Producer Prices Decelerate, Retail Sales Above Estimates, Business Sales Rise

- The Producer Price Index for October rose .1% versus estimates of a .3% gain and a 1.1% rise in September.

- The PPI Ex Food & Energy for October was unch. versus estimates of a .2% gain and a .1% rise in September.

- Advance Retail Sales for October rose .2% versus estimates of a .1% increase and an upwardly revised .7% gain in September.

- Retail Sales Less Autos for October rose .2% versus estimates of a .2% increase and a downwardly revised .3% gain in September.

- Business Inventories for September rose .4% versus estimates of a .4% gain and an upwardly revised .3% increase in August.

BOTTOM LINE: Prices paid to US producers rose in October at a slower pace than forecast, suggesting the economy is absorbing the effects of a jump in energy costs, Bloomberg said. Core producer prices are rising at a 2.5% rate over the last 12 months. Prices of light trucks fell 2.7%. Computer prices fell 1.3%. The cost of consumer goods rose .1%. Prices for capital goods fell .1%. While producer prices will likely jump next month on the rise in energy, I still believe inflation has peaked for this cycle and measures will continue to decelerate over the intermediate-term.

Retail Sales in the US increased at a better-than-expected .2% rate in October, Bloomberg reported. Unseasonably warm weather continues to weigh on clothing retailers. Overall retail sales have been modestly below average for awhile. I expect a bounceback to more average rates as cold weather comes and the holidays approach. I expect sales of consumer electronics to be very strong this holiday season.

Inventories at US businesses rose in September as sales surged .6%, Bloomberg reported. Businesses had enough goods on hand at the current sales pace to last only 1.27 months, the same as August. Inventories at retailers rose .1%. Inventory rebuilding and record exports should result in an upward revision to 3Q US GDP to above 4.5%. I continue to expect inventory rebuilding to help boost overall US growth over the intermediate-term as companies gain confidence in the sustainability of the current expansion.