By Jill Mislinski

Thursday’s release of the May Producer Price Index (PPI) for Final Demand was at 0.4% month-over-month seasonally adjusted, up from a 1.3% decrease last month. It is at -0.8% year over year, up from -1.2% last month, on a non-seasonally adjusted basis. Core Final Demand (less food and energy) came in at -0.1% MoM, down from 0.2% the previous month and is up 0.3% YoY NSA. Investing.com MoM consensus forecasts were for 0.1% headline and -0.1% core.

Here is the summary of the news release on Final Demand:

The Producer Price Index for final demand rose 0.4 percent in May, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This increase followed declines of 1.3 percent in April and 0.2 percent in March. (See table A.) On an unadjusted basis, the final demand index decreased 0.8 percent for the 12 months ended in May.

In May, the advance in the final demand index is attributable to prices for final demand goods, which climbed 1.6 percent. In contrast, the index for final demand services fell 0.2 percent.

Prices for final demand less foods, energy, and trade services edged up 0.1 percent in May, following three consecutive declines. For the 12 months ended in May, the index for final demand less foods, energy, and trade services moved down 0.4 percent, the largest 12-month decrease since the index began in August 2013.

Coronavirus (COVID-19) Impact on May 2020 Producer Price Index Survey Data

The Producer Price Index (PPI) response rates for May were consistent with those of April and no changes in estimation procedures were necessary. Additional information is available at www.bls.gov/covid19/effectsof-covid-19-pandemic-on-producer-price-index.htm. More…

Finished Goods: Headline and Core

The BLS shifted its focus to its new “Final Demand” series in 2014, a shift we support. However, the data for these series are only constructed back to November 2009 for Headline and April 2010 for Core. Since our focus is on longer-term trends, we continue to track the legacy Producer Price Index for Finished Goods, which the BLS also includes in its monthly updates.

As this (older) overlay illustrates, the Final Demand and Finished Goods indexes are highly correlated.

How To Consistency Beat the Market With Over a 90% Success Rate

Whether the market is up, down, or sideways, the Option Strategies Insider membership gives traders the power to consistently beat any market. Spend less than one hour a week and do the same.

Just click the link below to see our full presentation on exactly how we do it.

CLICK HERE TO JOIN OUR FREE WEBINAR

FRED® Graphs ©Federal Reserve Bank of St. Louis. All rights reserved.

Producer Price Index

As the next chart shows, the Core Producer Price Index is far more volatile than the Core Consumer Price Index. For example, during the last recession producers were unable to pass cost increases to the consumer.

PPI CPI Core Comparison

Check back next month for a new update.

Original Post

Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.