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Economy in Brief

U.S. Producer Price Index Strengthens as Service Prices Jump
by Tom Moeller  April 11, 2014

The overall final demand PPI increased 0.5% (1.4% y/y) in March following an unrevised 0.1% February slip. It was the largest increase in twelve months and easily beat expectations for a 0.1% uptick in the Action Economics Forecast Survey. Producer prices excluding food & energy jumped 0.6% (1.4 y/y), beating the expected 0.2% gain.

Final demand prices for services (63% of the total) provided the lift to last month's overall PPI gain with a 0.7% rise (1.6% y/y). Prices for transportation of passengers gained 2.0% (0.2% y/y) following declines in three of the prior four months. That increase was partially offset by a 0.1% slip (+1.3% y/y) in transportation of goods.

Final demand prices for goods (35% of the total) were unchanged (1.1% y/y) following three consecutive months of 0.4% increase. Consumer food prices increased 0.7% (1.9% y/y) but consumer demand prices for energy goods dropped 1.0% (+1.6% y/y). Finished consumer goods prices excluding food & energy ticked 0.1% higher (2.1% y/y). Private capital equipment prices were unchanged (1.2% y/y) as were export goods prices (0.4% y/y). Final demand prices for construction also were unchanged (3.2% y/y).

Prices for intermediate demand of processed goods fell 0.2% (+0.7% y/y).

Measured using the old formula, which is being phased out as the headline series, producer prices slipped 0.1% (+1.7% y/y) after a 0.4% February gain. Food costs rose 0.7% (2.0% y/y) while energy prices declined 1.0% (+1.7% y/y). Prices excluding food & energy ticked up 0.1% (1.7% y/y) for the second consecutive month.

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

Producer Price Index (%) Mar Feb Jan Mar Y/Y 2013 2012 2011
Final Demand 0.5 -0.1 0.2 1.4 1.3 1.9 3.9
  Excluding Food & Energy 0.6 -0.2 0.2 1.4 1.5 1.9 --
     Goods 0.0 0.4 0.4 1.1 0.8 1.7 6.8
       Foods 1.1 0.6 1.0 0.8 1.6 3.0 8.5
       Energy -1.2 0.5 0.3 1.0 -0.8 0.2 17.5
     Goods Excluding Food & Energy 0.1 0.2 0.4 1.2 1.1 1.8 3.4
   Services 0.7 -0.3 0.1 1.6 1.6 1.9 2.1
   Construction 0.0 0.1 0.6 3.2 1.8 2.9 2.2
Intermediate Demand - Processed Goods -0.2 0.7 0.6 0.7 0.0 0.5 8.9
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