U.S. Producer Prices Unexpectedly Fell in April
by:Sandy Batten
|in:Economy in Brief
Summary
- The headline index fell 0.5% m/m, the largest monthly decline since April 2020.
- The core index edged down 0.1% m/m.
- Final demand goods prices were unchanged while services prices fell 0.7% m/m.
The Producer Price Index for final demand unexpectedly fell 0.5% m/m (+2.4% y/y) in April following an upwardly revised unchanged reading in March (previously -0.4% m/m) according to the Bureau of Labor Statistics (BLS). The Action Economic Forecast Survey had expected a 0.1% m/m increase in April. Producer prices excluding food, energy & trade services edged down 0.1% m/m (+2.9% y/y) after rising 0.2% in March, revised up from +0.1% previously. This was the first monthly decline in this index since April 2020. The PPI excluding food and energy (the previous core index) fell 0.4% m/m (+3.1% y/y) in April, offsetting a 0.4% monthly gain in March. A 0.3% increase had been expected.
The April decline in the index for final demand is attributable to prices for final demand services, which decreased 0.7% m/m. The index for final demand goods was unchanged.
The 0.7% m/m decline in prices for final demand services was the largest decline since the index began in December 2009. Over two-thirds of the broad-based decrease can be traced to margins for final demand trade services, which dropped 1.6% m/m. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand services less trade, transportation, and warehousing and for final demand transportation and warehousing services fell 0.3% and 0.4%, respectively.
Over 40% of the April decline in the index for final demand services is attributable to margins for machinery and vehicle wholesaling, which dropped 6.1% m/m. The indexes for portfolio management, food and alcohol wholesaling, system software publishing, traveler accommodation services, and airline passenger services also fell. Conversely, prices for outpatient care increased 0.3%. The indexes for furniture retailing and for inpatient care also increased.
Prices for final demand goods were unchanged in April following a 0.9% monthly decline in March. In April, the index for final demand goods less foods and energy increased 0.4%. In contrast, prices for final demand foods and for final demand energy declined 1.0% and 0.4%, respectively. The index for general purpose machinery and equipment advanced 1.1%. Prices for residential electric power, fresh and dry vegetables, non-electronic cigarettes, and utility natural gas also rose. Conversely, the index for chicken eggs dropped 39.4%. Prices for gasoline, gas fuels, diesel fuel, and primary basic organic chemicals also fell.
Construction costs fell 0.4% m/m (+1.8% y/y) in April, more than reversing a 0.3% monthly gain in March.
Prices for intermediate demand of processed goods edged up 0.2% m/m (0.5% y/y) in April after having fallen 0.1% m/m in March. Processed energy goods prices declined 0.2% m/m, their third consecutive monthly fall, and processed foods prices slipped 1.0% m/m on top of a 0.5% monthly decline in March.
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
AuthorMore in Author Profile »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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