May 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 rose 0.5 percent in May, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices fell 0.4 percent in April and advanced 0.2 percent in March. On an unadjusted basis, the final demand index declined 1.1 percent for the 12 months ended in May, the fourth straight 12-month decrease. (See table A.)

In May, the increase in the final demand index can be traced to prices for final demand goods, which rose 1.3 percent. The index for final demand services was unchanged.

Within intermediate demand, prices for processed goods climbed 1.0 percent, the index for unprocessed goods jumped 3.3 percent, and prices for services fell 0.5 percent. (See tables B and C.)

Final Demand

Final demand goods: The index for final demand goods moved up 1.3 percent in May following a 0.7-percent decline in April. Eighty percent of the broad-based advance is attributable to prices for final demand energy, which increased 5.9 percent. The indexes for final demand goods less foods and energy and for final demand foods rose 0.2 percent and 0.8 percent, respectively.

Product detail: Sixty percent of the May advance in prices for final demand goods can be traced to the gasoline index, which jumped 17.0 percent. Prices for diesel fuel, chicken eggs, jet fuel, pharmaceutical preparations, and motor vehicles also moved higher. In contrast, the index for residential natural gas fell 1.6 percent. Prices for hay, hayseeds, and oilseeds and for primary basic organic chemicals also decreased. (See table 4.)

Final demand services: The index for final demand services was unchanged in May after inching down 0.1 percent in April. In May, a 0.6-percent increase in margins for final demand trade services offset a 0.2-percent decline in prices for final demand services less trade, transportation, and warehousing and a 0.1-percent decrease in the index for final demand transportation and warehousing services. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: Among final demand services in May, margins for food and alcohol retailing advanced 4.2 percent. The indexes for apparel, jewelry, footwear, and accessories retailing; television, video, and photographic equipment and supplies retailing; inpatient care; and residential real estate services (partial) also moved higher. Conversely, prices for services related to securities brokerage and dealing fell 7.4 percent. The indexes for machinery and equipment wholesaling; loan services (partial); health, beauty, and optical goods retailing; and wireless telecommunication services and also declined.

Special grouping, Final demand less foods, energy, and trade: The index for final demand less foods, energy, and trade services edged down 0.1 percent in May after inching up 0.1 percent in April. For the 12 months ended in May, prices for final demand less foods, energy, and trade services increased 0.6 percent.

Intermediate Demand by Commodity Type

Processed goods for intermediate demand: The index for processed goods for intermediate demand moved up 1.0 percent in May following nine consecutive declines. Most of the increase can be traced to a 5.8-percent jump in prices for processed energy goods. The index for processed foods and feeds advanced 0.5 percent. In contrast, prices for processed materials less foods and energy fell 0.2 percent. For the 12 months ended in May, the index for processed goods for intermediate demand dropped 7.0 percent. (See table B.)

Product detail: In May, an 18.8-percent jump in prices for diesel fuel was a major factor in the increase in the index for processed goods for intermediate demand. The indexes for gasoline, natural gas to electric utilities, jet fuel, processed eggs, and basic inorganic chemicals also moved higher. Conversely, prices for primary basic organic chemicals fell 3.3 percent. The indexes for prepared animal feeds and industrial electric power also decreased. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand climbed 3.3 percent in May, the largest increase since a 4.6-percent advance in February 2014. In May, 80 percent of the rise can be traced to prices for unprocessed energy materials, which jumped 7.7 percent. The index for unprocessed foodstuffs and feedstuffs climbed 1.4 percent. In contrast, prices for unprocessed nonfood materials less energy edged down 0.1 percent. For the 12 months ended in May, the index for unprocessed goods for intermediate demand fell 23.3 percent.

Product detail: In May, a 15.6-percent advance in prices for crude petroleum accounted for three- quarters of the increase in the index for unprocessed goods for intermediate demand. The indexes for slaughter barrows and gilts, ungraded chicken eggs, unprocessed finfish, raw milk, and coal also advanced. Conversely, prices for high-grade wastepaper declined 10.5 percent. The indexes for hay, hayseeds, and oilseeds and for natural gas also moved lower.

