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US DATA: PPI Details Point To 0.1pp Sequential Drag To Core PCE

US DATA
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  • Building on the above, core PPI surprised softer than expected but more importantly, the read through to core PCE looks decidedly weak.
  • Our crude calculation points to broadly a flat contribution from the main PCE-relevant components within the PPI report after a strong +0.1pp back in October, i.e. a sequential drag of -0.1pp.
  • The main culprits were portfolio management (-0.6% after +3.1%) and airfares (-2.1% after +2.6%).
  • Analyst core PCE estimates saw a particularly wide range after yesterday’s CPI release but broadly pointed to a 0.2% M/M increase. We suspect these could group lower now with sizeable odds of rounding to 0.1% M/M.
  • Morgan Stanley now look for a core PCE reading of 0.11% having been easily the softest post-CPI with their 0.136% previous estimate. 
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  • Building on the above, core PPI surprised softer than expected but more importantly, the read through to core PCE looks decidedly weak.
  • Our crude calculation points to broadly a flat contribution from the main PCE-relevant components within the PPI report after a strong +0.1pp back in October, i.e. a sequential drag of -0.1pp.
  • The main culprits were portfolio management (-0.6% after +3.1%) and airfares (-2.1% after +2.6%).
  • Analyst core PCE estimates saw a particularly wide range after yesterday’s CPI release but broadly pointed to a 0.2% M/M increase. We suspect these could group lower now with sizeable odds of rounding to 0.1% M/M.
  • Morgan Stanley now look for a core PCE reading of 0.11% having been easily the softest post-CPI with their 0.136% previous estimate.