U.S. PPI Strengthens in November; Core Price Gain Eases
by:Tom Moeller
|in:Economy in Brief
Summary
- Overall index rise driven by food prices.
- Advance in core goods prices is steady.
- Services price increases moderate.
The Producer Price Index for final demand increased 0.4% (3.0% y/y) during November after rising 0.3% in October, revised from 0.2%, and 0.2% in September, according to the Bureau of Labor Statistics (BLS). It was the largest increase since June. The reading compared to a 0.3% rise expected in the Action Economics Forecast Survey. Producer prices excluding food, energy & trade services edged 0.1% higher (3.5% y/y) following an unrevised 0.3% October rise and 0.1% September uptick. The PPI excluding food & energy rose 0.2% (3.4% y/y) after increasing an unrevised 0.3% in October.
Final demand food prices surged 3.1% (5.1% y/y) and accounted for 80% of the rise in last month’s PPI gain, according to the BLS. Egg prices strengthened 55.6% (80.2% y/y) while vegetable costs rose 33.2% (34.3% y/y). Fruit & melon prices surged 21.8% (11.0% y/y) while beef & veal prices rose 2.8% (6.7% y/y). Dairy product prices fell 1.0% (+5.6% y/y).
Energy prices increased 0.2% in November (-6.2% y/y) after a 0.1% October gain. Gasoline costs rose 0.4% (-9.3% y/y) while home heating oil prices jumped 6.1% (-19.5% y/y). Electric power prices rose 0.5% (0.8% y/y) and natural gas costs gained 0.9% (1.9% y/y). These gains were offset by a 2.1% drop (-20.6% y/y) in diesel fuel prices.
Final demand goods prices excluding food & energy rose 0.2% in November (2.2% y/y) for the sixth month in the last seven. Core finished consumer goods prices increased 0.3% (2.3% y/y) after rising 0.1%. The increase in core nondurable goods prices picked up to 0.4% last month (2.9% y/y) from 0.1% in October. Durable consumer goods prices improved 0.2% (1.4% y/y) after holding steady. Capital equipment prices rose 0.2% last month (2.7% y/y) following a 0.1% rise. Government-purchased goods prices edged 0.1% higher (2.1% y/y) after holding steady in October.
Final demand services prices rose 0.2% (3.9% y/y) in November, after increasing 0.3% in October. Trade services prices strengthened 0.8% (3.2% y/y) after rising 0.1%. Trade of finished goods prices increased 0.8% (3.0% y/y) after slipping 0.1% in October. Prices for final demand transportation and warehousing services fell 0.5% last month (+0.1% y/y) after a 0.7% gain. Services prices less these costs rose 0.1% in November (4.6% y/y) after rising 0.4% in October.
Construction costs held steady (+1.6% y/y) during November after falling 0.2% in October.
Prices for intermediate demand of processed goods were unchanged (-0.5% y/y) last month after rising 0.6% in October. Processed energy goods prices fell 1.2% following a 1.6% jump, while food prices rose 0.9% after a 0.1% increase.
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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