US producer prices slip in August on cheaper services

WASHINGTON, Sept 10 (Reuters) - U.S. producer prices unexpectedly fell in August, pulled down by a decline in the costs of services.

The Producer Price Index for final demand dipped 0.1% after a downwardly revised 0.7% jump in July, the Labor Department's Bureau of Labor Statistics said on Wednesday. Economists polled by Reuters had forecast the PPI would advance 0.3% after a previously reported 0.9% surge in July.

Services prices fell 0.2% after rebounding 0.7% in July. Goods prices edged up 0.1% after increasing 0.6% in the prior month. In the 12 months through August, the PPI increased 2.6% after climbing 3.1% in July.

Economists are expecting price pressures from tariffs to lift consumer inflation in August.

The Federal Reserve is expected to cut interest rates next Wednesday, with a quarter-percentage-point reduction fully priced in, after pausing its easing cycle in January because of uncertainty over the impact of President Donald Trump's sweeping tariffs. The anticipated rate cut is mostly driven by labor market weakness, which has raised concerns that the economy was stagnating.

The government estimated on Tuesday that the economy likely created 911,000 fewer jobs in the 12 months through March than previously estimated. That data followed the release last Friday of the monthly employment report, which showed job growth almost stalled in August and the economy shed jobs in June for the first time in four and a half years.