CIBC Private Wealth
August 14, 2024
Money Financial literacy Economy Professionals Commentary In the news NewsMorning Market Brief
Two days of critical US price data began yesterday with July’s producer prices. Producer prices edged higher in July, but the increase was slower than in the previous month. Price pressures have weighed on US households and businesses, raising concerns about the health of the US economy. Today, data for consumer prices for July will be released.
- Producer prices in the US rose by 0.1% in July over the previous month. This was down from the 0.2% increase in June. Monthly producer price growth has trended downward in 2024, helping to ease overall inflationary pressures.
- July’s slowdown was driven by a drop in prices in the services sector, the first decline in 2024. Prices for machinery and vehicle wholesaling dropped over the month. Conversely, prices for gasoline and industrial chemicals increased in July.
- On an annual basis, producer prices rose by 2.2% in July. Meanwhile, core producer prices, which exclude more volatile items, increased by 2.4% year-over-year, which was the slowest pace of growth since March.
- A survey of small businesses in July showed ongoing concern about elevated inflationary pressures. Small business owners noted that inflationary pressures persist, and labour costs continue to rise. This could result in small businesses having to raise prices.
- At the beginning of August, a weak labour market report raised concerns about the health of the US economy, pushing equity markets significantly lower. Slower inflation could push the US Federal Reserve Board (Fed) to cut rates at its September meeting.
Prices have been trending downward but remain elevated and above the Fed’s 2% target. Still, signs are pointing to the Fed beginning to lower interest rates this year, potentially as early as September. A narrowing gap between US and Canadian interest rates could help provide support for the Canadian dollar.
If you would like to discuss this economic and market update or have questions about your finances and investments, please feel free to contact me anytime.