INDICATOR: May Industrial Production and Producer Price Index
KEY DATA: IP: 0.0%; Manufacturing: +0.1%/PPI: +0.5%; Excluding Food and Energy: +0.1%
IN A NUTSHELL: "The manufacturing sector is wandering along and inflation is largely tame, so why is the Fed in a hurry to ease up on the accelerator?"
WHAT IT MEANS: May was hardly a break out month for the economy. Industrial production was flat and manufacturing output rose modestly. Even with vehicle and computer firms ramping up assembly lines, the production of consumer goods still fell slightly. There was more business equipment output but not when it came to construction or business supplies. In other words, the nation's industrial heartland moved forward but without a whole lot of gusto. That softness was likely a reason that wholesale prices, excluding volatile food and energy costs, were largely flat. There were some good-sized increases in the food and energy components but the critical confectionary products segment posted only a modest rise. My diet failed so I am giving up and eating again, as if I ever stopped. Wholesale price increases were minimal in most other consumer products and vehicle costs actually fell. In the business sector, capital goods prices were also tame. Looking outward, we could expect more food cost inflation and energy prices continue to slowly filter upward but that is about all.