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

US DATA
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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.
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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.