Producer Price Index data from BLS, chart by Mish

Final Demand Services

• The index for final demand services increased 0.2 percent in June, the same as in May.
• The index for final demand transportation and warehousing services decreased 0.9 percent.
• The indexes for food and alcohol retailing, traveler accommodation services, insurance, hospital inpatient care, and airline passenger services also moved higher.
• Prices for truck transportation of freight declined 2.1 percent. The indexes for food and alcohol wholesaling and for residential real estate loans (partial) also fell.

Final Demand Goods

• Prices for final demand goods were unchanged in June after decreasing 1.6 percent in May.
• In June, a 0.7-percent rise in the index for final demand energy offset falling prices for final demand goods less foods and energy and for final demand foods, which declined 0.2 percent and 0.1 percent, respectively.
• Prices for gasoline rose 3.4 percent. The indexes for electric power; beef and veal; chicken eggs; and medical, surgical, and personal aid devices also moved higher.
• Prices for iron and steel scrap dropped 10.8 percent. The indexes for diesel fuel, oilseeds, industrial chemicals, and residual fuels also decreased.

Intermediate Demand

Processed Goods for Intermediate Demand

• Prices for processed goods for intermediate demand moved down 0.6 percent in June, the fifth consecutive decline.
• Over half of the broad-based decrease in June can be traced to the index for processed materials less foods and energy, which fell 0.4 percent.
• Prices for processed energy goods and for processed foods and feeds also moved lower, declining 0.9 percent and 1.0 percent, respectively.
• For the 12 months ended in June, the index for processed goods for intermediate demand fell 9.4 percent, the largest 12-month decrease since dropping 12.0 percent in September 2009.
• A major factor in the decline in prices for processed goods for intermediate demand was the index for industrial chemicals, which fell 3.5 percent.
• Prices for diesel fuel, plastic resins and materials, fats and oils, utility natural gas, and residual fuels also decreased.
• The index for gasoline rose 3.4 percent. Prices for beef and veal and for cold rolled steel sheet and strip also advanced.

Unprocessed Goods for Intermediate Demand

• The index for unprocessed goods for intermediate demand moved down 2.1 percent in June after dropping 5.0 percent in May.
• Leading the June decline, prices for unprocessed energy materials decreased 5.0 percent. The index for unprocessed nonfood materials less energy moved down 2.4 percent.
• Prices for unprocessed foodstuffs and feedstuffs increased 0.9 percent.
• For the 12 months ended in June, the index for unprocessed goods for intermediate demand declined 32.2 percent, the largest 12-month decrease since dropping 35.0 percent in August 2009.
• Nearly three-quarters of the June decline in the index for unprocessed goods for intermediate demand is attributable to prices for crude petroleum, which fell 5.9 percent.
• The indexes for iron and steel scrap, raw milk, natural gas, oilseeds, and nonferrous metal ores also moved lower.
• Prices for slaughter steers and heifers advanced 8.3 percent. The indexes for coal and for construction sand, gravel, and crushed stone also rose.

Services for Intermediate Demand

• The index for services for intermediate demand was unchanged in June after rising 0.3 percent in May.
• Services less trade, transportation, and warehousing for intermediate demand inched up 0.1 percent. Offsetting this increase, the index for transportation and warehousing services for intermediate demand declined 0.4 percent, and margins for trade services for intermediate demand edged down 0.1 percent.
• For the 12 months ended in June, prices for services for intermediate demand advanced 4.4 percent.
• Within services for intermediate demand in June, prices for deposit services (partial) advanced 5.4 percent. The indexes for gross rents for retail properties, insurance, chemicals and allied products wholesaling, and arrangement of freight and cargo transportation also moved higher.
• Prices for truck transportation of freight fell 2.1 percent. The indexes for business loans (partial), food and alcohol wholesaling, gross rents for office buildings, and staffing services also decreased.

PPI Final Demand Year-Over-Year Four Ways

Year-Over-Year PPI

• Final Demand: +0.1 Percent
• Final Demand Services: +2.3 Percent
• Final Demand Goods: -4.4 Percent
• Final Demand Energy: -23.9 Percent

Transportation Month-Over-Month Recap

• Services: The index for final demand transportation and warehousing services decreased 0.9 percent.
• Intermediate: The index for transportation and warehousing services for intermediate demand declined 0.4 percent. Prices for truck transportation of freight fell 2.1 percent.
• Final Demand Goods: The indexes for diesel fuel, oilseeds, industrial chemicals, and residual fuels decreased.

Weak trucking and transportation imply weak demand for goods.

Global Export New Orders Fall 16 Straight Months Led by Goods

(Click on image to enlarge)

Weak demand for goods is not just a US phenomenon. For discussion, please see Global Export New Orders Fall 16 Straight Months Led by Goods

How much longer the service economy can keep humming all by itself remains to be seen.

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