Global| Apr 09 2020U.S. Producer Prices Weaken as Energy Prices Decline
by:Tom Moeller
|in:Economy in Brief
Summary
Weakness in industrial sector activity is translating into reduced pricing power. The Producer Price Index for final demand eased 0.2% (+0.7% y/y) during March following a 0.6% February fall. A 0.3% decline had been expected in the [...]
Weakness in industrial sector activity is translating into reduced pricing power. The Producer Price Index for final demand eased 0.2% (+0.7% y/y) during March following a 0.6% February fall. A 0.3% decline had been expected in the Action Economics Forecast Survey. Producer prices excluding food & energy improved 0.2% (1.4% y/y) following a 0.3% decline. An unchanged reading had been expected. The PPI excluding food, beverages and trade services, another measure of underlying price inflation, weakened 0.2% (+1.0% y/y) after slipping 0.1% in February.
Energy prices declined 6.7% (-10.3% y/y) after a 3.6% drop. Gasoline prices fell 16.8% (-18.9% y/y) while natural gas prices held steady (-1.3% y/y) for the second straight month. Home heating oil prices fell 0.7% (-17.6% y/y).
Food prices held steady (0.8% y/y) after falling 1.6% as the cost of beef & veal prices (-9.8% y/y) declined sharply for the fourth straight month. Dairy product prices also fell 0.9% m/m but were 2.9% higher y/y.
Final demand goods prices less food & energy improved 0.2% in March (0.5% y/y) after a 0.1% dip. The cost of finished consumer goods less food & energy rose 0.3% (1.2% y/y) after holding steady for two months. Core nondurable goods prices edged 0.2% higher (1.5% y/y) for a second month and durable product prices gained 0.4% (0.5% y/y). Private capital equipment prices increased 0.3% (1.3% y/y) following no change in February.
Services prices for final demand improved 0.2% (1.5% y/y) after falling 0.3% in February. Trade services prices strengthened 1.4% (2.4% y/y), as the cost of trade of finished goods surged 1.6%. Transportation & warehousing prices fell 3.3% (-2.4% y/y), down for the third straight month. Excluding these costs, prices held steady (1.5% y/y).
The cost of construction rose 0.1% (3.7% y/y) for the second straight month.
Intermediate product prices weakened 1.1% (-3.7% y/y) after declining 0.9%.
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, %) | Mar | Feb | Jan | Mar Y/Y | 2019 | 2018 | 2017 |
|---|---|---|---|---|---|---|---|
| Final Demand | -0.2 | -0.6 | 0.5 | 0.7 | 1.7 | 2.9 | 2.3 |
| Excluding Food & Energy | 0.2 | -0.3 | 0.5 | 1.4 | 2.1 | 2.6 | 1.9 |
| Excluding Food, Energy & Trade Services | -0.2 | -0.1 | 0.4 | 1.0 | 2.0 | 2.9 | 2.1 |
| Goods | -1.0 | -0.9 | 0.1 | -1.2 | 0.4 | 3.4 | 3.4 |
| Foods | 0.0 | -1.6 | 0.2 | 0.8 | 1.8 | 0.2 | 1.2 |
| Energy | -6.7 | -3.6 | -0.7 | -10.3 | -4.4 | 10.1 | 10.6 |
| Goods Excluding Food & Energy | 0.2 | -0.1 | 0.3 | 0.5 | 1.4 | 2.5 | 2.2 |
| Services | 0.2 | -0.3 | 0.7 | 1.5 | 2.2 | 2.6 | 1.8 |
| Trade Services | 1.4 | -0.7 | 1.2 | 2.4 | 2.5 | 1.8 | 1.5 |
| Construction | 0.1 | 0.1 | 0.8 | 3.7 | 4.9 | 4.1 | 2.2 |
| Intermediate Demand - Processed Goods | -1.1 | -0.9 | -0.3 | -3.7 | -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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