**MNI DATA IMPACT: US February PPI Below-Expected +0.1%>

--Core PPI +0.1% Vs +0.2% Expected; Also Ex. Trade Services +0.1%

--Durable Goods Orders Surprise +0.4%, But -0.1% Ex. Transportation

By Kevin Kastner, Shikha Dave, and Harrison Clarke

     WASHINGTON (MNI) - 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. 

     ** MNI Washington Bureau: 202-371-2121 ** 

[TOPICS: MAUDS$,MT$$$$,M$U$$$,MAUDR$]