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Economy in Brief

U.S. PPI Strength Driven By Energy
by Tom Moeller  May 12, 2011

The U.S. producer price index for finished goods increased 0.8% during April, similar to the 0.7% March gain. The rise was stronger than the 0.6% Consensus expectation and the y/y increase of 6.6% was its strongest since September 2008. Less food & energy, pricing pressures remained firm. The 0.3% gain in the PPI less food & energy equaled the March increase. The latest also beat Consensus expectations for a 0.2% rise and the 2.1% y/y gain was its strongest since August 2009.

Higher energy prices continued to drive the overall PPI with a 2.5% gain (20.6% y/y) as gasoline prices increased a not seasonally adjusted 8.9% (38.7% y/y). Since the late-2008 low, gasoline prices have more-than-doubled. Home heating oil prices also were strong, posting a 6.1% increase (37.6% y/y). Natural gas prices rose a moderate 1.5% (0.6% y/y) while electricity prices gained 0.6% (3.1% y/y). Food prices posted a moderate 0.3% rise but the y/y increase remained strong at 5.1%. Meat prices (15.8% y/y) and dairy product prices (15.5% y/y) firmed further.

Finished consumer goods prices rose a stronger 0.9% (8.5% y/y) with the gain in food & energy costs. Core prices rose 0.3% (2.8% y/y). Furniture prices rose 2.1% y/y, the strongest gain since 2009 but appliance prices slipped 0.1% m/m (0.5% y/y). Men's apparel prices increased 2.3% y/y but women's clothing prices rose just 0.7%. Capital goods prices increased 0.3% last month and by an accelerated 1.3% y/y, the most since August 2009.

Intermediate goods prices jumped another 1.3% as energy prices increased 1.9% (20.4% y/y). Food prices also strengthened by 1.8% (14.3% y/y). Core-intermediate prices remained firm and rose another 1.1% (5.6% y/y). Crude materials prices jumped 4.0% (23.5% y/y). Strength in factory output lifted prices less food & energy prices by 2.6% (18.2% y/y. Metal prices remained strong. Crude energy prices rose 4.8% (20.6% y/y) while food prices rose 4.0% (29.7% y/y).

The PPI data are contained in Haver's USECON database with further detail in PPI and PPIR. The expectation figure is available in the AS1REPNA database.

Producer Price Index (%) Apr Mar Feb Apr Y/Y 2010 2009 2008
Finished Goods 0.8 0.7 1.6 6.6 4.2 -2.5 6.4
    Energy 2.5 2.6 3.3 20.6 13.8 -17.7 14.1
    Food 0.3 -0.2 3.9 5.1 3.9 -1.4 6.8
  Less Food & Energy 0.3 0.3 0.2 2.1 1.2 2.5 3.4
Intermediate Goods 1.3 1.5 2.0 9.4 6.4 -8.4 10.3
  Less Food & Energy 1.1 0.9 1.1 5.6 4.3 -4.2 7.4
Crude Materials 4.0 -0.5 3.4 23.5 21.4 -30.3 21.5
  Less Food & Energy 2.6 -2.3 2.3 18.2 32.6 -23.4 14.7
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