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Economy in Brief

U.S. Producer Price Rebound Driven by Energy; Core Nudges Higher
by Tom Moeller  June 12, 2015

The overall Final Demand Producer Price Index rebounded 0.5% during May (-1.1% y/y) following an unrevised 0.4% April decline. It was the largest increase since September 2012. A 0.4% rise was expected in the Action Economics Forecast Survey. Prices excluding food & energy matched expectations and gained 0.1% (0.6% y/y) following a 0.2% decline.

Final demand goods prices (35% of the total index) recovered 1.3% (-4.3% y/y). The rise was led by a 5.9% surge in energy prices (-19.5% y/y), a record for the series which dates back to 2009. Gasoline prices jumped 17.0% (-31.3% y/y) and heating oil prices rose 11.5% (-32.1% y/y). The gains were offset by a 1.6% decline in natural gas costs (-17.7% y/y) and a 0.3% slip (+1.3% y/y) in electric power prices. Food prices increased 0.8% (-3.3% y/y), the first increase in six months. It was led by a 42.9% surge in egg prices (1.8% y/y) and a 1.4% rise in dairy product costs (-14.2% y/y). Beef & veal prices rose 0.6% (12.3% y/y) and pasta product prices fell 2.1% (+8.4% y/y).

Final demand goods prices excluding food & energy increased 0.2% (0.5% y/y) led by a 2.7% rise in apparel prices (3.2% y/y). Passenger car prices gained 0.4% (1.3% y/y) and light truck costs rose 0.6% (3.3% y/y). Furniture prices declined 0.2% (-0.4% y/y).

Final demand services costs (63% of the total index) were unchanged (0.6% y/y). Transportation of passengers prices fell 0.4% (-4.3% y/y) but trade services costs rose 0.6% (0.5% y/y).

Final demand construction prices (2.0% of the index) nudged 0.1% higher (1.8% y/y) for the third straight month.

Prices for intermediate demand rebounded 1.0% (-7.0% y/y) following a 1.1% fall.

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, %) May Apr Mar May Y/Y 2014 2013 2012
Final Demand 0.5 -0.4 0.2 -1.1 1.6 1.3 1.9
  Excluding Food & Energy 0.1 -0.2 0.2 0.6 1.7 1.5 1.9
     Goods 1.3 -0.7 0.3 -4.3 1.3 0.8 1.7
       Foods 0.8 -0.9 -0.8 -3.3 3.2 1.7 3.0
       Energy 5.9 -2.9 1.5 -19.5 -1.0 -0.8 0.2
     Goods Excluding Food & Energy 0.2 -0.1 0.2 0.5 1.5 1.1 1.8
   Services 0.0 -0.1 0.1 0.6 1.8 1.6 1.9
   Construction 0.1 0.1 0.1 1.8 3.0 1.8 2.9
Intermediate Demand - Processed Goods 1.0 -1.1 -0.1 -7.0 0.6 0.0 0.5
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