Recent Updates
- Australia: Labor Force Survey (Mar), Import/Export Price Indexes, SME Business Survey (Q1), Cash Flow Statements (2017)
- Japan: Input Output Prices (Mar), First 10 Days Trade (Apr), International Trade (Mar-Final)
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Economy in Brief
Japan Shows Very Moderate Growth As Trade War Clouds Gather
Japan’s sector indexes showed a solid gain in February...
U.S. Consumer Confidence Unexpectedly Rose in April
The Conference Board Consumer Confidence Index rose to 128.7 in April from 127.0 (initially reported as 127.7) in March...
U.S. New Home Sales and Prices Strengthen
Sales of new single-family homes during March increased 4.0% (8.8% y/y) to 694,000 (SAAR)...
U.S. FHFA House Price Index Continues to Strengthen
The FHFA index of U.S. house prices rose 0.6% during February...
U.S. Energy Prices Rise Further
Retail gasoline prices increased to $2.80 per gallon last week (14.3% y/y)...
by Tom Moeller July 18, 2006
The June producer price index for finished goods increased 0.5% and exceeded Consensus expectations for a 0.3% rise. Excluding food & energy, however, prices rose an expected 0.2%.
Despite the relatively tame m/m rise in prices less food & energy, year to date prices have risen at a 3.1% annual rate, the fastest six month rate of increase since early last year. During the last ten years there has been a 47% correlation between the y/y change in core producer prices and the change in the core CPI for goods. Over the last twenty years the correlation has been 78%.
Prices of all finished consumer goods less food & energy rose 0.2% (1.9% y/y) and rose at a 3.2% annual rate during the last six months. Durable consumer goods prices rose 0.2% (1.0% y/y) and the 2.8% annual rate of advance during the last six months was the fastest since January '05. A tame 0.1% rise in consumer nondurable prices (2.5% y/y) also belied the elevated nature of the rise during the last six months at a 3.4% rate.
Capital equipment prices rose 0.3% (1.8% y/y) for the second consecutive month. Here again, however, the 3.1% annual rate of advance during the last six months is elevated and the fastest since January of last year.
Finished consumer food prices showed strength in June with a 1.4% (0.6% y/y) increase that was the strongest since May 2004. A 15.0% (NSA, 3.3% y/y) jump in fresh fruit & melon prices fueled the increase along with a 38.1% (NSA, 36.6% y/y) rise in egg prices.
Finished energy prices increased 0.7% (19.1% y/y) as gasoline prices surged 6.3% (44.3% y/y) though natural gas prices fell for the fifth month this year (+7.2% y/y) and residential electric power costs fell 2.8% (+5.2% y/y).
Intermediate goods prices rose 0.7% as energy prices increased 0.4% (19.2% y/y) and food prices jumped 1.0% (-0.4% y/y). Core intermediate prices also rose a strong 0.8%. The six month growth in core intermediate goods prices remained elevated at 7.7% versus a 5.5% advance last year.
Crude goods prices reversed the prior month's strength with a 1.7% decline due to a 6.8% drop in energy prices (7.7% y/y). The decline reflected lower crude petroleum costs which have since risen to record high levels. In addition, core crude prices rose a strong 1.7%. Iron & steel scrap prices jumped a strong 6.2% (73.3% y/y) though aluminum base scrap prices eased 4.4% (+44.1% y/y). 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.
The Relationship between Expected Inflation, Disagreement, and Uncertainty: Evidence from Matched Point and Density Forecasts from the Federal Reserve Bank of New York can be found here.
Producer Price Index | June | May | Y/Y | 2005 | 2004 | 2003 |
---|---|---|---|---|---|---|
Finished Goods | 0.5% | 0.2% | 4.8% | 4.9% | 3.6% | 3.2% |
Core | 0.2% | 0.3% | 1.9% | 2.4% | 1.5% | 0.2% |
Intermediate Goods | 0.7% | 1.1% | 9.3% | 8.0% | 6.6% | 4.7% |
Core | 0.8% | 1.1% | 7.2% | 5.5% | 5.7% | 2.0% |
Crude Goods | -1.7% | 2.0% | 8.7% | 14.6% | 17.5% | 25.1% |
Core | 1.7% | 6.2% | 33.7% | 4.8% | 26.5% | 12.4% |