Jan. MoM PPI -0.8% vs -0.4% Expected; Ex-Food, Energy -0.1% vs 0.1%

Jan. MoM PPI -0.8% vs -0.4% Expected; Ex-Food, Energy -0.1% vs 0.1%

The Producer Price Index for final demand decreased 0.8 percent in January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices moved down 0.2 percent in both December and November. On an unadjusted basis, the index for final demand was unchanged for the 12 months ended in January.

In January, the 0.8-percent decline in final demand prices can be traced primarily to a 2.1-percent decrease in the index for final demand goods. Prices for final demand services fell 0.2 percent.

Within intermediate demand, the index for processed goods declined 2.8 percent, prices for unprocessed goods dropped 9.4 percent, and the index for services moved down 0.2 percent.

Final Demand

Final demand goods: The index for final demand goods moved down 2.1 percent in January, the seventh consecutive decrease. Leading the broad-based decline in January, prices for final demand energy fell 10.3 percent. The indexes for final demand foods and for final demand goods less foods and energy moved down 1.1 percent and 0.2 percent, respectively.

Product detail: The decline in prices for final demand goods was led by the index for gasoline, which dropped 24.0 percent. Prices for diesel fuel, jet fuel, basic organic chemicals, dairy products, and home heating oil also moved lower. Conversely, the index for residential electric power moved up 1.2 percent. Prices for pharmaceutical preparations and for fresh and dry vegetables also advanced.

Final demand services: The index for final demand services decreased 0.2 percent in January, the first decline since falling 0.3 percent in September 2014. In January, prices for final demand services less trade, transportation, and warehousing moved down 0.4 percent, and the index for final demand transportation and warehousing services dropped 0.8 percent. In contrast, margins for final demand trade services advanced 0.5 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: In January, a major contributor to the decline in the index for final demand services was prices for outpatient care (partial), which fell 0.7 percent. The indexes for automotive fuels and lubricants retailing; securities brokerage, dealing, investment advice, and related services; television, video, and photographic equipment and supplies retailing; mining services; and truck transportation of freight also decreased. Conversely, margins for apparel, jewelry, footwear, and accessories retailing advanced 3.6 percent. The indexes for machinery, equipment, parts, and supplies wholesaling and for loan services (partial) also increased.

Special grouping, Final demand less foods, energy, and trade: The index for final demand less foods, energy, and trade services moved down 0.3 percent after edging up 0.1 percent in December. For the 12 months ended in January, prices for final demand less foods, energy, and trade services climbed 0.9 percent.

Intermediate Demand by Commodity Type

Processed goods for intermediate demand: The index for processed goods for intermediate demand fell 2.8 percent in January, the largest decline since a 4.1-percent drop in December 2008. More than half of the broad-based January decrease is attributable to prices for processed energy goods, which moved down 8.3 percent. In addition, the index for processed materials less foods and energy fell 1.3 percent, and prices for processed foods and feeds declined 2.5 percent. For the 12 months ended in January, the index for processed goods for intermediate demand moved down 5.5 percent, the largest 12-month drop since a 7.7-percent decrease in October 2009.

Product detail: In January, a 19.2-percent decline in diesel fuel prices was a major factor in the decrease in the index for processed goods for intermediate demand. Prices for basic organic chemicals, gasoline, jet fuel, plastic resins and materials, and dairy products also moved lower. In contrast, the electric power index increased 1.3 percent. Prices for basic inorganic chemicals and formula feeds also advanced.

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand fell 9.4 percent in January, the largest drop since a 13.2-percent decrease in November 2008. About 90 percent of the broad-based decline in January can be traced to prices for unprocessed energy materials, which decreased 23.6 percent. The index for unprocessed foodstuffs and feedstuffs moved down 1.8 percent, and prices for unprocessed nonfood materials less energy fell 0.7 percent. For the 12 months ended in January, the index for unprocessed goods for intermediate demand declined 18.4 percent, the largest 12-month drop since a 31.7-percent decrease in September 2009.

Product detail: More than half of the January decline in the index for unprocessed goods for intermediate demand is attributable to prices for crude petroleum, which fell 30.6 percent. Prices for natural gas, slaughter hogs, raw milk, grains, and nonferrous scrap also moved lower. Conversely, the index for slaughter poultry rose 5.5 percent. Prices for unprocessed finfish and gold ores also advanced.

Services for intermediate demand: The index for services for intermediate demand moved down 0.2 percent in January, the largest decrease since falling 0.2 percent in April 2014. The decline in January was led by the index for services less trade, transportation, and warehousing for intermediate demand, which dropped 0.4 percent. Prices for transportation and warehousing services for intermediate demand fell 0.3 percent. In contrast, the index for trade services for intermediate demand rose 0.7 percent.

Product detail: In January, prices for securities brokerage, dealing, investment advice, and related services declined 4.5 percent. The indexes for television advertising time sales, radio advertising time sales, legal services, marketing consulting services, and truck transportation of freight also decreased. Conversely, margins for parts and supplies for machinery and equipment wholesaling advanced 1.0 percent. The indexes for business loans (partial) and staffing services also increased.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: The index for stage 4 intermediate demand moved down 0.7 percent in January, the fifth consecutive decline. In January, prices for total goods inputs to stage 4 intermediate demand decreased 1.3 percent. The index for total services inputs was unchanged. Lower prices for diesel fuel; gasoline; securities brokerage, dealing, investment advice, and related services; basic organic chemicals; dairy products; and asphalt outweighed increases in the indexes for business loans (partial), electric power, and parts and supplies for machinery and equipment wholesaling. For the 12 months ended in January, prices for stage 4 intermediate demand fell 0.5 percent.

Stage 3 intermediate demand: Prices for stage 3 intermediate demand fell 2.4 percent in January, the fourth straight decrease. In January, the index for total goods inputs to stage 3 intermediate demand dropped 4.2 percent, and prices for total services inputs edged down 0.1 percent. Falling prices for gasoline; jet fuel; basic organic chemicals; slaughter hogs; diesel fuel; and securities brokerage, dealing, investment advice, and related services outweighed increases in the indexes for slaughter poultry, business loans (partial), and unprocessed finfish. For the 12 months ended in January, the index for stage 3 intermediate demand fell 3.3 percent.

Stage 2 intermediate demand: The index for stage 2 intermediate demand dropped 5.0 percent in January, the eleventh consecutive decline. In January, prices for total goods inputs to stage 2 intermediate demand fell 9.8 percent, and the index for total services inputs moved down 0.5 percent. Lower prices for crude petroleum; gas fuels; plastic resins and materials; securities brokerage, dealing, investment advice, and related services; basic organic chemicals; and lubricating oil base stocks outweighed increases in the indexes for staffing services, formula feeds, and basic inorganic chemicals. For the 12 months ended in January, prices for stage 2 intermediate demand dropped 11.0 percent.

Stage 1 intermediate demand: The index for stage 1 intermediate demand declined 3.3 percent in January, the fifth straight decrease. In January, prices for total goods inputs to stage 1 intermediate demand dropped 5.7 percent. The index for total services inputs was unchanged. Lower prices for basic organic chemicals; diesel fuel; gasoline; crude petroleum; gas fuels; and securities brokerage, dealing, investment advice, and related services outweighed advances in the indexes for business loans (partial), electric power, and chemicals and allied products wholesaling. For the 12 months ended in January, the index for stage 1 intermediate demand decreased 6.3 percent.

You May Also Be Interested In

• Crude Inventory Declined 6.4 Million Barrels Last Week
• United States Oil Fund (USO) option implied volatility as WTI crude trades $82
• EUR/USD could stay on a holding pattern until key US data, analyst says