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US OUTLOOK/OPINION: Core Goods Prices Seen Rising For First Time Since Feb [3/3]

US OUTLOOK/OPINION
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  • Core goods CPI prices should see a rare monthly increase in September, the first since February and before that May 2023.
  • Used car prices play a large role in expectations here, seen increasing circa 0.9% M/M after a string of heavy declines including -1.0% in August. Wholesale used vehicle prices indicate potential for a further increase in October but gains could slow after that.
  • Core goods ex-used cars are again worth watching, after another -0.1% M/M decline in August despite higher input costs amidst a relative tightening in supply chain pressures.
  • The NY Fed’s global supply chain pressures index has eased a touch since August, falling from 0.20 to 0.13, but that’s still meaningfully tighter than the 0.45 standard deviations below historical averages seen through 1H24.
  • With core PPI readings also mostly running hotter than core goods, an acceleration beyond used cars would support the anecdotal evidence of firmer price pressures (latest S&P Global US PMI comments on the next page) whilst on the flip side a further deceleration here would be a dovish sign for pricing power.

 

A graph of the fall of the stock market Description automatically generated with medium confidence

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  • Core goods CPI prices should see a rare monthly increase in September, the first since February and before that May 2023.
  • Used car prices play a large role in expectations here, seen increasing circa 0.9% M/M after a string of heavy declines including -1.0% in August. Wholesale used vehicle prices indicate potential for a further increase in October but gains could slow after that.
  • Core goods ex-used cars are again worth watching, after another -0.1% M/M decline in August despite higher input costs amidst a relative tightening in supply chain pressures.
  • The NY Fed’s global supply chain pressures index has eased a touch since August, falling from 0.20 to 0.13, but that’s still meaningfully tighter than the 0.45 standard deviations below historical averages seen through 1H24.
  • With core PPI readings also mostly running hotter than core goods, an acceleration beyond used cars would support the anecdotal evidence of firmer price pressures (latest S&P Global US PMI comments on the next page) whilst on the flip side a further deceleration here would be a dovish sign for pricing power.

 

A graph of the fall of the stock market Description automatically generated with medium confidence