February Producer Price Index: Core Final Demand Down 0.3% MoM

Today's release of the February Producer Price Index (PPI) for Final Demand was at -0.6% month-over-month seasonally adjusted, down from a 0.5% increase last month. It is at 1.3% year-over-year, down from 2.1% last month, on a non-seasonally adjusted basis. Core Final Demand (less food and energy) came in at -0.3% MoM, down from 0.5% the previous month and is up 1.4% YoY NSA. Investing.com MoM consensus forecasts were for -0.1% headline and 0.1% core.

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

The Producer Price Index for final demand fell 0.6 percent in February, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices advanced 0.5 percent in January and 0.2 percent in December. (See table A.) On an unadjusted basis, the final demand index increased 1.3 percent for the 12 months ended in February.

In February, 60 percent of the decline in the final demand index can be traced to a 0.9-percent decrease in prices for final demand goods. The index for final demand services moved down 0.3 percent.

Prices for final demand less foods, energy, and trade services inched down 0.1 percent in February, the first decline since falling 0.1 percent in June 2019. For the 12 months ended in February, the index for final demand less foods, energy, and trade services rose 1.4 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
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