December Producer Price Index: Final Demand Down 0.1% MoM

Today's release of the December Producer Price Index (PPI) for Final Demand came in at -0.1% month-over-month seasonally adjusted, down from last month's 0.4%. It is at 2.6% year-over-year, down from 3.1% 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 2.3% 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 fell 0.1 percent in December, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices advanced 0.4 percent in both November and October. (See table A.) On an unadjusted basis, the final demand index climbed 2.6 percent in 2017 after a 1.7-percent rise in 2016.

Most of the December decline in the final demand index is attributable to a 0.2-percent decrease in prices for final demand services. The index for finaldemand goods was unchanged.

Prices for final demand less foods, energy, and trade services edged up 0.1 percent in December after rising 0.4 percent in November. In 2017, the index for final demand less foods, energy, and trade services climbed 2.3 percent following a 1.8-percent advance in 2016. 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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