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Economy in Brief

U.S. Producer Prices Decline With Oil Costs; Services Prices Up Minimally
by Tom Moeller  December 12, 2014

The overall Final Demand Producer Price Index fell 0.2% during November (1.4% y/y) and reversed an unrevised 0.2% October increase. A 0.1% slip was expected in the Action Economics Forecast Survey. Prices excluding food & energy remained unchanged (1.8% y/y) following a 0.4% jump. A 0.1% uptick was expected.

Services prices (64% of the total index) gained 0.1% (1.9% y/y) after a 0.5% jump. Final demand trade services prices inched 0.1% higher (2.5% y/y) following a 1.5% surge but prices for transportation of passengers declined 1.9% (+2.6% y/y). Prices for transportation and warehousing of goods for final demand fell 0.3% (2.0% y/y).

Remaining unchanged were construction prices for final demand (2% of the total index). They improved 2.2% y/y helped by a 0.5% October surge.

Final demand goods prices (34% of the total index) declined 0.7% (+0.4% y/y), led lower by a 3.1% decline (-5.9% y/y) in energy prices. Gasoline prices were off 6.3% (-14.2% y/y) while home heating oil prices declined 2.8% (-13.2% y/y). Natural gas prices fell 1.9% (+2.9% y/y) but electric power costs remained unchanged (3.3% y/y). Finished food prices edged 0.2% lower (+4.4% y/y) following a 1.0% jump. Beef & veal prices jumped another 1.6% (28.6% y/y) but dairy product prices declined 3.8% (+8.2% y/y).

Final demand prices for goods excluding food & energy slipped 0.1% (+1.6% y/y) for a second consecutive month. Passenger car prices remained unchanged (1.1% y/y) after a 1.0% jump while furniture prices ticked 0.1% higher (1.0% y/y). Private capital equipment prices edged 0.1% lower (+1.1% y/y).

Intermediate demand prices of processed goods were off 1.0% (-0.3% y/y) after a 0.9% decline.

Measured using the old formula, which is being phased out as the headline series, producer prices fell 0.6% (+1.0% y/y), the largest of four consecutive monthly declines. Food costs moved 0.5% lower (+5.5% y/y) while energy prices were again off 2.7% (-5.1% y/y). Prices excluding food & energy improved 0.1% (2.0% y/y).

Making Sense of Dissents: A History of FOMC Dissents from the Federal Reserve Bank of St. Louis is available here.

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 (%) Nov Oct Sep Nov Y/Y 2013 2012 2011
Final Demand -0.2 0.2 -0.1 1.4 1.3 1.9 3.9
  Excluding Food & Energy 0.0 0.4 0.0 1.8 1.5 1.9 --
     Goods -0.7 -0.4 -0.2 0.4 0.8 1.7 6.8
       Foods -0.2 1.0 -0.7 4.4 1.7 3.0 8.5
       Energy -3.1 -3.0 -0.7 -5.9 -0.8 0.2 17.5
     Goods Excluding Food & Energy -0.1 -0.1 0.2 1.6 1.1 1.8 3.4
   Services 0.1 0.5 -0.1 1.9 1.6 1.9 2.1
   Construction 0.0 0.5 0.0 2.2 1.8 2.9 2.2
Intermediate Demand - Processed Goods -1.0 -0.9 0.1 -0.3 0.0 0.5 8.9
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