High-yield/macroeconomics (fka YIELD)

[Preciouslife1]

U.S. Producer Prices Probably Fell in October by Most on Record

http://www.bloomberg.com/apps/news?pid=20601103&sid=a.bUl5_wf788&refer=news
By Shobhana Chandra

Nov. 18 (Bloomberg) -- Prices paid to U.S. producers probably fell in October by the most on record as weakening global growth caused demand for commodities to dry up, economists said before a government report today.

The projected 1.9 percent drop in wholesale prices last month, reflecting the median estimate in a Bloomberg News survey, would be the biggest since records began in 1947.
Excluding food and energy, so-called core costs probably rose 0.1 percent, the smallest gain in seven months.

Recessions in the U.S., Europe and Japan, combined with slower growth in China and India, may keep subduing raw-material costs as companies cut back. Deflation, or a prolonged decrease in prices, is displacing inflation as a threat for the Federal Reserve and other policy makers throughout the world.

``There's not much of a battle for inflation hawks to be fighting right now,'' said Maxwell Clarke, chief U.S. economist at IDEAglobal in New York. ``The only real concern for the Fed is the risk to the economy.''

The Labor Department's producer-price index is due at 8:30 a.m. in Washington. Forecasts of the 76 economists surveyed ranged from declines of 0.3 percent to 2.8 percent.

At 1 p.m., the National Association of Home Builders/Wells Fargo index may show homebuilder confidence in November held at a record low of 14, according to the survey median.

Producer prices are one of three monthly inflation gauges reported by Labor. Prices of goods imported into the U.S. fell last month by the most on record, a report last week showed.

Declining Prices

Figures due tomorrow may show consumer prices dropped 0.8 percent in October, the most since 1949, according to the Bloomberg survey.

The government asks producer-price survey participants to report costs for the Tuesday of the week that includes the 13th of the month. On that basis, crude oil fell 24 percent in October from the prior month on the New York Mercantile Exchange. Oil slid another 25 percent a barrel this month.

After contracting at a 0.3 percent annual pace in the third quarter, the U.S. economy may shrink again this quarter and in the first three months of 2009, according to a Bloomberg survey conducted from Nov. 3 to Nov. 11. The slump would be the longest since 1974-75.

Europe and Japan slipped into a recession last quarter, and China's economy, the biggest contributor to global growth in 2007, is slowing.

Dow Chemical Co., the largest U.S. chemical maker, is among producers hurt by a drop in demand. The prices Dow charges for two of the most-used plastics, polyethylene and polypropylene, fell as much as 40 percent since September, giving up gains achieved since June, the company said. Midland, Michigan-based Dow is closing more factories as sales decline.

``This is as bad as we have ever seen it in our lifetimes,'' Chief Executive Officer Andrew Liveris said in a Nov. 13 interview. An increase in prices ``is probably going to be near impossible in the next three to six months.''



Bloomberg Survey

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PPI Core NAHB
PPI Housing
MOM% MOM% Index
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Date of Release 11/18 11/18 11/18
Observation Period Oct. Oct. Nov.
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Median -1.9% 0.1% 14
Average -1.8% 0.1% 14
High Forecast -0.3% 0.3% 16
Low Forecast -2.8% -0.4% 12
Number of Participants 76 75 40
Previous -0.4% 0.4% 14
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4CAST Ltd. -2.3% 0.1% ---
Action Economics -2.5% 0.1% 14
AIG Investments -2.4% 0.2% 15
Aletti Gestielle SGR -1.9% 0.2% ---
Ameriprise Financial Inc -1.7% 0.2% 14
Argus Research Corp. -0.5% 0.1% ---
Banc of America Securitie -1.8% 0.3% ---
Bank of Tokyo- Mitsubishi -2.0% -0.1% 13
Bantleon Bank AG -2.0% --- ---
Barclays Capital -1.5% 0.1% 14
BMO Capital Markets -2.5% 0.0% 13
BNP Paribas -2.1% 0.2% ---
Briefing.com -2.0% 0.0% ---
Calyon -1.4% 0.2% ---
CIBC World Markets -1.8% 0.2% 14
Citi -1.8% 0.1% ---
ClearView Economics -1.5% 0.0% ---
Commerzbank AG -2.5% 0.2% ---
Credit Suisse -2.0% 0.1% ---
Daiwa Securities America -0.9% 0.1% ---
DekaBank -2.0% 0.0% 12
Desjardins Group -1.5% 0.2% ---
Deutsche Bank Securities -2.0% 0.1% 13
Deutsche Postbank AG -1.8% 0.1% ---
Dresdner Kleinwort -1.5% 0.1% 14
DZ Bank -1.2% 0.2% 14
First Trust Advisors -2.7% 0.1% ---
Fortis -1.5% 0.2% 14
FTN Financial -2.0% -0.1% ---
Goldman, Sachs & Co. -1.5% 0.3% ---
Helaba -1.5% 0.1% 14
Herrmann Forecasting -2.2% -0.1% 14
High Frequency Economics -2.5% 0.1% 14
Horizon Investments -2.0% 0.1% 15
HSBC Markets -2.6% -0.2% 14
IDEAglobal -1.9% 0.2% ---
IHS Global Insight -2.0% 0.1% ---
Informa Global Markets -0.6% 0.0% 16
ING Financial Markets -2.1% 0.0% 14
Insight Economics -1.8% 0.0% ---
Intesa-SanPaulo -2.5% 0.2% ---
J.P. Morgan Chase -2.1% 0.1% 14
Janney Montgomery Scott L -1.8% 0.1% 15
JPMorgan's Private Wealth -1.5% 0.1% 13
Landesbank Berlin -0.7% 0.1% ---
Lloyds TSB -1.8% 0.1% 14
Maria Fiorini Ramirez Inc -1.5% 0.1% ---
Merk Investments -2.8% 0.1% ---
Merrill Lynch -2.0% 0.1% 14
MFC Global Investment Man -2.2% -0.2% 14
Moody's Economy.com -1.1% 0.1% 14
Morgan Keegan & Co. -2.1% -0.2% ---
Morgan Stanley & Co. -2.1% -0.2% ---
National Bank Financial -1.8% 0.2% ---
National City Corporation -0.6% 0.1% ---
Newedge -1.9% 0.1% 15
Nomura Securities Intl. -0.7% 0.0% ---
Nord/LB -2.0% 0.0% 13
PNC Bank -1.5% 0.2% ---
RBS Greenwich Capital -2.5% -0.4% ---
Ried, Thunberg & Co. -1.8% 0.3% ---
Schneider Trading Associa -2.2% 0.2% 14
Scotia Capital -2.5% 0.2% 14
Societe Generale -1.7% 0.1% ---
Standard Chartered -1.8% 0.2% 14
Stone & McCarthy Research -1.4% 0.0% 14
TD Securities --- --- 15
Thomson Financial/IFR -0.3% 0.2% 13
Tullett Prebon -2.3% -0.2% 14
UBS Securities LLC -1.6% 0.1% 14
Unicredit MIB -0.8% 0.2% 14
University of Maryland -2.2% 0.1% 14
Wachovia Corp. -1.3% 0.1% ---
Wells Fargo & Co. -2.5% 0.1% 14
WestLB AG -1.5% 0.2% ---
Westpac Banking Co. -2.2% 0.1% 15
Wrightson Associates -1.5% 0.3% ---