Producer Price Index Stumbles 0.2%

The Producer Price Index (PPI) for final demand fell a seasonally adjusted 0.2% for May, according to a Labor Department report (link opens as PDF) released today.

"Final demand" is a more comprehensive indicator than that for finished goods alone. It includes goods, services, and construction sold for personal or government use, capital investment, and export.

After increasing 0.5% for March and 0.6% for April, this latest report proved to be an unpleasant surprise for analysts, who had expected a 0.1% rise. Although cheaper prices could mean cheaper purchases for consumers, it also means smaller sales for producers –- a key ingredient in the recipe for an economic slowdown. 

Source: Labor Department 

Diving deeper, both services and goods prices were behind this latest dip, each down 0.2%. In a sign of some optimism, "core goods" prices (excluding food and energy) managed to remain at April levels. A 0.9% drop in gasoline prices accounted for around half of the entire drop in the final demand goods index.

While this latest report failed to live up to expectations, May's numbers come after two months of solid price improvements. With 12-month price changes at 2%, the second-highest reading since last July (also 2.0%), investors will need to wait for June's report to get a better feel for what is going on with producer prices.

Discover a top stock pick for 2014
Every year, The Motley Fool's chief investment officer hand-picks 1 stock with outstanding potential. Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2993267, ~/Articles/ArticleHandler.aspx, 9/1/2015 4:29:34 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Justin Loiseau

Energy and Macroeconomic Specialist keeping investors up to date with macro news, utilities, and good companies doing good things.

Today's Market

updated Moments ago Sponsored by:
DOW 16,058.35 -469.68 -2.84%
S&P 500 1,913.85 -58.33 -2.96%
NASD 4,636.11 -140.40 -2.94%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes