Another Deflationary Data Release [CHARTS]

Another Deflationary Data Release by by Eric Bush, CFA, Gavekal Capital Blog

Yesterday, we saw some deflationary trends developing in the import/export price index release. Today, we see more deflationary data points in the Producer Price Index. Granted, this isn’t exactly a new or surprising trend. It is, however, interesting to note that in certain areas, such as manufacturing, producer prices are declining at pace only witnessed during the financial crisis. The manufacturing PPI has declined by over -6.6% year-over-year.  This rate of change has only been eclipsed once, in 2009, going back to 1974.

Overall, the YoY change in headline PPI is -2.88%. This is slightly higher than the low point of the year (-4.28% in February) but well below the long-term average of 3.06%. Our one-year PPI diffusion index is currently at -7.  Again, this is the lowest level since 2009.

Michael Mauboussin: Here’s what active managers can do

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Deflationary Data

Deflationary Data

The silver lining in today’s report is that core-PPI remains positive at 2.12% YoY. Since 1982, core-PPI has remained basically in a range between 0-5%. However, it did briefly go negative in late 02 and early 03.

Deflationary Data