Producer Prices: Goods Bottoming?

Bottom Line:  Producer prices rose more than expected than in August as the goods economy appears to be starting to bottom. Critical sectors like trade/transportation/warehousing saw notably higher prices. Processed and unprocessed goods prices were sharply higher, up 2.1% and 1.3%, respectively. Over 80% of the headline increase was due to the higher goods prices. Final demand services prices remained tame, up 0.2%, and trending in the 2.5% annualized area. Overall, producer prices reveal a potential bottoming in the goods economy. Deflation in goods is likely turning towards flat to modest inflation. Pipeline inflation in the services sector remains moderate but above 2%.