Broad-Based Increase In PPI Suggests Price Pressures Still Lurk

A few notes on the July PPI beat - the M/M +1.0% final demand figure was the 2nd highest since the series began in 2010, a divergence from Wednesday's downside miss vs expectations for CPI.

• Treasuries on session's lows and dollar on session's highs following the release.
• Nearly 3/4 of the 1.0% M/M increase in the final demand index was represented by the 1.1% M/M rise in services final demand prices; goods were up 0.6%.
• "For the 12 months ended in July, the index for final demand less foods, energy, and trade services rose 6.1 percent, the largest increase since 12-month data were first calculated in August 2014."
• On services final demand PPI: "About 20 percent of the July advance in prices for final demand services can be traced to margins for automobiles and automobile parts retailing, which climbed 11.2 percent. The Indexes for airline passenger services; hospital outpatient care; machinery and equipment wholesaling; traveler accommodation services; and securities brokerage, dealing, investment advice, and related services also increased."
• On goods final demand PPI: "Among prices for final demand goods in July, the index for tobacco products increased 2.7 percent. Prices for gasoline; diesel fuel; gas fuels; consumer, institutional, and commercial plastic products; and eggs for fresh use also moved higher. "

Source: BLS