Producer Prices Decline 0.1 Percent With Goods Declining and Services Rising

Last month I noted Producer Prices Decline For the First Time Since the Pandemic Due to Energy. 

Today, the BLS PPI Report shows a second straight drop, but again with services rising.

Key Details 

• The Producer Price Index for final demand fell 0.1 percent in August. 
• Final demand prices decreased 0.4 percent in July and advanced 1.0 percent in June. 
• On an unadjusted basis, the index for final demand moved up 8.7 percent for the 12 months ended in August. 
• In August, the decrease in the index for final demand is attributable to a 1.2-percent decline in prices for final demand goods. 
• The index for final demand services advanced 0.4 percent. 
• Prices for final demand less foods, energy, and trade services moved up 0.2 percent in August following a 0.1-percent rise in July. 
• For the 12 months ended in August, the index for final demand less foods, energy, and trade services increased 5.6 percent. 

Final Demand Goods

• The index for final demand goods fell 1.2 percent in August after declining 1.7 percent in July. The August decrease can be traced to a 6.0-percent drop in prices for final demand energy.
• Conversely, the index for final demand goods less foods and energy rose 0.2 percent, while prices for final demand foods were unchanged.
• In August, over three-quarters of the decrease in prices for final demand goods is attributable to the index for gasoline, which fell 12.7 percent. Prices for diesel fuel, jet fuel, chicken eggs, primary basic organic chemicals, and home heating oil also declined.
• In contrast, the index for construction machinery and equipment increased 2.6 percent.
• Prices for beverages and beverage materials and for electric power also rose.

Final Demand Services

• The index for final demand services moved up 0.4 percent in August, the fourth consecutive rise. Sixty percent of the August advance can be traced to a 0.8-percent increase in margins for final demand trade services. (Trade indexes measure changes in margins received by wholesalers and retailers.)
• Prices for final demand services less trade, transportation, and warehousing also moved higher, rising 0.3 percent.
• Conversely, the index for final demand transportation and warehousing services decreased 0.2 percent.
• Forty percent of the increase in prices for final demand services can be attributed to margins for fuels and lubricants retailing, which rose 14.2 percent.
• The indexes for securities brokerage, dealing, investment advice, and related services; loan services (partial); transportation of passengers (partial); portfolio management; and chemicals and allied products wholesaling also moved higher. In contrast, prices for truck transportation of freight decreased 1.9 percent.
• The indexes for guestroom rental and for food and alcohol retailing also fell. 

PPI Final Demand Year-Over-Year Four Ways

PPI Final Demand Year-Over-Year Details 

• Final Demand: Up 8.7 Percent
• Final Demand Goods: Up 12.2 Percent
• Final Demand Services: Up 6.6 Percent
• Final Demand Energy: Up 25.9 Percent

PPI Final Demand, Intermediate Demand, CPI 

Processed Goods for Intermediate Demand

• The index for processed goods for intermediate demand fell 1.7 percent in August after decreasing 2.2 percent in July. 
• About two-thirds of the August decline is attributable to a 5.2-percent drop in prices for processed energy goods. 
• The index for processed materials less foods and energy moved down 0.8 percent. Conversely, prices for processed foods and feeds inched up 0.1 percent. For the 12 months ended in August, the index for processed goods for intermediate demand increased 14.1 percent. 
• Over 40 percent of the August decline in the index for processed goods for intermediate demand can be traced to an 11.4-percent decrease in diesel fuel prices. 
• The indexes for primary basic organic chemicals; gasoline; steel mill products; jet fuel; and natural, processed, and imitation cheese also moved lower. 
• In contrast, prices for prepared animal feeds advanced 1.2 percent. The indexes for natural gas to electric utilities and for paper boxes and containers also rose.

 Unprocessed Goods for Intermediate Demand

• The index for unprocessed goods for intermediate demand moved up 5.7 percent in August, the largest advance since increasing 9.8 percent in February. 
• Leading the August rise, prices for unprocessed energy materials jumped 13.5 percent. 
• The index for unprocessed nonfood materials less energy advanced 1.0 percent. Conversely, prices for unprocessed foodstuffs and feedstuffs declined 1.9 percent. For the 12 months ended in August, the index for unprocessed goods for intermediate demand rose 36.1 percent. 
• Leading the August increase in prices for unprocessed goods for intermediate demand, the natural gas index surged 35.3 percent. Prices for livestock, corn, oilseeds, nonferrous metal ores, and nonferrous scrap also moved higher. In contrast, the index for raw milk fell 8.8 percent. Prices for crude petroleum and for iron and steel scrap also decreased.  

Services for Intermediate Demand

• The index for services for intermediate demand rose 1.0 percent in August, the largest advance since moving up 1.3 percent in March. 
• Leading the August increase, prices for services less trade, transportation, and warehousing for intermediate demand climbed 1.3 percent. 
• Margins for trade services for intermediate demand moved up 0.6 percent.
• Conversely, the index for transportation and warehousing services for intermediate demand declined 0.1 percent.
• For the 12 months ended in August, prices for services for intermediate demand advanced 6.3 percent. 
• Thirty percent of the August increase in the index for services for intermediate demand is attributable to a 5.5-percent rise in prices for nonresidential real estate rents. 
• The indexes for securities brokerage, dealing, investment advice, and related services; loan services (partial); fuels and lubricants retailing; machinery and equipment parts and supplies wholesaling; and arrangement of freight and cargo transportation also moved higher. In contrast, prices for warehousing, storage, and related services fell 5.3 percent. The indexes for television advertising time sales and for metals, minerals, and ores wholesaling also decreased.  

Stocks Hammered as CPI Rises a Mere 0.1 Percent More Than Expected

For discussion of the CPI and the stock market carnage that followed, please see Stocks Hammered as CPI Rises a Mere 0.1 Percent More Than Expected.

This post originated on MishTalk.Com.

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