March Producer Price Index: Core Final Demand Up 0.7% MoM

Friday morning's release of the March Producer Price Index (PPI) for Final Demand was at 1.0% month-over-month seasonally adjusted, up from a 0.5% increase last month. It is at 4.2% year-over-year, up from 2.8% last month, on a non-seasonally adjusted basis. Core Final Demand (less food and energy) came in at 0.7% MoM, up from the previous month and is up 3.1% YoY NSA. MoM consensus forecasts were for 0.5% headline and 0.2% core.

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

The Producer Price Index for final demand increased 1.0 percent in March, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.5 percent in February and 1.3 percent in January. (See table A.) On an unadjusted basis, the final demand index moved up 4.2 percent for the 12 months ended in March, the largest advance since rising 4.5 percent for the 12 months ended September 2011.

In March, almost 60 percent of the increase in the index for final demand can be traced to a 1.7-percent advance in prices for final demand goods. The index for final demand services moved up 0.7 percent.

Prices for final demand less foods, energy, and trade services rose 0.6 percent in March following an increase of 0.2 percent in February. For the 12 months ended in March, the index for final demand less foods, energy, and trade services moved up 3.1 percent, the largest advance since climbing 3.1 percent for the 12 months ended September 2018. 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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