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Macro Pulse highlights recent activity and events expected to affect the U.S. economy over the next 24 months. While the review is of the entire U.S. economy its particular focus is on developments affecting the Forest Products industry. Everyone with a stake in any level of the sector can benefit from
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Monday, April 20, 2015

March 2015 Consumer and Producer Price Indices (incl. Forest Products)

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The seasonally adjusted Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2% in March (in line with expectations). Increases in the energy and shelter indexes more than offset a decline in the food index and were the main factors in the rise of the seasonally adjusted all items index. The energy index rose 1.1% as advances in the gasoline and fuel oil indexes outweighed declines in the electricity and natural gas indexes. In contrast, the food index declined 0.2%, with the food at home index posting its largest decline since April 2009.  
The index for all items less food and energy rose 0.2% in March, the same increase as in January and February. Along with the shelter index, a broad array of indexes rose in March, including medical care, used cars and trucks, apparel, new vehicles, household furnishings and operations, and recreation. The index for airline fares, in contrast, declined for the fourth time in the last five months.  
The all items index declined 0.1% for the 12 months ending March. The energy index declined 18.3% during that time span, more than offsetting increases in the indexes for food (up 2.3%) and all items less food and energy (up 1.8%). 
The seasonally adjusted Producer Price Index for final demand (PPI) increased 0.2% in March. Final demand prices moved down 0.5% in February and 0.8% in January. On an unadjusted basis, the index for final demand decreased 0.8% for the 12 months ended in March.
In March, more than half of the rise in final demand prices can be attributed to a 0.3% advance in the index for final demand goods. Prices for final demand services moved up 0.1%.
Final demand goods:  The index for final demand goods moved up 0.3% in March (+0.2% expected) following eight consecutive decreases. A major factor in the advance was prices for final demand energy, which rose 1.5%. The index for final demand goods less foods and energy increased 0.2% in March. In contrast, prices for final demand foods fell 0.8%.
Product detail:  Leading the March advance in prices for final demand goods, the index for gasoline jumped 7.2%. Prices for motor vehicles, jet fuel, pharmaceutical preparations, basic organic chemicals, and beef and veal also moved higher. Conversely, the index for pork declined 5.1%. Prices for utility natural gas and for plastic resins and materials also fell.
Final demand services:  The index for final demand services inched up 0.1% in March following a 0.5% decrease in February. The advance can be traced to prices for final demand services less trade, transportation, and warehousing, which rose 0.3%. In contrast, the indexes for final demand transportation and warehousing services and for final demand trade services both declined 0.2% in March. (Trade indexes measure changes in margins received by wholesalers and retailers.)
Product detail:  Over 60% of the March increase in the index for final demand services can be attributed to prices for portfolio management, which jumped 4.1%. The indexes for loan services (partial), food wholesaling, wireless telecommunication services, and gaming receipts (partial) also moved higher. Conversely, margins for machinery, equipment, parts, and supplies wholesaling decreased 0.7%. The indexes for apparel, jewelry, footwear, and accessories retailing; physician care; and rail transportation of freight and mail also declined. 
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The price indexes we track were mixed on both month-over-month and year-over-year bases in March. Only Intermediate Materials increased from February to March. 
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The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

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