Global| Nov 13 2015U.S. Producer Prices Post a Surprising Decline
by:Tom Moeller
|in:Economy in Brief
Summary
The overall Final Demand Producer Price Index fell 0.4% during October (-1.6% y/y) following an unrevised 0.5% September decline. The Action Economics Forecast Survey expected a 0.2% increase. Prices excluding food & energy were off [...]
The overall Final Demand Producer Price Index fell 0.4% during October (-1.6% y/y) following an unrevised 0.5% September decline. The Action Economics Forecast Survey expected a 0.2% increase. Prices excluding food & energy were off 0.3% (+0.1% y/y) and repeated the prior month's decline. A 0.1% rise had been expected.
Final demand goods prices (35% of the total index) fell 0.4% (-4.8% y/y), down for the fourth straight month. The latest decline was led by a 0.8% drop (-4.2% y/y) in food prices. Egg prices have been quite volatile and fell 26.9% m/m, but they have risen by roughly one quarter y/y. Beef & veal prices fell 4.7% (-10.7% y/y) while bakery product prices eased 0.1% (+0.8% y/y). Fresh & dry vegetable costs rose 11.0% y/y, but dairy product costs were off roughly one-quarter. Energy prices remained unchanged (-21.5% y/y). Gasoline prices rebounded 3.8% (-37.9% y/y), but home heating oil prices eased 0.1% (-40.9% y/y). Residential natural gas prices also were off 0.1% (-10.8% y/y) and residential electric power costs fell 0.5% (+0.1% y/y).
Final demand goods prices excluding food & energy declined 0.3% (-0.1% y/y) after remaining steady in September. Core finished consumer goods fell 0.2% (2.6% y/y) and reversed the prior month's rise. Core consumer nondurables costs remained steady (3.3% y/y) following a 0.2% rise, but consumer durables dropped 0.5% (+1.0% y/y). Private capital equipment costs eased 0.2% (0.9% y/y) while core goods prices for government purchases were off 0.1%, unchanged y/y. Prices of goods for export fell 0.4% (-3.5% y/y), down for the fourth straight month.
Final demand services costs (63% of the total index) declined 0.3% (+0.1% y/y) after a 0.4% fall. This was led by trade services which fell 0.7% (-0.7% y/y); trade services represent the margins charged by retail and wholesale dealers and merchants. Prices for transportation of passengers fell 0.3% (-5.5% y/y), off for the third straight month. Prices for transportation and warehousing of goods eased 0.1% (-2.2% y/y). Other services, including financial, health care and communications, fell 0.1% (+0.8% y/y) after a 0.3% decline.
Final demand construction prices (2.0% of the index) jumped 1.0% (2.3% y/y) after remaining unchanged. Private capital investment costs also improved 1.0% (2.2% y/y).
Prices of processed goods for intermediate demand fell 0.4% (-7.6% y/y), off for the fourth straight month.
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 (SA, %) | Oct | Sep | Aug | Y/Y | 2014 | 2013 | 2012 |
|---|---|---|---|---|---|---|---|
| Final Demand | -0.4 | -0.5 | 0.0 | -1.6 | 1.6 | 1.3 | 1.9 |
| Excluding Food & Energy | -0.3 | -0.3 | 0.3 | 0.1 | 1.7 | 1.5 | 1.9 |
| Goods | -0.4 | -1.2 | -0.6 | -4.8 | 1.3 | 0.8 | 1.7 |
| Foods | -0.8 | -0.8 | 0.3 | -4.2 | 3.2 | 1.7 | 3.0 |
| Energy | 0.0 | -5.9 | -3.3 | -21.5 | -1.0 | -0.8 | 0.2 |
| Goods Excluding Food & Energy | -0.3 | 0.0 | -0.2 | -0.1 | 1.5 | 1.1 | 1.8 |
| Services | -0.3 | -0.4 | 0.4 | 0.1 | 1.8 | 1.6 | 1.9 |
| Construction | 1.0 | 0.0 | -0.1 | 2.3 | 3.0 | 1.8 | 2.9 |
| Intermediate Demand - Processed Goods | -0.4 | -1.5 | -0.6 | -7.6 | 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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