Upside surprise on US core PPI, Broad-based rebound in US manufacturing output
The PPI declined by -0.1% MoM in December, below the consensus +0.1% MoM. The downside surprise largely reflected the food component, which fell -0.8% after six consecutive months of gains. The energy component was also down -0.8%, close to expectations. Core PPI surprised on the upside, rising +0.3%, two-tenths above the consensus. This partly reflected a rebound in the vehicle components, autos and light trucks. Elsewhere, the picture was more mixed, with gains in pharmaceuticals, tobacco and women’s apparel offset by declines in electronic equipment, appliances, and men's apparel.
Industrial production rose +0.4% MoM in December, in line with consensus +0.5%. There was a sharp -2.7% decline in utilities output offset by a much stronger-than-expected +0.9% increase in manufacturing. The upside surprise partly reflected the vehicles component, which rose +0.3%. By industry group, both durable and nondurable components rose. Looking ahead, the continued upward trend in manufacturing surveys and the strong rebound in the level of output in December appears to have set a nice base for further production growth in Q1.
Assistant State Treasurer
Chief Investment Officer
State of Louisiana
Department of the Treasury