Haver Analytics
Haver Analytics
| Mar 15 2023

U.S. Producer Prices Unexpectedly Declined in February

  • The headline index fell 0.1% m/m in February with a meaningful downward revision to January.
  • Core index increased 0.2% m/m.
  • Annual headline rate fell further to slowest pace since March 2021. Annual core rate unchanged.

The Producer Price Index for Final Demand unexpectedly fell 0.1% m/m in February, the second monthly decline in the past three months, following a downwardly revised 0.3% m/m gain in January (previously +0.7% m/m). The Action Economics Forecast Survey had expected a 0.3% m/m increase. The y/y rate of advance continued to moderate, slowing to 4.6% y/y in February from a downwardly revised 5.7% y/y in January (previously 6.0% y/y) and a recent peak of 11.7% last March.

The PPI less food, energy and trade services increased a less-than-expected 0.2% m/m following a downwardly revised 0.5% m/m gain in January (previously 0.6% m/m). A 0.4% m/m increase had been expected. The y/y rate was unchanged at 4.4% in February with the January reading revised down to 4.4% from 4.5% previously. The PPI excluding food and energy prices was unchanged in February following a downwardly revised 0.1% monthly gain in January (previously 0.5% m/m) with the y/y rate slowing to 4.4% from 5.0%.

The PPI for final demand goods fell 0.2% m/m (+5.4% y/y) in February following a 1.2% advance in January. A 2.2% m/m decline in prices for final demand foods was a major factor in the February decrease. This was the third consecutive monthly decline in prices of final demand foods. Over 80% of the February decline in the index for final demand goods can be attributed to a 36.1% drop in prices for chicken eggs. The index for final demand energy edged down 0.2% m/m in February following a 5.2% monthly jump in January. By contrast, prices for final demand goods less foods and energy rose 0.3% m/m (+5.2% y/y) versus 0.6% m/m in January.

The PPI for final demand services inched down 0.1% (+3.8% y/y) in February, the same fall as in January. Leading the February decline, margins for final demand trade services fell 0.8% m/m on top of a 1.1% monthly decline in January. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand transportation and warehousing services decreased 1.1%m/m, their third monthly decline in the past four months. By contrast, the index for final demand services less trade, transportation, and warehousing advanced 0.3% m/m (3.3% y/y) in February following a 0.6% m/m increase in January.

Construction product prices inched up 0.1% m/m (16.2% y/y) in February following a 1.8% monthly jump in January. Construction product prices for private capital investment and for government construction each edged up 0.1% m/m.

Intermediate goods prices fell 0.4% m/m (+2.1% y/y) in February following a 1.1% monthly jump in January. This was the seventh monthly decline in the past eight months. Processed food prices fell 1.9% m/m, significantly more than offsetting their 0.2% m/m increase in January. Over three-quarters of the February decrease in processed intermediate goods prices can be traced to the index for processed energy goods, which fell 1.6% m/m after a 5.3% monthly jump in January. Prices of processed materials excluding foods and energy edged up 0.1% m/m, the same as in January.

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.

  • Sandy Batten has more than 30 years of experience analyzing industrial economies and financial markets and a wide range of experience across the financial services sector, government, and academia.   Before joining Haver Analytics, Sandy was a Vice President and Senior Economist at Citibank; Senior Credit Market Analyst at CDC Investment Management, Managing Director at Bear Stearns, and Executive Director at JPMorgan.   In 2008, Sandy was named the most accurate US forecaster by the National Association for Business Economics. He is a member of the New York Forecasters Club, NABE, and the American Economic Association.   Prior to his time in the financial services sector, Sandy was a Research Officer at the Federal Reserve Bank of St. Louis, Senior Staff Economist on the President’s Council of Economic Advisors, Deputy Assistant Secretary for Economic Policy at the US Treasury, and Economist at the International Monetary Fund. Sandy has taught economics at St. Louis University, Denison University, and Muskingun College. He has published numerous peer-reviewed articles in a wide range of academic publications. He has a B.A. in economics from the University of Richmond and a M.A. and Ph.D. in economics from The Ohio State University.  

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