Global| Sep 10 2020U.S. Producer Prices Rise Moderately in August
by:Tom Moeller
|in:Economy in Brief
Summary
• Core pricing power is improved. • Energy & food prices slip. • Services prices remain firm. The Producer Price Index for final demand rose 0.3% (-0.2% y/y) during August following a 0.6% July increase. A 0.2% increase had been [...]
• Core pricing power is improved.
• Energy & food prices slip.
• Services prices remain firm.
The Producer Price Index for final demand rose 0.3% (-0.2% y/y) during August following a 0.6% July increase. A 0.2% increase had been expected in the Action Economics Forecast Survey. Underlying pricing power also improved. Producer prices excluding food & energy rose 0.4% (0.6% y/y) after a 0.5% increase. A 0.2% rise had been expected. Another measure of underlying pricing power is the PPI excluding food, beverages and trade services. It rose 0.3% in August (0.3% y/y) for the third consecutive month.
A 0.4% decline (+0.2% y/y) in food prices held back the change in the PPI overall. Energy prices eased 0.1% (-12.4% y/y) as gasoline prices were off 1.4% (-29.7% y/y). Natural gas prices increased 0.5% both m/m and y/y. Electric power costs edged 0.1% higher (-0.1% y/y).
Final demand goods prices less food & energy rose 0.3% last month (0.8% y/y) for the second consecutive month. Prices for finished consumer goods less food & energy rose 0.3%, also for the second consecutive month and the 1.4% y/y increase was improved from a low of 1.0% in May. Core nondurable goods prices rose 0.2% (1.8% y/y). Women's apparel prices increased an accelerated 0.7% y/y but men's clothing costs rose a lessened 0.3% y/y. Durable consumer product prices improved 0.8% y/y as household appliance prices surged 1.6% y/y, improved from a 1.1% y/y decline in January.
For businesses, private capital equipment prices inched 0.1% higher last month and the y/y gain recently has been steady near 1.1% in 2020.
Services prices for final demand rose a steady 0.5% in August (0.4% y/y). Trade services prices strengthened 1.2% (1.6% y/y) after a 0.8% increase as the cost of trade of finished goods jumped 1.3% (1.7% y/y). A 0.2% increase (-5.2% y/y) in transportation & warehousing services prices offset the increase. Excluding these costs, trade services prices improved 0.3% (0.6% y/y) after a 0.4% rise.
The cost of construction weakened 0.2% last month (+1.8% y/y) following a 0.6% increase.
Intermediate product prices improved 0.6% (-2.6% y/y), strong for the third straight month.
The PPI data can be found in Haver's USECON database. Further detail can be found in PPI and PPIR. The expectations figures are available in the AS1REPNA database.
| Producer Price Index (SA, %) | Aug | Jul | Jun | Aug Y/Y | 2019 | 2018 | 2017 |
|---|---|---|---|---|---|---|---|
| Final Demand | 0.3 | 0.6 | -0.2 | -0.2 | 1.7 | 2.9 | 2.3 |
| Excluding Food & Energy | 0.4 | 0.5 | -0.3 | 0.6 | 2.1 | 2.6 | 1.9 |
| Excluding Food, Energy & Trade Services | 0.3 | 0.3 | 0.3 | 0.3 | 2.0 | 2.9 | 2.1 |
| Goods | 0.1 | 0.8 | 0.2 | -1.6 | 0.4 | 3.4 | 3.4 |
| Foods | -0.4 | -0.5 | -5.2 | 0.2 | 1.8 | 0.2 | 1.2 |
| Energy | -0.1 | 5.3 | 7.7 | -12.4 | -4.4 | 10.1 | 10.6 |
| Goods Excluding Food & Energy | 0.3 | 0.3 | 0.1 | 0.8 | 1.4 | 2.5 | 2.2 |
| Services | 0.5 | 0.5 | -0.3 | 0.4 | 2.2 | 2.6 | 1.8 |
| Trade Services | 1.2 | 0.8 | -1.8 | 1.6 | 2.5 | 1.8 | 1.5 |
| Construction | -0.2 | 0.6 | -0.3 | 1.8 | 4.9 | 4.1 | 2.2 |
| Intermediate Demand - Processed Goods | 0.6 | 1.5 | 0.9 | -2.6 | -1.4 | 5.4 | 4.7 |
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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