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Economy in Brief

U.S. Producer Price Decline is Widespread
by Tom Moeller  May 14, 2015

The overall Final Demand Producer Price Index declined 0.4% during April (-1.3% y/y) following an unrevised 0.2% March increase. It was the fifth decline in the last six months. A 0.2% uptick was expected in the Action Economics Forecast Survey. Prices excluding food & energy fell 0.2% (+0.8% y/y) following a 0.2% rise. It was the third decline in four months and contrasted with expectations for a 0.1% rise.

Final demand goods prices (34% of the total index) fell 0.7% (-5.5% y/y), led lower by a 2.9% decline in energy prices (-24.0% y/y). Gasoline prices fell 4.7%, the first decline in three months, leaving them down 41.4% y/y. Home heating oil prices also declined by 3.0% (-39.7% y/y). Residential natural gas prices fell 2.7% (-16.4% y/y), increasing only twice during the last year, and electric power costs eased 0.3% (+1.7% y/y). Food prices dropped 0.9% (-4.2% y/y), down for the fifth straight month. Egg prices were off  25.3% (-20.7% y/y) and dairy product prices declined 0.8% (-16.2% y/y). Beef & veal prices fell 0.5% (+13.1% y/y).

Final demand prices for goods excluding food & energy edged 0.1% lower (+0.3% y/y) and they've been unchanged since July. Passenger car prices were off 0.8% (+1.4% y/y) while furniture prices were unchanged, up 2.0% y/y. Light motor truck prices slipped 0.1% (+2.7% y/y). Private capital equipment prices were unchanged (1.3% y/y).

Services prices (64% of the total index) eased 0.1% (+0.9% y/y), the third decline in four months. Final demand trade services prices fell 0.8% (+1.0% y/y). Prices for transportation of passengers were unchanged (-3.3% y/y). Prices for transportation and warehousing of goods slipped 0.1% (-1.4% y/y), falling for the last five months.

Inching up by 0.1% for the third straight month (1.7% y/y) were construction prices for final demand (2% of the total index).

Intermediate demand prices of processed goods declined 1.1% (-7.8% y/y), the ninth straight monthly decline. Services prices for intermediate demand increased 0.5% (1.8% y/y). Construction prices improved 0.1% (1.6% y/y).

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

Producer Price Index (SA, %) Apr Mar Feb Apr Y/Y 2014 2013 2012
Final Demand -0.4 0.2 -0.5 -1.3 1.6 1.3 1.9
  Excluding Food & Energy -0.2 0.2 -0.5 0.8 1.7 1.5 1.9
     Goods -0.7 0.3 -0.4 -5.5 1.3 0.8 1.7
       Foods -0.9 -0.8 -1.6 -4.2 3.2 1.7 3.0
       Energy -2.9 1.5 0.0 -24.0 -1.0 -0.8 0.2
     Goods Excluding Food & Energy -0.1 0.2 -0.1 0.3 1.5 1.1 1.8
   Services -0.1 0.1 -0.5 0.9 1.8 1.6 1.9
   Construction 0.1 0.1 0.1 1.7 3.0 1.8 2.9
Intermediate Demand - Processed Goods -1.1 -0.1 -0.6 -7.8 0.6 0.0 0.5
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