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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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Thursday, September 12, 2019

August 2019 Consumer and Producer Price Indices (incl. Forest Products)

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The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1% in August (+0.1% expected). Increases in the indexes for shelter and medical care were the major factors in the seasonally adjusted all items monthly increase, outweighing a decline in the energy index. The energy index fell 1.9% in August as the gasoline index declined 3.5%. The food index was unchanged for the third month in a row.
The index for all items less food and energy rose 0.3% in August, the same increase as in June and July. Along with the indexes for medical care and shelter, the indexes for recreation, used cars and trucks, and airline fares were among the indexes that increased in August. The indexes for new vehicles and household furnishings and operations declined over the month.
The all items index increased 1.7% for the 12 months ending August; the 12-month increase has remained in the range of 1.5 to 2.0% since the period ending December 2018. The index for all items less food and energy rose 2.4% over the last 12 months, its largest 12-month increase since July 2018. The food index rose 1.7% over the last year while the energy index declined 4.4%. 
The Producer Price Index for final demand (PPI-FD) rose 0.1% in August (+0.1% expected). Final demand prices moved up 0.2% in July and 0.1% in June. In August, the advance in final demand prices is attributable to a 0.3% increase in the index for final demand services. In contrast, prices for final demand goods fell 0.5%.
On an unadjusted basis, the final demand index rose 1.8% for the 12 months ended in August. The index for final demand less foods, energy, and trade services rose 0.4% in August following a 0.1% decline in July. For the 12 months ended in August, prices for final demand less foods, energy, and trade services moved up 1.9%.
Final Demand
Final demand services: The index for final demand services advanced 0.3% in August after edging down 0.1% in July. Almost 80% of the broad-based increase can be traced to prices for final demand services less trade, transportation, and warehousing, which climbed 0.5%. Margins for final demand trade services rose 0.2%, and prices for final demand transportation and warehousing services advanced 0.3%. (Trade indexes measure changes in margins received by wholesalers and retailers.)
Product detail: A major factor in the increase in prices for final demand services was the index for guestroom rental, which moved up 6.4%. The indexes for fuels and lubricants retailing; apparel, footwear, and accessories retailing; chemicals and allied products wholesaling; gaming receipts (partial); and insurance also advanced. Conversely, margins for machinery and vehicle wholesaling declined 4.2%. The indexes for health, beauty, and optical goods retailing and for support activities for oil and gas operations also decreased.
Final demand goods: The index for final demand goods moved down 0.5% in August, the largest decrease since falling 0.6% in January. Over 80% of the August decline can be attributed to prices for final demand energy, which dropped 2.5%. The index for final demand foods moved down 0.6%, while prices for final demand goods less foods and energy were unchanged.
Product detail: Almost two-thirds of the August decline in the index for final demand goods can be traced to prices for gasoline, which dropped 6.6%. The indexes for fresh and dry vegetables, diesel fuel, corn, home heating oil, and ethanol also moved lower. In contrast, prices for meats advanced 3.0%. The indexes for iron and steel scrap and for residential electric power also increased. 
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The not-seasonally adjusted price indexes we track were almost all on a MoM basis; all were lower YoY. 
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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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