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Economy in Brief

U.S. Producer Prices Hold Steady
by Tom Moeller  June 13, 2017

The headline Final Demand Producer Price Index remained stable during May following a 0.5% April gain. The y/y increase was firm at 2.4%. Expectations also were for no change in the Action Economics Forecast Survey. The PPI excluding food and energy increased 0.3% after a 0.4% rise. A 0.2% monthly gain had been expected. The 2.1% y/y increase was up from little change y/y at the end of 2005.

An updated measure of "core" PPI inflation, final demand prices excluding food, energy, and trade services prices, eased 0.1% (+2.1% y/y) following a 0.7% jump.

Final demand goods prices declined 0.5% (+2.9% y/y) and reversed April's increase. Final demand energy prices declined 3.0% (+7.6% y/y) as gasoline prices dropped 11.2% (+6.4% y/y). Home heating oil prices declined 8.9% (+18.0% y/y), but natural gas prices ticked 0.4% higher (13.0% y/y). Food prices eased 0.2% (+0.9% y/y). Beef & veal prices jumped 12.1% (2.4% y/y) but fruit & melon prices fell 12.3% (+9.3% y/y). Egg prices reversed most of April's increase with an 11.8% decline (-1.0% y/y). Bakery product prices eased 0.1%, steady y/y. Pork prices fell 2.5% (-4.4% y/y) and dairy product prices eased 0.5% (+2.3% y/y).

Nondurable consumer goods prices excluding food & energy improved 0.4% for a second straight month. The y/y increase of 3.7% was down versus a 4.1% y/y rise in June 2015. Women's apparel prices rose 0.8% y/y and men's apparel costs also increased 0.8% y/y. Finished consumer durable goods prices eased 0.1% (+1.0% y/y). Passenger car prices declined 1.4% (-0.1% y/y) and light truck costs dipped 0.2% (+1.6% y/y). Furniture prices dipped 0.1% (+1.5% y/y) while appliance prices increased 0.4% (0.8% y/y). Private capital equipment prices eased 0.1% (+0.7% y/y).

Prices of final demand for services increased 0.3% (2.1% y/y) following 0.4% gain, while trade services prices jumped 1.1% (2.0% y/y). That followed a 0.3% April drop. Trade of finished goods strengthened 1.2% (2.0% y/y) after a 0.5% decline. Prices for transportation of private passengers declined 2.1% (+4.6% y/y) and reversed April's jump. Transportation & warehousing costs held steady (1.5% y/y) following a 0.3% increase.

Final demand construction costs improved 0.1% (1.0% y/y) following a 0.4% increase. Private construction costs gained 0.1% (1.2% y/y) while government sector building prices also improved 0.1% (0.9% y//y).

Prices of processed goods for intermediate demand notched 0.1% higher following a 0.5% increase. The 4.8% y/y gain compared to 5.7% price deflation during 2016.

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, %) May Apr Mar May Y/Y 2016 2015 2014
Final Demand 0.0 0.5 -0.1 2.4 0.5 -1.0 1.8
   Excluding Food & Energy 0.3 0.4 0.0 2.1 1.3 0.8 1.8
   Excluding Food, Energy & Trade Services -0.1 0.7 0.1 2.1 1.2 0.6 1.2
   Goods -0.5 0.5 -0.1 2.9 -1.5 -4.9 1.4
      Foods -0.2 0.9 0.9 0.9 -3.2 -3.1 3.7
      Energy -3.0 0.8 -2.9 7.6 -8.2 -25.6 -3.2
    Goods Excluding Food & Energy 0.1 0.3 0.4 2.2 0.8 0.4 1.6
   Services 0.3 0.4 -0.1 2.1 1.5 1.0 1.9
      Trade Services 1.1 -0.3 -0.1 2.0 1.5 1.4 2.0
   Construction 0.1 0.4 0.2 1.0 1.3 3.2 1.9
Intermediate Demand - Processed Goods 0.1 0.5 0.1 4.8 -5.7 -14.0 1.1
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