July 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 rose 0.1 percent in July, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This increase followed a 0.4-percent advance in June and a 0.2-percent decline in May. On an unadjusted basis, the index for final demand climbed 1.7 percent for the 12 months ended in July. (See table A.)

In July, the 0.1-percent increase in final demand prices can be traced to the index for final demand services, which also rose 0.1 percent. Prices for final demand goods were unchanged.

Within intermediate demand, prices for processed goods advanced 0.1 percent, the index for unprocessed goods dropped 2.7 percent, and prices for services moved up 0.3 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 inched up 0.1 percent in July after rising 0.3 percent in the prior month. Leading the July increase, the index for final demand transportation and warehousing services moved up 0.5 percent. Margins for final demand trade services advanced 0.2 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) The index for final demand services less trade, transportation, and warehousing was unchanged.

Product detail: In July, prices for truck transportation of freight climbed 0.7 percent. Margins for automotive fuels and lubricants retailing and for apparel, footwear, and accessories retailing increased. The indexes for portfolio management and passenger car rental also moved higher. In contrast, margins for machinery and equipment wholesaling fell 1.7 percent in July. The indexes for loan services (partial); apparel wholesaling; and health, beauty, and optical goods retailing also decreased. (See table 4.)

Final demand goods: Prices for final demand goods were unchanged in July after moving up 0.5 percent in June. In July, a 0.2-percent rise in the index for final demand goods less foods and energy and a 0.4-percent increase in prices for final demand foods offset a 0.6-percent decline in the index for final demand energy.

Product detail: In July, among prices for final demand goods, the index for pharmaceutical preparations rose 1.0 percent. Prices for meats, processed poultry, residential electric power, and light motor trucks also moved higher. Conversely, gasoline prices fell 2.1 percent in July. The indexes for soybeans, fresh and dry vegetables, grains, and gold and platinum jewelry also decreased.

Special grouping, Final demand less foods, energy, and trade: Prices for final demand less foods, energy, and trade services rose 0.2 in July following a 0.2-percent advance in June and no change in May. (The index for final demand less foods, energy, and trade services represents about two-thirds of final demand.)

Special grouping, Finished goods: Prices for finished goods inched up 0.1 percent in July after a 0.7-percent advance in June. (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 July increase was led by prices for finished consumer foods, which climbed 1.0 percent. The index for finished goods less foods and energy edged up 0.1 percent. In contrast, prices for finished consumer energy goods declined 0.7 percent. Within finished goods, rising prices for meats, residential electric power, processed poultry, pharmaceutical preparations, and light motor trucks outweighed falling prices for gasoline, fresh and dry vegetables, residential natural gas, and gold and platinum jewelry.

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 edged up 0.1 percent in July following a 0.4-percent increase in June. Leading the July advance, prices for processed materials less foods and energy rose 0.3 percent. Also contributing, but to a lesser extent, the index for processed foods and feeds moved up 0.4 percent. Conversely, prices for processed energy goods declined 0.3 percent. For the 12 months ended in July, prices for processed goods for intermediate demand rose 1.6 percent, the largest 12-month advance since a 2.9-percent increase in March 2012. (See table B.)

Product detail: Accounting for over three-quarters of the July increase in the index for processed goods for intermediate demand, prices for primary basic organic chemicals moved up 3.9 percent. The indexes for meats, nonferrous metals, diesel fuel, and electric power also advanced. In contrast, gasoline prices moved down 2.1 percent in July. The indexes for natural gas to electric utilities, prepared animal feeds, and ethanol also declined. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand moved down 2.7 percent in July, the largest decline since falling 3.3 percent in June 2012. The decrease in July was led by prices for unprocessed energy materials, which dropped 6.4 percent. The index for unprocessed foodstuffs and feedstuffs moved down 0.4 percent. Prices for unprocessed nonfood materials less energy were unchanged. For the 12 months ended in July, the index for unprocessed goods for intermediate demand rose 0.9 percent, the smallest 12-month change since a 0.5-percent decline in January 2014.

Product detail: In July, over two-thirds of the decline in the index for unprocessed goods for intermediate demand can be traced to crude petroleum prices, which fell 8.0 percent. The indexes for grains, soybeans, natural gas, ungraded chicken eggs, and wastepaper also decreased. In contrast, prices for slaughter livestock increased 7.9 percent. The indexes for nonferrous metals and unprocessed finfish also advanced.

Services for intermediate demand: The index for services for intermediate demand increased 0.3 percent in July after rising 0.6 percent in June. In July, nearly 70 percent of the broad-based advance can be traced to prices for services less trade, transportation, and warehousing for intermediate demand, which moved up 0.3 percent. A 0.5-percent increase in the index for transportation and warehousing services for intermediate demand and a 0.1-percent rise in margins for trade services for intermediate demand also contributed to the advance. For the 12 months ended in July, the index for services for intermediate demand increased 1.7 percent. (See table C.)

