U.S. Producer Price Gain Held Back by Lower Energy Prices; Core Index Is Unchanged
by:Tom Moeller
|in:Economy in Brief
Summary
- Services prices surge.
- Goods prices less food & energy are unchanged.
- Energy prices fall again; food prices weaken.
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The Producer Price Index for final demand increased 0.2% (2.6% y/y) during June after holding steady in May, revised from a 0.2% decline, according to the Bureau of Labor Statistics. A 0.1% gain had been expected in the Action Economics Forecast Survey. Producer prices excluding food, energy & trade services remained steady (+3.1% y/y) in June after rising 0.2% in May, revised from no change. The PPI excluding food & energy jumped 0.4% (3.0% y/y) after rising 0.3% in May, revised from no change. A 0.2% rise had been expected.
Services prices for final demand increased 0.6% (3.5% y/y) in June, following a 0.3% increase in May. Trade services prices strengthened 1.9% (2.7% y/y) after a 0.7% gain. Trade of finished goods prices increased 2.0% (2.2% y/y) following a 1.0% increase. Prices for final demand transportation and warehousing services fell 0.4% (+0.2% y/y) after a 0.8% decline. Services prices less these costs edged up 0.1% (4.2% y/y) following a 0.2% increase.
Final demand goods prices excluding food & energy held steady last month (+1.8% y/y) after rising 0.2% in May. Finished consumer goods prices also were unchanged in June (+1.9% y/y) after rising 0.3% in May. Core nondurable goods prices held steady in June (+2.5% y/y) after moving up 0.5% in May. Durable consumer goods prices were unchanged (+1.0% y/y) for a second straight month. Capital equipment prices edged 0.1% higher (2.6% y/y) for the third straight month, while government-purchased goods prices held steady (2.2% y/y) following a 0.1% easing.
Final demand energy prices declined 2.6% last month (+1.8% y/y) after a 2.0% increase. Gasoline prices fell 5.8% (-7.8% y/y) after falling 7.3% in May. Home heating oil prices declined 3.5% (+5.8% y/y) following a 6.1% decline. Electric power prices weakened 1.1% (+2.6% y/y) following no change. Natural gas prices increased 1.7% (0.9% y/y) after rising 0.4% in May. Food prices eased 0.3% (+1.1% y/y) after holding steady in May. The decline reflected a 6.3% weakening (-15.0% y/y) in fruit & melon prices as well as a 4.4% drop (-10.2% y/y) in fresh vegetable costs. Grain prices fell 1.7% (-29.0% y/y) and processed fruit & vegetable costs weakened 1.0% (+2.7% y/y). Offsetting these declines, beef & veal prices rose 2.0% (1.4% y/y) and fresh egg prices strengthened 55.9% (98.6% y/y).
Construction costs rose 0.4% in June (-0.6% y/y) after holding steady in May.
Prices for intermediate demand processed goods declined 0.2% (-0.5% y/y) in June after falling 1.4% in May. Processed energy goods prices fell 1.1%, while food prices rose 0.2%. The index for intermediate demand unprocessed goods increased 1.4% (2.7% y/y).
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.
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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.