November 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 fell 0.2 percent in November, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This decrease followed a 0.2-percent rise in October and a 0.1-percent decline in September. On an unadjusted basis, the index for final demand advanced 1.4 percent for the 12 months ended in November, the smallest 12-month increase since a 1.2-percent rise in February 2014. (See table A.)

In November, the 0.2-percent decline in final demand prices can be traced to the index for final demand goods, which decreased 0.7 percent. In contrast, prices for final demand services advanced 0.1 percent.

Within intermediate demand, prices for processed goods declined 1.0 percent, the index for unprocessed goods fell 1.3 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 goods: The index for final demand goods fell 0.7 percent in November, the fifth consecutive decrease. The broad-based November decline was led by prices for final demand energy, which dropped 3.1 percent. The index for final demand goods less foods and energy edged down 0.1 percent, and prices for final demand foods fell 0.2 percent.

Product detail: Sixty percent of the November decline in prices for final demand goods can be attributed to the index for gasoline, which dropped 6.3 percent. Prices for dairy products, pork, diesel fuel, residential natural gas, and primary basic organic chemicals also moved lower. Conversely, the index for pharmaceutical preparations increased 1.1 percent. Prices for fresh and dry vegetables and for soybeans also advanced. (See table 4.)

Final demand services: The index for final demand services inched up 0.1 percent in November subsequent to a 0.5-percent rise in October. In November, prices for final demand services less trade, transportation, and warehousing, as well as margins for final demand trade services, rose 0.1 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) In contrast, the index for final demand transportation and warehousing services dropped 0.8 percent.

Product detail: In November, a 4.0-percent jump in prices for loan services (partial) led the increase in the index for final demand services. Margins for machinery and equipment wholesaling, food wholesaling, and food and alcohol retailing, as well as prices for bundled wired telecommunications access services, also moved higher. Conversely, prices for airline passenger services moved down 1.9 percent. The indexes for automotive fuels and lubricants retailing; apparel, jewelry, footwear, and accessories retailing; and securities brokerage, dealing, and investment advice also decreased.

Special grouping, Final demand less foods, energy, and trade: The index for final demand less foods, energy, and trade services was unchanged after edging up 0.1 percent in October. For the 12 months ended in November, prices for final demand less foods, energy, and trade services rose 1.5 percent. (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 moved down 0.7 percent in November, the largest decrease since a 1.2-percent drop in July 2009. (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 November decline was led by the index for finished consumer energy goods, which dropped 2.7 percent. The index for finished consumer foods fell 0.5 percent. In contrast, prices for finished goods less foods and energy edged up 0.1 percent. Within finished goods, falling prices for gasoline, dairy products, pork, residential natural gas, light motor trucks, and fresh fruits and melons outweighed rising prices for pharmaceutical preparations, fresh and dry vegetables, and beef and veal.

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 moved down 1.0 percent in November, the largest decrease since a 1.1-percent drop in March 2013. Two-thirds of the broad-based decline in November was the result of prices for processed energy goods, which fell 3.4 percent. The indexes for processed materials less foods and energy and for processed foods and feeds moved down 0.5 percent and 0.3 percent, respectively. For the 12 months ended in November, the index for processed goods for intermediate demand moved down 0.3 percent, the first 12-month decline since a 0.2-percent decrease in February 2014. (See table B.)

Product detail: In November, a major contributor to the decline in the index for processed goods for intermediate demand was diesel fuel, which decreased 3.5 percent. Prices also fell for gasoline, primary basic organic chemicals, natural gas to electric utilities, lubricating oil base stocks, and dairy products. Conversely, the index for soybean cake and meal jumped 20.9 percent. Prices for asphalt and for paper boxes and containers also moved up in November. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand fell 1.3 percent in November, the second consecutive monthly decrease. Leading the November decline, the index for unprocessed energy materials dropped 3.7 percent. The index for unprocessed nonfood materials less energy moved down 1.6 percent. In contrast, prices for unprocessed foodstuffs and feedstuffs advanced 0.9 percent. For the 12 months ended in November, the index for unprocessed goods for intermediate demand fell 1.6 percent, the fourth straight year-over-year decrease.

Product detail: More than half of the November decline in the index for unprocessed goods for intermediate demand can be traced to prices for natural gas, which fell 7.7 percent. The indexes for raw milk, crude petroleum, slaughter chickens, carbon steel scrap, and unprocessed finfish also moved lower. In contrast, prices for slaughter hogs jumped 19.8 percent in November. The indexes for aluminum base scrap and coal also moved higher.

Services for intermediate demand: The index for services for intermediate demand advanced 0.3 percent in November after inching up 0.1 percent in October. The November increase was the result of a 0.4-percent rise in the index for services less trade, transportation, and warehousing for intermediate demand. Conversely, prices for transportation and warehousing services for intermediate demand fell 0.3 percent. The index for trade services for intermediate demand was unchanged. For the 12 months ended in November, prices for services for intermediate demand climbed 1.5 percent. (See table C.)

