February 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 fell 0.5 percent in February, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices moved down 0.8 percent in January and 0.2 percent in December. On an unadjusted basis, the index for final demand decreased 0.6 percent for the 12 months ended in February. (See table A.)

In February, about 70 percent of the decline in final demand prices can be attributed to a 0.5- percent decrease in the index for final demand services. Prices for final demand goods moved down 0.4 percent.

Within intermediate demand, the index for processed goods fell 0.6 percent, the index for unprocessed goods dropped 3.9 percent, and prices for services edged up 0.1 percent. (See tables B and C.)

Final Demand

Final demand services: Prices for final demand services fell 0.5 percent in February, the largest decline since the inception of the index in December 2009. Leading the decrease, margins for final demand trade services dropped 1.5 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) The index for final demand transportation and warehousing services also moved down 1.5 percent. In contrast, prices for final demand services less trade, transportation, and warehousing rose 0.3 percent.

Product detail: In February, nearly 30 percent of the decline in the index for final demand services can be traced to margins for fuels and lubricants retailing, which fell 13.4 percent. The indexes for machinery, equipment, parts, and supplies wholesaling; food and alcohol retailing; apparel, jewelry, footwear, and accessories retailing; truck transportation of freight; and wireless telecommunication services also moved lower. Conversely, prices for inpatient care advanced 0.6 percent. The indexes for outpatient care (partial) and for TV, video, and photographic equipment and supplies wholesaling also increased. (See table 4.)

Final demand goods: The index for final demand goods moved down 0.4 percent in February, the eighth consecutive decrease. Over two-thirds of the decline in February can be attributed to prices for final demand foods, which fell 1.6 percent. The index for final demand goods less foods and energy inched down 0.1 percent, and prices for final demand energy were unchanged.

Product detail: About a quarter of the decline in prices for final demand goods can be traced to the index for fresh and dry vegetables, which dropped 17.1 percent. Prices for iron and steel scrap, meats, jet fuel, industrial chemicals, and processed poultry also moved lower. In contrast, the index for gasoline rose 1.5 percent. Prices for light motor trucks and chicken eggs also moved up.

Special grouping, Final demand less foods, energy, and trade: The index for final demand less foods, energy, and trade services was unchanged after falling 0.3 percent in January. For the 12 months ended in February, prices for final demand less foods, energy, and trade services rose 0.7 percent.

Intermediate Demand by Commodity Type

Processed goods for intermediate demand: The index for processed goods for intermediate demand fell 0.6 percent in February, the seventh straight decline. Half of the February decrease is attributable to prices for processed materials less foods and energy, which moved down 0.4 percent. In addition, the index for processed foods and feeds dropped 1.9 percent, and prices for processed energy goods fell 0.6 percent. For the 12 months ended in February, the index for processed goods for intermediate demand decreased 6.4 percent, the largest 12-month decline since a 7.7-percent drop in October 2009. (See table B.)

Product detail: Over 20 percent of the decrease in prices for processed goods for intermediate demand can be traced to the index for industrial chemicals, which declined 1.9 percent. Prices for steel mill products, plastic resins and materials, meats, prepared animal feeds, and jet fuel also moved lower. Conversely, the index for gasoline rose 1.5 percent. The indexes for lubricating oil base stocks and paint colors also advanced. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand fell 3.9 percent in February, the fifth straight decrease. Three-quarters of the decline in February can be attributed to prices for unprocessed foodstuffs and feedstuffs, which dropped 6.7 percent. The index for unprocessed nonfood materials less energy fell 5.2 percent. In contrast, prices for unprocessed energy materials advanced 0.9 percent. For the 12 months ended in February, the index for unprocessed goods for intermediate demand decreased 25.0 percent, the largest 12-month drop since a 31.7-percent decline in September 2009.

Product detail: A major factor in the February decline in prices for unprocessed goods for intermediate demand was the index for slaughter poultry, which fell 14.7 percent. The indexes for natural gas; iron and steel scrap; raw milk; slaughter livestock; and hay, hayseeds, and oilseeds also decreased. Conversely, the index for crude petroleum moved up 12.3 percent. Prices for ungraded chicken eggs and gold ores also rose.

