September 2015 Producer Price Index

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The Producer Price Index for final demand declined 0.5 percent in September, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices were unchanged in August and rose 0.2 percent in July. On an unadjusted basis, the final demand index fell 1.1 percent for the 12 months ended in September, the eighth straight 12-month decline. (See table A.)

In September, two-thirds of the decrease in the final demand index is attributable to prices for final demand goods, which fell 1.2 percent. The index for final demand services moved down 0.4 percent.

Within intermediate demand, prices for processed goods fell 1.5 percent, the index for unprocessed goods dropped 3.1 percent, and prices for services decreased 0.7 percent. (See tables B and C.)

Final Demand

Final demand goods: The index for final demand goods moved down 1.2 percent in September, the largest decrease since a 1.9-percent drop in January. In September, over 80 percent of the decline can be traced to prices for final demand energy, which fell 5.9 percent. The index for final demand foods decreased 0.8 percent. Prices for final demand goods less foods and energy were unchanged.

Product detail: Over two-thirds of the September decline in the final demand goods index is attributable to prices for gasoline, which fell 16.6 percent. The indexes for beef and veal, diesel fuel, industrial chemicals, chicken eggs, and residual fuel also moved lower. In contrast, motor vehicle prices rose 0.5 percent. The indexes for fresh and dry vegetables and for pharmaceutical preparations also advanced. (See table 4.)

Final demand services: The index for final demand services decreased 0.4 percent in September, the largest decline since falling 0.5 percent in February. In September, almost half of the drop can be traced to prices for final demand services less trade, transportation, and warehousing, which decreased 0.3 percent. The indexes for final demand trade services and for final demand transportation and warehousing services also moved lower, falling 0.4 percent and 0.7 percent, respectively. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: Over a quarter of the September decline in the index for final demand services is attributable to prices for securities brokerage, dealing, investment advice, and related services, which dropped 4.3 percent. The indexes for machinery and equipment wholesaling; loan services (partial); apparel, footwear, and accessories retailing; portfolio management; and airline passenger services also moved lower. Conversely, margins for automotive fuels and lubricants retailing climbed 12.4 percent. The indexes for deposit services (partial) and water transportation of freight also increased.

Special grouping, Final demand less foods, energy, and trade: The index for final demand less foods, energy, and trade services fell 0.3 percent in September. For the 12 months ended in September, prices for final demand less foods, energy, and trade services advanced 0.5 percent.

Intermediate Demand by Commodity Type

Processed goods for intermediate demand: The index for processed goods for intermediate demand fell 1.5 percent in September, the largest decline since a 2.4-percent decrease in January. In September, over half of the broad-based drop can be traced to prices for processed energy goods, which fell 4.8 percent. The index for processed materials less foods and energy declined 0.6 percent, and prices for processed foods and feeds moved down 2.3 percent. For the 12 months ended in September, the index for processed goods for intermediate demand decreased 8.2 percent, the largest decline since a 12.0-percent drop in September 2009. (See table B.)

Product detail: A major factor in the September decrease in the index for processed goods for intermediate demand was prices for diesel fuel, which fell 12.8 percent. The indexes for gasoline, industrial chemicals, processed eggs, prepared animal feeds, and beef and veal also moved lower. In contrast, the index for asphalt advanced 7.6 percent. Prices for concrete products and pork also increased. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand fell 3.1 percent in September, the third straight decrease. Over 80 percent of the broad-based September decline can be traced to prices for unprocessed foodstuffs and feedstuffs, which dropped 5.7 percent. The index for unprocessed energy materials decreased 1.0 percent, and prices for unprocessed nonfood materials less energy moved down 1.1 percent. For the 12 months ended in September, the index for unprocessed goods for intermediate demand fell 26.1 percent, the largest 12-month decline since a 26.3-percent drop in April 2015.

