March 2014 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 final demand advanced 0.5 percent in March, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This increase followed a decline of 0.1 percent in February and a rise of 0.2 percent in January. On an unadjusted basis, the index for final demand moved up 1.4 percent for the 12 months ended in March, the largest 12-month advance since a 1.7-percent increase in August 2013. (See table A.)

In March, the 0.5-percent increase in final demand prices can be traced to the index for final demand services, which rose 0.7 percent. Prices for final demand goods were unchanged.

Within intermediate demand, the index for processed goods declined 0.2 percent, prices for unprocessed goods edged down 0.1 percent, and the index for services rose 0.4 percent. (See tables B and C.)

Final Demand

(Final demand includes goods, services, and construction which are sold for personal consumption, capital investment, government purchases, and export. See table 4 for product detail.)

Final demand services: The index for final demand services rose 0.7 percent in March, the largest advance since a 0.8-percent jump in January 2010. In March, over 60 percent of the broad-based increase can be traced to margins for final demand trade services, which climbed 1.4 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand services less trade, transportation, and warehousing increased 0.4 percent, and the index for final demand transportation and warehousing services rose 0.5 percent.

Product detail: In March, a 3.3-percent increase in margins for apparel, jewelry, footwear, and accessories retailing led the advance in prices for final demand services. The indexes for chemicals and allied products wholesaling; services related to securities brokerage and dealing; portfolio management; food wholesaling; and airline passenger services also increased. In contrast, prices for guestroom rental fell 2.4 percent. The indexes for automotive fuels and lubricants retailing and for loan services (partial) also moved lower in March. (See table 4.)

Final demand goods: Prices for final demand goods were unchanged in March after moving up 0.4 percent in each of the prior three months. In March, a 1.1-percent increase in the index for final demand foods and a 0.1-percent rise in prices for final demand goods less foods and energy offset a 1.2-percent decline in the index for final demand energy.

Product detail: In March, advances in the indexes for pork; residential natural gas; pharmaceutical preparations; sausage, deli, and boxed meats; and fluid milk products offset declines in prices for gasoline, diesel fuel, liquefied petroleum gas, primary basic organic chemicals, and fresh fruit and melons.

Special grouping, Final demand less foods, energy, and trade: Prices for final demand less foods, energy, and trade services rose 0.3 percent in March after edging up 0.1 percent in each of the prior two months. (The index for final demand less foods, energy, and trade services represents about two-thirds of final demand.)

Special grouping, Finished goods: The index for finished goods edged down 0.1 percent in March, the first decrease since September 2013. (The finished goods index represents about two- thirds of final demand goods, through the exclusion of the weight for government purchases and exports. The finished goods index represents about one-quarter of overall final demand.) The March decline was led by the index for finished consumer energy goods, which fell 1.0 percent. Conversely, prices for finished consumer foods and for finished goods less foods and energy increased 0.7 percent and 0.1 percent, respectively. Within finished goods, lower prices for gasoline, liquefied petroleum gas, diesel fuel, light motor trucks, and fresh fruits and melons outweighed higher prices for pork, residential natural gas, pharmaceutical preparations, and sausage, deli, and boxed meats.

Intermediate Demand

(Intermediate demand includes goods, services, and maintenance and repair construction sold to businesses, excluding capital investment. BLS publishes two parallel treatments of intermediate demand, each constructed from the identical set of commodity price indexes. The first treatment organizes commodities according to commodity type, and the second organizes commodities using a stage-based, production flow model. See the technical note for more information.)

Intermediate Demand by Commodity Type

Processed goods for intermediate demand: The index for processed goods for intermediate demand fell 0.2 percent in March, the first decline since moving down 0.3 percent in November 2013. Leading the March decrease, prices for processed energy goods fell 1.2 percent. The index for processed materials less foods and energy declined 0.2 percent. In contrast, prices for processed foods and feeds rose 1.6 percent. For the 12 months ended in March, the index for processed goods for intermediate demand advanced 0.7 percent, the largest 12-month increase since a 1.3-percent rise in July 2013. (See table B.)

Product detail: In March, a 7.0-percent decrease in diesel fuel prices was a major factor in the decline in the index for processed goods for intermediate demand. The indexes for primary basic organic chemicals, gasoline, commercial electric power, liquefied petroleum gas, and jet fuel also fell. Conversely, prices for prepared animal feeds climbed 1.8 percent in March. The indexes for utility natural gas and ethanol also advanced. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand edged down 0.1 percent in March, the first decline since a 1.7-percent decrease in November 2013. In March, prices for unprocessed energy materials fell 6.8 percent. In contrast, the index for unprocessed foodstuffs and feedstuffs jumped 7.6 percent. Prices for unprocessed nonfood materials less energy moved up 0.5 percent. For the 12 months ended in March, the index for unprocessed goods for intermediate demand rose 5.8 percent, the largest 12- month increase since an 8.5-percent advance in July 2013.

