Producer prices in November posted a decline following an unexpected hike the month before, registering their biggest drop since May
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The U.S. Labor Department on Friday reported a 0.4% decline, led by a drop in gasoline and car prices, on the heels of a 1.1% surge in October. Excluding the volatile food and energy sectors, producer prices fell 0.3% in November following a 0.5% increase the month before.
Newport Communications Senior Economist Jim Haughey said the report is a mixed bag for trucking. Truck and trailer prices remained steady for the third month, but some freight rates remained weak.
"Truckload freight rates rose 0.2% but are only 0.6% above a year ago because of a period of falling rates last spring. Truckload rates will be unchanged for the full year but a stronger economy will permit a 2.6% gain next year," he said.
According to Haughey, less-than-truckload rates jumped 1.7% to 5.4% above year-ago rates. "This reflects both the October rise in fuel costs and the recent quicker pace of growth in freight volume," he said. "Recently declining fuel prices should mean a steady or slightly lower index in the next few months."
He says one main reason is that inflation remains stuck at less than 1%. However, Haughey notes the improving world economy and further declines in the value of the dollar are likely to push inflation up to near 2% by the end of next year.
Meantime, a separate report from the University Of Michigan indicated consumers are feeling more upbeat about the economy. Its index of consumer sentiment increased to 87 in December from 84.2 the month before. The news comes as a report released on Thursday showed retail sales posted their best performance in three months.