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Economy in Brief

PPI: Total & Core Fell
by Tom Moeller November 14, 2006

The overall producer price index fell 1.6% last month, about triple Consensus expectations. Lower energy prices again lowered the total but other prices fell as well. The core PPI fell 0.9% and more than reversed the prior month's recovery. It was the third decline in the last four months. Expectations had been for a 0.1% increase.

Finished energy goods prices fell 5.0% (-10.3% y/y), led lower by a 7.9% (-18.5% y/y) drop in gasoline prices but fuel oil prices rose 1.8% (-14.8% y/y). Natural gas prices dropped 9.3% (-19.2% y/y) and residential electric power costs fell 0.9% (+4.1% y/y).

Finished consumer goods prices less food & energy. The 0.9% (+0.7% y/y) decline in October reversed the prior month's 0.6% rise and was the third decline in the last four months.

Capital equipment prices also reversed the prior month's increase with a 0.9% (+0.6% y/y) decline as light truck prices plunged 9.7% (-12.4% y/y).

Intermediate goods prices dropped 1.1% and prices less food & energy were unchanged.

The crude materials PPI plunged 10.5% due to the 9.4% (NSA, -8.2% y/y) drop in crude petroleum and a 39.6% collapse in natural gas (NSA, -66.8% y/y). Less food & energy crude goods prices reversed all of the prior month's strength with a 1.3% drop.

Producer Price Index October September Y/Y 2005 2004 2003
Finished Goods -1.6%  -1.3%   -1.5%   4.9%  3.6%  3.2%
  Core -0.9% 0.6%  0.7% 2.4% 1.5% 0.2%
Intermediate Goods -1.1% -1.4% 0.6%  8.0% 6.6% 4.7%
  Core 0.0% 0.1% 5.9%  5.5% 5.7% 2.0%
Crude Goods  -10.5%  -3.4%  -22.0% 14.6%  17.5% 25.1%
  Core -1.3% 1.0%  20.0% 4.8%  26.5% 12.4%
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