The Producer Price Index for finished goods fell 1.0 percent in May, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Prices for finished goods moved down 0.2 percent in April and were unchanged in March. At the earlier stages of processing, prices received by manufacturers of intermediate goods decreased 0.8 percent in May, and the crude goods index fell 3.2 percent. On an unadjusted basis, prices for finished goods advanced 0.7 percent for the 12 months ended in May, the eighth straight month of slowing year-over-year increases following a 7.0-percent rise for the 12 months ended September 2011. (See table A.)
This was all food and energy; indeed, energy was down 4.2%. That's a big change and it's all drop in oil prices.
Ex-food and energy the PPI was up 0.2%, stable over the last three months. The 12 month change rate declined again, as expected.
Intermediate and crudge goods, however, saw actual declines ex-food and eenergy. And the decline in crude goods was consistent for the second month, both headline and ex-food/energy, which implies a material slowdown in economic activity.
This is a yellow-level recession warning. One more month makes a trend -- and an official "three months from now, we're in the soup" indicator.
