U.S. producer prices unexpectedly fell in February on weak profit margins for trade services, pointing to tame inflation that could argue against an anticipated June interest rate hike from the Federal Reserve.
The U.S. Labor Department said on Friday its producer price index for final demand fell 0.5% after dropping 0.8% in January. It was the fourth straight monthly decline in the PPI.
In the 12 months through February, producer prices fell 0.6%, the first drop since the series was revamped in 2009, after being unchanged in January.
Economists had forecast the PPI rising 0.3% last month and remaining unchanged from a year ago.
U.S. Treasury prices turned up, with yields on the 30-year and 10-year bonds touching session lows after the data. The dollar pared its gains against a basket of currencies, while U.S. stock index futures were pointing to a weaker open.
Services accounted for 70% of the decline in the PPI last month. The volatile trade services component, which mostly reflects profit margins, fell a record 1.5% in February, after rising 0.5% in January.
It was pulled down by a 13.4% drop in margins at gasoline service stations. Profit margins also fell for apparel, footwear and jewelry retailers, as well as for food and alcohol.
There also were declines in machinery, equipment, parts and supplies wholesale margins, signs that a strong dollar was helping to restrain inflation.
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