Recent Updates

  • Switzerland: SNB Conditional Inflation Forecasts (Sep)
  • Germany: Gross Wages (Q2), Federal Budget, Monthly Tax Receipts (Aug)
  • France: URSSAF Employment Survey (Aug)
  • Turkey: Consumer Confidence (Sep)
  • Estonia: PPI (Aug); Hungary: FDI (Q2), Employment of Fostered Workers (Jul); Georgia: PPI (Aug); Lithuania: IIP (Q2); Czech Republic: IIP (Q2)
  • Denmark: Consumer Confidence (Sep);
  • Netherlands: Labor Force Survey (Aug), Consumer Confidence
  • more updates...

Economy in Brief

PPI Rise Doubled Expectations
by Tom Moeller January 13, 2006

The Producer Price Index for Finished Goods doubled Consensus expectations for a 0.4% increase and posted a 0.9% gain in December. It was the strongest increase in four months and lifted the year to year rise to 4.9%, the strongest since 1990.

Energy prices rose a firm 3.1% (24.5% y/y) as gasoline prices reversed the prior month's decline and rose 12.3% (41.7% y/y). Home heating oil prices rose 2.7% (41.5% y/y) though residential natural gas prices slipped for the second month, down 2.7% (+29.2% y/y).

Strength in finished food prices accounted for much of last month's surprise. A 0.9% increase was the strongest since September but that lest the annual increase at 2.0%, less than half the 2004 rise.

"Core" producer prices rose the same 0.1% as during November and the gain was half the Consensus expectation for a 0.2% increase.

Prices of finished consumer goods less food & energy rose a modest 0.1% (2.0% y/y). Durable goods prices rose 0.1% (-0.2% y/y) after two months of decline. Capital equipment prices rose for the first month in three by 0.1% (1.3% y/y).

Intermediate goods prices rose a modest 0.2% and core intermediate goods prices increased 0.3%, the slimmest increase since August.

Crude goods prices fell sharply for the second consecutive month. The 2.3% decline reflected a 5.4% (+44.8% y/y) decline in energy prices. Core crude prices also slipped marginally after the 5.4% in November. During the last thirty years "core" crude prices have been a fair indicator of industrial sector activity with a 48% correlation between the six month change in core crude prices and the change in factory sector industrial production.

Producer Price Index Dec Nov Y/Y 2005 2004 2003
Finished Goods 0.9% -0.7% 5.7% 4.9% 3.6% 3.2%
  Core 0.1% 0.1% 1.7% 2.4% 1.5% 0.2%
Intermediate Goods 0.2% -1.2% 8.5% 8.0% 6.6% 4.6%
  Core 0.3% 0.5% 4.4% 5.4% 5.7% 2.0%
Crude Goods -2.3% -1.2% 21.7% 14.5% 17.5% 25.1%
  Core -0.0% 5.4% 4.5% 4.9% 26.6% 12.4%
large image