Producer Prices Rebound; Initial Unemployment Claims Decline; Shopify (SHOP) Tumbles on Q1 Forecast

On Thursday, the US Bureau of Labor Statistics reported that the Producer Price Index for final demand increased 0.7% in January, seasonally adjusted.[0] This was a rebound from the previous month’s 0.2% decline and the largest advance since June 2022. Prices for final demand goods rose 1.2%, with a 5.0% increase in energy prices leading the way.[1] In addition, prices for final demand services increased 0.4%.[2] Excluding foods, energy, and trade services, the index for final demand rose 0.6%.[3]

The annual rate of the input Producer Price Index (PPI) has now been positive for 26 consecutive months. The annual rate of PPI input prices decreased to 14.1% in the 12 months ended January 2023, down from 16.2% in the year to December 2022. In the 12 months leading up to January 2023, producer output (factory gate) prices increased by 13.5%, a decrease from 14.6% in the year prior to December 2022.[4] The greatest decreases in the annual rates of input and output inflation were due to inputs of crude oil and petroleum products, respectively.[4] On a monthly basis, producer input prices decreased by 0.1%, and output prices increased by 0.5% in January 2023.[4]

Meanwhile, US weekly initial unemployment claims unexpectedly fell 1,000 to 194,000, showing a stronger labor market than expectations of an increase to 200,000.[5] In addition, US consumer prices rose 0.5% month-on-month in January, in line with economist estimates.[6]

Shopify (SHOP) tumbled more than 9% in pre-market trading after forecasting Q1 revenue growth in the high-teen percentages, weaker than the consensus of 20%.[5] Investors are likely to focus on speeches from Fed officials Mester and Bullard for further clues on the Fed’s rate hike path.[7] Core PPI rose 0.5% in January, and 5.4% from a year earlier.[6]

0. “US Producer Prices Exceed Forecast in Biggest Gain Since June” Bloomberg, 16 Feb. 2023, https://www.bloomberg.com/news/articles/2023-02-16/us-producer-prices-exceed-forecast-in-biggest-gain-since-june

1. “Producer Prices Rose 0.7% in January” Floor Focus, 16 Feb. 2023, https://www.floordaily.net/flooring-news/producer-prices-rose-07-in-january

2. “US producer prices rise more quickly than expected in January” ShareCast, 16 Feb. 2023, https://www.sharecast.com/news/international-economic/us-producer-prices-rise-more-quickly-than-expected-in-january–12367360.html

3. “Producer price index reacclerates in January” Seeking Alpha, 16 Feb. 2023, https://seekingalpha.com/news/3937158-producer-price-index-reacclerates-in-january

4. “Producer price inflation, UK: January 2023” Forex Factory, 15 Feb. 2023, https://www.forexfactory.com/news/1205738-producer-price-inflation-uk-january-2023

5. “Markets Today: Stock Index Futures Tumble as U.S. Jan PPI Exceeds Forecasts” Barchart, 16 Feb. 2023, https://www.barchart.com/story/news/14268583/markets-today-stock-index-futures-tumble-as-u-s-jan-ppi-exceeds-forecasts

6. “Producer Prices Rose, Pointing to Persistent Inflation” MarketWatch, 16 Feb. 2023, https://www.marketwatch.com/story/producer-prices-rose-pointing-to-persistent-inflation-4dda60ef

7. “S&P Futures Tick Lower Ahead of Key U.S. PPI Data” Barchart, 16 Feb. 2023, https://www.barchart.com/story/news/14260125/s-p-futures-tick-lower-ahead-of-key-u-s-ppi-data