October 11, 2023
In September, the U.S. Bureau of Labor Statistics reported a 0.5 percent increase in the Producer Price Index for final demand, which is seasonally adjusted. This follows a 0.7 percent rise in August and a 0.6 percent increase in July. On an unadjusted basis, the final demand index advanced by 2.2 percent over the 12 months ending in September, marking the largest increase since a 2.3 percent rise in the 12 months ending in April.
The increase in the final demand index in September was primarily driven by a 0.9 percent rise in prices for final demand goods, while the index for final demand services increased by 0.3 percent.
Excluding the impact of food, energy, and trade services, prices for final demand increased by 0.2 percent in September, marking the fourth consecutive monthly advance. Over the 12 months ending in September, the index for final demand, excluding foods, energy, and trade services, moved up by 2.8 percent.
Final Demand
In September, the Producer Price Index for final demand goods increased by 0.9 percent, marking the third consecutive monthly increase. The significant portion of this increase, around 75 percent, can be attributed to a 3.3 percent rise in prices for final demand energy. Additionally, the indexes for final demand foods and final demand goods, excluding foods and energy, also saw increases of 0.9 percent and 0.1 percent, respectively.
The price changes in final demand goods were influenced by several factors. Notably, a 5.4 percent rise in the gasoline index accounted for over 40 percent of the overall increase in goods prices. Prices for items like jet fuel, processed young chickens, meats, electric power, and diesel fuel also saw increases. However, there were some declines in prices, with the index for fresh and dry vegetables falling by 13.9 percent. Prices for wood pulp and utility natural gas also decreased.
Final demand services
In September, the Producer Price Index for final demand services increased by 0.3 percent, following a 0.2 percent rise in August. More than 60 percent of this September increase is attributed to prices for final demand services, excluding trade, transportation, and warehousing, which rose by 0.3 percent. The index for final demand trade services increased by 0.5 percent, measuring changes in margins received by wholesalers and retailers. On the other hand, prices for final demand transportation and warehousing services declined by 0.4 percent.
Notably, a significant factor contributing to the rise in prices for final demand services was a 13.9 percent increase in the index for deposit services (partial). Other areas that saw price increases included machinery, equipment, parts, and supplies wholesaling, health, beauty, and optical goods retailing, traveler accommodation services, outpatient care (partial), and application software publishing. In contrast, prices for airline passenger services fell by 2.1 percent. There were also declines in the indexes for automobile retailing (partial) and bundled wired telecommunications access services.
Disclaimer:
Analyst Certification – The views expressed in this research report accurately reflect the personal views of Mayberry Investments Limited Research Department about those issuer(s) or securities as at the date of this report. Each research analyst (s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation(s) or view(s) expressed by that research analyst in this research report.
Company Disclosure – The information contained herein has been obtained from sources believed to be reliable, however its accuracy and completeness cannot be guaranteed. You are hereby notified that any disclosure, copying, distribution or taking any action in reliance on the contents of this information is strictly prohibited and may be unlawful. Mayberry may effect transactions or have positions in securities mentioned herein. In addition, employees of Mayberry may have positions and effect transactions in the securities mentioned herein.