Inflation fell 0.5%; Industrial Output Rose 0.2%; Jobless Claims Fell 2k

Consumer prices (CPI) dropped by 0.5% in October, matching the September decline, according to The Labor Department. It was the first back-to-back drops in the Consumer Price Index since late last year, evidence that inflation pressures may be beginning to ease.

The core inflation (core CPI), which excludes volatile energy and food prices, rose 0.1%, the smallest gain in eight months. Over the past 12 months, core inflation is up by 2.7%. 

Energy prices, which declined 7.2 percent in September, fell 7.0 percent in October. Within energy, the index for petroleum-based energy decreased 10.7 percent and the index for energy services declined 2.5 percent. The food index increased 0.3 percent in October. Declines in the indexes for apparel and for lodging while away from home were largely responsible for the smaller advance in October.

During the first ten months of 2006, the CPI rose at a 2.4% seasonally adjusted annual rate (SAAR). This compares with an increase of 3.4% for all of 2005. The index for energy, which increased 17.1% in 2005, decreased at a 1.5% SAAR in the first ten months of 2006.

Industrial Production and Capacity Utilization:

Industrial production rose 0.2% in October following a 0.6% decrease  in September. At 113.7 percent of its 2002 average, the index in October was 4.9 percent higher than its year-earlier level, reported The Federal Reserve. Manufacturing output declined 0.2 percent in October; excluding motor vehicles and parts, manufacturing output rose 0.1 percent. The index for mining increased 0.6 percent, and the index for utilities bounced up 4.1 percent after having fallen 4.6 percent in September. 

The rate of capacity utilization for total industry rose 0.1 percentage point, to 82.2%, a level 1.2 percentage points above its 1972-2005 average. 

Jobless Claims:

The Labor Department reported that the number of Americans seeking unemployment benefits fell by 2,000 to 308,000 last week. 

The advance seasonally adjusted insured unemployment rate was 1.9 percent for the week ending Nov. 4, unchanged from the prior week's unrevised rate of 1.9 percent.

The advance number for seasonally adjusted insured unemployment during the week ending Nov. 4 was 2,443,000, unchanged from the preceding week's revised level of 2,443,000. The 4-week moving average was 2,433,250, a decrease of 750 from the preceding week's revised average of 2,434,000.  

Net Foreign Purchases:

Foreigners made $116.8 billion in net purchases of U.S. securities in August, according to government data released Tuesday. This was a significant increase from the $32.9 billion in net foreign purchases that occurred in the previous month.

The Philadelphia Fed Index:

The Philadelphia Fed index of manufacturing conditions rose to 5.1 from negative 0.7 in October, signifying growth in the area. Regional economic conditions "improved slightly" in November, but indicators for new orders and employment weakened.

NY Empire State Index:

Empire State index rose by about 4 points to a five-month high of 26.7, signaling improved business conditions, the New York Federal Reserve Bank reported Wednesday. The diffusion index improved for a third straight month, surprising economists who had expected a decline to about 15.4 in November from 22.9 in October.

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