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Economy in Brief

U.S. Producer Prices Increase With Strengthening Energy Prices
by Tom Moeller  June 13, 2018

The headline Final Demand Producer Price Index using new methodology jumped 0.5% (3.1% y/y) during May following an unrevised 0.1% uptick in April. A 0.3% increase had been expected in the Action Economics Forecast Survey. The PPI excluding food & energy improved 0.3% (2.4% y/y) after a 0.2% gain. A 0.2% rise had been expected. An updated measure of core producer price inflation (the overall index excluding food, energy and trade services) ticked 0.1% higher (2.6% y/y) for the second straight month.

Using the old methodology for the Producer Price Index, prices increased 1.0% (4.1% y/y) following a 0.1% dip. Excluding food & energy, the index increased 0.2% (2.2% y/y) after a 0.3% rise.

Final demand goods prices strengthened  1.0% (4.4% y/y) after remaining unchanged during April. The goods price index excluding food & energy gained a 0.3% (2.5% y/y) for the third straight month.

Energy prices rose 4.6% (16.5% y/y) following a 0.1% gain. Gasoline prices surged 9.8% (36.6% y/y) after falling for two straight months. Home heating oil prices rose 4.5% (42.3% y/y), about as they did during the prior month. Electric power costs rose 0.8% ( 1.5% y/y). To the downside were natural gas prices which fell 1.5% (-0.9% y/y). Food prices edged up 0.1% (0.5 y/y) last month after a 1.1% drop. Beef & veal prices surged 6.1% (-0.5% y/y) and recovered all of the April decline. Fresh fruit costs jumped 5.0% (-1.9% y/y). Dairy product prices increased 1.7% (0.2% y/y).

Nondurable consumer goods prices less food & energy ticked 0.1% higher (3.6% y/y) after a 0.6% rise. Durable consumer goods prices rose 0.4% (1.6% y/y) following a 0.1% uptick. Passenger car prices eased 0.1% (-0.2% y/y) but light truck prices increased 0.6% (1.1% y/y). Private capital equipment prices improved 0.3% (2.0% y/y) after a 0.1% gain. Manufacturing capital equipment costs rose 0.5% (2.0% y/y), while nonmanufacturing capital equipment prices improved 0.2% (1.1% y/y).

Final demand for services prices improved 0.3% (2.4% y/y) after a 0.1% rise. Prices less trade, transportation & warehousing held steady (2.3% y/y) after a 0.1% dip. Trade services costs strengthened 0.9% (1.9% y/y). Transportation and warehousing prices rose 0.7% (5.8% y/y).

Final demand construction prices held steady (4.1% y/y) after a 1.1% jump. Private capital investment construction prices rose 0.2% (4.2% y/y) after a 1.0% jump. Government costs eased 0.2% (+3.9% y/y) after a 1.2% strengthening.

Prices for intermediate demand goods posted a strong 1.5% rise (6.3% y/y) following a 0.5% increase.

The PPI data are contained in Haver's USECON database with further detail in PPI and PPIR. West Texas Intermediate Crude Oil prices are found in the WEEKLY database while the expectations figures are available in the AS1REPNA database.

Producer Price Index (SA, %, New Methodology) May Apr Mar May Y/Y 2017 2016 2015
Final Demand 0.5 0.1 0.3 3.1 2.3 0.4 -0.9
   Excluding Food & Energy 0.3 0.2 0.3 2.4 1.9 1.2 0.8
   Excluding Food, Energy & Trade Services 0.1 0.1 0.4 2.6 2.1 1.2 0.6
   Goods 1.0 0.0 0.3 4.4 3.3 -1.4 -4.3
      Foods 0.1 -1.1 2.2 0.5 1.2 -2.8 -2.6
      Energy 4.6 0.1 -2.1 16.5 10.4 -8.4 -20.6
    Goods Excluding Food & Energy 0.3 0.3 0.3 2.5 2.2 0.7 0.4
   Services 0.3 0.1 0.3 2.4 1.8 1.4 0.9
      Trade Services 0.9 0.2 0.2 1.9 1.5 1.3 1.3
   Construction 0.0 1.1 0.2 4.1 2.2 1.1 1.9
Intermediate Demand - Processed Goods 1.5 0.5 -0.3 6.3 4.7 -3.1 -6.9
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