Global| Feb 18 2015U.S. Producer Price Index Decline Reflects Broad-Based Weakness
by:Tom Moeller
|in:Economy in Brief
Summary
The overall Final Demand Producer Price Index fell 0.8% during January (0.0% y/y) following a 0.2% December decline, revised from -0.3%. A 0.5% drop was expected in the Action Economics Forecast Survey. Prices excluding food & energy [...]
The overall Final Demand Producer Price Index fell 0.8% during January (0.0%
y/y) following a 0.2% December decline, revised from -0.3%. A 0.5% drop was expected in
the Action Economics Forecast Survey. Prices excluding food & energy slipped
0.1% (+1.6% y/y) following a 0.3% rise. A 0.1% uptick was expected.
Final demand goods prices (34% of the total index) declined 2.1% (-3.7% y/y), led lower by a 10.3% decline (-22.2% y/y) in energy prices. Gasoline prices were off 24.0% (-44.4% y/y) while home heating oil prices declined 19.6% (-46.0% y/y). Electric power costs gained 1.2% (4.1% y/y) but natural gas prices fell 4.2% (-2.7% y/y). Finished food prices declined 1.1% (+2.5% y/y) following a 0.1% slip. Beef & veal prices increased 1.0% (23.6% y/y) but dairy product prices declined 5.7% (-7.2% y/y).
Final demand prices for goods excluding food & energy backpedaled 0.2% (+0.6% y/y) after a 0.1% gain. Passenger car prices rose 0.3% (1.0% y/y) following two months of 0.1% uptick while furniture prices increased 0.3% (+1.5% y/y). Light motor truck prices were off 0.7% (-0.1% y/y), down for the third month in the last four. Private capital equipment prices improved 0.1% (0.9% y/y) after a 0.2% rise.
Services prices (64% of the total index) were off 0.2% (+2.0% y/y) after a 0.3% increase. Final demand trade services prices posted another strong increase of 0.5% (4.4% y/y). Prices for transportation of passengers declined 1.0% (+0.3% y/y). Prices for transportation and warehousing of goods for final demand fell 0.6% (+0.8% y/y).
Recovering by 0.4% (1.9% y/y) were construction prices for final demand (2% of the total index) following two months of being unchanged.
Intermediate demand prices of processed goods were off 2.8% (-5.5% y/y), the largest of six straight monthly declines.
Measured using the old formula, which is being phased out as the headline series, producer prices fell 2.1% (-3.3% y/y), the largest of six consecutive monthly declines. Consumer food costs moved 0.8% lower (+3.9% y/y), down for the third straight month while energy prices declined 9.6% (-20.7% y/y). Prices excluding food & energy improved 0.2% (1.5% y/y). Intermediate goods prices declined 2.8% (-5.7 y/y), led lower by an 8.3% decline (-21.2% y/y) in energy prices while food costs fell 2.5% (-0.6% y/y). Intermediate goods prices excluding food & energy were off 1.3% (-1.4% y/y).
The PPI data are contained in Haver's USECON database with further detail in PPI and PPIR. The expectations figure is available in the AS1REPNA database.
| Producer Price Index (%) | Jan | Dec | Nov | Jan Y/Y | 2014 | 2013 | 2012 |
|---|---|---|---|---|---|---|---|
| Final Demand | -0.8 | -0.2 | -0.2 | 0.0 | 1.6 | 1.3 | 1.9 |
| Excluding Food & Energy | -0.1 | 0.3 | 0.1 | 1.6 | 1.7 | 1.5 | 1.9 |
| Goods | -2.1 | -1.1 | -0.7 | -3.7 | 1.3 | 0.8 | 1.7 |
| Foods | -1.1 | -0.1 | 0.0 | 2.5 | 3.2 | 1.7 | 3.0 |
| Energy | -10.3 | -6.2 | -3.8 | -22.2 | -1.0 | -0.8 | 0.2 |
| Goods Excluding Food & Energy | -0.2 | 0.1 | 0.0 | 0.6 | 1.5 | 1.1 | 1.8 |
| Services | -0.2 | 0.3 | 0.2 | 2.0 | 1.8 | 1.6 | 1.9 |
| Construction | 0.4 | 0.0 | 0.0 | 1.9 | 3.0 | 1.8 | 2.9 |
| Intermediate Demand - Processed Goods | -2.8 | -1.6 | -1.0 | -5.5 | 0.6 | 0.0 | 0.5 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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