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Economy in Brief

U.S. Producer Prices Strengthen
by Tom Moeller  October 12, 2017

The headline Final Demand Producer Price Index using new methodology increased 0.4% during September (2.6% y/y) after a 0.2% August gain. It was the strongest increase since April. A 0.4% rise had been expected in the Action Economics Forecast Survey. The PPI excluding food & energy also improved 0.4% last month (2.2% y/y) following a 0.1% rise. A 0.2% gain had been expected.

Using the old methodology for the Producer Price Index, prices increased 0.8% (3.3% y/y) following a 0.5% gain. Excluding food & energy, the index rose 0.2% (1.7% y/y) after a 0.1% uptick.

An updated measure of core producer price inflation is the overall index excluding food, energy and trade services. It gained 0.2% (2.1% y/y) for a second straight month.

Final demand goods prices strengthened 0.7% (3.3% y/y) after a 0.5% increase. It was the strongest rise since January. The price index excluding food & energy increased 0.3% (2.2% y/y) following a 0.2% rise.

A 3.4% jump in energy prices (10.6% y/y) followed a similar rise in August. Gasoline prices surged 10.9% (24.1% y/y) after a 9.5% rise. Home heating oil prices declined 4.1% (+10.9% y/y) following a 14.1% jump. Natural gas prices eased 0.3% (+3.8% y/y), down for the fourth straight month. Electric power costs fell 0.2% (+2.0% y/y), off for the third consecutive month. Food prices held steady (1.2% y/y) after a 1.3% fall. Beef & veal prices improved 2.2% (-2.8% y/y) after two months of sharp decline. Egg prices strengthened 20.6% (51.1% y/y). Dairy product prices weakened 1.8% (+1.2% y/y) while fresh fruit & melon costs recovered 4.8% (12.8% y/y).

Nondurable consumer goods prices less food & energy ticked 0.1% higher (3.0% y/y) following stability in August. Durable consumer goods prices jumped 0.4% (1.3% y/y) after a 0.3% rise. Household furniture costs eased 0.1% (+1.6% y/y) following two months of firm increase. Passenger car prices rose 0.2% (-0.7% y/y) after declines in three of the prior four months. Light truck prices strengthened 0.8% (2.4% y/y) after a 0.5% rise. Capital equipment prices ticked 0.1% higher (1.0% y/y) for a second straight month.

Final demand for services prices strengthened 0.4% (2.1% y/y), the strongest gain since April. Trade services prices surged 0.8% (2.2% y/y) after one month of stability. Private passenger transportation prices jumped 1.5% (2.9% y/y) after two months of decline.

Final demand construction prices ticked 0.1% higher (3.4% y/y) as prices for private capital investment also gained 0.1% (3.4% y/y). Prices for public investment held steady last month (3.3% y/y).

Prices for intermediate demand for goods strengthened 0.5% (4.3% y/y) following a 0.4% rise.

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.

The minutes to the latest FOMC meeting can be found here.

Producer Price Index (SA, %, New Methodology) Sep Aug Jul Sep Y/Y 2016 2015 2014
Final Demand 0.4 0.2 -0.1 2.6 0.5 -1.0 1.8
   Excluding Food & Energy 0.4 0.1 -0.1 2.2 1.3 0.8 1.8
   Excluding Food, Energy & Trade Services 0.2 0.2 0.0 2.1 1.2 0.6 1.2
   Goods 0.7 0.5 -0.1 3.3 -1.5 -4.9 1.4
      Foods 0.0 -1.3 0.0 1.2 -3.2 -3.1 3.7
      Energy 3.4 3.3 -0.3 10.6 -8.2 -25.6 -3.2
    Goods Excluding Food & Energy 0.3 0.2 -0.1 2.2 0.8 0.4 1.6
   Services 0.4 0.1 -0.2 2.1 1.5 1.0 1.9
      Trade Services 0.8 0.0 -0.5 2.2 1.5 1.4 2.0
   Construction 0.1 0.3 1.2 3.4 1.3 3.2 1.9
Intermediate Demand - Processed Goods 0.5 0.4 -0.1 4.3 -5.7 -14.0 1.1
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