March Producer Price Index: Final Demand Down 0.1%

Today's release of the March Producer Price Index (PPI) for Final Demand came in at -0.1% month-over-month seasonally adjusted, down from last month's 0.3%. It is at 2.3% year-over-year, up from 2.2% last month, on a non-seasonally adjusted basis. Core Final Demand (less food and energy) came in at 0.0% MoM, down from 0.3% the previous month and is up 1.6% YoY. Investing.com MoM consensus forecasts were for 0.0% headline and 0.2% core.

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

The Producer Price Index for final demand declined 0.1 percent in March, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices advanced 0.3 percent in February and 0.6 percent in January (See table A.) On an unadjusted basis, the final demand index rose 2.3 percent for the 12 months ended March 2017, the largest increase since moving up 2.4 percent for the 12 months ended March 2012.

In March 2017, three-fourths of the decrease in the final demand index is attributable to prices for final demand services, which fell 0.1 percent. The index for final demand goods also inched down 0.1 percent.

Prices for final demand less foods, energy, and trade services edged up 0.1 percent in March, the tenth straight advance. For the 12 months ended in March, the index for final demand less foods, energy, and trade services climbed 1.7 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 overlay illustrates, the Final Demand and Finished Goods indexes are highly correlated.

Final Demand vs. Finished Goods
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