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Economy in Brief

U.S. Producer Prices Increase Broadly
by Tom Moeller  May 13, 2016

The headline Final Demand Producer Price Index increased 0.2% (0.0% y/y) in April after an unrevised 0.1% March dip. The rise compared to a 0.3% increase expected in the Action Economics Forecast Survey. A 0.3% decline (-2.0% y/y) in food prices offset a 0.2% increase (-12.0% y/y) in energy prices. Excluding food & energy, the PPI improved an expected 0.1% (0.9% y/y).

The decline in food prices reflected a 29.5% drop in egg prices (-36.8% y/y) as well as a 1.1% fall in dairy product prices (-1.9% y/y). These declines were offset by a 1.7% rise (-15.2% y/y) in beef & veal costs. Pasta product prices gained 0.1% (-5.2% y/y). On the energy price front, the jump in prices was driven by a 5.5% increase (-21.3% y/y) in gasoline prices as well as a 0.6% rise (0.0% y/y) in electric power costs. Home heating oil prices declined 30.5% (-42.9% y/y). Natural gas prices fell 0.9% (-6.3% y/y), but electric power costs improved 0.6% (0.0% y/y).

Core producer goods prices for final demand increased 0.3%, following four consecutive 0.1% gains. It reflected the emerging improvement in factory sector activity. Durable consumer goods prices gained 0.1% (0.5% y/y) and core nondurable goods costs increased 0.6% (4.0% y/y), the strongest rise in three months. Capital equipment prices edged 0.1% higher (0.5% y/y) following three months of remaining unchanged.

The 0.1% service price increase (1.0% y/y) followed a 0.2% decline. It reflected a 0.8% drop (+3.0% y/y) in capital equipment trade. Personal consumption trade prices improved 0.2% (0.6% y/y) while government goods trade prices remained unchanged (0.3% y/y). Passenger transportation prices decreased 1.7% (-4.3% y/y) following a 0.7% increase. Prices for transportation & warehousing of goods rose 0.2% (-1.6% y/y) following four consecutive months of decline. Service prices excluding each of these categories improved 0.3% (1.5% y/y) after a 0.1% dip.

Construction costs for final demand jumped 0.8% (1.9% y/y) after a 0.1% uptick.

Prices for intermediate processed goods increased 0.3% (-4.6% y/y), the strongest rise in six months.

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, %) Apr Mar Feb Apr Y/Y 2015 2014 2013
Final Demand 0.2 -0.1 -0.2 0.0 -0.9 1.6 1.4
   Excluding Food & Energy 0.1 -0.1 0.0 0.9 0.8 1.7 1.5
   Excluding Food, Energy & Trade Services 0.3 0.0 0.1 0.9 0.6 1.2 --
   Goods 0.2 0.2 -0.6 -1.9 -4.3 1.3 0.8
      Foods -0.3 -0.9 -0.3 -2.0 -2.6 3.2 1.7
      Energy 0.2 1.8 -3.4 -12.0 -20.6 -0.9 -0.8
      Goods Excluding Food & Energy 0.3 0.1 0.1 0.6 0.4 1.5 1.1
   Services 0.1 -0.2 0.0 1.0 0.9 1.8 1.6
   Construction 0.8 0.1 -0.1 1.9 1.9 2.9 1.8
Intermediate Demand - Processed Goods 0.3 -0.2 -0.7 -4.6 -6.9 0.6 0.0
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