Prices at the wholesale level increased sharply in October, while industrial production fell and the retail sales picture improved.

On Friday, the U.S. Labor Department reported the Producer Price Index moved up 1.1% following a 0.1% gain in September, the biggest jump in three years.
Driving the increase was energy (+4.4%), food (+0.7%) and cars and light trucks (+2%). This follows a string of steady or slightly declining monthly inflation reports. Year-to-date, PPI inflation is at a 2% annual rate.
"Early partial data for November suggest that energy prices are already declining quickly, food price inflation has subsided and motor vehicle prices are steady after the unusually large new model year price changes," said Newport Communication Senior Economist Jim Haughey.
He said heavy and medium truck prices were steady despite the large price increases for post-Oct. 1 engines.
"Dealers were mostly selling units with the old engines and manufacturers were largely absorbing the higher cost of the new engines," he said. "But this will not last much longer."
According to Haughey, freight rates picked up sharply, partly due to the fuel cost adjustment clauses that likely will reverse in November, but also due to the demand pressure from a return to rising consumer spending.
"Truckload rates jumped 0.5%, but this only gets them back to the July 2001 level," he said. "Less-than-truckload rates rose 0.7% to 6.4% higher than a year ago. About a third of this gain is reversible fuel price adjustment."
Meantime on Friday the Federal Reserve reported industrial production in October posted its biggest decline in more than a year.
A larger than expected drop of 0.8% was led by a 0.7% decline in manufacturing output, which accounts for the largest portion of industrial production, followed by output at mines and utilities
Overall industrial production capacity fell to 75.2% in October, the lowest level since March.
On Thursday, the U.S. Commerce Department reported total sales were unchanged from September due to 1.9% drop in sales of new automobiles. When autos are removed the overall figure, retail sales moved up 0.7%, the biggest gain in six months.
"The worrisome late summer decline in retail sales is now over," said Haughey.
This drop in auto sales comes on top of a 6% drop in September, but Haughey said sales levels remain normal for this early recovery stage of the business cycle.
"This decline likely had little impact on October freight because it includes the effect of falling used car prices," he said. Also, auto production schedules remained high to replenish inventory from earlier higher retail sales.
According to Haughey the October increase in retail sales, minus auto, is more than double the average monthly gain expected when the economy is expanding at about a 3% pace. Expect gains for the rest of the year to be smaller.
"Cold weather drove shoppers to the malls to buy 4% more at clothing stores and 1.1% more at department stores," he said. "Hard goods sales - furniture, appliances, electronics, building materials and sporting goods - were up 0.4% from September, an above average gain since prices for these goods continue to fall."