US Economics - Sales and margins under pressure - continued price weakness

With the release of CPI figures last week we have completed our September economic model for the USA…Overall price weakness is the area of key concern and the average year-on-year price increase across the QMG coverage universe (10 countries) is now -2.5% with the trend having been consistently negative across the past 12 months.... Chart 1 shows the US trend which has been consistently negative for >= 12 months... the last time this occurred was 2011-12, albeit from a much higher base... Leading on from this we see margin pressure as the price decline is now greater than costs….Overall, Energy, Materials and Consumer Staples are the industries where price weakness is most severe…Our preference remains in favour of industries and products with strong volume growth that is offsetting price weakness – Consumer Discretionary continues to screen well… our read on overall US volume growth ties in well with US Industrial Production (see Chart 2) so keep an eye on this figure to foreshadow negativity in US equities... for access to our Sector/Stock ratings go here (VIEW LINK) full report out tomorrow.


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