PPI Beats November Estimates

The Producer Price Index (PPI) for final demand increased 0.3% in November, seasonally adjusted, which was well above the Bloomberg consensus estimate of 0.0%. Final demand prices decreased 0.4% in October and 0.5% in September. On an unadjusted basis, the final demand index fell 1.1% for the 12 months ended in November, the 10th consecutive 12-month decline.

The November rise in the final demand index can be traced to prices for final demand services, which advanced 0.5%. In contrast, the index for final demand goods moved down 0.1%.

Within intermediate demand, the index for processed goods fell 0.6%, prices for unprocessed goods dropped 5.1% and the index for services was unchanged.

Over 90% of the November decline can be traced to prices for final demand energy, which fell 0.6%. The index for final demand goods, less foods and energy, edged down 0.1%. In contrast, prices for final demand goods rose 0.3%. Half of the November decrease in the index for final demand goods is attributable to prices for gasoline, which fell 1.3%.
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The index for final demand less foods, energy and trade services inched up 0.1% in November. For the 12 months ended in November, prices for final demand, less foods, energy and trade services, advanced 0.3%.

Service prices proved an unlikely source of deflationary pressure in the producer price report for October, falling for a second month in a row. Both energy prices and food prices fell, with both finished goods and export prices also down. For November, forecasters originally expected no change in the producer prices final demand headline and a 0.1% gain for the core rate.