Interpretation of macroeconomic data on August 13: US July PPI monthly/annual rate,

First, look at the data:

US July PPI year-on-year, previous value 2.7% (revised from 2.6%), expected 2.3%, recorded 2.2%
U.S. July PPI m-o-m, prior 0.20%, expected 0.20%, recorded 0.10%

Conclusion:

This set of data is considered good data whether it is on an annual rate or a monthly rate. PPI, the Producer Price Index, is considered a leading indicator of CPI data. Currently, the PPI annual rate has dropped significantly to 2.2%, which is lower than expected and significantly lower than the previous value. The monthly rate has also dropped by half, indicating a drop in producer prices in July, which is very beneficial for inflation control. It is favorable for tomorrow's CPI data, and if CPI continues to drop, it will further enhance expectations of a rate cut in September.

Impact:
PPI data accelerates the drop, whether it is on a year-on-year basis or a month-on-month basis, which indicates a slowdown in price pressure from the production side. From the perspective of inflation data, it is more favorable for inflation control. This is the inflation control result that the Federal Reserve wants to see the most. The drop in inflation comes from a drop in prices rather than a decline in purchasing power.

At the same time, the data also shows that the economy is gradually moving towards benign development, greatly reducing the crisis of economic recession,

At the same time, the cost drop of the production end is beneficial to the increase of enterprise profit space, which is Favourable Information for physical enterprises.

However, after the PPI increased the profit of the enterprise, there is also a certain pressure on the rise in wages, but the rise in wages also needs to consider the employment market situation. At present, there is no need to worry about the PPI bringing more rise in wages, and it is necessary to combine employment data.

Regarding tomorrow's CPI data, the effective drop in PPI may lead to another drop in CPI. However, it is important to note that a gradual decrease in CPI is a good thing, but if the drop is too large, it may instead trigger a theory of economic recession, which would be a bad thing.

Waiting for tomorrow's #CPI results!
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