Image Source: Pexels
 

The BLS just released September PPI data. Let’s take a look.
 

PPI month-over-month

Please consider the much delayed BLS Producer Price Report for September.

Final Demand Month-Over-Month
 

• Final Demand: 0.3 Percent
• Goods: 0.9 Percent
• Food: 1.1 Percent
• Services: 0.0 Percent
• Excluding Food and Energy: 0.1 Percent
• Energy: 3.5 Percent

Final Demand Goods
 

Final demand goods: The index for final demand goods advanced 0.9 percent in September, the largest increase since moving up 0.9 percent in February 2024. Two-thirds of the broad-based rise in September can be traced to prices for final demand energy, which climbed 3.5 percent. The index for final demand foods advanced 1.1 percent, and prices for final demand goods less foods and energy increased 0.2 percent.

Sixty percent of the September rise in the index for final demand goods can be traced to prices for gasoline, which advanced 11.8 percent. The indexes for meats, residential electric power, natural gas liquids, motor vehicles and equipment, and ethanol also moved higher. In contrast, prices for fresh and dry vegetables declined 1.8 percent. The indexes for nonferrous metal ores and for residual fuels also fell.

Final Demand Services
 

The index for final demand services was unchanged in September after decreasing 0.3 percent in August. In September, price advances of 0.8 percent for final demand transportation and warehousing services and 0.1 percent for final demand services less trade, transportation, and warehousing offset a 0.2-percent decline in margins for final demand trade services.

Within the index for final demand services in September, prices for airline passenger services advanced 4.0 percent. The indexes for food wholesaling, chemicals and allied products wholesaling, deposit services (partial), and furniture retailing also moved higher. Conversely, margins for machinery and equipment wholesaling decreased 3.5 percent. The indexes for automobile retailing (partial); apparel, jewelry, footwear, and accessories retailing; portfolio management; and long-distance motor carrying also declined.

PPI Final Demand Year-Over-Year
 

PPI Final Demand Year-Over-Year
 

• Final Demand: 2.7 Percent
• Goods: 3.3 Percent
• Food: 4.0 Percent
• Services: 2.5 Percent
• Excluding Food and Energy: 2.6 Percent
• Energy: 3.8 Percent

The Goods-Services Tradeoff
 

Excluding food and energy, the month-over-month increase was only 0.1 Percent

Given that services are about two-thirds of the PPI, the Fed is happy with falling services and rising goods vs the other way around.

The bond market was happy.

Long-term yields dropped 5 basis points. The 30-year long bond yield is down to 4.655 percent. The 10-year note yield is 4.003.

All things considered, this report was a breather. The odds of a Fed rate cut on December 10 are back up to 84.4 percent.

More By This Author: