U.S. PPI Firms in July; Core Prices Rise Modestly
by:Tom Moeller
|in:Economy in Brief
Summary
- Annual gain edges higher but remains near three-year low.
- Core goods prices hold steady; services prices strengthen.
- Energy prices hold steady but food prices strengthen.
The Producer Price Index for final demand rose 0.3% (0.8% y/y) during July after remaining unchanged in June, revised from 0.1%. The May decline of 0.3% was unrevised. A 0.2% July increase had been expected in the Action Economics Forecast Survey. The PPI excluding food & energy increased 0.3% (2.4% y/y) after easing 0.1% in June. A 0.2% increase had been expected. The PPI excluding food, energy & trade services increased 0.2% (2.7% y/y) following a 0.1% uptick.
Energy prices were unchanged last month (-16.8% y/y) after rising 0.7% in June. Gasoline prices fell 1.1% (-24.5% y/y) after rising 3.2% and the cost of home heating oil rose 13.3% (-32.8% y/y) after a 1.3% June increase. Natural gas prices rose 1.8% (-10.0% y/y) following five straight months of decline, and electric power prices slipped 0.5% (+6.3% y/y) after rising 0.9% in June.
Food prices rose 0.5% last month (-0.2% y/y) following three straight months of decline. Beef & veal prices jumped 4.8% (19.2% y/y) following two months of strong increase while egg prices edged 0.3% higher (-56.7% y/y) after strengthening 33.8% in June. Dairy product prices weakened 1.5% (-12.7% y/y) after a 2.1% decline but processed fruit & vegetable prices rose 0.1% in July (12.5% y/y) after rising 0.9% last month.
Goods prices for final demand less food & energy were unchanged in July (+1.9% y/y) following a 0.2% decline in June. Core consumer goods prices rose 0.2% (3.7% y/y) after holding steady in June. The cost of core nondurable consumer goods rose 0.3% (4.7% y/y) after a 0.1% gain while durable consumer goods prices rose 0.2% in July (2.3% y/y) after holding steady. Private capital equipment prices rose 0.3% (4.3% y/y) following a 0.1% June gain. The cost of government-purchased goods less food & energy edged 0.1% higher in July (+0.6% y/y) after slipping 0.1% for two consecutive months.
Services prices rose 0.5% (2.5%) in July after easing 0.1% in June. Trade services prices jumped 0.7% (1.2% y/y) following a 0.8% decline. The final demand price of transportation & warehousing of finished services increased 0.5% (-6.0% y/y) after holding steady in June. Services prices less these costs gained 0.3% (+4.2% y/y) after a like increase in June.
Construction costs fell 1.3% (+3.8% y/y) last month after remaining unchanged in June. Intermediate goods prices fell 0.6% in July (-7.8% y/y), off for the sixth month this year.
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.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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