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US DATA: Anecdotal Data Watch - Harder To Pass Cost Increases On [1/2]

US DATA

With some FOMC members increasingly monitoring anecdotal data to help policy setting at turning points, today’s US flash PMIs broadly supported findings in yesterday’s Fed Beige Book showing reduced ability to pass on price increases. It does however suggest some greater relative cost pressures than in the Eurozone. 

  • S&P Global PMI for Oct flash - smallest monthly increase in prices charged since May 2020: “October saw average prices charged for goods and services rise at a sharply reduced rate, registering the smallest monthly increase since May 2020. The moderation represented a contrast to the uptick seen in September and pushed the rate of inflation below the prepandemic long-run average. The rate of selling price inflation cooled especially sharply in the service sector, down to its lowest for almost four-and-a-half years, but also fell in manufacturing.
  • Input cost inflation still historically high: “Input cost inflation also slowed, though remained elevated by historical standards, notably in the service sector. Although service sector input cost inflation waned slightly, generally linked to lower wage pressures, it remained the third-highest recorded over the past year and well above the pre-pandemic average.”
  • Fed Beige Book for October: “Many Districts noted increasing price sensitivity among consumers. […] Input prices generally rose moderately. Contacts across several industries noted more acute pressures from rising insurance and healthcare costs. Multiple Districts reported that input prices generally rose faster than selling prices, compressing firms’ profit margins.

 

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With some FOMC members increasingly monitoring anecdotal data to help policy setting at turning points, today’s US flash PMIs broadly supported findings in yesterday’s Fed Beige Book showing reduced ability to pass on price increases. It does however suggest some greater relative cost pressures than in the Eurozone. 

  • S&P Global PMI for Oct flash - smallest monthly increase in prices charged since May 2020: “October saw average prices charged for goods and services rise at a sharply reduced rate, registering the smallest monthly increase since May 2020. The moderation represented a contrast to the uptick seen in September and pushed the rate of inflation below the prepandemic long-run average. The rate of selling price inflation cooled especially sharply in the service sector, down to its lowest for almost four-and-a-half years, but also fell in manufacturing.
  • Input cost inflation still historically high: “Input cost inflation also slowed, though remained elevated by historical standards, notably in the service sector. Although service sector input cost inflation waned slightly, generally linked to lower wage pressures, it remained the third-highest recorded over the past year and well above the pre-pandemic average.”
  • Fed Beige Book for October: “Many Districts noted increasing price sensitivity among consumers. […] Input prices generally rose moderately. Contacts across several industries noted more acute pressures from rising insurance and healthcare costs. Multiple Districts reported that input prices generally rose faster than selling prices, compressing firms’ profit margins.

 

Keep reading...Show less