Producer Price Index Jumps

Large jumps for steel and aluminum and also the closely watched trade services category lead an overheated 0.5 percent rise in the producer price index for May. The results hit the top end of the Econoday consensus range as does a 0.3 percent increase when excluding food and also energy which rose a sharp 4.6 percent in May. When excluding food, energy and a striking 0.9 percent surge for trade services, the gain comes down to 0.1 percent.

Prices for steel mill products surged a monthly 4.3 percent following a 3.2 percent gain in April. Prices for aluminum mill shapes came in at an even hotter 5.0 percent monthly gain that follows April's 1.8 percent climb. Gains in metals are at the intermediate level but may already be affecting the finished level where goods prices rose a sharp 1.0 percent in the month.

Year-on-year rates in this report have been flat but they do show a pivot higher in May, to 3.1 percent which is the highest in 6 years. The rise in metals will be a general focus while for forecasters and Federal Reserve policy makers the gain that will get special attention is trade services, a reading that offers an indication of price change for wholesalers and retailers.