Producer Prices: Pipeline Pressures Slow Less Than Expected

Bottom Line:  Producer prices rose slightly more than expected, continuing a sharp deceleration in producer price pressures. However, the readings were stronger than expected and were revised higher for October. Final demand services led the increase, with about 1/3rd of that coming because of higher stock market prices -- investment management fees calculated based on assets under management jumped with the stock market gains in November. Goods prices continued to decelerate, with final demand goods rising just 0.1% after increasing 0.6% in October. And prices for intermediate finished goods moved DOWN for the fifth consecutive month. While a touch stronger than expected, this report confirmed the continued correction in core goods prices and deceleration in services price inflation. Core PPI was running at just 2.7% annualized in the three months that ended in October, well below the pace of the last six- and 12-months, 3.5%, and 6.26%, respectively.

The PPI ROSE by 0.3% in November, compared with market expectations for an increase of 0.2%.   Overall producer prices are 7.4% ABOVE the year-ago level.
                                                                                      
The Goods PPI ROSE by 0.1% in November and is now 9.6% ABOVE its year-ago level. Food prices rose by 3.3% and are now 15.4% ABOVE their year-ago level.  Meanwhile, energy prices fell by 3.3%. but are now 16.0% ABOVE their year-ago level. The Goods PPI less food and energy  ROSE by 0.3%,  and is now 6.2% ABOVE its year-ago level.

The Services PPI ROSE by 0.4% in November and is now 5.9% ABOVE its year-ago level.The Core PPI ROSE by 0.4%, compared with market expectations for an increase of 0.2%.  Core producer prices are now 6.3% ABOVE their year-ago level.