The non-stellar news from MarketWatch:
Touching off renewed talk about stagflation, U.S. wholesale prices rose faster than expected in April while industrial output was surprisingly weak, economic data showed Tuesday...
The U.S. producer price index increased a larger-than-expected 0.6% in April on higher energy prices, the Labor Department reported.
Excluding food and energy prices, the producer price index for finished goods increased 0.3% on the month. Read the full PPI release.
The gains in April were slightly stronger than expected. Wall Street economists had forecast the PPI to rise by 0.4%, with core prices expected to increase 0.2%, according to a survey conducted by MarketWatch. See Economic Calendar.
Also Tuesday, industrial production fell 0.2% last month, including a 2.3% drop in utility output. Manufacturing production was flat, with weak auto production offsetting gains in computers and machinery. See full story on industrial production.
Not that the news was all bad:
Still, the year-over-year gain in the PPI dipped to 4.8% in April from 4.9% in March. Core prices were up 2.6% year-over-year, unchanged from March.
Economist said the details in the PPI report provided a something of a silver lining, with reduced pressures coming from raw materials prices.
"While the headline looks ugly because of energy and the core is a little higher than we would like to see, this report is not necessarily a disaster," said Steve Stanley, chief economist for RBS Greenwich Capital.
And there was this looking-on-the-bright-side comment from Bloomberg:
"You have to take this data with a little caution because the overall number being up 0.6 percent includes the energy prices,'' Daniel Laufenberg, chief economist at American Express Financial Corp., said of the producer prices report in an interview. "We know that more recently those prices have come down a bit, so we're not likely to see that continuing.'"
And this as well:
"Manufacturing has been weighed down in the last couple of months by the auto sector as Detroit goes through an inventory correction,'' said Joshua Shapiro, chief economist at Maria Fiorini Ramirez Inc., a New York consulting firm, who forecast a 0.1 percent drop. "Once we get through the auto correction in the next couple of months, manufacturing can move ahead.''...
Outside of autos, manufacturing production picked up, rising 0.4 percent after an unchanged reading the previous month.
Of course, there is the housing market to either delight or horrify you, depending on your perspective. From Reuters:
While the industrial sector cooled in April, the already hot housing sector grew hotter. The Commerce Department said groundbreaking for new homes climbed a steep 11 percent to a 2.038 million unit rate -- well above forecasts...
The housing starts report showed ground-breaking on both single-family and multifamily homes recovering after a March plunge. Permits for future groundbreaking also rose, a reflection of builder confidence.
On to tomorrow's CPI report.