Global| May 14 2014U.S. Producer Price Index Reflects Broad-Based Strength
by:Tom Moeller
|in:Economy in Brief
Summary
Pricing power improved last month throughout much of the economy. The overall final demand PPI increased 0.6% (2.1% y/y) during April following an unrevised 0.5% March gain. It was the largest increase since September 2012 and easily [...]
Pricing power improved last month throughout much of the economy. The overall final demand PPI increased 0.6% (2.1% y/y) during April following an unrevised 0.5% March gain. It was the largest increase since September 2012 and easily surpassed expectations for a 0.2% gain in the Action Economics Forecast Survey. Also showing strength were producer prices excluding food & energy. Their 0.5% rise (1.4% y/y) was barely off the 0.6% March increase and exceeded expectations for a 0.2% gain.
Final demand prices for goods (35% of the total index) rebounded 0.6% (1.9% y/y) after no change during March. Higher prices for consumer foods led the gain with a 2.4% jump (5.2% y/y). Prices for consumer energy goods improved 0.5% (4.4% y/y) yet government purchased energy prices offset the rise with a 1.4% decline (+1.5% y/y). Finished consumer goods prices excluding food & energy improved 0.2% (2.3% y/y). Private capital equipment prices increased 0.2% (1.3% y/y).
Final demand prices for construction improved 0.4% (3.2% y/y) following no change during March.
Final demand prices for services (63% of the total index) increased 0.6% (2.0% y/y), just off the 0.7% March rise. Prices for transportation of passengers jumped another 2.8% (4.6% y/y) and added to a 2.0% March increase. Prices for transportation and warehousing of goods for final demand were unchanged (1.8% y/y).
Intermediate demand prices of processed goods also were unchanged (1.5% y/y).
Measured using the old formula, which is being phased out as the headline series, producer prices jumped 0.7% (3.1% y/y) after a 0.1% March slip. Food costs increased 2.3% (5.2% y/y) while energy prices gained 0.5% (4.5% y/y). Prices excluding food & energy improved 0.3% (1.8% 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 (%) | Apr | Mar | Feb | Apr Y/Y | 2013 | 2012 | 2011 |
|---|---|---|---|---|---|---|---|
| Final Demand | 0.6 | 0.5 | -0.1 | 2.1 | 1.3 | 1.9 | 3.9 |
| Excluding Food & Energy | 0.5 | 0.6 | -0.2 | 1.4 | 1.5 | 1.9 | -- |
| Goods | 0.6 | 0.0 | 0.4 | 1.9 | 0.8 | 1.7 | 6.8 |
| Foods | 2.7 | 1.1 | 0.6 | 4.9 | 1.6 | 3.0 | 8.5 |
| Energy | 0.1 | -1.2 | 0.5 | 3.8 | -0.8 | 0.2 | 17.5 |
| Goods Excluding Food & Energy | 0.3 | 0.1 | 0.2 | 1.4 | 1.1 | 1.8 | 3.4 |
| Services | 0.6 | 0.7 | -0.3 | 2.0 | 1.6 | 1.9 | 2.1 |
| Construction | 0.4 | 0.0 | 0.1 | 3.2 | 1.8 | 2.9 | 2.2 |
| Intermediate Demand - Processed Goods | 0.0 | -0.2 | 0.7 | 1.5 | 0.0 | 0.5 | 8.9 |
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.
