Economic data

Oct PPI fell .3% m/o/m but is still up 5.9% y/o/y. Both are less than expected as energy prices fell 1.4% and food prices were up just .1%. Also keeping a lid on wholesale prices was an .8% fall in the prices of passenger cars and 1.6% drop in light truck prices. Inflation in the pipeline moderated as intermediate goods prices fell by 1.1% m/o/m and crude goods prices were down by 2.5%. On a y/o/y basis though, both are still solidly higher, up by 8.3% and 12.6% respectively. Bottom line, while PPI is certainly a focus, tomorrow’s CPI will be the key inflation data point of the week.

The Nov NY mfr’g Fed survey, the 1st Nov industrial figure out, was +.6, a touch above estimates of -2.0 and an improvement from the -8.5 reading in Oct. The components though don’t point to much improvement as New Orders fell from flat to -2.0, Backlogs fell to -7.3 from -4.5, and Employment fell to -3.7 from +3.4. Inventories fell 3 pts to near a one year low, a set up for a rebuild but reflecting mfr’g reluctance to add inventories. Prices Paid fell 4 pts to the lowest since Nov ’09 but Prices Received rose 1.6 pts. The outlook 6 months out was a bright spot as it rose to 39.0 from 6.7. This measures the direction of change, not the degree of it but seems to point to confidence that things will get better in the 1st half of 2012

Oct Retail Sales were above expectations with the core rate (ex auto’s, gasoline and building materials) rising .6% m/o/m. Headline sales rose .5% vs an expected gain of .3% and sales were higher by .7% ex auto’s and gasoline vs a forecasted rise of .2%. The breakdown of the sales however seemed mixed. Online sales rose a strong 1.5% and are up 10.5% y/o/y. Sales also rose at restaurants/bars, sporting goods, health/personal care, food/beverages, electronics, auto’s and building materials. Sales though fell at clothing stores, furniture, department stores and gas stations. Bottom line, while retail sales in the aggregate were better than expected, the real test of consumer habits is now upon us with black Friday just a little more than a week away.

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