U.S Producer Price Index declined in August

The Producer Price Index for final demand declined 0.1 percent in August, seasonally adjusted,
the U.S. Bureau of Labor Statistics reported today. Final demand prices were unchanged in July
and increased 0.3 percent in June. (See table A.) On an unadjusted basis, the final demand index
rose 2.8 percent for the 12 months ended in August.

In August, the decline in the final demand index can be attributed to a 0.1-percent decrease in
prices for final demand services. The index for final demand goods was unchanged.

The index for final demand less foods, energy, and trade services edged up 0.1 percent in August
after advancing 0.3 percent in both July and June. For the 12 months ended in August, prices for
final demand less foods, energy, and trade services rose 2.9 percent.

Final demand

Final demand services: The index for final demand services inched down 0.1 percent in August, the
same as in July. The August decrease was led by a 0.9-percent decline in the index for final demand
trade services. (Trade indexes measure changes in margins received by wholesalers and retailers.)
Prices for final demand transportation and warehousing services fell 0.6 percent. In contrast, the
index for final demand services less trade, transportation, and warehousing rose 0.3 percent.

Product detail: In August, over 80 percent of the decrease in prices for final demand services can be
traced to margins for machinery and equipment wholesaling, which fell 1.7 percent. The indexes for
health, beauty, and optical goods retailing; application software publishing; airline passenger
services; and hospital outpatient care also moved lower. Conversely, prices for loan services (partial)
jumped 3.0 percent. The indexes for food retailing, bundled wired telecommunication access
services, and physician care also rose. (See table 4.)

Final demand goods: The index for final demand goods was unchanged in August after increasing
in each of the prior three months. In August, a 0.4-percent advance in prices for final demand energy
offset a 0.6-percent decline in the index for final demand foods. Prices for final demand goods less
foods and energy were unchanged.

Product detail: In August, the index for residential electric power moved up 0.6 percent. Prices for
fresh and dry vegetables, corn, gasoline, and passenger cars also increased. In contrast, the index for
fresh fruits and melons dropped 11.3 percent. Prices for diesel fuel, meats, eggs for fresh use, and
iron and steel scrap also declined.


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell