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US PPI Rises 0.3% in July: Final Demand Services Lead the Way

By:
James Hyerczyk
Updated: Aug 11, 2023, 14:21 GMT+00:00

U.S. July's PPI rose 0.3% after June's flat performance, surpassing the 0.2% estimate.

PPI

Highlights

  • July’s PPI increases by 0.3%.
  • Final demand services rise by 0.5%.
  • Portfolio management prices jump 7.6%.

Overview

The U.S. Bureau of Labor Statistics reported a 0.3% seasonally adjusted rise in the Producer Price Index (PPI) for final demand in July. This comes after a stagnant June and a 0.3% decline in May. In a year-over-year comparison, the unadjusted index for final demand recorded a 0.8% advance ending in July.

The surge in the final demand prices was primarily attributed to a 0.5% increase in the index for final demand services. Conversely, final demand goods witnessed a more modest increase, edging up by 0.1%. Notably, the final demand foods sector contributed significantly with a 0.5% rise. However, prices for final demand goods, excluding foods and energy, remained static, similar to final demand energy.

Digging deeper, the index for final demand, excluding foods, energy, and trade services, experienced a 0.2% increment in July – the most substantial growth since February. Over the past 12 months, this index has grown by 2.7%. A significant part of the July progress, about 40%, was due to a pronounced 7.6% surge in portfolio management prices. Other sectors, such as machinery and vehicle wholesaling and outpatient care, also registered positive movement. On the downside, food and alcohol retailing saw a 2.5% decline.

Given the current data and trends, the market sentiment leans slightly bullish. The consistent growth in the services sector, coupled with the steady performance of goods, indicates a robust economic backdrop. While monthly core PPI is anticipated to increase by 0.2%, market players should monitor these indices closely for any shifts that might impact future strategies.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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