Inflation picked up in January. Here are the five things we learned from U.S. economic data released during the week ending February 17.
Consumer prices jumped in January. The Consumer Price Index (CPI) increased a seasonally adjusted 0.5 percent, the biggest rise for the Bureau of Labor Statistics measure since last October. Energy CPI jumped 2.9 percent (gasoline: +2.4 percent; natural gas: +6.4 percent) and food CPI grew 0.5 percent (eggs: +8.5 percent). Net of energy and food, core CPI increased 0.4 percent (matching its December gain). Rising were prices for medical care commodities (+1.1 percent), transportation services (+0.9 percent), apparel (+0.8 percent), shelter (+0.7 percent), and new vehicles (+0.2 percent). CPI has risen 6.4 percent over the past year, while core CPI’s 12-month comparable was +5.6 percent. While below recent peaks, both measures remain well above the Federal Reserve’s two percent target for inflation.
…as had wholesale prices in January. The Bureau of Labor Statistics Producer Price Index (PPI) for final demand rose a seasonally adjusted 0.7 percent after declining in December. The core measure, which removes energy, food, and trade services, jumped 0.6 percent (its biggest increase since last March). Wholesale goods prices increased 1.2 percent. Energy prices surged 5.0 percent (gasoline: +6.2 percent) and food prices dropped 1.0 percent). Net of both, core goods PPI gained 0.6 percent (its biggest increase since last May). Services PPI was up 0.4 percent. Over the past year, PPI has risen 6.0 percent, while core PPI was up 4.5 percent. Like with consumer prices, the 12-month comparables were below recent highs even as they remain inflated.
Retail sales surged in January. Retail and food services sales jumped 3.0 percent to a seasonally adjusted $697.0 billion. The Census Bureau measure was 6.4 percent above year-ago levels. Gas station sales were flat during the month, while sales at auto dealers/parts stores swelled 5.9 percent. (Note that the data series does not adjust for inflation.) Net of both, core retail sales gained 2.6 percent for the month and 7.0 percent from a year earlier. Sales improved in nearly retail sector, including restaurants/bars (+7.2 percent), furniture (+4.4 percent), electronics/appliances (+3.5 percent), general merchandise (+3.2 percent), apparel (+2.5 percent), and health/personal care (+1.9 percent).
Manufacturing rebounded in January. Manufacturing output rose a seasonally adjusted 1.0 percent. The Federal Reserve measure had declined 0.8 percent and 1.8 percent in October and November, respectively. Durable and nondurable goods production increased 0.8 percent and 1.1 percent, respectively, with widespread across product categories. Overall industrial production was flat in January as a 9.9 percent drop in utility output (due to warm winter weather) counterbalanced the 2.0 percent surge in mining activity. Manufacturing production was up a mere 0.3 percent from a year earlier, while industrial production was 1.1 percent above January 2022.
Forward-looking measures continue to suggest a recession. The Conference Board’s Leading Economic Index (LEI) declined 0.3 percent to a reading of 110.3 (2016=100). The measure has fallen 3.6 percent over the past six months after dropping 2.4 percent during the prior six-month period. Five of ten LEI made positive contributions to the index, led by average weekly manufacturing hours worked, jobless claims, and stock prices. Purchasing managers’ report on new manufacturing orders and consumer sentiment dragged down the LEI. The coincident index inched up 0.2 percent to 109.5, with all four components making positive contributions. The lagging index also gained 0.2 percent to 118.5, with three of seven components positively contributing. The Conference Board “expects high inflation, rising interest rates, and contracting consumer spending to tip the U.S. economy into recession in 2023.”
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending February 11, 2023, First-Time Claims, seasonally adjusted): 194,000, -1,000 vs. the previous week, -15,000 vs. the same week a year earlier). 4-week moving average: 189,500 (-9.3% vs. the same week a year earlier).
- Import Prices (January 2023, All Imports, not seasonally adjusted): -0.2% vs. December 2022; +0.8% vs. January 2022. Nonfuel Imports: +0.3% vs. December 2022; +0.8% vs. January 2022.
- Export Prices (January 2023, All Exports, not seasonally adjusted): +0.8% vs. December 2022; +2.3% vs. January 2022. Nonagricultural Exports: +0.8% vs. December 2022; +1.7% vs. January 2022.
- Housing Starts (January 2023, Privately-Owned Housing Starts, seasonally adjusted annualized rate): 1.309 million (-4.5% vs. December 2022; -21.4% vs. January 2022).
- NFIB Small Business Optimism (January 2022, Index (1986=100), seasonally adjusted): 90.3 (December 2022: 89.8; January 2022: 97.1).
- Treasury International Capital (December 2022, Net Foreign Purchases of U.S. Securities, not seasonally adjusted): +$103.3 billion (November 2022: +$140.6 billion; December 2021: +$76.9 billion).
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