PPI and Trade Prices Weakest Ever In An Expansionary PeriodMarch 13, 2015
With the release of (the plunging) producer price index today, we thought we would take a look at some of our latest PPI and trade price charts (i.e. February data point) that have been released in the last two days. Unfortunately, we don’t get the latest CPI numbers until March 24th but if these releases are any indication I think we can all guess which direction the CPI series will be moving.
The headline PPI for finished goods fell to -3.5% YoY%. This is the third lowest level in the post-war period and the lowest level ever recorded when the economy wasn’t in a recession. The good news is the core-PPI reading remains positive, and fairly steady, at 1.54% YoY%. PPI for consumer goods has also fallen to its third lowest level in the post war period as it is down nearly 5% YoY%.
The year-over-year change in import prices ex-oil has been negative since December and the decline looks like it is still in its early stages given the move in the US dollar. The YoY% change in the headline export price is nearly -6%. Going back to the 1984 which is when the data series begins, this is the second largest drop and is only surpassed by the fall in 2009. Currently, the year-over-year change in Autos, Parts & Engines is -1.3%. This series has been negative on a year-over-year basis since May 2013. This 21 month streak is the longest such period going back to 1982 when this series began. The year-over-year change in the export prices of Autos, Parts & Engines remains just above the zero line at 9 basis points. It will be worthwhile to keep our eye on this series in subsequent months as it has only once (briefly) dipped into negative territory since 1981 (October 2009). The 26 basis point one-month change in February is the third largest one-month change since 1990.