Product detail: In September, an 8.5-percent decline in the index for slaughter cattle accounted for over two-fifths of the decrease in prices for unprocessed goods for intermediate demand. The indexes for natural gas; hay, hayseeds, and oilseeds; slaughter chickens; ungraded chicken eggs; and iron and steel scrap also fell. Conversely, the index for crude petroleum increased 2.3 percent. Prices for corn and for hides and skins also advanced.

Services for intermediate demand: The index for services for intermediate demand fell 0.7 percent in September, the largest decrease since the inception of the index in November 2009. In September, 80 percent of the broad-based decline can be traced to a 0.7-percent decrease in prices for services less trade, transportation, and warehousing for intermediate demand. Margins for trade services for intermediate demand moved down 0.6 percent, and the index for transportation and warehousing services for intermediate demand edged down 0.1 percent. For the 12 months ended in September, the index for services for intermediate demand advanced 1.2 percent. (See table C.)

Product detail: In September, a 3.6-percent decline in the index for loan services (partial) was a major factor in the drop in prices for services for intermediate demand. The indexes for securities brokerage, dealing, investment advice, and related services; portfolio management; building materials, paint, and hardware wholesaling; airline passenger services; and metals, minerals, and ores wholesaling also fell. In contrast, prices for deposit services (partial) climbed 2.8 percent. The indexes for parts and supplies for machinery and equipment wholesaling and for water transportation of freight also moved higher.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: The index for stage 4 intermediate demand decreased 0.7 percent in September, the largest decline since the inception of the index in November 2009. In September, prices for total goods inputs to stage 4 intermediate demand fell 0.8 percent, and the index for total services inputs moved down 0.7 percent. Decreases in the indexes for diesel fuel; gasoline; securities brokerage, dealing, investment advice, and related services; portfolio management; loan services (partial); and industrial chemicals outweighed increases in the indexes for deposit services (partial), parts and supplies for machinery and equipment wholesaling, and concrete products. (See table 6.) For the 12 months ended in September, prices for stage 4 intermediate demand decreased 1.7 percent, the ninth straight 12-month decline.

Stage 3 intermediate demand: The index for stage 3 intermediate demand fell 2.1 percent in September, the largest decrease since a 2.4-percent decline in January. In September, prices for total goods inputs to stage 3 intermediate demand dropped 3.4 percent, and the index for total services inputs moved down 0.5 percent. Lower prices for gasoline; slaughter cattle; slaughter chickens; ungraded chicken eggs; industrial chemicals; and securities brokerage, dealing, investment advice, and related services outweighed advances in the indexes for asphalt, deposit services (partial), and agricultural chemicals and chemical products. For the 12 months ended in September, the stage 3 intermediate demand index dropped 7.0 percent, the largest decline since the inception of the index in November 2009.

Stage 2 intermediate demand: The index for stage 2 intermediate demand moved down 0.9 percent in September, the third straight decline. In September, prices for total goods inputs to stage 2 intermediate demand fell 1.4 percent, and the index for total services inputs decreased 0.5 percent. Declines in the indexes for natural gas; securities brokerage, dealing, investment advice, and related services; thermoplastic resins and materials; hay, hayseeds, and oilseeds; prepared animal feeds; and portfolio management outweighed higher prices for crude petroleum, co-employment staffing services, and cable network advertising times sales. For the 12 months ended in September, prices for stage 2 intermediate demand fell 11.9 percent.

Stage 1 intermediate demand: The index for stage 1 intermediate demand declined 1.9 percent in September, the largest decrease since a 2.8-percent drop in January. In September, prices for total goods inputs to stage 1 intermediate demand fell 2.5 percent, and the index for total services inputs moved down 0.9 percent. Lower prices for industrial chemicals; diesel fuel; gasoline; loan services (partial); securities brokerage, dealing, investment advice, and related services; and iron and steel scrap outweighed increases in the indexes for deposit services (partial), water transportation of freight, and corn. For the 12 months ended in September, the stage 1 intermediate demand index dropped 9.7 percent, the largest decline since the inception of the index in November 2009.