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Economy in Brief

U.S. Producer Prices Increase Broadly
by Tom Moeller  October 14, 2016

The headline Final Demand Producer Price Index increased 0.3% (0.7% y/y) during September following unrevised stability in August. A 0.2% rise had been expected in the Action Economics Forecast Survey. Excluding food & energy, prices gained 0.2% (1.2% y/y), the largest rise in three months. A 0.1% rise was expected. The PPI excluding food, energy & trade services rose 0.3% (1.5% y/y), the same as in August.

Energy prices jumped 2.5% (-2.5% y/y) after two months of decline. Gasoline prices rebounded 5.3% (-7.7% y/y), but didn't recover all of the two prior months' decline. Home heating oil prices jumped 9.7% (-5.3% y/y) after a 7.6% drop. Natural gas costs rose 2.9% (1.0% y/y), the third consecutive month of strong increase. Residential electric power costs rose 0.2% (1.0% y/y).

Food prices gained 0.5% (-3.5% y/y) after two months of sharp decline. Vegetable prices jumped 10.5% (NSA, -4.8% y/y), and egg prices increased 24.2% (-64.8% y/y). Fish & shellfish prices increased 1.7% (8.5% y/y), but beef & veal costs fell 3.7% (-21.7% y/y). Dairy product prices were off 1.0% (+0.3% y/y), and grain prices declined 3.4% (NSA, -18.5% y/y). Fresh fruit & melon prices remained unchanged (NSA, +6.8% y/y).

Final demand prices for goods less food & energy increased 0.3% (0.9% y/y), the strongest rise since April. Durable consumer goods prices rose 0.2% (0.2% y/y) as passenger car prices rose 0.7% (-0.2% y/y), and light truck prices gained 0.2% (-0.4% y/y). Nondurable consumer goods prices less food & energy jumped 0.6% (3.5% y/y) as women's apparel prices increased 1.0% (1.9% y/y). Capital equipment prices nudged 0.1% higher (0.3% y/y).

Final demand services prices improved 0.1% (1.4% y/y), the same as in August. It reflected a 4.1% jump (0.4% y/y) in passenger transportation costs. Working the other way, trade services prices fell 0.4%, down for the third straight month and unchanged y/y. Final demand services less trade, transportation & warehousing costs rose 0.2% (2.2% y/y).

Construction prices for final demand improved 0.1% (0.8% y/y) following no change.

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, %) Sep Aug Jul Sep Y/Y 2015 2014 2013
Final Demand 0.3 0.0 -0.4 0.7 -0.9 1.6 1.4
   Excluding Food & Energy 0.2 0.1 -0.3 1.2 0.8 1.7 1.5
   Excluding Food, Energy & Trade Services 0.3 0.3 0.0 1.5 0.6 1.2 --
   Goods 0.7 -0.4 -0.4 -0.4 -4.3 1.3 0.8
      Foods 0.5 -1.6 -1.1 -3.5 -2.6 3.2 1.7
      Energy 2.5 -0.8 -1.0 -2.5 -20.6 -0.9 -0.8
      Goods Excluding Food & Energy 0.3 0.1 0.0 0.9 0.4 1.5 1.1
   Services 0.1 0.1 -0.3 1.4 0.9 1.8 1.6
   Construction 0.1 0.0 -0.6 0.8 1.9 2.9 1.8
Intermediate Demand - Processed Goods 0.5 -0.1 0.2 -1.2 -6.9 0.6 0.0
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