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Economy in Brief

PPI Up 0.1%, Core Prices Fell
by Tom Moeller September 19, 2006

The finished goods producer price index increased 0.1% in August, the same as in July and below Consensus expectations for a 0.2% rise.Excluding food & energy finished producer prices were similarly under control last month and unexpectedly fell 0.4% after a 0.3% drop in July. Expectations had been for a 0.2% increase in the core PPI.

Finished consumer goods prices less food & energy dropped 0.5% (+0.7% y/y) as passenger car prices dropped 2.6% (-5.4% y/y). Capital equipment prices also fell by 0.3% (+1.0% y/y) for the second consecutive monthly decline as light truck prices fell 3.4% (-7.5% y/y). Prices of pumps, compressors & equipment were, however, strong and posted a 0.6% (3.7% y/y) increase.

Finished energy goods prices posted a 0.3% (13.1% y/y) August gain as . residential natural gas prices rose 1.6% (5.2% y/y) and residential electric power costs increased 1.3% (7.4% y/y). Gasoline prices fell 2.2% (+20.9% y/y) though fuel oil prices rose 0.7% (25.1% y/y).

Intermediate goods prices posted another strong increase and rose 0.4%. The gain reflected a like 0.4% rise in prices less food & energy.

The crude materials PPI again was strong posting a 2.2% increase led by a 15.7% (NSA, -9.2% y/y) gain in natural gas. Less food & energy crude goods prices fell 2.8% led lower by a 14.7% (+20.1% y/y) drop in iron & steel scrap prices. Aluminum base scrap prices also were weak last month and fell 4.6% (+30.1% y/y).

The Internationalization of the Dollar and Trade Balance Adjustment from the Federal Reserve Bank of New York is available here.

Producer Price Index August July Y/Y 2005 2004 2003
Finished Goods 0.1%  0.1%   3.6%   4.9%  3.6%  3.2%
  Core -0.4% -0.3%  0.9% 2.4% 1.5% 0.2%
Intermediate Goods 0.4% 0.5% 8.7%  8.0% 6.6% 4.7%
  Core 0.4% 0.7% 8.3%  5.5% 5.7% 2.0%
Crude Goods  2.2%  3.1%  5.4% 14.6%  17.5% 25.1%
  Core -2.8% 1.3%  25.2% 4.8%  26.5% 12.4%
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