Product detail: In July, about 30 percent of the rise in the index for services for intermediate demand can be traced to a 5.6-percent jump in prices for television advertising time sales. The indexes for portfolio management; passenger car rental; services related to securities brokerage and dealing; courier, messenger, and U.S. postal services; and paper and plastics products wholesaling also increased. Conversely, prices for loan services (partial) fell 2.1 percent in July. The indexes for parts and supplies for machinery and equipment wholesaling and for services related to air transportation also decreased.

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 July. Prices for total services inputs to stage 4 intermediate demand rose 0.3 percent, and the index for total goods inputs moved up 0.1 percent. (See table D.) Increases in prices for portfolio management, meats, services related to securities brokerage and dealing, passenger car rental, diesel fuel, and processed poultry outweighed declines in the indexes for grains, loan services (partial), and gasoline. (See table 6.) For the 12 months ended in July, the index for stage 4 intermediate demand rose 1.5 percent.

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.): Prices for stage 3 intermediate demand moved up 0.6 percent in July, the largest advance since a 1.0-percent increase in March 2014. In July, the index for total goods inputs to stage 3 intermediate demand rose 0.7 percent, and the index for total services inputs advanced 0.4 percent. Higher prices for slaughter livestock; slaughter poultry; television advertising time sales; courier, messenger, and U.S. postal services; unprocessed finfish; and diesel fuel outweighed decreases in the indexes for ungraded chicken eggs, grains, and loan services (partial). For the 12 months ended in July, the index for stage 3 intermediate demand climbed 3.6 percent, the largest 12-month advance since a 4.3-percent increase in 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 fell 1.7 percent in July, the largest decrease since a 2.0- percent drop in March 2014. In July, prices for total goods inputs to stage 2 intermediate demand declined 3.1 percent. In contrast, the index for total services inputs rose 0.2 percent. Decreases in the indexes for crude petroleum, natural gas, grains, prepared animal feeds, loan services (partial), and soybeans outweighed advances for television advertising time sales, primary basic organic chemicals, and nonferrous metals. For the 12 months ended in July, the index for stage 2 intermediate demand moved down 0.6 percent, the largest 12-month decline since a 1.3-percent decrease in November 2013.

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 increased 0.7 percent in July, the largest rise since a 1.2-percent advance in January 2014. In July, prices for total goods inputs to stage 1 intermediate demand rose 0.7 percent, and the index for total services inputs moved up 0.5 percent. Increases in the indexes for primary basic organic chemicals, industrial electric power, nonferrous metals, portfolio management, services related to securities brokerage and dealing, and diesel fuel outweighed falling prices for gasoline; industrial natural gas; and securities brokerage, dealing, and investment advice. For the 12 months ended in July, the index for stage 1 intermediate demand jumped 2.3 percent, the largest 12-month rise since a 2.5- percent advance in January 2012.

Resampling of Industries

Effective with the release of data for July 2014, the Producer Price Index (PPI) includes data for 47 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 2014 issue of the PPI Detailed Report online at www.bls.gov/ppi/ppidr201407.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 212111 Bituminous coal and lignite surface mining 212112 Bituminous coal underground mining 212230 Copper, nickel, lead and zinc mining* 212324 Kaolin and ball clay mining 212391 Potash, soda, and borate mineral mining 236222 New school building construction 311811 Retail bakeries 312130 Wineries 312230 Tobacco manufacturing 316992 Women's handbag and purse manufacturing 321212 Softwood veneer and plywood manufacturing 322110 Pulp mills 322122 Newsprint mills 323117 Books printing 325199 All other basic organic chemical manufacturing 325998 Other miscellaneous chemical product manufacturing 332439 Other metal container manufacturing 333314 Optical instrument and lens manufacturing 333414 Heating equipment (except warm air furnaces) manufacturing 333519 Rolling mill and other metalworking machinery manufacturing 334290 Other communications equipment manufacturing 334412 Bare printed circuit board manufacturing 334514 Totalizing fluid meters and counting devices manufacturing 334519 Other measuring and controlling device manufacturing 335228 Other major household appliance manufacturing 335931 Current-carrying wiring device manufacturing 336214 Travel trailer and camper manufacturing 336991 Motorcycle, bicycle, and parts manufacturing 337215 Showcases, partitions, shelving, and lockers manufacturing 339994 Broom, brush, and mop manufacturing 445310 Beer, wine, and liquor stores 446110 Pharmacies and drug stores 451211 Book stores 453110 Florists 453220 Gift, novelty, and souvenir stores 488119 Other airport operations 488190 Other support activities for air transportation 621111 Offices of physicians, except mental health 621210 Offices of dentists 621511 Medical laboratories 621512 Diagnostic imaging centers 621610 Home health care services 622110 General medical and surgical hospitals 622210 Psychiatric and substance abuse hospitals 622310 Other specialty hospitals 623110 Nursing care facilities 623210 Residential developmental disability homes

* Combines data formerly included under NAICS 212231 (Lead ore and zinc ore mining) and NAICS 212234 (Copper ore and nickel ore mining).