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Economy in Brief

U.S. Producer Prices Recover
by Tom Moeller  September 13, 2017

The headline Final Demand Producer Price Index using new methodology increased 0.2% during August (2.4% y/y) after a 0.1% July dip. A 0.3% rise in the index had been expected in the Action Economics Forecast Survey. The PPI excluding food & energy increased 0.2% last month (2.0% y/y) following a 0.1% decline. A 0.2% gain had been expected.

Using the old definition of the Producer Price Index, prices eased 0.2% (+2.2% y/y). Excluding food & energy, the index ticked 0.1% higher (1.8% y/y).

An updated measure of core producer price inflation is the overall index excluding food, energy and trade services. It gained 0.2% last month (1.9% y/y) following stability during July.

Final demand goods prices jumped 0.5% (3.1% y/y) after a 0.1% dip. The price index excluding food & energy eased gained 0.2% (2.0% y/y) following a 0.1% decline.

A 3.3% jump in energy prices (8.6% y/y) followed three straight months of decline. Gasoline prices surged 9.5% (14.4% y/y), also after three months decline. Home heating oil prices strengthened 14.1% (18.7% y/y) following six consecutive months of decline. Natural gas prices eased 0.1% (+6.1% y/y), down for the third straight month. Electric power costs slipped 0.1% (+2.7% y/y). Food prices declined 1.3% (+1.7% y/y) following July's stability. Beef & veal prices fell 6.5% (-5.0% y/y) after a 12.0% drop. Egg prices jumped 6.4% (36.5% y/y). Dairy product prices improved 0.3% (2.6% y/y) while fresh fruit & melon costs declined 5.5% (+8.5% y/y).

Nondurable consumer goods prices less food & energy remained unchanged (3.1% y/y) following a 0.1% uptick. Durable consumer goods prices rose 0.3% (1.2% y/y) and recovered July's decline. Household furniture costs rose 0.6% (2.2% y/y). Passenger car prices fell 0.2% (-0.4% y/y) but light truck prices improved 0.5% (2.2% y/y). Capital equipment prices rose 0.1% (0.9% y/y) after one month of stability.

Final demand for services prices gained 0.1% (2.1 % y/y) after a 0.2% decline. Trade services prices held steady (+2.1% y/y) following two months of decline. Private passenger transportation prices fell 0.9% (-1.3% y/y), the fifth decline this year.

Final demand construction prices increased 0.3% (3.3% y/y) as prices for private capital investment also gained 0.3% (3.3% y/y). Prices for public investment rose 0.2% (3.4% y/y).

Prices for intermediate demand for goods strengthened 0.4% (4.1% y/y) following two months of decline.

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, %, New Methodology) Aug Jul Jun Aug Y/Y 2016 2015 2014
Final Demand 0.2 -0.1 0.1 2.4 0.5 -1.0 1.8
   Excluding Food & Energy 0.2 -0.1 0.1 2.0 1.3 0.8 1.8
   Excluding Food, Energy & Trade Services 0.2 0.0 0.2 1.9 1.2 0.6 1.2
   Goods 0.5 -0.1 0.1 3.1 -1.5 -4.9 1.4
      Foods -1.3 0.0 0.6 1.7 -3.2 -3.1 3.7
      Energy 3.3 -0.3 -0.5 8.6 -8.2 -25.6 -3.2
    Goods Excluding Food & Energy 0.2 -0.1 0.1 2.0 0.8 0.4 1.6
   Services 0.1 -0.2 0.2 2.1 1.5 1.0 1.9
      Trade Services 0.0 -0.5 -0.2 2.1 1.5 1.4 2.0
   Construction 0.3 1.2 0.2 3.3 1.3 3.2 1.9
Intermediate Demand - Processed Goods 0.4 -0.1 -0.2 4.1 -5.7 -14.0 1.1
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