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PPI-FD  
Released On 1/15/2016 8:30:00 AM For Dec, 2015
PriorConsensusConsensus RangeActual
PPI-FD - M/M change0.3 %-0.1 %-0.3 % to 0.1 %-0.2 %
PPI-FD - Y/Y change-1.1 %-1.0 %
PPI-FD less food & energy - M/M change0.3 %0.1 %0.0 % to 0.3 %0.1 %
PPI-FD less food & energy - Y/Y change0.5 %0.3 %
PPI-FD less food, energy & trade services - M/M change0.1 %0.2 %
PPI-FD less food, energy & trade services - Y/Y change0.3 %0.3 %

Highlights
The producer price-final demand headline in December fell 0.2 percent, nearly reversing November's 0.3 percent increase which now, regrettably, looks like an upside outlier. Year-on-year, the headline is down 1.0 percent. The ex-gas ex-food core rate did rise, but only 0.1 percent while the year-on-year rate is down 2 tenths in the month to only plus 0.3 percent. The ex-gas ex-food ex-services headline is up 0.2 percent with the year-on-year rate unchanged, also at plus 0.3 percent.

Services are the disappointment in this report, up only 0.1 percent in the month following November's 0.5 percent bounce back that followed, however, two prior months of decline. Lack of price traction in services is a blow to Federal Reserve policy makers who are counting on improvement in domestic prices to offset ongoing contraction in fuel and commodity prices. Year-on-year, service prices are up only 0.4 percent.

Energy prices fell 3.4 percent in the month with the year-on-year rate at minus 16.2 percent. Food prices, which have been another source of weakness, fell 1.3 percent with the year-on-year rate at minus 5.2 percent. Two other areas of weakness are export prices, down 0.1 percent and 3.4 percent year-on-year, and also, in bad news for manufacturers, finished goods prices which fell 0.7 percent and are down 2.7 percent on the year. Construction prices, which have been a source of strength, were unchanged though up 1.8 percent on the year.

This report for November did show promise but not in December and it isn't a source of optimism going into the January price collapse for oil which, for WTI, is struggling to stay over $30 this morning. This along with yesterday's import & export price report will not boost confidence that inflation expectations are well anchored and that inflation itself moving higher. Watch next Wednesday for the consumer price report.

Recent History Of This Indicator
The producer prices - final demand headline is expected to slip 0.1 percent following a much stronger-than-expected 0.3 percent rise in November. Forecasters see less weakness for December's core rate where the consensus is plus 0.1 percent. Service-centered gains in this report would help underscore the strength of domestic demand.

Definition
The Producer Price Index (PPI) of the Bureau of Labor Statistics (BLS) is a family of indexes that measure 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
 
 

2016 Release Schedule
Released On: 1/152/173/154/135/136/157/148/129/1510/1411/1612/14
Release For: DecJanFebMarAprMayJunJulAugSepOctNov
 


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