October 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 0.4 percent in October, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices moved down 0.5 percent in September and were unchanged in August. On an unadjusted basis, the final demand index fell 1.6 percent for the 12 months ended in October, a record 12-month decline for this index, which was introduced in November 2009. (See table A.)

In October, 70 percent of the decrease in the final demand index can be traced to prices for final demand services, which moved down 0.3 percent. The index for final demand goods declined 0.4 percent.

Within intermediate demand, prices for processed goods fell 0.4 percent, the index for unprocessed goods was unchanged, and prices for services decreased 0.4 percent. (See tables B and C.)

Final Demand

Final demand services: The index for final demand services moved down 0.3 percent in October following a 0.4-percent decline in the prior month. Over 70 percent of the decrease in October can be traced to margins for final demand trade services, which dropped 0.7 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) The index for final demand services less trade, transportation, and warehousing edged down 0.1 percent. In contrast, prices for final demand transportation and warehousing services inched up 0.1 percent.

Product detail: Over half of the October decline in the index for final demand services is attributable to margins for fuels and lubricants retailing, which fell 15.8 percent. The indexes for apparel, jewelry, footwear, and accessories retailing; loan services (partial); portfolio management; wireless telecommunication services; and health, beauty, and optical goods retailing also declined. Conversely, prices for truck transportation of freight advanced 0.3 percent. The indexes for food retailing and deposit services (partial) also increased. (See table 4.)

Final demand goods: The index for final demand goods moved down 0.4 percent in October, the fourth consecutive decrease. Leading the decline in October, the index for final demand goods less foods and energy fell 0.3 percent. Prices for final demand foods decreased 0.8 percent. The index for final demand energy was unchanged.

Product detail: Over one-third of the October decline in the final demand goods index is attributable to prices for light motor trucks, which fell 1.8 percent. (In accordance with usual practice, most new- model-year passenger cars and light motor trucks were introduced into the PPI in October. See Report on Quality Changes for 2016 Model Vehicles, at www.bls.gov/web/ppi/ppimotveh.htm.) The indexes for chicken eggs, iron and steel scrap, beef and veal, boxed meat, and electric power also moved lower. In contrast, gasoline prices rose 3.8 percent. The indexes for pharmaceutical preparations and corn also advanced.

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 October. For the 12 months ended in October, prices for final demand less foods, energy, and trade services advanced 0.4 percent.

Intermediate Demand by Commodity Type

Processed goods for intermediate demand: The index for processed goods for intermediate demand moved down 0.4 percent in October, the fourth straight decrease. In October, nearly half of the broad-based decline can be traced to prices for processed energy goods, which fell 1.0 percent. The index for processed materials less foods and energy decreased 0.2 percent, and prices for processed foods and feeds moved down 0.5 percent. For the 12 months ended in October, the index for processed goods for intermediate demand fell 7.6 percent. (See table B.)

Product detail: Over a quarter of the October decline in the index for processed goods for intermediate demand is attributable to prices for electric power, which fell 1.3 percent. The indexes for steel mill products, beef and veal, primary basic organic chemicals, boxed meat, and asphalt also decreased. Conversely, the index for diesel fuel advanced 6.7 percent. Prices for formula feeds and for cyclic intermediate chemicals and dyes also moved higher. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand was unchanged in October following three consecutive declines. In October, prices for unprocessed foodstuffs and feedstuffs decreased 1.7 percent, and the index for unprocessed nonfood materials less energy fell 1.3 percent. In contrast, prices for unprocessed energy materials advanced 3.0 percent. For the 12 months ended in October, the index for unprocessed goods for intermediate demand declined 23.7 percent.

Product detail: In October, the index for crude petroleum advanced 8.2 percent. Prices for corn, slaughter hogs, oilseeds, and nonferrous scrap also increased. Conversely, prices for raw milk decreased 6.2 percent. The indexes for iron and steel scrap, ungraded chicken eggs, slaughter steers and heifers, and natural gas also moved lower.

Services for intermediate demand: The index for services for intermediate demand fell 0.4 percent in October following a 0.7-percent decrease in September. In October, over three-quarters of the broad-based decline can be traced to a 0.5-percent drop in prices for services less trade, transportation, and warehousing for intermediate demand. Margins for trade services for intermediate demand fell 0.4 percent, and the index for transportation and warehousing services for intermediate demand edged down 0.2 percent. For the 12 months ended in October, the index for services for intermediate demand advanced 0.5 percent. (See table C.)

Product detail: In October, a 3.3-percent decline in the index for portfolio management accounted for one-third of the decrease in prices for services for intermediate demand. The indexes for business loans (partial), television advertising time sales, services related to securities brokerage and dealing, wireless telecommunication services, and fuels and lubricants retailing also fell. In contrast, prices for deposit services (partial) climbed 2.1 percent. The indexes for legal services and for food and alcohol wholesaling also moved higher.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: The index for stage 4 intermediate demand decreased 0.3 percent in October after declining 0.7 percent a month earlier. In October, prices for total services inputs to stage 4 intermediate demand fell 0.3 percent, and the index for total goods inputs moved down 0.2 percent. Decreases in the indexes for portfolio management; business loans (partial); electric power; paper and plastics products wholesaling; beef and veal; and metals, minerals, and ores wholesaling outweighed increases in the indexes for diesel fuel, legal services, and food and alcohol wholesaling. (See table 6.) For the 12 months ended in October, prices for stage 4 intermediate demand decreased 1.7 percent, the tenth straight 12-month decline.

