Global| Oct 18 2011U.S. Producer Prices Show Unexpected Strength
by:Tom Moeller
|in:Economy in Brief
Summary
Pricing power is up at the wholesale level. The September producer price index for finished goods jumped 0.8% after an unrevised no-change during August. The figure compared to Consensus expectations for a 0.2% rise, according to the [...]
Pricing power is up at the wholesale level. The September producer price index for finished goods
jumped 0.8% after an unrevised no-change during August. The figure
compared to Consensus expectations for a 0.2% rise, according to the
Action Economics survey. The increase pulled the y/y change to an elevated
7.0%. There's also been acceleration in core pricing power. Less food
& energy, producer prices rose 0.2% last month after a 0.1% gain in
July. The rise left the twelve-month increase at 2.5%, double last year's
advance.
Energy prices reversed an August decline and rose 2.3% (18.9% y/y) due to strength in gasoline (39.2% y/y) and home heating oil (39.0% y/y). Much more moderate increases in electric power (0.9% y/y) and natural gas (1.1%) have offset that strength. Food prices continued firm with a 0.6% rise (8.1% y/y). Prices for eggs rose by more-than one-third y/y while beef prices rose 16.9% y/y. Dairy prices also posted a firm 13.2% y/y gain and fresh fruit prices were up 13.2% as well.
Finished consumer goods prices jumped 1.0% (8.9% y/y) with the gain in food & energy. Elsewhere, pricing power also improved with a 0.3% m/m rise (3.2% y/y). Within the components, women's apparel prices rose 1.4% y/y after last year's 0.5% y/y decline but men's apparel costs jumped 8.7% y/y after the 0.3% 2009 uptick. Household furniture prices rose 2.2% y/y, up from 0.3% last year, and appliance prices rose 1.5% after a 0.6% fall in 2010. Passenger car prices rose 0.6% after last year's 1.4% decline and tobacco prices rose a stable and strong 6.3% y/y. Capital goods prices were unchanged last month but were up 1.7% y/y after last year's 0.4% gain.
Intermediate goods prices rose 0.6% as energy prices jumped 1.7% (20.7% y/y) and food prices rose 0.9% (14.4% y/y). Core-intermediate prices rose 0.2% (+7.5% y/y). Crude materials prices jumped 2.8% as energy prices surged 7.7% (20.3% y/y) but food prices slipped 0.9% (+21.6% y/y). Also strong were prices less food & energy which jumped 1.0% and by nearly one-quarter y/y. Raw cotton prices have been notably strong, up 27.6% y/y. Gains in prices for nonferrous metal ores (28.4% y/y), iron & steel scrap (20.7% y/y) and copper scrap (18.6% y/y) also have been elevated.
The PPI data are contained in Haver's USECON database with further detail in PPI and PPIR. The expectation figure is available in the AS1REPNA database.
| Producer Price Index (%) | Sep | Aug | Jul | Sep Y/Y | 2010 | 2009 | 2008 |
|---|---|---|---|---|---|---|---|
| Finished Goods | 0.8 | 0.0 | 0.2 | 7.0 | 4.2 | -2.5 | 6.4 |
| Energy | 2.3 | -1.0 | -0.6 | 18.9 | 13.7 | -17.7 | 14.1 |
| Food | 0.6 | 1.1 | 0.6 | 8.1 | 3.9 | -1.4 | 6.8 |
| Less Food & Energy | 0.2 | 0.1 | 0.4 | 2.5 | 1.2 | 2.5 | 3.4 |
| Intermediate Goods | 0.6 | -0.5 | 0.2 | 10.8 | 6.4 | -8.4 | 10.3 |
| Less Food & Energy | 0.2 | -0.1 | 0.2 | 7.5 | 4.3 | -4.2 | 7.4 |
| Crude Materials | 2.8 | 0.2 | -1.2 | 21.1 | 21.4 | -30.3 | 21.5 |
| Less Food & Energy | 1.0 | 1.6 | 0.7 | 20.8 | 32.6 | -23.4 | 14.7 |
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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