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Economy in Brief

U.S. Producer Price Total Unchanged in August as Core Prices Continue To Rise
by Carol Stone  September 11, 2015

The overall Final Demand Producer Price Index was flat in August (-0.8% y/y) following a 0.2% increase in July. The Action Economics Forecast Survey looked for a 0.1% decrease. Prices excluding food & energy were also stronger than expectations, rising 0.3% (0.9% y/y) for a third straight month. A 0.1% uptick had been expected.

Final demand goods prices (35% of the total index) fell 0.6% (-4.1% y/y) in August after easing 0.1% in July. The latest decline was again paced by energy prices, which fell 3.3% (-19.6% y/y). Home heating oil costs also again led this drop, down by 11.0% (-41.0%). Gasoline was next with a 7.7% fall (-32.6% y/y), and diesel fuel was down 4.1% (-38.0% y/y). Residential electric power edged down 0.2% (+1.3% y/y). Residential natural gas was the only energy category with an increase, 1.5% (-10.5% y/y). Food prices turned back up, rising 0.3% in August (-2.2% y/y) after their brief 0.1% dip in July. Egg prices were the biggest mover, pushing back up by 32.3% after their 24.8% drop in July; these were thus up by 130.2% from August 2014. Fresh vegetables, fresh fruits and beef and veal were also up, while other meats and dairy prices were down.

Final demand goods prices excluding food & energy decreased 0.2% in August (+0.4% y/y), after being unchanged in July. Finished consumer goods were flat for a second month (+2.7% y/y). Consumer nondurables (ex food and energy) were also flat (+3.6% y/y), but consumer durables fell 0.2% (+1.4% y/y). Private capital equipment costs decreased 0.1% (1.3% y/y), goods for government purchase rose 0.2% (+0.2% y/y) and those for export fell 0.5% (-3.2% y/y).

Final demand services costs (63% of the total index) increased 0.4% again in August as they had in July (+1.0% y/y). This was led by trade services, which rose 0.9% (+1.6% y/y); trade services represent the margins charged by retail and wholesale dealers and merchants. Prices for transportation of passengers turned back down by 1.6% in August (-5.1% y/y) after rising 0.9% in July. Prices for transportation and warehousing of goods fell 0.3% (-2.1% y/y) after being unchanged. Other services, including financial, health care and communications, among others, rose 0.2% in August (+1.2% y/y) after July's 0.4% rise.

Final demand construction prices (2.0% of the index) eased 0.1% (+1.8% y/y) in August after a sizable 0.5% rise in July. The earlier gain was generated mainly by health care building costs, which had increased 0.8%, and that category immediately declined by 0.8% then in August (+0.5% y/y).

Prices of processed goods for intermediate demand fell 0.6% in August (-7.0% y/y) following a 0.2% reduction in July.

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, %) Aug Jul Jun Aug Y/Y 2014 2013 2012
Final Demand 0.0 0.2 0.4 -0.8 1.6 1.3 1.9
  Excluding Food & Energy 0.3 0.3 0.3 0.9 1.7 1.5 1.9
     Goods -0.6 -0.1 0.7 -4.1 1.3 0.8 1.7
       Foods 0.3 -0.1 0.6 -2.2 3.2 1.7 3.0
       Energy -3.3 -0.6 2.4 -19.6 -1.0 -0.8 0.2
     Goods Excluding Food & Energy -0.2 0.0 0.4 0.4 1.5 1.1 1.8
   Services 0.4 0.4 0.3 1.0 1.8 1.6 1.9
   Construction -0.1 0.5 0.1 1.8 3.0 1.8 2.9
Intermediate Demand - Processed Goods -0.6 -0.2 0.7 -7.0 0.6 0.0 0.5
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