Plunging manufacturing indexes spark inflation worries
Consumer prices continued higher in the
month of August, according to the
CPI report from the
Department of Labor, although the increase came in line with economist
estimates. Nonetheless, the report did not include much of the impact of
Hurricane Katrina.
The Labor Dept. said that the consumer price index rose 0.5 percent in August,
matching the increase seen in the previous month. Most economists had been
expecting prices to increase by 0.5 percent.
The increase in consumer prices was largely due to a sharp rise in energy
prices, which rose 5.0 percent in August following a 3.8 percent increase in
July. The increase reflected a 7.9 percent increase in prices for energy
commodities and a 1.3 percent increase in prices for energy services.
The report also showed that the core CPI, which excludes food and energy prices,
rose by 0.1 percent for the fourth consecutive month. The increase came in
slightly below economist expectations of an increase of 0.2 percent.
The Philly Fed Survey
showed that the pace of manufacturing activity in the region slowed during
September, with companies reporting a sharp decline in new orders.
The Federal Reserve Bank of Philadelphia
revealed that its diffusion index of current manufacturing activity dropped to
2.2 for September compared to a reading of 17.5 for August. September
represented the lowest reading in 3 months, the Philly Fed reported.
The new orders index included in the
Philly Fed report showed a particularly sharp decline. The measure dropped from
19.8 in August to negative 0.5 in September, its first negative reading since
April of 2003. Meanwhile, the Philly Fed’s inventories index went from negative
to positive, climbing from a negative 7.3 in August to a positive 1.4 in
September.
The index of prices paid increased during
the month, the Federal Reserve bank reported, increasing from 25.9 in August to
52.7 in September. Prices received also showed an advance, with the index
climbing from 3.0 in the previous month to a reading in September of 8.6.
The U.S. Labor Department
reported
that initial jobless claims jumped to 398,000 for the week ended September 10,
up 71,000 from the previous week’s revised figure. The sharp advance during the
week came as a large number of people displaced by Hurricane Katrina filed for
unemployment benefits.
The 4-week moving average for initial
claims, which flattens out the week-to-week volatility, rose 19,750 to 340,750.
Continuing claims for the week ended on September 3, the most recent week for
which the government has data, rose 20,000 to 2.59 million.
The latest report by the US Minerals Management Service
report was
virtually unchanged from yesterday. Shut-in oil production is equivalent to
56.14% of the daily oil production, shut-in gas production is equivalent to
34.11% of the daily gas production in the Gulf Of Mexico.
Energy prices were mixed today, Harbor
Unleaded Gas -1.91%, Crude Oil -0.73% and Heating Oil -0.20%
closed lower. Natural Gas +1.91% closed higher.
Today’s data sent US treasuries lower. The US
10yr T-Note -0.29%, 5yr T-Note -0.12% and 2yr T-Note -0.02%.
The major grain contracts all closed lower, Soybeans -1.81%,
Wheat -1.07% and Corn
-0.36%.
All the softs closed lower, Coffee -2.54%, Lumber
-0.13%,
Cotton -0.88% and Frozen Orange Juice 0.21%, Cocoa
-1.33%.
The whole livestock group closed in the higher today, after
yesterday’s across the board decline.
Once again Copper -0.40% was the only faller in the metals. Gold
+1.23%, Silver +0.47%, Palladium +1.30% and Platinum +0.24%
ended higher.
Economic News
Business Inventories:
M/M Change – Actual -0.5% Consensus -0.0%
Consumer Price Index:
CPI, M/M Change – Actual 0.5% Consensus 0.5%
CPI (less Food and Energy), M/M Change – Actual 0.1% Consensus 0.2%
NY Empire Index:
General Business Conditions – Actual 17 Consensus 18
Jobless Claims:
New Claims – Actual 398 K Consensus 350K
Philadelphia Fed Survey:
General Business Conditions – Actual 2.2 Consensus 14.0
Ashton Dorkins