January 2016 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 advanced 0.1 percent in January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices decreased 0.2 percent in December and advanced 0.4 percent in November. On an unadjusted basis, the final demand index declined 0.2 percent for the 12 months ended in January. (See table A.)

The increase in the final demand index for January can be traced to a 0.5-percent advance in prices for final demand services. In contrast, the index for final demand goods moved down 0.7 percent.

In January, the index for final demand less foods, energy, and trade services advanced 0.2 percent for the second consecutive month. For the 12 months ended in January, prices for final demand less foods, energy, and trade services climbed 0.8 percent.

Final Demand

Final demand services: The index for final demand services advanced 0.5 percent in January, the third consecutive rise. Leading the broad-based increase in January, margins for final demand trade services moved up 0.9 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) The indexes for both final demand services less trade, transportation, and warehousing and for final demand transportation and warehousing services rose 0.4 percent.

Product detail: Nearly half of the January increase in prices for final demand services is attributable to a 4.0-percent advance in margins for machinery and equipment wholesaling. The indexes for services related to securities brokerage and dealing; loan services (partial); apparel, footwear, and accessories retailing; fuels and lubricants retailing; and airline passenger services also moved higher. Conversely, margins for food and alcohol retailing declined 4.1 percent. The indexes for health, beauty, and optical goods retailing and for physician care also decreased. (See table 4.)

Final demand goods: Prices for final demand goods fell 0.7 percent in January for the second consecutive month. In January, the decrease in the index for final demand goods can be traced to prices for final demand energy goods, which fell 5.0 percent. In contrast, the index for final demand foods advanced 1.0 percent. Prices for final demand goods less foods and energy were unchanged.

Product detail: Over half of the January decrease in prices for final demand goods can be attributed to the gasoline index, which fell 8.8 percent. Prices for home heating oil, electric power, jet fuel, basic organic chemicals, and corn also moved lower. Conversely, the indexes for fresh and dry vegetables jumped 17.3 percent. Prices for pharmaceutical preparations and residential natural gas also increased.

Intermediate Demand by Commodity Type

Within intermediate demand, prices for processed goods fell 1.2 percent, the index for unprocessed goods declined 0.7 percent, and prices for services climbed 1.1 percent. (See tables B and C.)

Processed goods for intermediate demand: Prices for processed goods for intermediate demand fell 1.2 percent in January, the seventh consecutive decline. In January, nearly two-thirds of the broad-based decrease can be traced to the index for processed energy goods, which dropped 4.6 percent. Prices for processed materials less foods and energy and for processed foods and feeds also moved down, falling 0.5 percent and 0.4 percent, respectively. For the 12 months ended in January, the index for processed goods for intermediate demand decreased 5.4 percent.

Product detail: In January, a major factor in the decrease in the index for processed goods for intermediate demand was an 18.9-percent drop in prices for jet fuel. The indexes for basic organic chemicals, gasoline, plastic resins and materials, industrial electric power, and lubricating oil base stocks also moved lower. In contrast, prices for natural gas to electric utilities advanced 3.2 percent. The indexes for beef and veal and for biological products for human use also increased. (See table 5.)

Unprocessed goods for intermediate demand: Prices for unprocessed goods for intermediate demand fell 0.7 percent in January, the seventh consecutive decline. In January, the decrease can be traced to the index for unprocessed energy goods, which dropped 10.0 percent. Conversely, prices for unprocessed foodstuffs and feedstuffs jumped 5.5 percent. The index for unprocessed nonfood materials less energy was unchanged. For the 12 months ended in January, prices for unprocessed goods for intermediate demand fell 17.9 percent.

Product detail: Leading the decline in the index for unprocessed goods for intermediate demand, prices for crude petroleum dropped 23.1 percent. The indexes for corn, natural gas, raw milk, nonferrous scrap, and slaughter hogs also fell. In contrast, prices for slaughter steers and heifers climbed 13.4 percent. The indexes for slaughter poultry and carbon steel scrap also increased.

