US producer prices recorded their largest increase in nine months last month, but that jump will probably not ignite inflation pressures as the nation’s economic growth remains moderate.
The US Department of Labor said on Friday that its seasonally adjusted producer price index (PPI) for final demand increased 0.5 percent last month, after slipping 0.1 percent in February. The increase last month, which was the largest since June last year, reflected a surge in the prices of food and trade services.
“Will inflation accelerate? Probably, but not rapidly,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. “Growing demand should stabilize prices, but the economy is not strong enough to cause inflation to pick up very much.”
Economists had expected prices received by the nation’s farms, factories and refineries to gain only 0.1 percent last month. Some were puzzled by the increase.
Gus Faucher, a senior economist at PNC Financial Services in Pittsburgh, said harsh weather during the winter could have distorted producer prices.
“But there is also the possibility that inflation may be picking up, as firms raise prices given the recent limited acceleration in wage growth and stronger demand,” Faucher said.
A survey on Tuesday last week showed a significant increase in the share of small businesses raising their prices this month. Fewer reduced prices last month. US government data on Thursday showed an unexpectedly big rise in the price of imported goods last month.
Last month, prices at the factory gate excluding volatile food and energy costs rose 0.6 percent, the biggest gain in three years. The so-called core PPI for final demand had declined 0.2 percent in February.
A broader gauge of core producer prices — final demand less foods, energy, and trade services — rose 0.3 percent after ticking up 0.1 percent.
US demand could strengthen further with a separate report on Friday showing US consumer sentiment hitting a nine-month high early this month.
The consumer sentiment index from Thomson Reuters/University of Michigan rose to 82.6 this month, the highest since July, from 80 in March.
The upbeat household sentiment fit in with other reports such as employment and automobile sales that have suggested the economy was regaining some momentum after a weather-induced lull early this year.
Last month, food prices jumped 1.1 percent, the largest increase since May last year, after rising 0.6 percent in February.
Food prices were pushed up by a surge in the cost of pork, which saw its largest rise since August 2008. Sausage, deli meat and boxed meat prices rose by the most since August 1980.
Services for final demand spiked 0.7 percent, the largest gain since January 2010, after falling 0.3 percent in February.
Shares of contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) came under pressure yesterday after a report that Apple Inc is looking to shift some orders from the Taiwanese company to Intel Corp. TSMC shares fell NT$55, or 2.4 percent, to close at NT$2,235 on the local main board, Taiwan Stock Exchange data showed. Despite the losses, TSMC is expected to continue to benefit from sound fundamentals, as it maintains a lead over its peers in high-end process development, analysts said. “The selling was a knee-jerk reaction to an Intel-Apple report over the weekend,” Mega International Investment Services Corp (兆豐國際投顧) analyst Alex Huang
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is expected to remain Apple Inc’s primary chip manufacturing partner despite reports that Apple could shift some orders to Intel Corp, industry experts said yesterday. The comments came after The Wall Street Journal reported on Friday that Apple and Intel had reached a preliminary agreement following more than a year of negotiations for Intel to manufacture some chips for Apple devices. Taiwan Institute of Economic Research (台灣經濟研究院) economist Arisa Liu (劉佩真) said TSMC’s advanced packaging technologies, including integrated fan-out and chip-on-wafer-on-substrate, remain critical to the performance of Apple’s A-series and M-series chips. She said Intel and Samsung
TRANSITION: With the closure, the company would reorganize its Taiwanese unit to a sales and service-focused model, Bridgestone said Bridgestone Corp yesterday announced it would cease manufacturing operations at its tire plant in Hsinchu County’s Hukou Township (湖口), affecting more than 500 workers. Bridgestone Taiwan Co (台灣普利司通) said in a statement that the decision was based on the Tokyo-based tire maker’s adjustments to its global operational strategy and long-term market development considerations. The Taiwanese unit would be reorganized as part of the closure, effective yesterday, and all related production activities would be concluded, the statement said. Under the plan, Bridgestone would continue to deepen its presence in the Taiwanese market, while transitioning to a sales and service-focused business model, it added. The Hsinchu
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has approved a capital budget of US$31.28 billion for production expansion to meet long-term development needs during the artificial intelligence (AI) boom. The company’s board meeting yesterday approved the capital appropriation plan for purposes such as the installation of advanced technology capacity and fab construction, the world’s largest contract chipmaker said in a statement. At an earnings conference last month, TSMC forecast that its capital expenditure for this year would be at the higher end of the US$52 billion to US$56 billion range it forecast in January in response to robust demand for 5G, AI and
RSS