Not Quite Tamed: December 9 – 13

Prices rose more quickly in November. Here are the five things we learned from U.S. economic data released during the week ending December 13.

Consumer inflation accelerated in November. The Consumer Price Index (CPI) grew a seasonally adjusted 0.3 percent following four consecutive 0.2 percent monthly gains. The Bureau of Labor Statistics measure has jumped 2.7 percent over the past 12 months. Energy CPI increased 0.2 percent (gasoline: +0.6 percent) and food prices rose 0.5 percent. Net of energy and food, core CPI grew 0.3 percent, matching its gains over the previous three months. Core CPI’s year-to-year comparable was +3.3 percent. Rising were prices for used cars/trucks +2.0 percent), new vehicles (+0.6 percent), medical care services (+0.4 percent), shelter (+0.3 percent), and apparel (+0.2 percent). Prices for medical care commodities slipped 0.1 percent.

Wholesale prices rose in November. The Producer Price Index (PPI) for final demand jumped a seasonally adjusted 0.4 percent. This was the highest rate of wholesale inflation since June. The Bureau of Labor Statistics’s core PPI—which nets out food, energy, and trade services—eked out a 0.1 percent increase. Goods PPI surged 0.7 percent, boosted by a 3.1 percent rise in food PPI. Wholesale prices for energy and core goods increased 0.2 percent. Services PPI also gained 0.2 percent, even as trade services prices (i.e., retailer and wholesaler margins) jumped 0.8 percent. Over the past year, PPI for final demand has risen 3.0 percent, while core PPI has swelled 3.5 percent.

Small business sentiment surges in November. The Small Business Optimism Index from the National Federation of Independent Business rose 8.0 points to a seasonally adjusted 101.7 (1986=100). The index had not been this high in over three years (June 2021). All ten index components made positive contributions, with expectations for the economy and real sales showing dramatic rises. The election results were the big driver for the shift in small business owner sentiment, with the press release noting the outcome had helped “Main Street…becoming…more certain about future business conditions.”

Wholesaler sales slipped in October while their inventories expanded slightly. Merchant wholesaler sales declined 0.1 percent to a seasonally adjusted $675.1 billion. The Census Bureau measure was up 0.9 percent from a year earlier. Durable wholesale goods sales held steady in October (to $326.4 billion), while nondurable sales slowed to $348.7 billion. Wholesaler inventories expanded 0.2 percent to a seasonally adjusted $905.3 billion, up 0.9 percent from a year earlier. Durable and nondurable stockpiles increased 0.1 percent and 0.3 percent, respectively. The inventory-to-sales (I/S) ratio was unchanged at 1.34 (also matching its October 2023 ratio). The nondurables I/S ratio held steady at 0.95, while that for durables added a basis point to 1.76.

Productivity swelled during Q3. The Bureau of Economic Analysis reports nonfarm business output grew 3.5 percent on a seasonally adjusted annualized basis, supported by a 1.2 percent gain in hours worked. As a result, nonfarm business productivity rose by an annualized 2.2 percent during Q3. Relative to a year earlier, nonfarm business productivity increased 2.0 percent, with output up 2.8 percent and hours worked rising 0.7 percent. Over the past four quarters, hourly compensation jumped 4.3 percent and unit labor costs have gained 2.2 percent. Manufacturing productivity increased a more modest 0.9 percent (annualized) during Q3 and 0.6 percent over the past year.

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

• Jobless Claims (Week ending December 7, 2024, First-Time Claims, seasonally adjusted): 242,000, +17,000 vs. the previous week, +37,000 vs. the same week a year earlier). 4-week moving average: 224,250 (+5.9% vs. the same week a year earlier).
• Import Prices (November 2024, All Imports, not seasonally adjusted): +0.1% vs. October 2024; +1.3% vs. November 2023. Nonfuel Imports: Unchanged vs. October 2024; +2.3% vs. November 2023.
• Export Prices November 2024, All Exports, not seasonally adjusted): Unchanged vs. October 2024; +0.8% vs. November 2023. Nonagricultural Exports: +0.1% vs. October 2024; +1.2% vs. November 2023.
• Monthly Treasury Statement (November 2024, Federal Government Budget Deficit FY Year to Date): -$624.2 billion (vs. 1^st 2 months of FY2024: -$380.6 billion).

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