Producer Prices Fall the Most in Almost 3 Years, Housing Starts Exceed Estimates

- The Producer Price Index for November fell .7% versus estimates of a .5% decline and a .7% gain in October.
- The PPI Ex Food & Energy for November rose .1% versus estimates of a .2% increase and a .3% decline in October.
- Housing Starts for November rose to 2123K versus estimates of 2018K and 2017K in October.
- Building Permits for November rose to 2155K versus estimates of 2091K and 2103K in October.

BOTTOM LINE: US producer prices fell in November by the most since April 2003 as energy prices receded, a government report showed, Bloomberg reported. Core prices are rising at a 1.8% annual pace this year versus a 2.2% rate at the same time last year. The cost of energy fell 4.0% last month, the largest fall in 2 ½ years. As well, car prices fell .8%, computers fell 1.1% and capital equipment prices declined .1%. I continue to believe most measures of inflation will continue to decelerate through next year.

US housing starts in November rose by the most in seven months as a pickup in jobs and reconstruction after the hurricanes reignited the homebuilding market. Home sales have set four consecutive annual records. The National Assoc. of Realtors is forecasting a 4.8% decline in home starts next year. New housing starts increased 12.3% in the Midwest, 11.5% in the West and 11% in the Northeast. Starts declined 1.3% in the South. I continue to believe housing is slowing to more healthy sustainable levels.