The United States Work Statistics Office reported on Wednesday that the Producer Price Index for the Final Demand was not modified in June, as a 0.3% gain in the prices of the goods was compensated with a decrease of 0.1% of the prices of the services.
The flat reading followed a revised increase of 0.3% in May and, according to Reuters, coincided with the forecasts of the economists without any change in the PPI holder for the final demand.
During the twelve months in June, the IPP for the final demand increased by 2.3%, below the annual advance of May 2.7%, according to BLS data.
The basic measures of producer inflation, which explain volatile eating and energetic components, are also above the goal of 2% of the Federal Reserve, reinforcing the expectations that the Central Bank will maintain its reference rate during 4.25% by 4.50% at the end of July meeting.
“From a market point of view, investors have to deal with the fact that this is now the fourth consecutive year (at least so far) that the markets have despised what the FED would be,” said Henry Allen, a macro strategist in Deutsche Bank, in a client note, Marketwatch reported.
“After all, at the beginning of 2025, future was priced at a federal type of federally for the June meeting, which has not happened,” he added.
The entry costs of the construction sector showed relief in June. According to the Federal Reserve Bank of St. Louis, the non -adjusted PPI for construction materials fell to 338,482 in June 343,975 in May, a fall of 1.6% month to month that can facilitate short -term budget pressures for contractors.
“The contractors are still largely occupied, but they are increasingly listening to the owners that projects are pausing, reduced or even canceled due to the uncertainty over where the economy is heading,” said Ken Simonson, an economist in none of the general contractors associated with America, in a Linkedin place.
“Politician – and changing effective dates – contractors have difficulty finding out their costs,” added the AGC economist
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“Entry price climbing reasons means that taxpayers will get even fewer infrastructure for spent dollar,” Zack Fritz, economist at the associated building and contractor contractors group, said.
“ This is a particularly urgent problem, as federal regulations and material prices have increased the costs of infrastructure in recent years; the cost of road construction in the United States increased around 65 percent from the beginning of 2020 until the end of 2024, according to the National Dot road construction index, ” he continued.
In addition, the contractors continue to feel the bite of the price hikes related to the previous rates. In a May Survey, ABC found that 87% of its members had been notified of the price increases in the imported material rights and 22% of the project delays as a direct result.
“Almost 22% of contractors had a backward or canceled project in April due to the rates, up to 18% in March,” said ABC’s chief economist, ABB Basu, in a statement on Wednesday.
“Economic uncertainty is still extraordinarily high,” Basu added.
ABC’s main economist agreed that the Fed will be unlikely to reduce interest rates at this month’s meeting. However, despite higher rates and entry costs, contractors have remained optimistic about the benefits. Basu said that it is possibly due to the depreciation of a permanent bonus of 100% in the large number of invoice compensation expenses.
And there is more uncertainty: President Donald Trump has been emphasized that the additional rate increases the imports of Mexico, Japan, Canada, Brazil and the European Union will enter into force on August 1.
Many economists have won their play, arguing that taxes will maintain high goods prices at the end of the year.
“Although it is unclear how and when trade policy will affect the prices of construction materials, the impact became clear on the release of the June consumption price index; the prices of basic products, excluding cars, increased to the faster rate since the end of 2021,” said Basu.
The bottom line: Mixed PPI signals indicate moderate entry prices this summer, but the rates and volatility of the service sector require flexible contracts and a closed control of the costs of the material.
