Deflationary Trends Resume

The BLS Producer Price Report shows deflationary trends resume in June.

Final Demand 

  • Services: The index for final demand services moved down 0.3 percent in June, the largest decrease since falling 0.3 percent in February. The June decline can be attributed to margins for final demand trade services, which dropped 1.8 percent.
  • Goods: The index for final demand goods rose 0.2 percent in June after increasing 1.6 percent in May. Leading the June advance, prices for final demand energy jumped 7.7 percent. 
  • Food:Final demand foods dropped 5.2 percent
  • Less Food and Energy: The index for final demand goods less foods and energy inched up 0.1 percent. 

Economists Miss the Mark

PPI vs Econoday Consensus for June 2020

Real Economy vs the Stock Market

Not only did economists miss the mark badly, results were outside the range of any estimate on three of four categories.

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Prices did not rebound as expected.

Demand destruction tops prices except of course for the stock market. That's where the inflation is found. 

Understanding Demand Destruction

  1. There is No Recovery in the Aerospace Industry
  2. Fewer People Pay Their Rent on Time in July
  3. United Warns It May Cut 36,000 Employees
  4. New York City Commercial Property Sales Plunge to 2009 Lows

There will be no recovery without a recovery in jobs. The recent data is grim.

Total Unemployment Claims on the Rise

All Continued Claims in 2020 July 9

For details, please see State Claims Decline But All Unemployment Claims Are on the Rise

Mish

Producer Price Inflation is Unexpectedly Negative, Huge Intermediate Declines

The Producer Price Indexes for goods and services both unexpectedly declined in September.

Producer Price Inflation Weak and Below Expectations

The Producer Price Index missed expectations across the board: Even services have been weak.

Producer Price Inflation Flat, Well Under Consensus, Bond Yields Tumble

Economists expected the Producer Price Index would jump in July. Instead, the PPI was flat and bond yields tumbled.

Producer Prices Unexpectedly Decline

The Producer Price Index (PPI) for final goods unexpectedly declined in July. The PPI fell 0.1% as did the core PPI which excludes food and energy. THe Econoday consensus expected a 0.1% gain.

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.

Producer Price Inflation Lower Than Expected

The PPI and core PPI each rose 0.1% month-over-month. Economists expected a 0.2% rise in both.

Producer Prices Inch Up 0.1% in April

In April, the price index for final demand services advanced 0.1 percent. Prices for final demand goods were unchanged.