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Economy in Brief

U.S. PPI Total & Core Weak
by Tom Moeller November 14, 2007

Finished producer prices ticked up just 0.1% during October following the firm 1.1% rise during September. The gain was the smallest since June and was slightly less than Consensus expectations for a 0.3% rise. Nevertheless, it lifted the y/y increase to 6.0% its strongest in two years.

Core finished goods producer prices were unchanged last month. It was the first month without an increase in prices since a slight decline this past March and it was less than the expected 0.2% increase. Again, it left the y/y gain at 2.5% which was its strongest in two years. The recent momentum in core producer prices did, however, fall to its lowest of 1.0% since May.

Energy prices fell 0.8% (16.1% y/y) as prices for gasoline fell 0.8% (+32.4% y/y) after the 4.7% September jump. Natural gas prices also fell 0.5% (+7.7% y/y) but home heating oil prices increased 3.2% (16.2% y/y.

Food prices were again strong and rose 0.8% (7.1% y/y) on the heels of a 1.5% jump during September. Vegetable prices soared 29.1% (27.0% y/y) but beef prices fell 2.1% (+1.5% y/y).

Household appliance prices were firm and rose 0.4% (1.2% y/y) after two months of 0.2% decline while passenger car prices jumped 5.7% (0.4% y/y).

Capital equipment prices jumped 1.0% (2.0% y/y) reflecting strength in most categories.

Intermediate goods prices ticked up 0.1% and the index excluding food & energy prices again rose a small 0.1%. Prices for steel mill products fell 1.8%, the fourth month of sharp decline.

The crude materials PPI rose 2.4% led higher by a 3.7% (4.1% y/y) gain in crude petroleum and a 9.7% (37.6% y/y) rise in natural gas prices. The core crude materials PPI also was strong and rose 1.4%. Iron & steel scrap prices again rose 1.4% (29.8% y/y).

Today's speech by Federal Reserve Chairman Ben S. Bernanke on Federal Reserve Communications can be found here.

Producer Price Index October September Y/Y 2006 2005 2004
Finished Goods 0.1% 1.1%    6.0%  2.9%  4.9%  3.6% 
  Core 0.0% 0.1%  2.5% 1.4% 2.4% 1.5%
Intermediate Goods 0.1% 0.4% 5.4% 6.4%  8.0% 6.6%
  Core 0.1% 0.1% 1.9% 6.0%  5.5% 5.7%
Crude Goods 2.4%  0.1%   25.6% 1.4% 14.6%  17.5%
  Core 1.4% 1.6%  18.8% 20.9% 4.9%  26.5%
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