Thursday, March 15, 2018

US Producer Price Index down 0.2% in Feb, vs 0.1% increase expected

https://www.cnbc.com/2018/03/14/us-producer-price-index-february-2018.html

http://mam.econoday.com/byshoweventfull.asp?fid=485737&cust=mam&year=2018&lid=0&prev=/byweek.asp#top

PPI-FD 
Released On 3/14/2018 8:30:00 AM For Feb, 2018
PriorConsensusConsensus RangeActual
PPI-FD - M/M change0.4 %0.2 %0.0 % to 0.5 %0.2 %
PPI-FD - Y/Y change2.7 %2.8 %
PPI-FD less food & energy - M/M change0.4 %0.2 %0.1 % to 0.3 %0.2 %
PPI-FD less food & energy - Y/Y change2.2 %2.5 %
PPI-FD less food, energy & trade services - M/M change0.4 %0.3 %0.2 % to 0.3 %0.4 %
PPI-FD less food, energy & trade services - Y/Y change2.5 %2.7 %
Highlights
Prices at the wholesale level proved soft in February, up an as-expected 0.2 percent and down from January's 0.4 percent gain. Year-on-year, producer prices rose 1 tenth to 2.8 percent which is still down from the 3.1 percent rate hit late last year.

Goods prices fell 0.1 percent in February with energy also down as well as food which shows an unusual 27 percent monthly plunge for wholesale vegetables. Trade service prices fell 0.2 percent for the second decline in three months in closely watched results that point to weakness. Construction prices managed only a 0.1 percent February gain with finished goods prices for light trucks, cars and computers all falling sharply.

However much price readings may be soaring in reports like the Philly Fed or the ISM, today's results, which follow yesterday's consumer price report and last week's average hourly earnings data, confirm the month of February as a subdued one for inflation. Accelerating inflation won't be an immediate issue at next week's FOMC meeting.
Consensus Outlook
Boosted by increases in service prices, producer prices resumed their march higher in January though forecasters are calling for moderating increases in February. The headline consensus is plus 0.2 percent. Less food and energy is seen up 0.2 percent with less food, energy and trade services expected to rise 0.3 percent.
Definition
The Producer Price Index (PPI) of the Bureau of Labor Statistics (BLS) is a family of indexes that measures the average change over time in the prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller. Effective with the January 2014 PPI data release in February 2014, BLS transitioned from the Stage of Processing (SOP) to the Final Demand-Intermediate Demand (FD-ID) aggregation system. The headline PPI (for Final Demand) measures price changes for goods, services, and construction sold to final demand: personal consumption, capital investment, government purchases, and exports.  Why Investors Care
 
[Chart]
With the redefined and expanded PPI Final Demand series, energy still creates monthly volatility. However, services and construction have softened the headline and core numbers.
Data Source: Haver Analytics
 
[Chart]
A sluggish economy in 2013 and 2014 slowed inflation at the producer level.
Data Source: Haver Analytics

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