Product detail: In March, a 10.9-percent drop in natural gas prices was a major factor in the decline in the index for unprocessed goods for intermediate demand. Prices for crude petroleum, carbon steel scrap, copper base scrap, and fresh fruits and melons also fell. Conversely, the slaughter hogs index surged 30.4 percent in March. Prices for slaughter poultry, slaughter cattle, and nonferrous metal ores also rose.

Services for intermediate demand: The index for services for intermediate demand moved up 0.4 percent, the largest rise since a 0.4-percent increase in June 2013. In March, the broad-based advance was led by prices for services less trade, transportation, and warehousing for intermediate demand, which increased 0.4 percent. The index for trade services for intermediate demand climbed 0.5 percent, and prices for transportation and warehousing services for intermediate demand moved up 0.2 percent. For the 12 months ended in March, the index for services for intermediate demand advanced 1.6 percent, the largest 12-month increase since a 1.8-percent rise in September 2013. (See table C.)

Product detail: Leading the March increase in the index for services for intermediate demand, prices for services related to securities brokerage and dealing jumped 8.8 percent. The indexes for portfolio management, chemicals and allied product wholesaling, passenger car rental, paper and plastics products wholesaling, and food wholesaling also increased. In contrast, margins for parts and supplies for machinery and equipment wholesaling fell 1.8 percent. The indexes for loan services (partial) and for securities brokerage, dealing, and investment advice also declined.

Intermediate Demand by Production Flow

Stage 4 intermediate demand (The stage 4 intermediate demand index measures price changes for products purchased by industries that primarily produce output sold to final demand.): The index for stage 4 intermediate demand advanced 0.2 percent in March, the fourth consecutive rise. In March, the index for total services inputs to stage 4 intermediate demand moved up 0.5 percent, and prices for total goods inputs fell 0.1 percent. (See table D.) Increases in the indexes for services related to securities brokerage and dealing, portfolio management, chemicals and allied products wholesaling, food wholesaling, passenger car rental, and grains outweighed decreases for diesel fuel, parts and supplies for machinery and equipment wholesaling, and jet fuel. For the 12 months ended in March, the index for stage 4 intermediate demand advanced 1.3 percent, the largest 12-month rise since climbing 1.3 percent in August 2013. (See table 6.)

Stage 3 intermediate demand (The stage 3 intermediate demand index measures price changes for products purchased by industries that primarily produce output sold to industries classified in stage 4.): The index for stage 3 intermediate demand rose 0.9 percent in March, the third consecutive increase. In March, prices for total goods inputs to stage 3 intermediate demand advanced 1.6 percent, and the index for total services inputs moved up 0.2 percent. Higher prices for slaughter hogs, slaughter poultry, raw milk, slaughter cattle, utility natural gas, and cable network advertising time sales outweighed lower prices for diesel fuel, gasoline, and loan services (partial). For the 12 months ended in March, the index for stage 3 intermediate demand rose 2.9 percent, the largest advance since a 4.3-percent increase for the 12 months ended January 2012.

Stage 2 intermediate demand (The stage 2 intermediate demand index measures price changes for products purchased by industries that primarily produce output sold to industries classified in stage 3.): The index for stage 2 intermediate demand moved down 2.0 percent in March, the largest decrease since a 2.0-percent decline in June 2012. In March, prices for total goods inputs to stage 2 intermediate demand fell 3.4 percent, and the index for total services inputs moved up 0.3 percent. Declines in the indexes for natural gas; crude petroleum; liquefied petroleum gas; primary basic organic chemicals; metals, minerals, and ores wholesaling; and diesel fuel outweighed increases for chemicals and allied products wholesaling, grains, and prepared animal feeds. For the 12 months ended in March, the index for stage 2 intermediate demand climbed 2.7 percent.

Stage 1 intermediate demand (The stage 1 intermediate demand index measures price changes for products purchased by industries that primarily produce output sold to industries classified in stage 2.): The index for stage 1 intermediate demand declined 0.5 percent in March, the largest decrease since falling 0.8 percent in April 2013. In March, the index for total goods inputs to stage 1 intermediate demand fell 1.5 percent, and prices for total services inputs rose 0.9 percent. Decreases in the indexes for primary basic organic chemicals; carbon steel scrap; diesel fuel; electric power; gasoline; and securities brokerage, dealing, and investment advice outweighed higher prices for services related to securities brokerage and dealing, portfolio management, and utility natural gas. For the 12 months ended in March, the index for stage 1 intermediate demand rose 1.2 percent.