January 2015 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 decreased 0.8 percent in January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices moved down 0.2 percent in both December and November. On an unadjusted basis, the index for final demand was unchanged for the 12 months ended in January. (See table A.)

In January, the 0.8-percent decline in final demand prices can be traced primarily to a 2.1-percent decrease in the index for final demand goods. Prices for final demand services fell 0.2 percent.

Within intermediate demand, the index for processed goods declined 2.8 percent, prices for unprocessed goods dropped 9.4 percent, and the index for services moved down 0.2 percent. (See tables B and C.)

Final Demand

Final demand goods: The index for final demand goods moved down 2.1 percent in January, the seventh consecutive decrease. Leading the broad-based decline in January, prices for final demand energy fell 10.3 percent. The indexes for final demand foods and for final demand goods less foods and energy moved down 1.1 percent and 0.2 percent, respectively.

Product detail: The decline in prices for final demand goods was led by the index for gasoline, which dropped 24.0 percent. Prices for diesel fuel, jet fuel, basic organic chemicals, dairy products, and home heating oil also moved lower. Conversely, the index for residential electric power moved up 1.2 percent. Prices for pharmaceutical preparations and for fresh and dry vegetables also advanced. (See table 4.)

Final demand services: The index for final demand services decreased 0.2 percent in January, the first decline since falling 0.3 percent in September 2014. In January, prices for final demand services less trade, transportation, and warehousing moved down 0.4 percent, and the index for final demand transportation and warehousing services dropped 0.8 percent. In contrast, margins for final demand trade services advanced 0.5 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: In January, a major contributor to the decline in the index for final demand services was prices for outpatient care (partial), which fell 0.7 percent. The indexes for automotive fuels and lubricants retailing; securities brokerage, dealing, investment advice, and related services; television, video, and photographic equipment and supplies retailing; mining services; and truck transportation of freight also decreased. Conversely, margins for apparel, jewelry, footwear, and accessories retailing advanced 3.6 percent. The indexes for machinery, equipment, parts, and supplies wholesaling and for loan services (partial) also increased.

Special grouping, Final demand less foods, energy, and trade: The index for final demand less foods, energy, and trade services moved down 0.3 percent after edging up 0.1 percent in December. For the 12 months ended in January, prices for final demand less foods, energy, and trade services climbed 0.9 percent.

Intermediate Demand by Commodity Type

Processed goods for intermediate demand: The index for processed goods for intermediate demand fell 2.8 percent in January, the largest decline since a 4.1-percent drop in December 2008. More than half of the broad-based January decrease is attributable to prices for processed energy goods, which moved down 8.3 percent. In addition, the index for processed materials less foods and energy fell 1.3 percent, and prices for processed foods and feeds declined 2.5 percent. For the 12 months ended in January, the index for processed goods for intermediate demand moved down 5.5 percent, the largest 12-month drop since a 7.7-percent decrease in October 2009. (See table B.)

Product detail: In January, a 19.2-percent decline in diesel fuel prices was a major factor in the decrease in the index for processed goods for intermediate demand. Prices for basic organic chemicals, gasoline, jet fuel, plastic resins and materials, and dairy products also moved lower. In contrast, the electric power index increased 1.3 percent. Prices for basic inorganic chemicals and formula feeds also advanced. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand fell 9.4 percent in January, the largest drop since a 13.2-percent decrease in November 2008. About 90 percent of the broad-based decline in January can be traced to prices for unprocessed energy materials, which decreased 23.6 percent. The index for unprocessed foodstuffs and feedstuffs moved down 1.8 percent, and prices for unprocessed nonfood materials less energy fell 0.7 percent. For the 12 months ended in January, the index for unprocessed goods for intermediate demand declined 18.4 percent, the largest 12-month drop since a 31.7-percent decrease in September 2009.

Product detail: More than half of the January decline in the index for unprocessed goods for intermediate demand is attributable to prices for crude petroleum, which fell 30.6 percent. Prices for natural gas, slaughter hogs, raw milk, grains, and nonferrous scrap also moved lower. Conversely, the index for slaughter poultry rose 5.5 percent. Prices for unprocessed finfish and gold ores also advanced.

Services for intermediate demand: The index for services for intermediate demand moved down 0.2 percent in January, the largest decrease since falling 0.2 percent in April 2014. The decline in January was led by the index for services less trade, transportation, and warehousing for intermediate demand, which dropped 0.4 percent. Prices for transportation and warehousing services for intermediate demand fell 0.3 percent. In contrast, the index for trade services for intermediate demand rose 0.7 percent. (See table C.)

Product detail: In January, prices for securities brokerage, dealing, investment advice, and related services declined 4.5 percent. The indexes for television advertising time sales, radio advertising time sales, legal services, marketing consulting services, and truck transportation of freight also decreased. Conversely, margins for parts and supplies for machinery and equipment wholesaling advanced 1.0 percent. The indexes for business loans (partial) and staffing services also increased.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: The index for stage 4 intermediate demand moved down 0.7 percent in January, the fifth consecutive decline. In January, prices for total goods inputs to stage 4 intermediate demand decreased 1.3 percent. The index for total services inputs was unchanged. (See table D.) Lower prices for diesel fuel; gasoline; securities brokerage, dealing, investment advice, and related services; basic organic chemicals; dairy products; and asphalt outweighed increases in the indexes for business loans (partial), electric power, and parts and supplies for machinery and equipment wholesaling. (See table 6.) For the 12 months ended in January, prices for stage 4 intermediate demand fell 0.5 percent.

