Producer Prices Unexpectedly Drop For The First Time In 18 Months

producer prices unexpectedly drop for the first time in months

With all eyes on US CPI inflation data tomorrow to confirm the overheating aspects of last Friday’s blistering hot jobs report, moments ago the BLS reported that wholesale inflation in the form of producer prices unexpectedly fell in August, its first drop in 18 months since last February; the decline followed an unchanged print in July and missed expectations of a 0.2% increase.

Producer Prices Unexpectedly Drop For The First Time In 18 Months

Excluding food and energy, core PPI fell also 0.1% M/M, below the exp. 0.2% rise;

On an annual basis, headline PPI rose just 2.8% y/y, missing expectations of a 3.2% print and down from 3.3% last month; core PPI was up 2.3% y/y, missing the estimate of 2.7%, and down from last month’s 2.7% print.

Producer Prices Unexpectedly Drop For The First Time In 18 Months

According to the BLS, the decline in the PPI reflected a 0.1 percent drop in the cost of services – more than 80% of which was accounted for by falling margins for machinery and equipment wholesaling. Goods prices were unchanged, as a 0.6% drop in food costs offset a 0.4% increase in energy.

While headline PPI fell, underlying producer prices rose, as core PPI – excluding food, energy, and trade services costs – rose 0.1% from the previous month following a 0.3% increase, however that too missed the 0.2% consensus print.

The report also notes that in August, the index for residential electric power moved up 0.6 percent. Prices for fresh and dry vegetables, corn, gasoline, and passenger cars also increased. In contrast, the index for fresh fruits and melons dropped 11.3 percent. Prices for diesel fuel, meats, eggs for fresh use, and iron and steel scrap also declined.

Some other details:

  • Machinery and equipment wholesale margins fell 1.7 percent, most since December; health, beauty and optical goods retail margins dropped 2.7 percent, most since February
  • Airline passenger services fell 2 percent, most since January
  • Construction machinery and equipment rose 0.8 percent, most since 2011
  • Processed lumber for intermediate demand fell 6.9 percent, the most since 1980

According to Bloomberg, today’s unexpectedly soft data suggest that inflationary pressures may be taking a breather even as most signs of economic growth remain solid. Analysts are also watching for signs of how trade tariffs and retaliatory levies are affecting companies, particularly how they are filtering through the production pipeline to other businesses and consumers.

Producer Prices Unexpectedly Drop For The First Time In 18 Months Read on Z H

Author: HEDGE

Hedge Accordingly was founded ahead of the global financial crisis in January of 2008, with the goal of providing our readers our unique take on The Latest News on Wall Street, Stocks, #Politics and Business news. Hedge Accordingly produces both original, and aggregated #Wallst news content from top publishers around the world. We curate aggregated content covering the latest news on politics, stocks, wall street, and the tech industry. We also provide free stock charting, quotes and a bitcoin, forex and currency exchange. Learn More About