Producer prices for final demand have largely stabilized with services stronger than goods. Falling energy prices account for much of it.
Final Demand Services
- The index for final demand services increased 0.2 percent in June, the same as in May.
- The index for final demand transportation and warehousing services decreased 0.9 percent.
- The indexes for food and alcohol retailing, traveler accommodation services, insurance, hospital inpatient care, and airline passenger services also moved higher.
- Prices for truck transportation of freight declined 2.1 percent. The indexes for food and alcohol wholesaling and for residential real estate loans (partial) also fell.
Final Demand Goods
- Prices for final demand goods were unchanged in June after decreasing 1.6 percent in May.
- In June, a 0.7-percent rise in the index for final demand energy offset falling prices for final demand goods less foods and energy and for final demand foods, which declined 0.2 percent and 0.1 percent, respectively.
- Prices for gasoline rose 3.4 percent. The indexes for electric power; beef and veal; chicken eggs; and medical, surgical, and personal aid devices also moved higher.
- Prices for iron and steel scrap dropped 10.8 percent. The indexes for diesel fuel, oilseeds, industrial chemicals, and residual fuels also decreased.
Intermediate Demand
Processed Goods for Intermediate Demand
- Prices for processed goods for intermediate demand moved down 0.6 percent in June, the fifth consecutive decline.
- Over half of the broad-based decrease in June can be traced to the index for processed materials less foods and energy, which fell 0.4 percent.
- Prices for processed energy goods and for processed foods and feeds also moved lower, declining 0.9 percent and 1.0 percent, respectively.
- For the 12 months ended in June, the index for processed goods for intermediate demand fell 9.4 percent, the largest 12-month decrease since dropping 12.0 percent in September 2009.
- A major factor in the decline in prices for processed goods for intermediate demand was the index for industrial chemicals, which fell 3.5 percent.
- Prices for diesel fuel, plastic resins and materials, fats and oils, utility natural gas, and residual fuels also decreased.
- The index for gasoline rose 3.4 percent. Prices for beef and veal and for cold rolled steel sheet and strip also advanced.
Unprocessed Goods for Intermediate Demand
- The index for unprocessed goods for intermediate demand moved down 2.1 percent in June after dropping 5.0 percent in May.
- Leading the June decline, prices for unprocessed energy materials decreased 5.0 percent. The index for unprocessed nonfood materials less energy moved down 2.4 percent.
- Prices for unprocessed foodstuffs and feedstuffs increased 0.9 percent.
- For the 12 months ended in June, the index for unprocessed goods for intermediate demand declined 32.2 percent, the largest 12-month decrease since dropping 35.0 percent in August 2009.
- Nearly three-quarters of the June decline in the index for unprocessed goods for intermediate demand is attributable to prices for crude petroleum, which fell 5.9 percent.
- The indexes for iron and steel scrap, raw milk, natural gas, oilseeds, and nonferrous metal ores also moved lower.
- Prices for slaughter steers and heifers advanced 8.3 percent. The indexes for coal and for construction sand, gravel, and crushed stone also rose.
Services for Intermediate Demand
- The index for services for intermediate demand was unchanged in June after rising 0.3 percent in May.
- Services less trade, transportation, and warehousing for intermediate demand inched up 0.1 percent. Offsetting this increase, the index for transportation and warehousing services for intermediate demand declined 0.4 percent, and margins for trade services for intermediate demand edged down 0.1 percent.
- For the 12 months ended in June, prices for services for intermediate demand advanced 4.4 percent.
- Within services for intermediate demand in June, prices for deposit services (partial) advanced 5.4 percent. The indexes for gross rents for retail properties, insurance, chemicals and allied products wholesaling, and arrangement of freight and cargo transportation also moved higher.
- Prices for truck transportation of freight fell 2.1 percent. The indexes for business loans (partial), food and alcohol wholesaling, gross rents for office buildings, and staffing services also decreased.
PPI Final Demand Year-Over-Year Four Ways
Year-Over-Year PPI
- Final Demand: +0.1 Percent
- Final Demand Services: +2.3 Percent
- Final Demand Goods: -4.4 Percent
- Final Demand Energy: -23.9 Percent
Transportation Month-Over-Month Recap
- Services: The index for final demand transportation and warehousing services decreased 0.9 percent.
- Intermediate: The index for transportation and warehousing services for intermediate demand declined 0.4 percent. Prices for truck transportation of freight fell 2.1 percent.
- Final Demand Goods: The indexes for diesel fuel, oilseeds, industrial chemicals, and residual fuels decreased.
Weak trucking and transportation imply weak demand for goods.
Global Export New Orders Fall 16 Straight Months Led by Goods
Weak demand for goods is not just a a US phenomenon. For discussion, please see Global Export New Orders Fall 16 Straight Months Led by Goods
How much longer the service economy can keep humming all by itself remains to be seen.
It took 4 straight years of zero means-of-payment money supply growth to cause the GFC. It will take years of negligible money growth to slow inflation back to 2%.
Our government is corrupt, Government data has no integrity. Mish, you are auguring the entrails of a goat.
that about sums it up perfectly. simple smell test proves your point. my benjamin buys way less less today from 12, 24 and 36months ago.
Nice analysis of PPI
If Fed watching this – how are they not — it is difficult to argue for any more rate increases
PS Your last headline is not true —
“Global Export New Orders Fall 16 Straight Months Led by Goods”
This is why I stay away from PMI’s they are all diffusion indexes
A diffusion index does not count new orders per se and this particular index does not count global export new orders, so you cannot say that global export new orders fell
You CAN say “global export new orders have probably been in a state contraction” – this is a much vaguer statement and the “probably” is in there because again they are doing a poll and not actually counting anything
Services up, prices down, soft landing, anyone?
