Global| Mar 13 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 0.5% during February (-0.6% y/y) following an unrevised 0.8% January decline. A 0.2% rise was expected in the Action Economics Forecast Survey. Prices excluding food & energy also [...]
The overall Final Demand Producer Price Index fell 0.5% during February (-0.6% y/y) following an unrevised 0.8% January decline. A 0.2% rise was expected in the Action Economics Forecast Survey. Prices excluding food & energy also were off 0.5% (+1.0% y/y) following a 0.1% slip. A 0.1% rise was expected.
Final demand goods prices (34% of the total index) fell 0.4% (-4.2% y/y), led lower by a 1.6% decline (+0.4% y/y) in food prices. Beef & veal prices decreased 3.2% (+19.1% y/y) but dairy product prices declined 3.0% (-12.8% y/y). Egg prices rose 12.6% (10.4% y/y). Energy prices remained unchanged (-22.4% y/y). Gasoline prices improved 1.5% (-42.7% y/y) and home heating oil prices recovered 9.9% (-39.6% y/y). Electric power costs slipped 0.1% (4.6% y/y) while natural gas prices fell 2.1% (-9.2% y/y). Final demand prices for goods excluding food & energy backpedaled 0.1% (+0.4% y/y) after a 0.2% decline. Passenger car prices fell 0.8% (+0.2% y/y) while furniture prices improved 0.4% (2.0% y/y). Light motor truck prices gained 0.5% (0.3% y/y). Private capital equipment prices improved 0.1% (1.0% y/y) for a second straight month.
Services prices (64% of the total index) were off 0.5% (+1.2% y/y) following a 0.2% decline. Final demand trade services prices fell 1.5% (+2.2% y/y) and retraced two months of 0.5% increase. Prices for transportation of passengers declined 2.7% (+0.3% y/y). Prices for transportation and warehousing of goods fell 1.1% (-0.8% y/y).
Inching up by 0.1% (2.0% y/y) were construction prices for final demand (2% of the total index) after a 0.4% rise.
Intermediate demand prices of processed goods were off 0.6% (-6.4% y/y), the seventh straight monthly decline.
Measured using the old formula, which is being phased out as the headline series, producer prices slipped 0.1% (-3.5% y/y). Consumer food costs moved 1.4% lower (+1.8% y/y), down for the fourth straight month but energy prices rebounded 0.6% (-19.9% y/y). Prices excluding food & energy ticked 0.1% higher (1.5% y/y). Intermediate goods prices declined 0.6% (-6.5% y/y), led lower by a 1.9% shortfall (-3.1% y/y) in food prices while energy costs fell 0.7% (-21.5% y/y). Intermediate goods prices excluding food & energy were off 0.4% (-2.2% y/y). Crude goods prices were pulled 3.9% lower (-25.1% y/y) by a 6.7% drop (-9.2% y/y) in food price. Energy prices gained 0.9% (-45.0% y/y) and core prices fell 5.2% (11.4% y/y).
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 (%) | Feb | Jan | Dec | Feb Y/Y | 2014 | 2013 | 2012 |
|---|---|---|---|---|---|---|---|
| Final Demand | -0.5 | -0.8 | -0.2 | -0.6 | 1.6 | 1.3 | 1.9 |
| Excluding Food & Energy | -0.5 | -0.1 | 0.3 | 1.0 | 1.7 | 1.5 | 1.9 |
| Goods | -0.4 | -2.1 | -1.1 | -4.2 | 1.3 | 0.8 | 1.7 |
| Foods | -1.6 | -1.1 | -0.1 | 0.4 | 3.2 | 1.7 | 3.0 |
| Energy | 0.0 | -10.3 | -6.2 | -22.4 | -1.0 | -0.8 | 0.2 |
| Goods Excluding Food & Energy | -0.1 | -0.2 | 0.1 | 0.4 | 1.5 | 1.1 | 1.8 |
| Services | -0.5 | -0.2 | 0.3 | 1.2 | 1.8 | 1.6 | 1.9 |
| Construction | 0.1 | 0.4 | 0.0 | 2.0 | 3.0 | 1.8 | 2.9 |
| Intermediate Demand - Processed Goods | -0.6 | -2.8 | -1.6 | -6.4 | 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.
