The February PPI data were below expectations, lowering the year/year rates slightly. Overall PPI rose by 0.1%, compared with a 0.2% gain expected in both the MNI and Bloomberg surveys, while core prices also rose 0.1%, below the 0.2% gain expected.
At the same time, January durable goods orders data were released, showing the headline orders number was much stronger than expected with a 0.4% gain. The MNI forecast was for a 0.5% decline, while Bloomberg looked for a 0.4% decline.
Here are some of the key takeaways from the data released Wednesday:
February PPI was up 0.1% (+0.085% unrounded) month/month overall on a gain in energy prices and the core reading, partially offset by a decline in food prices. Trade services prices also declined.
Due to the more modest increase for overall PPI, the year/year rate fell to +1.9% from +2.0% in January. At the same time, the year/year rate for core prices fell to +2.5% from +2.6% in January. Also excluding trade prices, PPI was up 0.1% month/month and 2.3% year/year, slower than the 2.5% year/year gain in January.
Core PPI was +0.086% unrounded, on the low side of +0.1%, with the major components generally mixed. There were soft gains for a number of industrial and office categories that muted the monthly gain.
Energy prices rose by 1.8% in February after a 3.8% drop in January, with gasoline prices rising 3.3%. AAA noted higher gasoline prices in mid-March than a month ago, so another gain in next month's data is possible. Electricity prices rose 0.1% and natural gas prices fell 0.7%. PPI excluding only energy posted a flat reading, while food prices were down 0.3% on a sharp drop in vegetable prices.
Durable goods orders rose 0.4% in January, mostly due to a surprise 1.2% gain in transportation orders. The Bloomberg consensus had expected a 0.4% decline in the headline number, while the MNI median was for a 0.5% decline. Boeing data expected a drop in aircraft orders in January and see a further one in February.
Excluding transportation, new orders fell 0.1% in the month, below the 0.1% gains expected by both the Bloomberg consensus and MNI medians. There were gains in machinery and electrical equipment and declines in primary metals and computers and electronics.
Nondefense capital goods shipments fell 1.6% in the month, while shipments ex. aircraft rose 0.8%, suggesting a positive start for first quarter nonresidential fixed investment after weak readings in November and December.
