U.S. Producer Prices Firm in November
by:Tom Moeller
|in:Economy in Brief
Summary
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Core goods increase after holding steady for two months.
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Service price gain is strongest in three months.
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Food price gain offsets energy price decline.
The Producer Price Index for Final Demand increased 0.3% during November, the same as in the prior two months. The October gain was revised from 0.2%. During the last 12 months, the PPI increase moderated to 7.4% from an 11.7% March peak. A 0.3% November rise had been expected in the Action Economics Forecast Survey.
The Producer Price Index less food, energy & trade services also increased 0.3% after rising an unrevised 0.2% in October. Core prices rose 4.9% y/y, down from a 7.1% y/y March peak. The y/y gain was the strongest since September 1981. The PPI excluding just food & energy rose 0.5% last month. A 0.2% increase had been expected.
Food prices rose 3.3% last month (15.5% y/y) after they moved up 0.8% in October. Fresh & dried vegetable prices surged 38.1% (80.6% y/y) while egg prices strengthened 26.0% (244.1% y/y). Beef & veal prices rose 3.6% (-15.6% y/y) while fresh fruit & melon prices increased 3.2% (15.8% y/y). Dairy product prices eased 0.7% (+16.1% y/y).
The November PPI included a 3.3% decline (+16.2% y/y) in energy prices which followed a 2.3% October rise. Gasoline prices fell 6.0% (+6.8% y/y). Home heating oil prices fell 13.1% (+45.5% y/y). Natural gas costs declined 3.5% (14.5% y/y) and electric power costs slipped 0.6% (+12.4% y/y).
The PPI for goods less food & energy rose 0.3% (6.2% y/y) in November after holding steady in each of the prior two months. Finished consumer goods prices less food & energy increased 0.6% (7.7% y/y) after a 0.2% gain. Durable consumer goods prices rose 0.3% (6.6% y/y) while core nondurable consumer goods prices strengthened 0.8% (8.3% y/y). Prices for private capital equipment rose 0.4% in November (8.5% y/y) after a 0.3% gain. Core government goods prices rose 0.2% (7.3% y/y) after holding steady two months.
Services prices moved up 0.4% (5.9% y/y) in November after rising 0.1% in October. Trade services prices rebounded 0.7% (10.8% y/y) after falling in each of the prior two months. Transportation & warehousing services costs fell 0.9% (+12.7% y/y) but passenger transportation prices declined 5.6% (+18.0% y/y). Services prices less trade, transportation & warehousing increased 0.4% (2.7% y/y) after rising 0.2% in October.
Construction product prices edged up 0.1% in November (19.0% y/y) after rising 2.8% in October. Construction product prices for private capital investment rose 0.2% (20.4% y/y) and government construction costs gained 0.1% (16.3% y/y).
Intermediate goods prices fell 0.9% (+7.7% y/y) in November after falling in each of the prior four months. Processed energy goods prices at the intermediate level fell 3.7% after a 1.8% October gain.
The PPI data are published by the Bureau of Labor Statistics and can be found in Haver's USECON database. Further detail is contained in PPI and PPIR. The expectations figures are available in the AS1REPNA database.
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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