Stage 3 intermediate demand: Prices for stage 3 intermediate demand fell 2.4 percent in January, the fourth straight decrease. In January, the index for total goods inputs to stage 3 intermediate demand dropped 4.2 percent, and prices for total services inputs edged down 0.1 percent. Falling prices for gasoline; jet fuel; basic organic chemicals; slaughter hogs; diesel fuel; and securities brokerage, dealing, investment advice, and related services outweighed increases in the indexes for slaughter poultry, business loans (partial), and unprocessed finfish. For the 12 months ended in January, the index for stage 3 intermediate demand fell 3.3 percent.

Stage 2 intermediate demand: The index for stage 2 intermediate demand dropped 5.0 percent in January, the eleventh consecutive decline. In January, prices for total goods inputs to stage 2 intermediate demand fell 9.8 percent, and the index for total services inputs moved down 0.5 percent. Lower prices for crude petroleum; gas fuels; plastic resins and materials; securities brokerage, dealing, investment advice, and related services; basic organic chemicals; and lubricating oil base stocks outweighed increases in the indexes for staffing services, formula feeds, and basic inorganic chemicals. For the 12 months ended in January, prices for stage 2 intermediate demand dropped 11.0 percent.

Stage 1 intermediate demand: The index for stage 1 intermediate demand declined 3.3 percent in January, the fifth straight decrease. In January, prices for total goods inputs to stage 1 intermediate demand dropped 5.7 percent. The index for total services inputs was unchanged. Lower prices for basic organic chemicals; diesel fuel; gasoline; crude petroleum; gas fuels; and securities brokerage, dealing, investment advice, and related services outweighed advances in the indexes for business loans (partial), electric power, and chemicals and allied products wholesaling. For the 12 months ended in January, the index for stage 1 intermediate demand decreased 6.3 percent.

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

Effective with this release, the Bureau of Labor Statistics has updated 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 continue to be based on shipment values from the 2007 economic census, the proportions of these weights allocated to the various FD-ID categories have changed. The new allocations are based primarily on data from the 2007 Input-Output Accounts produced by the Bureau of Economic Analysis.

It is important to note that this allocation update did not change the PPI commodity classification system, reference base, the FD-ID aggregation structure, or historical index data. It has, however, resulted in some 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 detail this shift from 2002 to 2007 input- output relationships, are available on the PPI website at www.bls.gov/ppi. A detailed analysis of the PPI weight allocation update also is being posted the PPI homepage. 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.

Resampling of Industries

Effective with this release, the Producer Price Index (PPI) includes data for 28 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 January 2015 issue of the PPI Detailed Report online at www.bls.gov/ppi/ppidr201501.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 113310 Logging 212312 Crushed and broken limestone mining 212313 Crushed and broken granite mining 313320 Fabric coating mills 315990 Apparel accessories and other apparel manufacturing 322121 Paper, except newsprint, mills 322130 Paperboard mills 325311 Nitrogenous fertilizer manufacturing 325312 Phosphatic fertilizer manufacturing 325314 Fertilizer, mixing only, manufacturing 325413 In-vitro diagnostic substance manufacturing 327992 Ground or treated minerals and earths manufacturing 333316 Photographic and photocopying equipment manufacturing 333995 Fluid power cylinder and actuator manufacturing 333996 Fluid power pump and motor manufacturing 335312 Motor and generator manufacturing 336213 Motor home manufacturing 339940 Office supplies (except paper) manufacturing 429930 Material recyclers 446191 Food (health) supplement stores 447190 Other gasoline stations 448320 Luggage and leather goods stores 451130 Sewing, needlework, and piece goods stores 481112 Scheduled freight air transportation 511120 Periodical publishers 515210 Cable and other subscription programming 541110 Offices of lawyers 621111 Offices of physicians, except mental health

Recalculation of Seasonal Adjustment Factors

Effective with this release, seasonal adjustment factors have been recalculated to reflect price- movement patterns during 2014 for the Final Demand-Intermediate Demand (FD-ID) System and commodity-grouping indexes. This routine annual recalculation may affect previously published seasonally adjusted indexes and percent changes for January 2010 through December 2014.

Revised seasonally adjusted data for this period, as well as seasonal adjustment factors for directly adjusted commodity indexes to be used through December 2015, were released February 13, 2015. To obtain this information, contact the Division of Industrial Prices and Price Indexes, Section of Index Analysis and Public Information at ppi-info@bls.gov or (202) 691-7705, or visit the Producer Price Index homepage at www.bls.gov/ppi.

Tables E and F below provide monthly seasonally adjusted percent changes for major FD-ID system indexes in 2014, based on former and recalculated seasonal factors. These percent changes include final price data through August 2014 and may differ from values shown in tables A through D of this release, which include final price data through September 2014.