US October Producer Price Index (PPI) Comes in at 1.3%, Below Expected 1.9%

• Prior month 2.2%
• PPI final demand YoY 1.3% versus 1.9% expected
• PPI final demand MoM -0.5% versus 0.1% expected
• PPI ex Food and Energy YoY 2.4% versus 2.7% expected. Prior month 2.7%
• PPI ex Food and Energy MoM 0.0% versus 0.3% expected. Prior month revised to 0.2% from 0.3%.
• PPI Ex Food and Energy/Trade 2.9% versus 3.0% last month (revised from 2.8%)
• PPI Ex Food and Energy/Trade 0.1% versus 0.3% last month (revised from 0.2%)

More details from the Bureau of Labor Statistics on final demand for goods and services

• Prices for final demand goods decreased by 1.4% in October, with the primary contributor being a 6.5% drop in the index for final demand energy.
• Prices for final-demand foods fell by 0.2%, while the index for final demand goods excluding foods and energy increased slightly by 0.1%.
• The significant portion of the decline in the final demand goods index can be attributed to a 15.3% decrease in gasoline prices.
• Other products that saw price declines include diesel fuel, hay, hayseeds, oilseeds, home heating oil, liquefied petroleum gas, and light motor trucks. However, prices for tobacco products increased by 2.4%.

On the final demand services:

• In final demand services, prices remained unchanged in October after six consecutive increases.
• The index for final demand transportation and warehousing services increased by 1.5%, while prices for final demand services excluding trade, transportation, and warehousing rose by 0.1%.
• Margins for final demand trade services declined by 0.7%.
• Within final demand services, airline passenger services saw a 3.1% price increase, while other sectors like chemicals and allied products wholesaling, inpatient care, and truck transportation of freight also experienced price hikes.
• Conversely, margins for machinery and vehicle wholesaling declined by 2.9%, and prices fell in sectors like apparel, footwear, and accessories retailing, portfolio management, traveler accommodation services, and health, beauty, and optical goods retailing.

The PPI data is thought to be a pipeline measure for CPI down the road. Yesterday CPI data showed a 0.0% increase for the month a month and 0.2% for the core measure. That led to a sharp decline in yields. The yields are higher in trading here today and trading near high levels despite the lower inflation data.

Stock futures are also not cheering (incrementally) the data this morning but are still higher on the day with the Dow futures implying a gain of 90 points. The NASDAQ futures are implying a gain of 94 points. The S&P is implying a gain of 15.8 point. Those levels are marginally lower than early New York levels.

For the full report from the BLS click here.