Tuesday’s PPI data indicated that some firms are shielding their customers from the brunt of the steep and blunt tariffs on imported goods, wrote Samuel Tombs, chief US economist at Pantheon Macroeconomics.
He noted the trade services category, which tends to be quite volatile, measures profit margins for wholesalers and retailers. So, economists have been watching that category closely as a potential indication for how much businesses might be absorbing some of the tariff costs versus passing them along to consumers.
Trade services in September dipped 0.2%, following a 1.7% drop in August, PPI data showed.
“But the picture differs markedly by sector, with auto retailers accepting substantially lower margins, while most other retailers are passing on all the rise in acquisition prices to consumers,” Tombs wrote.
For consumers, September PPI could mean better news if they’re in the market for sneakers or sports equipment, less so if they’re wanting to buy a new computer or TV.
In addition to auto dealers, the industries showing some of the biggest hits to their margins (and potentially lower cost increases for the end consumer) included retailers of sporting goods, clothing, shoes and jewelry as well as wholesalers of machinery, paper and plastics, PPI data shows.
Industries with the largest increases in margins (indicating higher costs are potentially being passed on to consumers) were retailers of TVs, video equipment, computers, furniture and flooring – categories where the US is heavily reliant on imports.