July 2013 Producer Price Index

Historical release narrative reproduced from the official public-domain source. Statistical tables, standard technical appendices, administrative material and attendance rosters are omitted; formatting is adapted for reading. Figures retain the release's historical context and may have been revised. Consult the linked source for the complete document.

The Producer Price Index for finished goods was unchanged in July, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Prices for finished goods moved up 0.8 percent in June and 0.5 percent in May. At the earlier stages of processing, prices received by manufacturers of intermediate goods also were unchanged in July, and the crude goods index rose 1.2 percent. On an unadjusted basis, prices for finished goods advanced 2.1 percent for the 12 months ended July 2013. (See table A.)

Stage-of-Processing Analysis

Finished goods

The index for finished goods was unchanged in July as a 0.1-percent rise in prices for finished goods less foods and energy was offset by a 0.2-percent decrease in the index for finished energy goods. Prices for finished consumer foods were unchanged.

Finished core: The index for finished goods less foods and energy edged up 0.1 percent in July, the ninth consecutive increase. The July advance was led by prices for pharmaceutical preparations, which rose 1.0 percent. Increases in the indexes for light motor trucks and for communication and related equipment also contributed to higher finished core prices. (See table 2.)

Finished energy: Prices for finished energy goods moved down 0.2 percent in July after climbing 2.9 percent a month earlier. This decline is mostly attributable to a 3.9-percent decrease in the index for residential natural gas. Lower prices for gasoline and finished lubricants also were factors in the decline in the index for finished energy goods.

Finished foods: Prices for finished consumer foods were unchanged in July following a 0.2- percent advance in June. In July, a 5.6-percent increase in the index for pork offset a 10.6- percent decline in prices for fresh vegetables, except potatoes.

Intermediate goods

The Producer Price Index for intermediate materials, supplies, and components was unchanged in July after rising 0.5 percent in June. In July, a 1.2-percent advance in prices for intermediate foods and feeds and a 0.3-percent increase in the index for intermediate energy goods offset a 0.3-percent decline in prices for intermediate materials less foods and energy. (See table B.)

Intermediate foods: Prices for intermediate foods and feeds rose 1.2 percent in July, the largest increase since a 2.5-percent jump in August 2012. The July advance is mostly attributable to a 4.9-percent rise in the index for prepared animal feeds. Higher prices for pork and for shortening and cooking oils also contributed to the increase in the intermediate foods and feeds index. (See table 2.)

Intermediate energy: The index for intermediate energy goods moved up 0.3 percent in July, the third straight increase. Accounting for most of the July advance, prices for diesel fuel jumped 5.6 percent.

Intermediate core: Prices for intermediate materials less foods and energy moved down 0.3 percent in July after a 0.1-percent increase in the previous month. More than half of the decrease can be traced to a 1.4-percent drop in the index for industrial chemicals. Lower prices for nonferrous metals and fertilizer materials also contributed to the decline in the intermediate core index.

Crude goods

The Producer Price Index for crude materials for further processing advanced 1.2 percent in July. For the 3-month period ended in July, prices for crude materials rose 3.5 percent after falling 2.3 percent from January to April. In July, the monthly increase in the crude goods index is attributable to prices for crude energy materials, which climbed 4.0 percent. By contrast, the indexes for crude foodstuffs and feedstuffs and for crude nonfood materials less energy declined 1.1 percent and 0.3 percent, respectively. (See table B.)

Crude energy: Prices for crude energy materials increased 4.0 percent in July. From April to July, the index for crude energy materials rose 9.5 percent subsequent to a 1.3-percent decline for the 3 months ended in April. In July, the monthly rise is mostly due to a 10.6-percent jump in crude petroleum prices. Higher prices for coal also contributed to the increase in the crude energy index. (See table 2.)

Crude foods: The index for crude foodstuffs and feedstuffs moved down 1.1 percent in July. From April to July, the index for crude foods rose 0.6 percent following a 2.9-percent decrease for the 3 months ended in April. Over seventy percent of the monthly decline in July is attributable to raw milk prices, which fell 5.9 percent. Lower prices for slaughter chickens also were a factor in the decrease in the crude foodstuffs and feedstuffs index.

Crude core: The index for crude nonfood materials less energy moved down 0.3 percent in July. For the 3 months ended in July, crude core prices fell 2.5 percent compared with a 2.2- percent decline from January to April. The monthly decrease in July is mostly the result of a 2.9-percent drop in the index for nonferrous metals. Lower prices for corn also contributed to the decline in the crude core index.

Services Analysis

Trade industries: The Producer Price Index for the net output of total trade industries edged up 0.1 percent in July following a 0.5-percent decrease in June. (Trade indexes measure changes in margins received by wholesalers and retailers.) Leading the advance, margins received by the industry for merchant wholesalers of durable goods rose 1.0 percent. Higher margins received by grocery stores and gasoline stations with convenience stores also contributed to the increase in the total trade industries index.

Transportation and warehousing industries: The Producer Price Index for the net output of transportation and warehousing industries was unchanged in July after rising 0.6 percent in June. In July, higher prices received by the scheduled air transportation industry group and the crude petroleum pipeline industry offset falling prices for freight transportation arrangement and for couriers and express delivery services.