Services for intermediate demand: The index for services for intermediate demand advanced 0.1 percent in February following a 0.2-percent decrease in January. Leading the increase, prices for services less trade, transportation, and warehousing for intermediate demand rose 0.2 percent. The index for trade services for intermediate demand inched up 0.1 percent. In contrast, prices for transportation and warehousing services for intermediate demand fell 0.8 percent. For the 12 months ended in February, the index for services for intermediate demand moved up 1.2 percent, the smallest advance since a 1.0-percent increase in April 2014. (See table C.)

Product detail: In February, a 1.3-percent rise in the index for securities brokerage, dealing, investment advice, and related services led the advance in prices for services for intermediate demand. The indexes for legal services; metals, minerals, and ores wholesaling; management consulting services; and hardware, building material, and related supplies retailing also moved higher. Conversely, prices for truck transportation of freight fell 1.3 percent. The indexes for co- employment staffing services, wireless telecommunication services, and fuels and lubricants retailing also decreased.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: The index for stage 4 intermediate demand edged down 0.1 percent in February, the fourth consecutive decline. In February, prices for total goods inputs to stage 4 intermediate demand fell 0.4 percent. In contrast, the index for total services inputs increased 0.2 percent. (See table D.) Lower prices for meats, co-employment staffing services, truck transportation of freight, unprocessed and packaged fish, and industrial chemicals outweighed advances in the indexes for legal services; management consulting services; securities brokerage, dealing, investment advice, and related services; and plastic construction products. (See table 6.) For the 12 months ended in February, prices for stage 4 intermediate demand decreased 0.7 percent.

Stage 3 intermediate demand: Prices for stage 3 intermediate demand dropped 1.4 percent in February, the fifth straight decrease. In February, the index for total goods inputs to stage 3 intermediate demand fell 2.7 percent. Conversely, prices for total services inputs edged up 0.1 percent. Declines in the indexes for slaughter poultry, raw milk, slaughter livestock, jet fuel, industrial chemicals, and passenger car rental outweighed advances in the indexes for metals, minerals, and ores wholesaling; ungraded chicken eggs; and gasoline. For the 12 months ended in February, prices for stage 3 intermediate demand moved down 5.0 percent.

Stage 2 intermediate demand: The index for stage 2 intermediate demand decreased 0.2 percent in February after dropping 5.0 percent in January. In February, prices for total goods inputs to stage 2 intermediate demand fell 0.6 percent. In contrast, the index for total services inputs moved up 0.2 percent. Lower prices for natural gas, plastic resins and materials, prepared animal feeds, steel mill products, co-employment staffing services, and iron and steel scrap outweighed higher prices for legal services; crude petroleum; and securities brokerage, dealing, investment advice, and related services. For the 12 months ended in February, the index for stage 2 intermediate demand dropped 14.2 percent.

Stage 1 intermediate demand: Prices for stage 1 intermediate demand fell 1.4 percent in February, the sixth straight decline. In February, the index for total goods inputs to stage 1 intermediate demand decreased 2.2 percent, and prices for total services inputs moved down 0.3 percent. Lower prices for iron and steel scrap, industrial chemicals, nonferrous scrap, wireless telecommunication services, natural gas, and diesel fuel outweighed advances in the indexes for metals, minerals, and ores wholesaling; crude petroleum; and securities brokerage, dealing, investment advice, and related services. For the 12 months ended in February, prices for stage 1 intermediate demand fell 7.5 percent.

PPI to Update Samples More Frequently

The Producer Price Index (PPI) periodically updates the sample of producers providing index data in order to reflect current conditions more accurately when the structure, membership, technology, or product mix of an industry shifts. Since 1986, these sample changes have occurred at semi-annual intervals, with the release of data for January and July. Effective with the release of PPI data for June 2015 on July 15, 2015, PPI will update samples on a tri-annual basis, coinciding with the release of data for February, June, and October (in March, July, and November, respectively). This accelerated approach to replacing industry samples will result in indexes that better represent current industry production and will improve data quality.

With each sample update, PPI will continue to publish a notice listing the impacted industries in both the PPI News Release and PPI Detailed Report. In addition, PPI will continue to publish information on specific index additions, deletions, and recodes associated with the updated samples in the PPI Detailed Report.