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US DATA: Stronger-Than-Expected PPI, But PCE Elements Look Soft

US DATA

Lots to get through on this PPI report but we note upward revisions to sequential December producer prices, and pay special attention to the beats on the Y/Y figures - these are not just the result of seasonal factor revisions, they are just straight-up beats (ex-food/energy/trade 3.4% Y/Y vs 3.1% expected, 3.5% prior rev up from 3.3%). PPI momentum thus looks stronger overall at the moment.

  • BUT a few standouts in the details for PCE that at first glance make it look soft for the translation: airline passenger services fell 0.3% M/M (after +5.0%), portfolio management decelerated to 0.4% (after 0.6%), health/medical insurance fell 1.1% (after 0.1%), and indeed the broad set of medical services categories decelerated/were deflationary in January.
  • We will go through this in more detail shortly.
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Lots to get through on this PPI report but we note upward revisions to sequential December producer prices, and pay special attention to the beats on the Y/Y figures - these are not just the result of seasonal factor revisions, they are just straight-up beats (ex-food/energy/trade 3.4% Y/Y vs 3.1% expected, 3.5% prior rev up from 3.3%). PPI momentum thus looks stronger overall at the moment.

  • BUT a few standouts in the details for PCE that at first glance make it look soft for the translation: airline passenger services fell 0.3% M/M (after +5.0%), portfolio management decelerated to 0.4% (after 0.6%), health/medical insurance fell 1.1% (after 0.1%), and indeed the broad set of medical services categories decelerated/were deflationary in January.
  • We will go through this in more detail shortly.