NEW YORK (Reuters) -U.S. producer prices increased more than expected in July amid a surge in the costs of services and goods, suggesting a broader pickup in inflation in the months ahead.
The producer price index for final demand jumped 0.9% last month after being unchanged in June, the Labor Department's Bureau of Labor Statistics said on Thursday. Economists polled by Reuters had forecast the PPI rising 0.2%.
MARKET REACTION:
STOCKS: U.S. stock index futures slipped after the PPI data.BONDS: U.S. Treasury
yields pared their increase, two-year yield last up 1.8 basis points.FOREX: The dollar was last down 0.3% against the yen at 146.98 yen.
COMMENTS:
PETER ANDERSEN, FOUNDER OF ANDERSEN CAPITAL MANAGEMENT, BOSTON:
"It's sending a mixed message about the economy. We have been too anxious to draw a conclusion that the economy is fine, it's not overheated. But this wholesale data does show that perhaps there is some inflation working and we shouldn't be so quick to conclude, we need to cut interest rates. It reinforces the case that the Fed might say we still don't have a clear picture yet based on the tariffs in the employment picture to take any action and I would expect that they would tend to be neutral and make no change in September as opposed to the majority of opinions out there. I do think it would be premature if they did."
CHRIS ZACCARELLI, CHIEF INVESTMENT OFFICER, NORTHLIGHT ASSET MANAGEMENT, CHARLOTTE: (VIA EMAIL)
"The large spike in the Producer Price Index (PPI) this morning shows inflation is coursing through the economy, even if it hasn't been felt by consumers yet. Given how benign the CPI numbers were on Tuesday, this is a most unwelcome surprise to the upside and is likely to unwind some of the optimism of a 'guaranteed' rate cut next month.
(Compiled by the Global Finance & Markets Breaking News team))
