September Producer Price Index: Core Final Demand Up 0.2% MoM

Today’s release of the September Producer Price Index (PPI) for Final Demand came in at 0.2% month-over-month seasonally adjusted, up from last month’s -0.1%. It is at 2.6% year-over-year, down from 2.8% last month, on a non-seasonally adjusted basis. Core Final Demand (less food and energy) also came in at 0.2% MoM, up from -0.1% the previous month and is up 2.5% YoY NSA. Investing.com MoM consensus forecasts were for 0.2% headline and 0.2% core.

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

The Producer Price Index for final demand increased 0.2 percent in September, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices declined 0.1 percent in August and were unchanged in July. (See table A.) On an unadjusted basis, the final demand index advanced 2.6 percent for the 12 months ended in September.

In September, the rise in the final demand index can be traced to a 0.3-percent increase in prices for final demand services. In contrast, the index for final demand goods decreased 0.1 percent.

The index for final demand less foods, energy, and trade services moved up 0.4 percent in September, the largest rise since a 0.5-percent increase in January. For the 12 months ended in September, prices for final demand less foods, energy, and trade services advanced 2.9 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 (older) overlay illustrates, the Final Demand and Finished Goods indexes are highly correlated.

Final Demand vs. Finished Goods