Interpretation of macro data on August 13: U.S. PPI monthly rate/annual rate in July,
First look at the data:
U.S. PPI annual rate in July, previous value 2.7% (2.6% before correction), expected 2.3%, recorded 2.2%
U.S. PPI monthly rate in July, previous value 0.20%, expected 0.20%, recorded 0.10%
Conclusion:
This set of data is good data, whether it is annual rate or monthly rate. PPI Producer Price Index is considered forward-looking data of CPI data. The current PPI annual rate has dropped significantly to 2.2%, which is beyond expectations and significantly lower than the previous value. The monthly rate has also doubled, indicating that producer prices have dropped in July, which is very friendly to inflation control. It is beneficial to tomorrow's CPI data, and if the CPI data continues to decline, it will further promote the expectation of interest rate cuts in September.
Impact:
PPI data is decreasing at an accelerated rate, both year-on-year and month-on-month, indicating that the price pressure from the production side has eased, which is more conducive to inflation control. This is the inflation control result that the Fed wants to see most. The reduction in inflation comes from the reduction in prices rather than the decline in consumption capacity.
At the same time, the data will also show that the economy is gradually moving towards a healthy development, which greatly reduces the crisis of economic recession.
At the same time, the reduction in production costs is conducive to the increase in corporate profit margins, which is a positive effect for real enterprises.
However, after PPI increases corporate profits, there is also a certain growth pressure on the wage growth rate, but wage growth must also consider the employment market situation. At present, there is no need to worry about PPI bringing more wage growth rates, and it must be combined with employment data.
For tomorrow's CPI data, the effective reduction of PPI may lead to another reduction in CPI, but it should be noted that the gradual reduction of CPI is a good thing, but if the reduction is too large, it will trigger the theory of economic recession and become a bad thing.
Wait for tomorrow's#CPIresults!
