Today's release of the September Producer Price Index (PPI) for Final Demand came in at -0.5% month-over-month seasonally adjusted, down from 0.0% in August. It is down -1.1% year-over-year, the ninth consecutive month of YoY shrinkage. Core Final Demand (less food and energy) came in at -0.3% MoM, down from 0.3% the previous month and is up 0.8% YoY. The Investing.com forecasts were for -0.2% headline and 0.1% core.
Here is the summary of the news release on Finished Goods:
The Producer Price Index for final demand declined 0.5 percent in September, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices were unchanged in August and rose 0.2 percent in July. On an unadjusted basis, the final demand index fell 1.1 percent for the 12 months ended in September, the eighth straight 12-month decline....
In September, two-thirds of the decrease in the final demand index is attributable to prices for final demand goods, which fell 1.2 percent. The index for final demand services moved down 0.4 percent. More…
Finished Goods: Headline and Core
The BLS shifted its focus to its new "Final Demand" series in 2014, a shift we fully support. However, the data for these series are only constructed back to November 2009 for Headline and April 2010 for Core. Since our focus is on longer term trends, we continue to track the legacy Producer Price Index for Finished Goods, which the BLS also includes in their monthly updates.
The Headline Finished Goods for September came in at -1.3% MoM and is down -4.1% YoY. Core Finished Goods were up 0.2% MoM and up 2.1% YoY.
Now lets visualize the numbers with an overlay of the Headline and Core (ex food and energy) PPI for finished goods since 2000, seasonally adjusted. The plunge since mid-2014 in headline PPI is, of course, energy related -- now off its interim low set in April. Core PPI has remained relatively stable since early 2014.
As the next chart shows, the Core Producer Price Index is far more volatile than the Core Consumer Price Index. For example, during the last recession producers were unable to pass cost increases to the consumer.
Check back next month for a new update.
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