May Producer Price Index: Final Demand Unchanged

Today's release of the May Producer Price Index (PPI) for Final Demand came in at 0.0% month-over-month seasonally adjusted, down from last month's 0.5%. It is at 2.4% year-over-year, down from 2.5% last month, on a non-seasonally adjusted basis. Core Final Demand (less food and energy) came in at 0.3% MoM, down from 0.4% the previous month and is up 2.1% YoY. Investing.com MoM consensus forecasts were for 0.1% headline and 0.2% core.

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

The Producer Price Index for final demand was unchanged in May, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.5 percent in April and edged down 0.1 percent in March. (See table A.) On an unadjusted basis, the final demand index increased 2.4 percent for the 12 months ended in May.

Within final demand in May, a 0.3-percent increase in the index for final demand services offset a 0.5-percent decline in prices for final demand goods.

Prices for final demand less foods, energy, and trade services fell 0.1 percent in May, the first decline since a similar 0.1-percent decrease in May 2016. For the 12 months ended May 2017, the index for final demand less foods, energy, and trade services moved up 2.1 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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