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Federal Reserve: U.S. Economic Growth Continues Modest to Moderate Pace

Canadian Industrial Product Price Index Up in February

Prices of products sold by Canadian manufacturers, as measured by the Industrial Product Price Index (IPPI), edged up 0.1 percent in February. Widespread price increases in the major commodity groups of the IPPI were largely offset by lower energy and petroleum product prices. Prices for raw materials purchased by Canadian manufacturers, as measured by the Raw Materials Price Index (RMPI), fell 0.3 percent due to lower prices for crude energy products.

The IPPI edged up 0.1 percent in February, following a 0.4 percent increase in January. The increase in the IPPI in February was widespread, with 17 commodity groups up, 2 down and 2 unchanged.

Motorized and recreational vehicles (+0.4 percent) contributed the most to the increase in the IPPI in February. The growth in this commodity group was mainly attributable to higher prices for motor vehicle engines and motor vehicle parts (+0.8 percent), aircraft (+1.2 percent), and aircraft engines, aircraft parts and other aerospace products (+1.3 percent). Higher prices for motorized and recreational vehicles were closely linked to the depreciation of the Canadian dollar relative to the US dollar.

Prices for chemicals and chemical products (+0.7 percent) and primary non-ferrous metal products (+0.7 percent) also pushed the IPPI upward.

Higher prices for plastic resins (+2.9 percent) and, to a lesser extent, petrochemicals (+0.7 percent) were the main source of the increase in chemicals and chemical products.

The gain in primary non-ferrous metal products was mainly attributable to higher prices for other unwrought non-ferrous metals and non-ferrous metal alloys (+2.4 percent). Higher prices for unwrought precious metals and precious metal alloys (+0.3 percent) and unwrought aluminum and aluminum alloys (+0.7 percent) also contributed to the increase in this commodity group.

Pulp and paper products (+1.2 percent) rose for the fifth consecutive month in February, mainly due to higher prices for wood pulp (+2.1 percent) and paper (except newsprint) (+1.6 percent).

The increase in the IPPI was mostly offset by lower prices for energy and petroleum products (-1.8 percent), following a 3.2 percent increase the previous month. The decline in this commodity group was mainly attributable to lower prices for light fuel oils (-4 percent), diesel fuel (-2.9 percent) and motor gasoline (-0.9 percent). The IPPI excluding energy and petroleum products rose 0.3 percent.

Some IPPI prices are reported in US dollars and converted to Canadian dollars using the average monthly exchange rate. Consequently, any change in the value of the Canadian dollar relative to the US dollar will affect the level of the index. From January to February, the Canadian dollar fell 1.3 percent relative to the US dollar. If the exchange rate had remained constant, the IPPI would have decreased 0.2 percent instead of rising 0.1 percent.

The IPPI rose 1.9 percent over the 12-month period ending in February, following a 2.1 percent increase in January.

Compared with February 2017, the increase in the IPPI in February was mainly due to higher prices for energy and petroleum products (+10.6 percent), particularly motor gasoline (+13.5 percent), light fuel oils (+14.8 percent) and diesel fuel (+14.3 percent). Year over year, prices for energy and petroleum products have been on an upward trend since December 2016. The IPPI excluding energy and petroleum products rose 0.7 percent year over year.

Higher prices for pulp and paper products (+10.8 percent) also contributed to the year-over-year increase in the IPPI, but more moderately. The increase in this commodity group was mainly the result of higher prices for wood pulp (+24.8 percent). Year over year, this was the largest increase for pulp and paper products since March 2009 (+11.4 percent).

Primary non-ferrous metal products (+4.3 percent) also rose compared with February 2017. The increase in primary non-ferrous metal products was mainly due to higher prices for other unwrought non-ferrous metals and non-ferrous metal alloys (+11.7 percent), unwrought copper and copper alloys (+13.1 percent) and unwrought aluminum and aluminum alloys (+10.4 percent). However, lower prices for unwrought precious metals and precious metal alloys (-2.3 percent) moderated this growth.

Year over year, the increase in the IPPI was mainly offset by lower prices for motorized and recreational vehicles (-3.2 percent). Lower prices for passenger cars and light trucks (-4.1 percent) were mainly responsible for the decline in this commodity group. Prices for motor vehicle engines and motor vehicle parts (-2.1 percent) and aircraft (-2.5 percent) also declined compared with February 2017.

The RMPI fell 0.3 percent in February, following a 3.4 percent increase in January. Of the six major commodity groups, five were up and one was down.

The decline in the RMPI in February was primarily due to lower crude energy product prices (-1.9 percent), especially conventional crude oil (-1.9 percent). The RMPI excluding crude energy products rose 0.9 percent.

The decline in the RMPI was mainly offset by higher prices for metal ores, concentrates and scrap (+0.7 percent), which rose for the fifth consecutive month.

Other commodity groups with higher prices in February included animals and animal products (+0.6 percent) and crop products (+1.2 percent).

The increase in the animals and animal products group was primarily due to higher prices for live animals (+1.2 percent), particularly hogs (+4.6 percent).

Crop products rose mainly due to higher prices for soybeans (+10.1 percent), canola (including rapeseed) (+2.7 percent) and grain corn (+4.1 percent).

Compared with the same month a year earlier, the RMPI rose 5.9 percent in February, continuing the upward trend that began in October 2016.

The increase in the RMPI was primarily due to crude energy products (+10 percent), specifically higher conventional crude oil prices (+10.2 percent). Year over year, crude energy prices have risen every month since July 2017. The RMPI excluding crude energy prices rose 2.9 percent.

Metal ores, concentrates and scrap prices (+6.5 percent) also contributed to the year-over-year increase in the RMPI, but to a lesser extent.

Prices for animals and animal products (+0.4 percent) and logs, pulpwood, natural rubber and other forestry products (+2 percent) also increased compared with February 2017.

 

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