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Economy in Brief

U.S. Producer Price Index Reflects Broad-Based Strength
by Tom Moeller  May 14, 2014

Pricing power improved last month throughout much of the economy. The overall final demand PPI increased 0.6% (2.1% y/y) during April following an unrevised 0.5% March gain. It was the largest increase since September 2012 and easily surpassed expectations for a 0.2% gain in the Action Economics Forecast Survey. Also showing strength were producer prices excluding food & energy. Their 0.5% rise (1.4% y/y) was barely off the 0.6% March increase and exceeded expectations for a 0.2% gain.

Final demand prices for goods (35% of the total index) rebounded 0.6% (1.9% y/y) after no change during March. Higher prices for consumer foods led the gain with a 2.4% jump (5.2% y/y). Prices for consumer energy goods improved 0.5% (4.4% y/y) yet government purchased energy prices offset the rise with a 1.4% decline (+1.5% y/y). Finished consumer goods prices excluding food & energy improved 0.2% (2.3% y/y). Private capital equipment prices increased 0.2% (1.3% y/y).

Final demand prices for construction improved 0.4% (3.2% y/y) following no change during March.

Final demand prices for services (63% of the total index) increased 0.6% (2.0% y/y), just off the 0.7% March rise. Prices for transportation of passengers jumped another 2.8% (4.6% y/y) and added to a 2.0% March increase. Prices for transportation and warehousing of goods for final demand were unchanged (1.8% y/y).

Intermediate demand prices of processed goods also were unchanged (1.5% y/y).

Measured using the old formula, which is being phased out as the headline series, producer prices jumped 0.7% (3.1% y/y) after a 0.1% March slip. Food costs increased 2.3% (5.2% y/y) while energy prices gained 0.5% (4.5% y/y). Prices excluding food & energy improved 0.3% (1.8% y/y).

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 (%) Apr Mar Feb Apr Y/Y 2013 2012 2011
Final Demand 0.6 0.5 -0.1 2.1 1.3 1.9 3.9
  Excluding Food & Energy 0.5 0.6 -0.2 1.4 1.5 1.9 --
     Goods 0.6 0.0 0.4 1.9 0.8 1.7 6.8
       Foods 2.7 1.1 0.6 4.9 1.6 3.0 8.5
       Energy 0.1 -1.2 0.5 3.8 -0.8 0.2 17.5
     Goods Excluding Food & Energy 0.3 0.1 0.2 1.4 1.1 1.8 3.4
   Services 0.6 0.7 -0.3 2.0 1.6 1.9 2.1
   Construction 0.4 0.0 0.1 3.2 1.8 2.9 2.2
Intermediate Demand - Processed Goods 0.0 -0.2 0.7 1.5 0.0 0.5 8.9
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