Producer Prices: Up 0.2% Month-Over-Month, Down 0.2% Year-Over-Year

The BLS reports another mostly benign producer price report. Trucking is one exception.

The Producer Price Index for final demand increased 0.2 percent in September, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today.

  • Final demand prices declined 0.1 percent in August and were unchanged in July. On an unadjusted basis, the final demand index advanced 2.6 percent for the 12 months ended in September.
  • In September, the rise in the final demand index can be traced to a 0.3-percent increase in prices for final demand services. In contrast, the index for final demand goods decreased 0.1 percent. The index for final demand less foods, energy, and trade services moved up 0.4 percent in September, the largest rise since a 0.5-percent increase in January.
  • For the 12 months ended in September, prices for final demand less foods, energy, and trade services advanced 2.9 percent.

Final Demand Goods

  • The index for final demand goods edged down 0.1 percent in September, the first decrease since a 0.5-percent drop in May 2017. Leading the September decline, prices for final demand energy fell 0.8 percent. The index for final demand foods decreased 0.6 percent. In contrast, prices for final demand goods less foods and energy rose 0.2 percent.
  • Product detail: Leading the September decline in the index for final demand goods, gasoline prices fell 3.5 percent. The indexes for electric power; iron and steel scrap; canned, cooked, smoked, or prepared poultry; and fresh and dry vegetables also moved down. Conversely, the index for light motor trucks rose 0.8 percent. Prices for liquefied petroleum gas, pharmaceutical preparations, and unprocessed and prepared seafood also increased.

Final Demand Services

  • The index for final demand services increased 0.3 percent in September following two consecutive declines of 0.1 percent. The broad-based advance was led by a 1.8-percent jump in the index for final demand transportation and warehousing services. Prices for final demand services less trade, transportation, and warehousing rose 0.3 percent, and the index for final demand trade services inched up 0.1 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.)
  • Product detail: In September, over one-third of the advance in prices for final demand services can be traced to the index for airline passenger services, which rose 5.5 percent. The indexes for food and alcohol wholesaling; deposit services (partial); outpatient care (partial); apparel wholesaling; and lawn, garden, farm equipment, and supplies retailing also moved higher. Conversely, margins for apparel, jewelry, footwear, and accessories retailing fell 2.5 percent. The indexes for automotive fuels and lubricants retailing and for traveler accommodation services also declined.

Econoday cites a shortage of truck drivers.

"A big jump in transport services headlines what is otherwise, however, another benign producer price report. The PPI-FD rose an as-expected 0.2 percent in September with the year-on-year rate slipping 2 tenths to 2.6 percent. But transport prices surged 1.8 percent in the month with this yearly rate showing very clear pressure at 5.9 percent. Lack of capacity in the shipping sector, including lack of trucks and especially lack of truck drivers, has been a serious constraint in 2018."

Mike "Mish" Shedlock

Comments
No. 1-1
CautiousObserver
CautiousObserver

TSLA briefly below $250 at 10AM this morning. Good call by Mish.

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