August 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 was unchanged in August, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.2 percent in July and 0.4 percent in June. On an unadjusted basis, the final demand index moved down 0.8 percent for the 12 months ended in August, the seventh straight 12-month decline. (See table A.)

In August, a 0.4-percent increase in the index for final demand services offset a 0.6-percent decrease in prices for final demand goods.

Within intermediate demand, prices for processed goods moved down 0.6 percent, the index for unprocessed goods fell 4.4 percent, and prices for services advanced 0.7 percent. (See tables B and C.)

Final Demand

Final demand services: The index for final demand services moved up 0.4 percent in August, the third consecutive rise. In August, three-quarters of the advance can be traced to a 0.9-percent increase in the index for final demand trade services. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand services less trade, transportation, and warehousing moved up 0.2 percent. Conversely, the index for final demand transportation and warehousing services dropped 0.7 percent.

Product detail: Almost half of the August advance in the index for final demand services is attributable to margins for apparel, footwear, and accessories retailing, which jumped 7.0 percent. The indexes for automotive fuels and lubricants retailing; securities brokerage, dealing, investment advice, and related services; wireless telecommunication services; residential real estate loans (partial); and inpatient care also moved higher. In contrast, prices for airline passenger services declined 1.6 percent. The indexes for machinery and equipment wholesaling and guestroom rental also fell. (See table 4.)

Final demand goods: The index for final demand goods fell 0.6 percent in August, the largest decline since moving down 0.6 percent in April. The August decrease is mostly attributable to a 3.3- percent drop in prices for final demand energy. The index for final demand goods less foods and energy moved down 0.2 percent. Conversely, prices for final demand foods rose 0.3 percent.

Product detail: Accounting for nearly two-thirds of the decline in the final demand goods index, prices for gasoline fell 7.7 percent. The indexes for jet fuel, grains, iron and steel scrap, home heating oil, and light motor trucks also moved lower. In contrast, the index for chicken eggs surged 23.2 percent. Prices for residential natural gas and for search, detection, navigation, and guidance systems and equipment also increased.

Special grouping, Final demand less foods, energy, and trade: The index for final demand less foods, energy, and trade services inched up 0.1 percent in August after advancing 0.2 percent in July. For the 12 months ended in August, prices for final demand less foods, energy, and trade services increased 0.7 percent.

Intermediate Demand by Commodity Type

Processed goods for intermediate demand: The index for processed goods for intermediate demand moved down 0.6 percent in August following a 0.2-percent decline in July. In August, over 70 percent of the decrease can be traced to prices for processed energy goods, which fell 2.1 percent. The index for processed materials less foods and energy declined 0.2 percent, and prices for processed foods and feeds were unchanged. For the 12 months ended in August, the index for processed goods for intermediate demand decreased 7.0 percent, the tenth consecutive 12-month decline. (See table B.)

Product detail: A major factor in the August decline in the index for processed goods for intermediate demand was prices for jet fuel, which fell 16.0 percent. The indexes for gasoline, diesel fuel, nonferrous metals, primary basic organic chemicals, and residual fuels also moved lower. Conversely, the index for utility natural gas advanced 2.0 percent. Prices for beef and veal and for non-corrugated paperboard also increased. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand fell 4.4 percent in August, the largest decrease since moving down 9.3 percent in January. Almost three-quarters of the broad-based August decline can be traced to prices for unprocessed energy materials, which fell 9.5 percent. The index for unprocessed nonfood materials less energy decreased 4.8 percent, and prices for unprocessed foodstuffs and feedstuffs edged down 0.1 percent. For the 12 months ended in August, the index for unprocessed goods for intermediate demand fell 23.6 percent.

Product detail: In August, a 20.0-percent decline in the index for crude petroleum accounted for four-fifths of the decrease in prices for unprocessed goods for intermediate demand. The indexes for grains, iron and steel scrap, raw milk, coal, and nonferrous metals also fell. In contrast, the index for slaughter hogs jumped 18.1 percent. Prices for natural gas and corrugated wastepaper also advanced.

Services for intermediate demand: The index for services for intermediate demand moved up 0.7 percent in August, the largest increase since a 0.7-percent rise in October 2012. Three- quarters of the August advance is attributable to prices for services less trade, transportation, and warehousing for intermediate demand, which also rose 0.7 percent. Contributing to a lesser extent, margins for trade services for intermediate demand climbed 1.1 percent. Conversely, the index for transportation and warehousing services for intermediate demand fell 0.3 percent. For the 12 months ended in August, the index for services for intermediate demand rose 1.8 percent, the largest increase since a 1.9-percent advance in April 2015. (See table C.)

Product detail: In August, over one-third of the increase in the index for services for intermediate demand can be traced to a 3.7-percent rise in prices for securities brokerage, dealing, investment advice, and related services. The indexes for loan services (partial); metals, minerals, and ores wholesaling; portfolio management; machinery and equipment parts and supplies wholesaling; and paper and plastic products wholesaling also moved higher. In contrast, the index for airline passenger services declined 1.6 percent. The indexes for hardware, building materials, and supplies retailing and for guestroom rental also moved lower.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: The index for stage 4 intermediate demand edged up 0.1 percent, the fourth consecutive increase. In August, prices for total services inputs to stage 4 intermediate demand rose 0.7 percent. Conversely, the index for total goods inputs fell 0.4 percent. (See table D.) Increases in the indexes for securities brokerage, dealing, investment advice, and related services; loan services (partial); machinery and equipment parts and supplies wholesaling; portfolio management; and beef and veal outweighed declines in the indexes for gasoline; diesel fuel; grains; and hardware, building materials, and supplies retailing. (See table 6.) For the 12 months ended in August, prices for stage 4 intermediate demand decreased 1.0 percent, the eighth straight 12-month decline.

Stage 3 intermediate demand: The index for stage 3 intermediate demand fell 0.3 percent in August following a similar 0.3-percent decline a month earlier. In August, prices for total goods inputs to stage 3 intermediate demand decreased 1.2 percent. In contrast, the index for total services inputs rose 0.7 percent. Lower prices for gasoline, jet fuel, raw milk, nonferrous metals, asphalt, and diesel fuel outweighed increases in the indexes for securities brokerage, dealing, investment advice, and related services; slaughter hogs; and metals, minerals, and ores wholesaling. For the 12 months ended in August, the stage 3 intermediate demand index declined 4.8 percent, the eighth straight 12-month decrease.

Stage 2 intermediate demand: The index for stage 2 intermediate demand moved down 1.1 percent in August, the largest decline since a 4.3-percent drop in January. In August, prices for total goods inputs to stage 2 intermediate demand fell 3.1 percent. Conversely, the index for total services inputs rose 0.5 percent. Lower prices for crude petroleum, grains, nonferrous metals, coal, plastic resins and materials, and cable network advertising time sales outweighed advances in the indexes for securities brokerage, dealing, investment advice, and related services; natural gas; and portfolio management. For the 12 months ended in August, prices for stage 2 intermediate demand dropped 11.5 percent.

Stage 1 intermediate demand: The index for stage 1 intermediate demand declined 0.5 percent in August after three straight advances. In August, prices for total goods inputs to stage 1 intermediate demand fell 1.5 percent. In contrast, prices for total services inputs rose 0.9 percent. Lower prices for iron and steel scrap, diesel fuel, crude petroleum, grains, nonferrous metals, and guestroom rental outweighed increases in the indexes for securities brokerage, dealing, investment advice, and related services; loan services (partial); and corrugated wastepaper. For the 12 months ended in August, the stage 1 intermediate demand index declined 8.5 percent.