US final demand PPI "solid" in January, economists say

Factory gate prices in the US rose more quickly than expected last month, driven by steep gains in energy costs, but economists said the underlying details were "solid" too.

So-called total final demand prices increased at a 0.4% month-on-month clip in January, according to the Bureau of Labor Statistics, following a flat reading for the month before, driven by a 3.4% jump in energy prices.

However, overall goods prices were ahead by 0.7% when compared with the month before, economists at Barclays research noted, after a 0.1% rise in December and following a run-up of 0.9% in November.

Services also picked-up, advancing at a 0.3% clip on the month - amid broad-based gains by categories - after slipping by a tenth of a percentage point in December.

"Personal consumption PPI, the BLS series that tracks pipeline price pressures for CPI inflation, rose by 0.5% m/m (2.4% y/y), consistent with the strong CPI inflation print received yesterday. The annual rate of growth in personal consumption PPI, at 2.4%, is lower relative to December, but is still a strong print, considering the high base in January 2016," said Pooja Sriram at Barclays Research.

Year-on-year, headline final demand PPI was ahead by 2.7% (consensus: 2.5%) after a reading of 2.6% in December and 3.1% for November.

Excluding food, energy and trade, final demand producer prices were up by 0.4% on the month and 2.5% on the year.

By way of a reaction, the yield on the benchmark 10-year US Treasury note was flat at 2.91%, but off an intra-session high of 2.94%.