Product detail: A 5.3-percent increase in the index for business loans (partial) led the November rise in prices for services for intermediate demand. The indexes for portfolio management; food wholesaling; broadcast and network television advertising time sales; hardware, building material, and supplies retailing; and nonresidential property sales and leases also increased. In contrast, prices for airline passenger services fell 1.9 percent. The indexes for securities brokerage, dealing, and investment advice and for building materials, paint, and hardware wholesaling 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 moved down 0.3 percent in November, the largest decrease since a 0.4-percent decline in March 2013. In November, prices for total goods inputs to stage 4 intermediate demand fell 0.5 percent. Conversely, the index for total services inputs edged up 0.1 percent. (See table D.) Decreasing prices for gasoline; securities brokerage, dealing, and investment advice; jet fuel; diesel fuel; commercial electric power; and dairy products outweighed increases in the indexes for business loans (partial), portfolio management, and soybean cake and meal. (See table 6.) For the 12 months ended in November, prices for stage 4 intermediate demand advanced 0.8 percent, the smallest 12-month rise since a 0.6-percent increase in February 2014.

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 down 0.4 percent in November after a 0.2-percent decline in October. In November, the index for total goods inputs to stage 3 intermediate demand decreased 1.0 percent. In contrast, prices for total services inputs rose 0.3 percent. Declines in the indexes for raw milk, slaughter chickens, gasoline, diesel fuel, residual fuels, and staffing services outweighed advances in prices for business loans (partial), slaughter hogs, and fresh and dry vegetables. For the 12 months ended in November, the index for stage 3 intermediate demand increased 2.5 percent, the smallest 12-month advance since a 1.4-percent rise in February 2014.

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 1.1 percent in November, the fifth straight decline. In November, prices for total goods inputs to stage 2 intermediate demand moved down 2.2 percent. Conversely, the index for total services inputs climbed 0.4 percent. Lower prices for natural gas; crude petroleum; primary basic organic chemicals; liquefied petroleum gas; carbon steel scrap; and securities brokerage, dealing, and investment advice outweighed increases in prices for business loans (partial), soybean cake and meal, and grains. For the 12 months ended in November, the index for stage 2 intermediate demand fell 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.): Prices for stage 1 intermediate demand moved down 1.4 percent in November, the largest decrease since a 1.8-percent decline in June 2012. In November, the indexes for total goods inputs and total services inputs to stage 1 intermediate demand fell 2.2 percent and 0.2 percent, respectively. Decreasing indexes for primary basic organic chemicals; carbon steel scrap; gasoline; securities brokerage, dealing, and investment advice; industrial electric power; and commercial electric power outweighed higher prices for aluminum base scrap, portfolio management, and asphalt. For the 12 months ended in November, prices for stage 1 intermediate demand moved down 0.2 percent, the first year-over-year decrease since edging down 0.1 percent in October 2013.

PPI Updates Commodity Weight Allocations for the Final Demand-Intermediate Demand Aggregation Structure

Effective with the release of data for January 2015 on February 18, 2015, the Bureau of Labor Statistics will update the weight allocations used to calculate the Producer Price Index (PPI) Final Demand-Intermediate Demand (FD-ID) indexes to more accurately reflect recent sales patterns. While PPI commodity index weights will continue to be based on shipment values from the 2007 economic census, the proportions of these weights allocated to the various FD-ID categories will change. The new allocations will be based primarily on data from the 2007 Input- Output Accounts produced by the Bureau of Economic Analysis.

It is important to note that the allocation update will not change the PPI commodity classification system, reference base, the FD-ID aggregation structure, or historical index data. It may, however, result in significant shifts in the relative importance figures of commodity components that make up the FD-ID indexes.

Relative importance figures as of December 2014, which will detail this shift from 2002 to 2007 input-output relationships, will be available on February 13, 2015 on the BLS website at www.bls.gov/ppi. This information also may be requested from the Division of Industrial Prices and Price Indexes, Section of Index Analysis and Public Information through e-mail to ppi- info@bls.gov or by calling (202) 691-7705. For further information on this update, contact Jonathan Weinhagen at weinhagen.jonathan@bls.gov or (202) 691-7709.

Recalculated Seasonal Adjustment Factors and Relative Importance Figures to be Available on February 13, 2015

Each year with the release of PPI data for January, seasonal adjustment factors and relative importance figures are recalculated to reflect price movements from the just-completed calendar year. The following seasonal information will be available on February 13, 2015 (2 workdays prior to the release of PPI data for January 2015 on February 18):

* Direct seasonal factors for PPI commodity indexes for the year 2015, * Recalculated seasonal factors for the last 5 years (2010-2014) for PPI commodity indexes, * Recalculated seasonal factors for the last 5 years (2010-2014) for PPI Final Demand- Intermediate Demand indexes, * Recalculated seasonal data for the last 5 years (2010-2014) for Final Demand-Intermediate Demand and commodity indexes. This revision to seasonally adjusted indexes for the previous 5 years will be posted to the PPI database on the BLS website.

In addition, the following relative importance tables as of December 2014 also will be available on February 13, 2015:

* Final demand by individual commodities * Final demand by component series * Individual commodities of intermediate demand by commodity type * Component series of intermediate demand by commodity type * Individual commodities of intermediate demand by production flow * Component series of intermediate demand by production flow * Commodities, all levels * Wherever-provided services and construction

To obtain this information, visit the PPI website at www.bls.gov/ppi, e-mail PPI at ppi- info@bls.gov, or call the Division of Industrial Prices and Price Indexes, Section of Index Analysis and Public Information at (202) 691-7705.