Services for intermediate demand: The index for services for intermediate demand moved down 0.5 percent in May, the largest decrease since falling 0.5 percent in May 2013. The May 2015 decline is attributable to a 0.8-percent drop in prices for services less trade, transportation, and warehousing for intermediate demand. In contrast, the indexes for trade services for intermediate demand and for transportation and warehousing services for intermediate demand moved up 0.6 percent and 0.1 percent, respectively. For the 12 months ended in May, prices for services for intermediate demand rose 1.3 percent. (See table C.)

Product detail: In May, a 7.4-percent decrease in the index for services related to securities brokerage and dealing accounted for about 40 percent of the drop in prices for services for intermediate demand. The indexes for loan services (partial), television advertising time sales, deposit services (partial), wireless telecommunication services, and fuels and lubricants retailing also fell. Conversely, margins for metals, minerals, and ores wholesaling rose 3.6 percent. The indexes for services related to air transportation and legal services also moved higher.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: The index for stage 4 intermediate demand advanced 0.2 percent in May after declining 0.2 percent in April. In May, prices for total goods inputs to stage 4 intermediate demand jumped 0.6 percent. In contrast, the index for total services inputs decreased 0.2 percent. (See table D.) Increases in the indexes for diesel fuel; gasoline; unprocessed finfish; metals, minerals, and ores wholesaling; parts and supplies for machinery and equipment wholesaling; and building materials, paint, and hardware wholesaling outweighed falling prices for loans services (partial), services related to securities brokerage and dealing, and lumber. (See table 6.) For the 12 months ended in May, the stage 4 intermediate demand index declined 1.1 percent, the fifth consecutive 12- month decrease.

Stage 3 intermediate demand: The index for stage 3 intermediate demand rose 1.2 percent in May, the largest increase since a 1.4-percent advance in April 2011. In May, prices for total goods inputs to stage 3 intermediate demand jumped 2.3 percent. Conversely, the total services inputs index moved down 0.2 percent. Rising indexes for gasoline; slaughter barrows and gilts; jet fuel; diesel fuel; ungraded chicken eggs; and metals, minerals, and ores wholesaling outweighed declines in prices for services related to securities brokerage and dealing, slaughter chickens, and primary basic organic chemicals. For the 12 months ended in May, the stage 3 intermediate demand index decreased 4.8 percent, the fifth consecutive 12-month decline.

Stage 2 intermediate demand: The index for stage 2 intermediate demand advanced 0.8 percent in May, the largest rise since jumping 3.5 percent in February 2014. In May, prices for total goods inputs to stage 2 intermediate demand increased 2.2 percent. In contrast, the index for total services inputs fell 0.4 percent. Advances in the indexes for crude petroleum, diesel fuel, lubricating oil base stocks, thermoplastic resins and materials, gasoline, and maintenance and repair of nonresidential buildings (partial) outweighed declining prices for services related to securities brokerage and dealing, prepared animal feeds, and gas fuels. For the 12 months ended in May, the stage 2 intermediate demand index dropped 12.6 percent, the eleventh straight 12-month decrease.

Stage 1 intermediate demand: The index for stage 1 intermediate demand increased 0.6 percent in May, the first rise since a 0.9-percent advance in July 2014. In May, prices for total goods inputs to stage 1 intermediate demand jumped 1.4 percent. Conversely, the index for total services inputs fell 0.6 percent. Increases in the indexes for diesel fuel; gasoline; crude petroleum; metals, minerals, and ores wholesaling; copper base scrap; and residual fuels outweighed declining prices for loan services (partial), primary basic organic chemicals, and services related to securities brokerage and dealing. For the 12 months ended in May, the index for stage 1 intermediate demand dropped 7.7 percent, the seventh consecutive 12-month decrease.

Respondent Samples to be Updated 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 been updated 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 triannual 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.