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Economy in Brief
Composite PMIs...the Best of Times; the Worst of Times-Really?
PMI data now rank observations on their range of values since December 2016...
U.S. Housing Starts Rise Again in December
Housing starts increased 5.8% (5.2% y/y) during December to 1.669 million...
Philadelphia Fed Manufacturing Index Jumps in January
The Federal Reserve Bank of Philadelphia Factory Sector Business Conditions Index jumped to January to 26.5...
U.S. Initial Jobless Claims Ease, but Are Still High
Initial claims for unemployment insurance fell to 900,000 in the week ended January 16...
French Surveys Improve Despite Ongoing Virus Issues
The spread of the virus in Franc is still untamed...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Tom Moeller July 10, 2020
• Price index less food & energy eases as the coronavirus curbs demand.
• Core goods prices inch higher.
• Service price decline led by trade services.
Pricing power remains weak in the industrial sector. The Producer Price Index for final demand fell 0.2% (-0.8% y/y) during June following a 0.4% May increase. It was the fourth decline in five months. A 0.4% increase had been expected in the Action Economics Forecast Survey. Underlying pricing pressure remained weak. Producer prices excluding food & energy eased 0.3% (+0.1% y/y), the third consecutive monthly decline. A 0.1% rise had been expected. Another measure of underlying pricing power is the PPI excluding food, beverages and trade services. It improved 0.3% last month (-0.1% y/y) after edging 0.1% higher in May.
A 5.2% decline in food prices held back the change in the PPI overall, almost reversing a 6.0% rise in May. A 44.5% decline (+4.5% y/y) in beef & veal prices led the falloff as it reversed a 69.1% jump, and the price of pork fell 15.2% (-4.4% y/y). Egg prices also weakened 12.7% (NSA) but rose 14.7% y/y. Oilseed prices were off 1.1% (+3.9% y/y). These declines were offset by an 11.9% increase (NSA, -2.9% y/y) in vegetable prices and a 6.1% increase (NSA, 1.7% y/y) in the cost of fresh fruit & melons. Bakery product prices held steady (1.0% y/y).
A 7.7% strengthening in energy prices countered the decline last month. Gasoline prices increased 26.3% (-36.3% y/y) following a 43.9% May rise. The cost of home heating oil surged 53.3% (-44.2% y/y) and natural gas prices rose 0.4% (0.1% y/y). The cost of electric power was off 0.4% (-1.3% y/y), down for the fourth month in the last five.
Final demand goods prices less food & energy edged 0.1% higher last month after holding steady in May. Prices for finished consumer goods less food & energy were unchanged (1.1% y/y). Core nondurable goods prices also held steady (+1.5% y/y) following years of strength. Women's apparel prices declined 0.7% y/y but men's clothing costs rose 0.6% y/y. Durable consumer product prices improved 0.4% y/y while household appliance prices rose 1.1% y/y.
For businesses, private capital equipment prices rose 0.1% last month (1.0% y/y) and added to the prior month's 0.2% rise.
Services prices for final demand slipped 0.3% in June, down for the fourth month in the last five. Trade services prices fell 1.8%, as the cost of trade of finished goods weakened 1.9% (+0.8% y/y). A 0.9% rise (-4.7% y/y) in transportation & warehousing services prices offset the decline. Excluding these costs, trade services prices improved 0.3% (0.1% y/y).
The cost of construction weakened 0.3% last month following a 0.1% easing.
Intermediate product prices increased 0.9% (-5.0% y/y), following a 0.1% uptick.
The PPI data can be found in Haver's USECON database. Further detail can be found in PPI and PPIR. The expectations figures are available in the AS1REPNA database.
House Price Booms, Then and Now from the Federal Reserve Bank of Philadelphia is available here.
Producer Price Index (SA, %) | Jun | May | Apr | Jun Y/Y | 2019 | 2018 | 2017 |
---|---|---|---|---|---|---|---|
Final Demand | -0.2 | 0.4 | -1.3 | -0.8 | 1.7 | 2.9 | 2.3 |
Excluding Food & Energy | -0.3 | -0.1 | -0.3 | 0.1 | 2.1 | 2.6 | 1.9 |
Excluding Food, Energy & Trade Services | 0.3 | 0.1 | -0.9 | -0.1 | 2.0 | 2.9 | 2.1 |
Goods | 0.2 | 1.6 | -3.3 | -2.6 | 0.4 | 3.4 | 3.4 |
Foods | -5.2 | 6.0 | -0.5 | 0.8 | 1.8 | 0.2 | 1.2 |
Energy | 7.7 | 4.5 | -19.0 | -17.1 | -4.4 | 10.1 | 10.6 |
Goods Excluding Food & Energy | 0.1 | 0.0 | -0.4 | 0.3 | 1.4 | 2.5 | 2.2 |
Services | -0.3 | -0.2 | -0.2 | -0.1 | 2.2 | 2.6 | 1.8 |
Trade Services | -1.8 | -0.8 | 1.6 | 0.6 | 2.5 | 1.8 | 1.5 |
Construction | -0.3 | -0.1 | 0.5 | 2.2 | 4.9 | 4.1 | 2.2 |
Intermediate Demand - Processed Goods | 0.9 | 0.1 | -3.7 | -5.0 | -1.4 | 5.4 | 4.7 |