October Producer Price Index: Final Demand Up 0.4% MoM

Today’s release of the October Producer Price Index (PPI) for Final Demand came in at 0.4% month-over-month seasonally adjusted, unchanged from last month’s 0.4%. It is at 2.8% year-over-year, up from 2.6% last month, on a non-seasonally adjusted basis. Core Final Demand (less food and energy) also came in at 0.4% MoM, unchanged from the previous month and is up 2.4% YoY NSA. Investing.com MoM consensus forecasts were for 0.4% headline and 0.4% core.

Here is the summary of the news release on Final Demand:

The Producer Price Index for final demand increased 0.4 percent in October, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices advanced 0.4 percent in September and 0.2 percent in August. (See table A.) On an unadjusted basis, the final demand index increased 2.8 percent for the 12 months ended in October, the largest rise since an advance of 2.8 percent for the 12 months ended February 2012.

Within final demand in October, prices for final demand services rose 0.5 percent, and the index for final demand goods moved up 0.3 percent.

Prices for final demand less foods, energy, and trade services rose 0.2 percent in October. For the 12 months ended in October, the index for final demand less foods, energy, and trade services advanced 2.3 percent. More…

Finished Goods: Headline and Core

The BLS shifted its focus to its new “Final Demand” series in 2014, a shift we 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.

As this overlay illustrates, the Final Demand and Finished Goods indexes are highly correlated.