also saw an increase of 1.2%. Steel scrap surged 10.7%, while indices for gas, fresh fruits and melons, fresh and dry vegetables, and industrial chemicals all jumped. Core inflation at the wholesale level, which excludes the more volatile food and energy indices, increased 0.8% in November. Over the past 12 months, core prices are up 9.5%.
The Commerce Department reported advance U.S. retail and food services sales increased 0.3% to $639.8B in November, this follows an upwardly revised 1.8% in October. Retail sales are running 18.2% higher than a year ago. Total sales for September 2021 through November 2021 were up 16.2% year over year. Retail and food service reported up (+0.3%), excluding motor vehicles and parts sales (+0.3%), and excluding gas (+0.1%). Gas stations (+1.7%), sporting goods (+1.3%), and food services and drinking places (+1.0%) all saw increases. Auto dealerships, nonstore retailers, and home furnishings were all flat. Sales at electronics and appliance stores dropped (-4.6%), while department store sales plunged (-5.4%). Core retail sales, a measurement that excludes spending on autos, gasoline, building materials, and food services declined (-0.1%) from October to November.
The Federal Reserve in its policy statement forecast a much quicker end to its monthly asset purchases. The Fed will be buying $60B of bonds monthly as of January, half the level prior to the November taper, and $30B less than it had been buying in December. The Fed will accelerate the reduction in 2022, which means the central bank will likely conclude its bond purchases (which keep long-term rates such as mortgages low) by March instead of June. The decision was made “in light of inflation developments and the further improvement in the labor market,” according to the policy statement. Fed officials project as many as three quarter-point rate increases in 2022. Six of the 18 FOMC members projected less than three increases next year, and no members saw rates staying near zero. In addition, 11 members anticipate further rate hikes in 2023.
Wednesday December 22 – GQP (QoQ) (Q3)
Thursday December 23 – Core Durable Goods Orders (MoM) (November)
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