October Producer Price Index: Core Final Demand Up 0.1% MoM

This morning's release of the October Producer Price Index (PPI) for Final Demand was at 0.3% month-over-month seasonally adjusted, down from a 0.4% increase last month. It is at 0.5% year-over-year, down from 0.4% last month, on a non-seasonally adjusted basis. Core Final Demand (less food and energy) came in at 0.1% MoM, down from the previous month and is up 1.1% 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 advanced 0.3 percent in October, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.4 percent in September and 0.3 percent in August. (See table A.) On an unadjusted basis, the final demand index increased 0.5 percent for the 12 months ended in October, the largest advance since moving up 1.1 percent for the 12 months ended in February.

In October, nearly 60 percent of the rise in the final demand index can be traced to a 0.5-percent increase in prices for final demand goods. The index for final demand services moved up 0.2 percent.

The index for final demand less foods, energy, and trade services advanced 0.2 percent in October, the sixth consecutive increase. For the 12 months ended in October, prices for final demand less foods, energy, and trade services rose 0.8 percent, the largest advance since moving up 1.0 percent for the 12 months ended in March. 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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