US Producer Prices Surge 6.3% Year-Over-Year in September, Blowing Past 5.4% Forecast

A wave of US economic data released on October 15 painted a picture of persistent inflation and resilient consumer spending, with producer prices delivering the sharpest shock. September PPI jumped 6.3% year-over-year against a 5.4% estimate and a prior reading of 5.4%, while the monthly gain came in at 1.3% versus the 0.6% forecast and a previous 0.4%. Core PPI accelerated as well, rising 0.7% month-over-month against a 0.3% estimate and 5.0% year-over-year against a 4.4% forecast, signaling that upstream price pressures are broadening.

Consumer spending also topped expectations. September retail sales rose 0.8% month-over-month, more than double the 0.3% estimate, though below the prior month's 1.2%-1.3% pace. Core retail sales, which strip out autos, gained 0.9% against a 0.5%-0.6% estimate. The retail control group, a closer proxy for GDP consumption, rose only 0.1%, missing the 0.3% forecast, and the ex-autos-and-gas measure matched estimates at 0.2%, suggesting the headline beat was partly driven by those categories.

Manufacturing signals were mixed. The October Philadelphia Fed Business Outlook Index fell sharply to 20.9 from 37.8 the prior month, missing the 28.0 estimate, though the prices-paid component eased to 43.2 from 48.6. In contrast, the October New York Fed Empire Manufacturing index surged to 25.5, well above the 12.0 forecast and up from 7.6 previously. On the labor market, initial jobless claims for the week of October 10 came in at 199,000, essentially in line with the 200,000 estimate, while continuing claims for the week of October 3 fell to 1.710 million, marginally below the prior week's 1.716 million.