Services for intermediate demand: The index for services for intermediate demand moved up 1.1 percent in January, the third straight advance. Leading the January increase, prices for services less trade, transportation, and warehousing for intermediate demand climbed 1.8 percent. The index for trade services for intermediate demand edged up 0.1 percent. Conversely, prices for transportation and warehousing services for intermediate demand declined 0.7 percent. For the 12 months ended in January, the index for services for intermediate demand rose 1.5 percent, the largest advance since a 1.6-percent increase in August 2015.

Product detail: Over 70 percent of the January rise in the index for services for intermediate demand can be traced to prices for services related to securities brokerage and dealing, which jumped 31.1 percent. The indexes for business loans (partial); metals, minerals, and ores wholesaling; food wholesaling; management consulting services; and airline passenger services also moved higher. In contrast, prices for courier, messenger, and U.S. postal services decreased 1.7 percent. The indexes for securities brokerage, dealing, and investment advice and for chemicals and allied products wholesaling also fell.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: The index for stage 4 intermediate demand increased 0.3 percent in January following five straight declines. In January, prices for total services inputs to stage 4 intermediate demand rose 0.9 percent. Conversely, prices for total goods inputs moved down 0.3 percent. (See table D.) Advances in the indexes for services related to securities brokerage and dealing; business loans (partial); unprocessed finfish; beef and veal; metals, minerals, and ores wholesaling; and food wholesaling outweighed decreases in the indexes for gasoline, industrial electric power, and machinery and equipment parts and supplies wholesaling. (See table 6.) For the 12 months ended in January, prices for stage 4 intermediate demand fell 0.9 percent.

Stage 3 intermediate demand: The index for stage 3 intermediate demand inched up 0.1 percent in January following six consecutive decreases. In January, prices for total services inputs to stage 3 intermediate demand increased 0.8 percent. In contrast, the index for total goods inputs fell 0.6 percent. Higher prices for services related to securities brokerage and dealing, slaughter steers and heifers, slaughter poultry, business loans (partial), and ungraded chicken eggs outweighed lower prices for gasoline; jet fuel; industrial chemicals; and courier, messenger, and U.S. postal services. For the 12 months ended in January, the index for stage 3 intermediate demand moved down 4.1 percent.

Stage 2 intermediate demand: The index for stage 2 intermediate demand fell 1.0 percent in January, the third straight decline. In January, prices for total goods inputs to stage 2 intermediate demand dropped 3.9 percent. Conversely, the index for total services inputs advanced 1.0 percent. Decreasing prices for crude petroleum; plastic resins and materials; natural gas; courier, messenger, and U.S. postal services; industrial chemicals; and corn outweighed rising prices for services related to securities brokerage and dealing, airline passenger services, and oilseeds. For the 12 months ended in January, the index for stage 2 intermediate demand fell 4.7 percent.

Stage 1 intermediate demand: The index for stage 1 intermediate demand moved down 0.2 percent in January, the seventh consecutive decline. In January, prices for total goods inputs to stage 1 intermediate demand fell 1.4 percent. In contrast, prices for total services inputs rose 1.3 percent. Declines in the indexes for industrial chemicals, crude petroleum, gasoline, nonferrous scrap, diesel fuel, and chemicals and allied products wholesaling outweighed rising prices for services related to securities brokerage and dealing, business loans (partial), and carbon steel scrap. For the 12 months ended in January, the index for stage 1 intermediate demand fell 6.3 percent.

Recalculation of Seasonal Adjustment Factors

Effective with this release, seasonal adjustment factors have been recalculated to reflect price- movement patterns during 2015 for the Final Demand-Intermediate Demand (FD-ID) System and commodity-grouping indexes. This routine annual recalculation may affect previously published seasonally adjusted indexes and percent changes for January 2011 through December 2015.

Revised seasonally adjusted data for this period, as well as seasonal adjustment factors for directly adjusted commodity indexes to be used through December 2016, were released February 12, 2016. To obtain this information, contact the Division of Industrial Prices and Price Indexes, Section of Index Analysis and Public Information at ppi-info@bls.gov, or (202) 691-7705, or visit the Producer Price Index website at www.bls.gov/ppi.

Tables E and F below provide monthly seasonally adjusted percent changes for major FD-ID system indexes in 2015, based on former and recalculated seasonal factors. These percent changes include final price data through August 2015 and may differ from values shown in tables A through D of this release, which include final price data through September 2015.