Release Explanation: The rate of inflation of manufacturers when purchasing Goods and Services; the rate of Inflation at the factory Gate.
Economic impact: An increase in the price of raw Goods and services usually gets passed on to the consumer, therefore this is the first stage on Retail Inflation. This can go on to affect CPI, Retail Sales and Consumer Confidence. This is an inflationary report and therefore is a pre-cursor to CPI data.
Trade Desk Thoughts: Producer prices increased by 0.1% in February, the Department of Labor said today. That was less than the 0.3% increase economists had expected to see and far below the 0.8% increase seen in January.
Core prices, ex-food and energy, increased 0.2% last month after the 0.4% increase seen in January.
At the earlier stage of processing, prices received by manufacturers for intermediate goods decreased 0.9% last month after falling by 0.7% in January. The index for crude materials declined 4.5% following a 2.9% decrease in January.
The numbers imply that demand is still weakening, said Matthew Carniol, chief currency strategist at TheLFB-forex.com. It's a cycle of declining jobs and tightening credit that's difficult to break.
For the year, prices decreased 1.3%, more than the 1.0% seen in the year to January and the 0.9% decrease seen in December.
Forex Technical Reaction: S&P futures had been declining by about 2 points prior to the report, but the better-than-expected report on housing starts helped to push them about 1 point higher. The dollar had gained just prior to the reports but weakened as stocks futures improved.