Services less trade, transportation, and warehousing: The Producer Price Index for the net output of services less trade, transportation, and warehousing inched up 0.1 percent in July following a 0.4-percent rise in June. Leading the July advance, prices received by the industry for investment banking and securities dealing climbed 3.6 percent. Higher prices received by the accommodation industry group and by general medical and surgical hospitals also contributed to the advance in the index for services less trade, transportation, and warehousing.

Resampling of Industries

Effective with the release of data for July 2013, the Producer Price Index (PPI) includes data for 33 resampled industries classified according to the 2012 North American Industry Classification System (NAICS). The Bureau of Labor Statistics periodically updates the sample of producers providing data for the PPI to reflect current conditions more accurately when the structure, membership, technology, or product mix of an industry shifts. The first results of this systematic process were published in July 1986. Subsequent efforts have been completed at 6- month intervals.

For information on specific index additions, deletions, and recodes effective this month, see the July 2013 issue of the PPI Detailed Report online at www.bls.gov/ppi/ppidr201307.pdf, or contact the PPI's Section of Index Analysis and Public Information at ppi-info@bls.gov or (202) 691-7705.

NAICS Code Industry

236221 New warehouse building construction 2381MR Nonresidential building maintenance and repair 311211 Flour milling 311520 Ice cream and frozen dessert manufacturing 311812 Commercial bakeries 311821 Cookie and cracker manufacturing 311824 Dry pasta, dough, and flour mixes manufacturing from purchased flour 321911 Wood window and door manufacturing 321918 Other millwork, including flooring 322220 Paper bag and coated and treated paper manufacturing 326111 Plastics bag and pouch manufacturing 326112 Plastics packaging film and sheet manufacturing 326113 Nonpackaging plastics film and sheet manufacturing 326199 All other plastics product manufacturing 327215 Glass product manufacturing made of purchased glass 327410 Lime manufacturing 33299T Small arms, ordnance, and ordnance accessories manufacturing 333120 Construction machinery manufacturing 333242 Semiconductor machinery manufacturing 333612 Speed changer, drive, and gear manufacturing 333912 Air and gas compressor manufacturing 334220 Broadcast and wireless communications equipment manufacturing 334511 Search, detection, and navigation instrument manufacturing 335210 Small electrical appliance manufacturing 336212 Truck trailer manufacturing 336370 Motor vehicle metal stamping 336411 Aircraft manufacturing 423000 Merchant wholesalers, durable goods 424000 Merchant wholesalers, nondurable goods 425120 Wholesale trade agents and brokers 454110 Electronic and mail-order shopping 517210 Wireless telecommunications carriers 532412 Other heavy machinery rental and leasing

Producer Price Index to Transition from Stage-of-Processing to Final Demand- Intermediate Demand Aggregation System

Effective with the January 2014 PPI data release in February 2014, BLS will transition from the Stage of Processing (SOP) to the Final Demand-Intermediate Demand (FD-ID) aggregation system. This shift will result in significant changes to the PPI news release, as well as other documents available from PPI. The transition to the FD-ID system is the culmination of a long-standing PPI objective to improve the current SOP aggregation system by incorporating PPIs for services, construction, government purchases, and exports. In comparison to the SOP system, the FD-ID system more than doubles current PPI coverage of the United States economy to over 75 percent of in-scope domestic production. The FD-ID system was introduced as a set of experimental indexes in January 2011. Nearly all new FD-ID goods, services, and construction indexes provide historical data back to either November 2009 or April 2010, while the indexes for goods that correspond with the historical SOP indexes go back to the 1970s or earlier.

The FD-ID system will highlight the index for final demand, which measures price changes for goods, services, and construction sold to final demand: personal consumption, capital investment, government purchases, and exports. The composition of products in the final demand price index differs from that of the finished goods index in two major respects. First, it includes government purchases and exports. Second, it includes services and construction, which are not reflected in finished goods.

The FD-ID system also includes two separate parallel treatments of intermediate demand: price changes for goods, services, and construction sold to business as inputs to production. The first treatment, intermediate demand by commodity type, measures price changes based on similarity of product and includes aggregate indexes for processed goods for intermediate demand, unprocessed goods for intermediate demand, and services for intermediate demand.

The second treatment, intermediate demand by production flow, is a stage-based system of price indexes, where price changes for goods, services, and construction can be studied as they move through the production chain of the economy to final demand. This treatment includes four stages of intermediate demand, which were established to maximize forward flow of production through the economy, while minimizing backflow of production.

These FD-ID indexes are constructed using PPI commodity indexes for goods, services, and construction, where products are assigned to various categories according to buyer type and level of fabrication. A product purchased by different classes of buyers is assigned to multiple FD-ID aggregates, with unique weights allocated to each aggregate based on the product's value of shipments to each buyer type.

To assist with the transition to the FD-ID system, PPI will provide, on a monthly basis, a version of the PPI news release based on the FD-ID model, starting with the publication of July 2013 data in August. The document will be labeled "Experimental" through the December release in January 2014 and will be posted to the PPI Experimental Aggregation webpage about two weeks after each month's scheduled PPI release. That webpage, http://www.bls.gov/ppi/experimentalaggregation.htm, also contains detailed methodological information for the FD-ID aggregation system. With the publication of January 2014 data in February 2014, the FD-ID version of the PPI news release will become the official news release document of record.

Further information also is available from the PPI Section of Index Analysis and Public information, at ppi-info@bls.gov or (202) 691-7705.