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Economy in Brief
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the current situation in the eyes of the ZEW experts strengthened in August in the U.S. and the U.K. but...
U.S. Home Builder Index Extends Downward Trend
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The Empire State Manufacturing Index of General Business Conditions plunged to -31.3 in August...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Gerald D. Cohen February 15, 2018
The headline Final Demand Producer Price Index using new methodology increased 0.4% in January following an unchanged reading in December. The year-on-year (y/y) gain edged up to 2.7%. A 0.3% January rise had been expected in the Action Economics Forecast Survey. The PPI excluding food & energy also increased 0.4% in January, well above the 0.2% expectation. Year-on-year growth decelerated slightly to 2.2% from 2.3% in December. An updated measure of core producer price inflation -- the overall index excluding food, energy and trade services -- showed the same 0.4% gain last month. This took the y/y growth to 2.5%, the strongest reading since the series began in August 2013.
Using the old methodology for the Producer Price Index, prices surged 0.7% (+3.0% y/y) in January following an unchanged reading. Excluding food & energy, the index edged up 0.1% (1.9% y/y).
Final demand goods prices jumped 0.7% (3.3% y/y) following a 0.1% rise. The goods price index excluding food & energy increased 0.2% (2.1% y/y).
Food prices declined 0.2% (+1.8% y/y) in January. Energy prices jumped 3.4% (9.2% y/y), as the price of West Texas Intermediate Crude Oil was up 9.9% in January (21.1% y/y). Thus gasoline prices surged 7.7% (12.9% y/y) and home heating oil prices increased 5.5% (19.6% y/y). Meanwhile natural gas prices fell 2.7% (0.9% y/y) and electric power costs rose 1.3% (3.9% y/y).
Nondurable consumer goods prices less food & energy edged up 0.1% (3.5% y/y) the second consecutive 0.1% gain. Durable consumer goods prices increased 0.2% (1.5% y/y) after an unchanged reading in December. Passenger car prices were unchanged (-0.6% y/y) and light truck prices declined 0.1% (1.5% y/y) following a 1.1% surge. Capital equipment prices increased 0.1% (1.0% y/y) after a flat reading in December. Manufacturing capital equipment rose 0.2% (1.6% y/y) while nonmanufacturing capital equipment showed another unchanged reading (0.8% y/y).
Final demand for services prices increased 0.3% (+2.3% y/y) in January. Prices less trade, transportation & warehousing gained 0.4%, bringing the y/y growth to 2.5%, the strongest reading since the series began in November 2009. Trade services prices rose 0.3% (+1.7% y/y) after two consecutive monthly declines. Private passenger transportation prices declined 1.6% (-3.6% y/y) after a 4.5% drop in December.
Final demand construction prices jumped 0.8% (+3.4% y/y) driven by 0.7% increase in private capital investment constructions (+3.4% y/y) and a 1.0% gain in government (3.6% y/y).
Prices for intermediate demand goods strengthened 0.7% (4.6% y/y). This is the sixth consecutive month of gains of 0.5% or greater.
The PPI data are contained in Haver's USECON database with further detail in PPI and PPIR. The expectations figures are available in the AS1REPNA database.
Producer Price Index (SA, %, New Methodology) | Jan | Dec | Nov | Jan Y/Y | 2017 | 2016 | 2015 |
---|---|---|---|---|---|---|---|
Final Demand | 0.4 | 0.0 | 0.4 | 2.7 | 2.3 | 0.4 | -0.9 |
Excluding Food & Energy | 0.4 | -0.1 | 0.2 | 2.2 | 1.9 | 1.2 | 0.8 |
Excluding Food, Energy & Trade Services | 0.4 | 0.1 | 0.3 | 2.5 | 2.1 | 1.2 | 0.6 |
Goods | 0.7 | 0.1 | 0.9 | 3.3 | 3.3 | -1.4 | -4.3 |
Foods | -0.2 | -0.4 | 0.4 | 1.8 | 1.3 | -2.8 | -2.6 |
Energy | 3.4 | 0.5 | 3.6 | 9.2 | 10.4 | -8.4 | -20.6 |
Goods Excluding Food & Energy | 0.2 | 0.2 | 0.3 | 2.1 | 2.2 | 0.7 | 0.4 |
Services | 0.3 | -0.1 | 0.2 | 2.3 | 1.8 | 1.4 | 0.9 |
Trade Services | 0.3 | -0.4 | -0.3 | 1.7 | 1.5 | 1.3 | 1.3 |
Construction | 0.8 | -0.1 | -0.2 | 3.4 | 2.2 | 1.1 | 1.9 |
Intermediate Demand - Processed Goods | 0.7 | 0.5 | 0.5 | 4.6 | 4.7 | -3.1 | -6.9 |