Wholesaler Inflation Subsides a Bit: December 5 – 9

Wholesaler inflation was smaller than seen previously. Here are the five things we learned from U.S. economic data released during the week ending December 9.


Lower gasoline prices helped keep wholesale inflation in check in November. The Producer Price Index (PPI) for final demand increased 0.3 percent, matching its September and October gains. Also rising 0.3 percent was the Bureau of Labor Statistics’ core wholesale price measure, which removes energy, food, and trade services. The former has increased 7.4 percent over the past year and the core measure has risen 4.9 percent. Both remained well above the Fed’s two percent inflation target, but each was below their recent peaks. Energy PPI fell 3.3 percent as wholesale gasoline prices dropped 6.0. Food PPI surged 3.3 percent, boosted by higher prices for fresh/dry vegetables, eggs, meat, and poultry. Core goods PPI advanced 0.3 percent. Services PPI jumped 0.4 percent as trade services PPI (wholesaler and retailer margins) swelled 0.7 percent.  

Factory orders rose in October. The Census Bureau estimates new orders for manufactured goods jumped 1.0 percent to a seasonally adjusted $556.6 billion. Orders for the first ten months of 2022—$5.425 trillion—were 12.8 percent above the same months in 2021. Durable and nondurable goods were up 1.1 percent and 1.0 percent, respectively, while that for civilian nonaircraft capital goods grew 0.6 percent. Shipments gained 0.7 percent to $554.8 billion and totaled $5.415 trillion thus far in 2022 (+12.9 percent versus 2021). Unfilled orders expanded for a 26th straight month (+0.6 percent to $1.144 trillion), while inventories swelled 0.5 percent to $805.3 billion.

Service sector activity picked up in November. The Institute for Supply Management’s Services PMI added 2.1 points to a reading of 56.5. The Services PMI has remained above a reading of 50.0—the threshold between an expanding and contracting service sector—for 30 straight months. Rising were measures for business activity/production, employment, and inventories. The new orders index slipped in November. Thirteen of 18 tracked service sector industries reported growing during the month, led by real estate, mining, and agriculture. Survey respondents noted “continued improvement in supply chain and logistics performance.”

The trade deficit swelled in October. The Census Bureau and the Bureau of Economic Analysis report that exports slowed 0.7 percent to a seasonally adjusted $256.6 billion and improved 0.6 percent to $334.8 billion. The resulting -$78.2 billion was up 5.4 percent from September and its biggest since June. The goods deficit rose by $6.1 billion to -$99.6 billion, while the services surplus jumped $2.1 billion to +$21.4 billion. In the case of the former, exports fell for energy products and pharmaceuticals, while energy product imports increased. The U.S. had its largest goods deficits with China, the European Union, Mexico, and Vietnam.

Consumers’ moods remained sour in early December. The University of Michigan’s Index of Consumer Sentiment added 2.3 points to a seasonally adjusted 59.1 (1966Q1=100). The same measure was at 70.6 a year earlier. The current conditions index edged up 1.4 points to 60.2 (December 2021: 74.2) and the expectations index grew by 2.8 points to 58.4 (December 2021: 68.3). The press release noted that despite the improvement, sentiment remained “low from a historical perspective.” One-year inflation expectations were at +4.6 percent, its lowest in 15 months but “still well above 2 years ago.”

Other U.S. economic data released over the past week:

  • Jobless Claims (Week ending December 3, 2022, First-Time Claims, seasonally adjusted): 230,000, +4,000 vs. the previous week, +2,000 vs. the same week a year earlier). 4-week moving average: 230,000 (-5.8% vs. the same week a year earlier). 
  • Productivity (2022Q3-Revised, Nonfarm Business Labor Productivity, seasonally adjusted annualized rate): +0.8% vs. 2022Q2; -1.3% vs. 2021Q3.
  • Wholesale Trade (October 2022, Merchant Wholesalers Inventories, seasonally adjusted): $923.8 billion (+0.5% vs. September 2022; +21.9% vs. October 2021). 
  • Consumer Credit (October 2022, Outstanding Non-Real Estate Backed Credit Balances, seasonally adjusted): $4.729 trillion (+$27.1 billion vs. September 2022; +8.1% vs. October 2021)

The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.

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