PPI jumps for month but falls from year ago; Reed, CEA, fed differ on activity levels
The producer price index for finished goods rose 1 percent, not seasonally adjusted (1.7 percent, seasonally adjusted) in August, but dropped 4.3 percent over 12 months, the Bureau of Labor Statistics reported today [Sept. 15]. The PPI for inputs to construction industries climbed 1.1 percent for the month but fell 7.4 percent from August 2008. Three items accounted for much of the up-and-down movement: the PPI for diesel fuel jumped 17 percent for the month but fell 41 percent over 12 months; steel mill products, 6.8 percent and -36 percent; and copper and brass mill shapes, 11 percent and -14 percent. PPIs for finished nonresidential buildings, which are intended to capture contractors' labor, overhead and profits as well as materials costs, rose for warehouses, 0.1 percent for the month and 1.4 percent over 12 months; offices, 0.2 percent and 2.9 percent; schools, -0.5 percent and 7.3 percent; and industrial buildings, -0.2 percent and 0.1 percent. But these indexes are based on contractors' estimates for hypothetical projects, not actual competitive bids, and may not reflect the deep discounting that contractors and owners alike report is occurring on projects, according to a Sept. 15 Data DIGest report.