I was thinking the same thing. I was on the “rolling recession” bandwagon but it seems JPOW has done a wonderful job in doing what he said he was going to do. Bidenomics, despite all the criticism here, is doing just fine despite all the hysterics about “inflationary” green policies. Here we are with the perfect economy, green policies, low unemployment and inflation going down.
Bottom line: JPow+Bidenomics = the “miracle” economy. All that needs to happen now is get some dimwitted Republican in office and the whole thing will come crashing down as usual.
Agree a soft landing is in the works, nicely engineered by Powell.
But as to the snide political swipe — which is fine if you’re at a Dem fundraiser, this is not —
*Trump turned barely breathing Obama economy into historic roaring success
*Reagan inherited Carter mess and turned it into 80s growth decade
*Eisenhower presided over similar boom in 1950s after Truman poorly managed economy
Nixon, inheriting LBJ’s guns and butter inflation, and Bush, inheriting Nasdaq bubble and 9/11, both had a mixed record.
Clinton once he turned middle of road with divided government, turned 90s into great success.
“If money isn’t loosened up, this sucker could go down.”
George W. Bush
Summing up the risk to the global economy if Congressional leaders failed to approve Treasury Secretary Paulson’s $700 billion financial bailout plan, at a bipartisan meeting hosted by the White House (September 26, 2008);
Just after 9/11, Bush Jr. said “go out and shop.”
Where government policy has a latency much like Fed policy, often even longer, presidents usually take credit for past policies.
In this case though, not Eisenhauer, his highway infrastructure was one of the greatest boosts to the us economy of all time, jobs and lasting economic prosperity as a result.
Carter (never) gets credit for signing the Community Reinvestment Act that partially led to the economic boom of the 80’s, home ownership exploded until removing Glass-Steagall screwed that up (Thanks, Clinton). Carter was never credited for it’s benefits, Reagan and Clinton were.
I give Reagan credit for the 40 year sugar-rush, the explosion of household and government debt that started the Fed’s 40 year trajectory of decreasing rates to enable household consumption with lower payments on debt to accommodate tax cuts for the wealthy, Iran-Contra was interesting, but most of all, he was a fantastic actor in his time, he played a great, Oscar Award level role as president.
I give Trump credit for stoking hatred & tensions, for openly chastising the Fed to cut rates in 2020 while spewing fiscal stimulus at the same time to buy votes, thus creating the nasty mess Powell seems to be negotiating us out of now. Also for starting a trade war with China….granted, we need a crackdown on our China trade policy, it coulda been done with more tact/diplomacy, less name calling, without xenophobia.
Biden’s boring, and yes, he’s navigated a few “stealth” Keynesian programs that have bolstered consumption despite the Fed, but I’d vote for a tree stump before I’d vote Trump in 2024….and, I think Biden may have buffered Fed policy at the middle class level.
Bring back the pre LBJ Dixiecrat GOP, with Eisenhauer at the helm, I’ll vote Republican…until then, I go with the lesser of two evils, the one the chooses citizen welfare over corporate welfare, the one that won’t promote austerity at the height of economic hysteria to preserve tax favors for corporate donors or leave gramma to die because her insurance won’t cover her “existing condition” of old age.
2008-09 Republican antics changed me forever.
Currently, it seems anyone with moderate views has no chance, the only viable candidates are one extreme or the other.
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Very nice write up FM or you could have just posted a link to this….
link to forbes.com
Average stock market returns for:
Republicans: 43.91%
Democrats: 67.31%
Dems are 23.40% better than Republicans.
Data driven analysis at its best because data don’t lie but opinionated people do!
MPO45v2
July 13, 2023
“Average stock market returns for:
Republicans: 43.91%
Democrats: 67.31%
Dems are 23.40% better than Republicans.”
***
Pending interpretation, This could then go either way –
The right would say –
“Dems cater to the wealthy by bolstering stocks, where 80% of stocks are owned by the top…”
Or, using my own statement, that stocks and economic changes are latent, i.e. my thoughts on Carter’s C.R.A. benefitting the 80’s-90’s housing boom, Clinton’s removal of Glass-Steagall set up Bush for an ugly 2008, etc, which set up Obama to look like a hero in 2009+ and so on, and so on….
I’ll go with Occam’s razor, both parties more often aim for short term electoral
benefit, votes, or campaign funds… and leave the mess to be dealt with later – Reaganomics being the most glaring & long lasting example.
Personally, if I’m to choose between corporate/wealthy or individual welfare, individual is best for the economy, both are drowning us in debt, but corporate/wealthy has been the biggest contributor to that debt for 40 years, exporting our jobs, investing outside America, self regulation at the expense of us all, while receiving more and more “job creating” tax cuts.
.
….”individual is best for the economy…”
I agree, I am interested in greater profits, greater returns, and the data shows that this will be 23.4% better during dem presidency. I honestly don’t care about politics, just data and profits. A dem is president now so it’s profits to the moon!
But…. dooooooooooom?
I’m still holding short positions for January 2024 expiry so give it some time….maybe.
I assume you’re referring to the homebuilder short, in your case, a hedge on your real property, not a thing I’d suggest, shorting builders without a counter.
That’s a pretty charitable assesment of his trade lol! Creating a hedge against real property might have been a tiny factor, if at all. Mostly, it was speculative. With the brutal rally in homebuilder stocks lately, they’d probably need to be cut in half for those options to be in the money. Got PUTS??
Lol. Where were you 15 months ago? Don’t count me out yet, I have until Jan 19, 2024 to exercise those options. If the economy is red hot, JPow will need to be more aggressive with rates which will tank housing but there is one other event coming which may still turn things around for my puts…
Don’t worry, I’ll likely win in the end but anything can happen. 190 days to go.