Stage 3 intermediate demand: The index for stage 3 intermediate demand fell 0.6 percent in October, the fourth consecutive decrease. In October, prices for total goods inputs to stage 3 intermediate demand dropped 1.1 percent, and the index for total services inputs moved down 0.4 percent. Lower prices for raw milk, ungraded chicken eggs, slaughter steers and heifers, slaughter cows and bulls, slaughter poultry, and business loans (partial) outweighed advances in the indexes for gasoline, slaughter hogs, and food and alcohol wholesaling. For the 12 months ended in October, the stage 3 intermediate demand index dropped 7.4 percent, the tenth consecutive decline.

Stage 2 intermediate demand: The index for stage 2 intermediate demand was unchanged in October after three straight declines. In October, a 0.5-percent increase in prices for total goods inputs to stage 2 intermediate demand offset a 0.4-percent decrease in the index for total services inputs. Advances in the indexes for crude petroleum, oilseeds, formula feeds, legal services, and corn offset falling prices for portfolio management, cable network advertising time sales, natural gas, wireless telecommunication services, and steel mill products. For the 12 months ended in October, prices for stage 2 intermediate demand fell 9.7 percent.

Stage 1 intermediate demand: The index for stage 1 intermediate demand declined 0.7 percent in October, the fourth consecutive decrease. In October, prices for total goods inputs to stage 1 intermediate demand fell 0.8 percent, and the index for total services inputs moved down 0.7 percent. Declines in the indexes for iron and steel scrap; business loans (partial); wireless telecommunications services; fuels and lubricants retailing; electric power; and metals, minerals, and ores wholesaling outweighed increases in prices for diesel fuel, nonferrous scrap, and deposit services (partial). For the 12 months ended in October, the stage 1 intermediate demand index dropped 9.3 percent.

Resampling of Industries

Effective with the release of data for October 2015, the Producer Price Index (PPI) includes data for 26 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 regular intervals.

For information on specific index additions, deletions, and recodes effective October 2015, see the current issue of the PPI Detailed Report online at www.bls.gov/ppi/ppidr201510.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 211111 Crude petroleum and natural gas extraction 211112 Natural gas liquids extraction 236223 New office building construction 311230 Breakfast cereal manufacturing 311422 Specialty canning 311611 Animal, except poultry, slaughtering 325212 Synthetic rubber manufacturing 326160 Plastics bottle manufacturing 326211 Tire manufacturing, except retreading 332813 Electroplating, anodizing, and coloring metal 333249 Other industrial machinery manufacturing 333515 Cutting tool and machine tool accessory manufacturing 333999 All other miscellaneous general purpose machinery manufacturing 334515 Electricity and signal testing instruments manufacturing 336211 Motor vehicle body manufacturing 337121 Upholstered household furniture manufacturing 452111 Department stores, except discount 484210 Used household and office goods moving 484220 Other specialized trucking, local 511110 Newspaper publishers 511130 Book publishers 518210 Data processing, hosting, and related services 532120 Truck, utility trailer, and RV rental and leasing 561330 Professional employer organizations 622110 General medical and surgical hospitals 713940 Fitness and recreational sports centers

Recalculated Seasonal Adjustment Factors and Relative Importance Figures to be Available on February 12, 2016

Each year with the release of PPI data for January, seasonal adjustment factors and relative importance figures are recalculated to reflect price movements from the just-completed calendar year. The following seasonal information will be available on February 12, 2016 (2 workdays prior to the release of PPI data for January 2016 on February 17):

* Direct seasonal factors for PPI commodity indexes for the year 2016, * Recalculated seasonal factors for the last 5 years (2011-2015) for PPI commodity indexes, * Recalculated seasonal factors for the last 5 years (2011-2015) for PPI Final Demand- Intermediate Demand indexes, * Recalculated seasonal data for the last 5 years (2011-2015) for Final Demand-Intermediate Demand and commodity indexes. This revision to seasonally adjusted indexes for the previous 5 years will be posted to the PPI database on the BLS website.

In addition, the following relative importance tables as of December 2015 will be available on February 12, 2016:

* Final demand by individual commodities * Final demand by component series * Individual commodities of intermediate demand by commodity type * Component series of intermediate demand by commodity type * Individual commodities of intermediate demand by production flow * Component series of intermediate demand by production flow * Commodities, all levels * Wherever-provided services and construction

To obtain this information, visit the PPI website at www.bls.gov/ppi, e-mail PPI at ppi- info@bls.gov, or call the Division of Industrial Prices and Price Indexes, Section of Index Analysis and Public Information at (202) 691-7705.