Global| Jul 15 2015U.S. Producer Price Index Posts Unexpectedly Firm Increase
by:Tom Moeller
|in:Economy in Brief
Summary
The overall Final Demand Producer Price Index increased 0.4% during June (-0.7% y/y) following an unrevised 0.5% May rise. A 0.2% gain was expected in the Action Economics Forecast Survey. Prices excluding food & energy also beat [...]
The overall Final Demand Producer Price Index increased 0.4% during June (-0.7% y/y) following an unrevised 0.5% May rise. A 0.2% gain was expected in the Action Economics Forecast Survey. Prices excluding food & energy also beat expectations and rose 0.3% (0.8% y/y) following a 0.1% uptick. A 0.1% improvement had been expected.
Final demand goods prices (35% of the total index) gained 0.7% (-3.7% y/y) on the heels of a 1.3% jump. The rise was led by a 2.4% increase in energy prices (-17.9% y/y) following a record 5.9% spurt in May. Natural gas prices surged 3.1% (-13.2% y/y), the first increase this year. Electric power costs jumped 1.3% (2.0% y/y) after four straight months of decline. Gasoline prices rose 4.3% (-31.3% y/y) following a 17.0% jump while home heating oil prices eased 0.6% (-31.0% y/y) after an 11.5% rise. Food prices increased 0.6% (-3.0% y/y) after a 0.8% jump. It was led by a two-thirds surge in egg prices which have nearly doubled y/y and a 1.2% rise in dairy product costs (-12.2% y/y). These gains were offset by a 0.7% decline in beef & veal prices (+9.5% y/y) and pasta product prices eased 0.5% (+7.5% y/y).
Final demand goods prices excluding food & energy jumped 0.4% (0.6% y/y), the largest increase since January 2014. It was led by a 1.1% increase in nondurable goods prices (4.1% y/y). Light truck prices gained 0.2% (3.8% y/y) but passenger car prices eased 0.2% (+1.1% y/y). Furniture prices slipped 0.1% (+1.6% y/y).
Final demand services costs (63% of the total index) increased 0.3% (0.8% y/y), the largest increase in six months. Transportation of passengers prices improved 0.5% (-4.4% y/y) and reversed the prior month's decline. Trade services costs rose 0.2% (1.3% y/y) following a 0.6% jump.
Final demand construction prices (2.0% of the index) nudged 0.1% higher (1.8% y/y) for the fourth month this year.
Prices for intermediate demand posted a second month of strength with a 0.7% rise (-6.3% 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.
Semiannual Monetary Policy Report to the Congress by Federal Reserve Board Chair Janet L. Yellen is available here.
| Producer Price Index (SA, %) | Jun | May | Apr | Jun Y/Y | 2014 | 2013 | 2012 |
|---|---|---|---|---|---|---|---|
| Final Demand | 0.4 | 0.5 | -0.4 | -0.7 | 1.6 | 1.3 | 1.9 |
| Excluding Food & Energy | 0.3 | 0.1 | -0.2 | 0.8 | 1.7 | 1.5 | 1.9 |
| Goods | 0.7 | 1.3 | -0.7 | -3.7 | 1.3 | 0.8 | 1.7 |
| Foods | 0.6 | 0.8 | -0.9 | -3.0 | 3.2 | 1.7 | 3.0 |
| Energy | 2.4 | 5.9 | -2.9 | -17.9 | -1.0 | -0.8 | 0.2 |
| Goods Excluding Food & Energy | 0.4 | 0.2 | -0.1 | 0.6 | 1.5 | 1.1 | 1.8 |
| Services | 0.3 | 0.0 | -0.1 | 0.8 | 1.8 | 1.6 | 1.9 |
| Construction | 0.1 | 0.1 | 0.1 | 1.8 | 3.0 | 1.8 | 2.9 |
| Intermediate Demand - Processed Goods | 0.7 | 1.0 | -1.1 | -6.3 | 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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