Consumer Prices Rose 2.1% in December From a Year Earlier Inflation seen ending the year on a somewhat stronger note
Prices rose 0.3% in December when excluding the often-volatile categories of food and energy, the largest increase for so-called core prices since January 2017. Economists surveyed by The Wall Street Journal had expected core prices would rise a more modest 0.2% versus November.
Overall prices climbed 2.1% in December compared with a year earlier, easing a bit from November’s 2.2% annual gain. Prices excluding food and energy were up 1.8% from the end of 2016, firming slightly from the prior month’s annual increase. (…)
In a separate report Friday, the Labor Department said inflation-adjusted average weekly earnings for private-sector workers rose 0.2% in December from the prior month, as wages grew faster than prices and the average workweek was unchanged. (…)
Core CPI: last 3 months annualized: +2.4% vs +1.2% the previous 3 months.
Business-Level Inflation Falls Unexpectedly The producer-price index fell 0.1% in December from a month earlier, the first decline since August 2016
Prices fell broadly, particularly for services in industries like airline travel and apparel. Excluding volatile food and energy categories, so-called core prices also fell 0.1%. (…) Producer prices rose 2.6% in December compared with a year earlier, the largest calendar-year increase since 2011. Core prices climbed 2.3% last year. (…)
From Haver Analytics’ table, last 3 months annualized (previous 3 months): Core Final Demand: +2.8% (+1.6%), Core Goods: +3.2% (+2.0%), Intermediate Demand-Processed Goods: +8.2% +3.7%), all accelerating. Not in table: Intermediate Demand-Core Processed Goods: +4.9% (+1.2%).
PPI Services declined 0.2% in December, after 9 consecutive increases and mainly because of the weakness in Trade Services, down in both November and December. Here’s how the BLS defines Trade Services:
Most of the decrease can be traced to a 0.6-percent decline in margins for final demand trade services. (Trade indexes measure changes in margins received by wholesalers and
Brent crude tops $70 a barrel as global inventories tighten
(…) The giant retailer, which employs around 1.5 million people in the U.S., currently pays $9 or $10 an hour to most new store workers. The wage increase to well above the federal minimum could pressure restaurants, warehouses and smaller retailers that compete for low-skilled hourly workers.
On Thursday, the company also announced plans to cut roughly 10,000 jobs by closing about 10% of its 660 U.S. Sam’s Club warehouse stores. (…)
Some manufacturers, too, are reacting. Fiat Chrysler Automobiles NV said Thursday it would pay $2,000 bonuses to about 60,000 U.S. salaried employees and invest $1 billion in a Michigan plant following the tax overhaul. (…)
The higher wage will add about $300 million in annual expenses for Wal-Mart while the bonuses will result in a $400 million hit to the current quarter’s profit, the company said. But the payout is just a sliver of what Wal-Mart, which had nearly $500 billion in revenue last year, stands to gain from the tax overhaul.
“The $300 million of incremental labor expenses in 2018 only represents about 15% of the potential cash windfall we estimate that [Wal-Mart] could enjoy,” wrote Ray Young, a retail analyst for Gordon Haskett Research Advisors. (…)
To combat wage pressures, Wal-Mart has tried to save on labor costs by adjusting the number of workers per store and more recently by automating many rote tasks. It is adding more self-service registers and using robots to scan shelves for items that are out of stock. Last year, Wal-Mart had around 15% fewer workers per square foot of store than a decade ago, according to an analysis by The Wall Street Journal. (…)
Wal-Mart’s average hourly wage for full-time U.S. store employees is expected to rise to around $14.50 an hour after the latest change, up from $13.85 an hour currently, said Mr. Lundberg. (…)
More on wage inflation:
U.S.: Job creation now tilting towards sectors with higher wage inflation
(…) And while wage growth remains low, it is arguably heading in the right direction. As today’s Hot Chart shows, unlike in 2016, job creation now seems to be tilting towards sectors with higher wage inflation. (NBF)
Take-Home Pay Is Set to Increase The government estimates that more than 90% of workers will have bigger paychecks under the withholding changes, and it says employers should implement the changes by Feb. 15.
And then, there were none:
ECB Minutes Signal Pivot on Stimulus, Sending Euro Higher The European Central Bank indicated that it might move sooner than investors had expected to phase out its giant bond-buying program, sending the euro and eurozone government bond yields higher.
(…) ECB officials “widely” agreed that the bank would need to change its guidance to investors, though they stressed the move should take place “gradually over time to avoid sudden and unwarranted movements in financial conditions.” (…)
Yen Drives Higher for a Second Day After Central-Bank Surprise The yen’s upward momentum continued Wednesday, a day after the Bank of Japan reignited speculation that it is effectively tapering its asset buying.
China Reports Biggest-Ever Annual Trade Surplus With U.S. China’s chronically high trade surplus with the U.S. hit a record level in 2017, adding fuel to Trump administration criticisms about Chinese trade practices just as it weighs a range of penalties and other actions to curb the imbalance.
‘I will say that if we don’t make a fair deal for this country, a Trump deal, then….I will terminate.’ (President Donald Trump, in a WSJ interview, on the Nafta negotiations.)
Earnings at private, middle-market companies in the U.S. grew at their fastest pace since 2012 during the fourth quarter, according to a report by Golub Capital, a lender to these companies.
The report is based on the Golub Capital Altman Index, which measures the median revenue and earnings growth of more than 150 closely-held companies in Golub Capital’s loan portfolio. There are no energy companies in the index.
Earnings increased 12.8% in the fourth quarter of 2017 from a year earlier, the fastest rate of year-over-year growth since the inception of the index in 2012 and up from 4.9% growth in the third quarter. Revenue rose 11.5%, up from 6.8% in the third quarter. (…)
The information technology sector posted standout performance during the quarter, with earnings up 29.7%, according to the report. Revenue for the sector expanded 15.4% during the fourth quarter. (…)
The second-largest gains in earnings came from the industrials sector, which posted 15.6% growth for the quarter, while revenue rose 14%. (…)
The Spark Behind Iran’s Unrest: Millions of Defrauded Investors The collapse of investment firms offering outlandish returns fueled the protests that grew into the biggest challenge to the regime since 2009. Iranians blame the firms for pocketing funds and the government for not adequately regulating the industry.
(…) Protests have ebbed in recent days. But the working-class grievances that gave rise to the protests remain, including double-digit inflation, a 12% unemployment rate and the perception that systemic corruption is robbing the country’s wealth from the majority.
Iran’s economy, strained under international sanctions, structural mismanagement and the diversion of funds to battlefields in Syria, Iraq and Yemen, has been in disarray for years. The nuclear deal boosted economic growth—the International Monetary Fund expects 3.8% growth this year—but that hasn’t solved underlying problems. (…)
Mr. Rouhani caused a stir in early December when he revealed the details of his proposed government budget to the public, showing millions of dollars allocated to religious foundations and clerical offices outside the government’s control. The Islamic Revolutionary Guard Corps received around $8 billion. At the same time, he warned that cash handouts for the poor would be slashed and some fuel prices could rise 50%. (…)
Iranian analysts and economists say the [more than 7,000 such financial] firms were doomed to fail. They were owned and managed not by financial experts but by people with close links to religious institutions, the judiciary and the Revolutionary Guards. (…) A lack of regulation, accountability or transparency and a culture of corruption sped the collapse of many. (…)