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Economy in Brief

U.S. Producer Prices Rise Moderately in September
by Tom Moeller  October 14, 2020

• Core pricing power remains firm.

• Goods price increase picks up.

• Services prices remain firm.

The Producer Price Index for final demand rose 0.4% both m/m and y/y during September following a 0.3% August increase. A 0.2% rise had been expected in the Action Economics Forecast Survey. Underlying pricing power remained firm. Producer prices excluding food & energy rose a steady 0.4% (1.2% y/y). A 0.2% rise had been expected. Another measure of underlying pricing power is the PPI excluding food, beverages and trade services. It also rose 0.4% in September (0.7% y/y), following three straight 0.3% increases.

A 1.2% increase (1.0% y/y) in food prices bolstered the change in the PPI overall. Energy prices eased 0.3% (-11.5% y/y) as gasoline prices fell 2.8% (-28.3% y/y). Natural gas prices increased 2.2% (2.7% y/y). Electric power costs strengthened 1.2% (-0.3% y/y).

Final demand goods prices less food & energy rose 0.4% last month (1.3% y/y) following two straight 0.3% increases. Prices for finished consumer goods less food & energy rose 0.1% (1.5% y/y) after two straight 0.3% increases. Core nondurable goods prices held steady (1.7% y/y). Women's apparel prices declined 4.1% y/y, but men's clothing costs rose a steady 0.4% y/y. Durable consumer product prices improved 0.2% (1.0% y/y) as household appliance prices rose 2.1% y/y and furniture prices improved 1.4% y/y.

Private capital equipment prices rose 0.2% last month and the y/y gain has been steady near 1.2% this year.

Services prices for final demand rose 0.4% in September (1.1% y/y) following two months of 0.5% increase. Trade services prices rose a lessened 0.2% (2.6% y/y) after a 1.2% increase. The cost of trade of finished goods improved 0.1% (2.6% y/y) after a 1.3% strengthening while transportation & warehousing services prices rose 0.4% (-4.5% y/y), the strongest change in four months. Excluding these costs, trade services prices improved 0.5% (1.1% y/y) after a 0.3% rise.

The cost of construction weakened 0.2% (+1.6% y/y) for a second straight month.

Intermediate product prices strengthened 1.0% (-1.5% y/y), strong for the fourth straight month.

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.

Producer Price Index (SA, %) Sep Aug Jul Sep  Y/Y 2019 2018 2017
Final Demand 0.4 0.3  0.6 0.4 1.7 2.9 2.3
   Excluding Food & Energy 0.4 0.4 0.5 1.2 2.1 2.6 1.9
   Excluding Food, Energy & Trade Services 0.4 0.3 0.3 0.7 2.0 2.9 2.1
   Goods 0.4 0.1 0.8 -1.0 0.4 3.4 3.4
      Foods 1.2 -0.4 -0.5 1.0 1.8 0.2 1.2
      Energy -0.3 -0.1 5.3 -11.5 -4.4 10.1 10.6
    Goods Excluding Food & Energy 0.4 0.3 0.3 1.3 1.4 2.5 2.2
   Services 0.4 0.5 0.5 1.1 2.2 2.6 1.8
      Trade Services 0.2 1.2 0.8 2.6 2.5 1.8 1.5
   Construction -0.2 -0.2 0.6 1.6 4.9 4.1 2.2
Intermediate Demand - Processed Goods 1.0 0.6 1.5 -1.5 -1.4 5.4 4.7
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