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

The decrease in the final demand index in February can be traced to prices for final demand goods, which moved down 0.6 percent. The index for final demand services was unchanged.

The index for final demand less foods, energy, and trade services inched up 0.1 percent in February after increasing 0.2 percent in both January and December. For the 12 months ended in February, prices for final demand less foods, energy, and trade services rose 0.9 percent, the largest 12-month advance since a 0.9-percent increase in July 2015.

Final Demand

Final demand goods: The index for final demand goods fell 0.6 percent in February, the third consecutive decline. Most of the February decrease can be traced to prices for final demand energy, which dropped 3.4 percent. The index for final demand foods moved down 0.3 percent. In contrast, prices for final demand goods less foods and energy advanced 0.1 percent.

Product detail: Leading the February decline in prices for final demand goods, the gasoline index fell 15.1 percent. Prices for fresh and dry vegetables, diesel fuel, beef and veal, passenger cars, and industrial chemicals also moved lower. Conversely, the index for pharmaceutical preparations climbed 1.2 percent. Prices for home heating oil and eggs for fresh use also increased. (See table 4.)

Final demand services: The index for final demand services was unchanged in February following three consecutive advances. In February, a 0.3-percent rise in prices for final demand services less trade, transportation, and warehousing offset a 0.4-percent decrease in the index for final demand trade services and a 0.7-percent drop in prices 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 February, prices for securities brokerage, dealing, investment advice, and related services moved up 4.8 percent. The indexes for machinery, equipment, parts, and supplies wholesaling; food retailing; guestroom rental; and outpatient care (partial) also increased. In contrast, the index for apparel, footwear, and accessories retailing declined 6.0 percent. The indexes for fuels and lubricants retailing, portfolio management, truck transportation of freight, and deposit services (partial) also fell.

Intermediate Demand by Commodity Type

Within intermediate demand in February, prices for processed goods fell 0.7 percent, the index for unprocessed goods declined 2.1 percent, and prices for services rose 0.3 percent. (See tables B and C.)

Processed goods for intermediate demand: Prices for processed goods for intermediate demand fell 0.7 percent in February, the eighth consecutive decline. In February, nearly two-thirds of the decrease can be traced to the index for processed energy goods, which fell 2.9 percent. Prices for processed materials less foods and energy also moved down, declining 0.4 percent. In contrast, the index for processed foods and feeds edged up 0.1 percent. For the 12 months ended in February, the index for processed goods for intermediate demand declined 5.6 percent.

Product detail: In February, a major factor in the decrease in the index for processed goods for intermediate demand was a 9.8-percent drop in prices for diesel fuel. The indexes for gasoline, industrial chemicals, non-corrugated paperboard, thermoplastic resins and materials, and nonferrous wire and cable also moved lower. Conversely, prices for processed poultry rose 1.2 percent. The indexes for heating oil and industrial gases also increased. (See table 5.)

Unprocessed goods for intermediate demand: Prices for unprocessed goods for intermediate demand fell 2.1 percent in February, the eighth consecutive decline. In February, almost 60 percent of the decrease can be traced to the index for unprocessed foodstuffs and feedstuffs, which fell 2.4 percent. Prices for unprocessed energy materials also moved down, declining 3.2 percent. In contrast, the index for unprocessed nonfood materials less energy advanced 0.3 percent. For the 12 months ended in February, prices for unprocessed goods for intermediate demand fell 16.8 percent.

Product detail: A major factor in the February decline in the index for unprocessed goods for intermediate demand was prices for raw milk, which decreased 11.4 percent. The indexes for crude petroleum; slaughter poultry; fresh vegetables, except potatoes; coal; and hides and skins also fell. Conversely, prices for iron and steel scrap moved up 2.5 percent. The indexes for slaughter hogs and natural gas also advanced.

Services for intermediate demand: The index for services for intermediate demand moved up 0.3 percent in February, the fourth straight advance. The February increase can be traced to prices for services less trade, transportation, and warehousing for intermediate demand, which rose 0.4 percent. In contrast, prices for transportation and warehousing services for intermediate demand declined 0.2 percent. The index for trade services for intermediate demand was unchanged. For the 12 months ended in February, the index for services for intermediate demand climbed 1.9 percent, the largest advance since a 1.9-percent increase in April 2015.

Product detail: A major factor in the February rise in prices for services for intermediate demand was the index for business loans (partial), which advanced 1.1 percent. The indexes for securities brokerage, dealing, investment advice, and related services; co-employment staffing services; legal services; paper and plastics products wholesaling; and the U.S. Postal Service also moved higher. Conversely, prices for truck transportation of freight decreased 0.9 percent. The indexes for portfolio management and for fuels and lubricants retailing also fell.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: The index for stage 4 intermediate demand edged down 0.1 percent in February following a 0.3-percent rise a month earlier. In February, prices for total goods inputs to stage 4 intermediate demand fell 0.4 percent. In contrast, prices for total services inputs inched up 0.1 percent. (See table D.) Decreases in the indexes for gasoline, portfolio management, diesel fuel, deposit services (partial), and industrial chemicals outweighed increases in prices for securities brokerage, dealing, investment advice, and related services; legal services; business loans (partial); and commercial electric power. (See table 6.) For the 12 months ended in February, prices for stage 4 intermediate demand fell 0.8 percent.

Stage 3 intermediate demand: The index for stage 3 intermediate demand dropped 0.9 percent in February following a 0.1-percent rise in January. In February, prices for total goods inputs to stage 3 intermediate demand fell 2.1 percent. Conversely, the index for total services inputs increased 0.3 percent. Lower prices for gasoline, raw milk, slaughter poultry, diesel fuel, industrial chemicals, and advertising space sales in periodicals and newspapers outweighed higher prices for securities brokerage, dealing, investment advice, and related services; slaughter hogs; and heating oil. For the 12 months ended in February, the index for stage 3 intermediate demand moved down 3.9 percent.

Stage 2 intermediate demand: The index for stage 2 intermediate demand fell 0.3 percent in February, the eighth straight decline. In February, prices for total goods inputs to stage 2 intermediate demand dropped 1.4 percent. In contrast, the index for total services inputs advanced 0.5 percent. Decreasing prices for crude petroleum, portfolio management, non- corrugated paperboard, thermoplastic resins and materials, cable network advertising time sales, and industrial chemicals outweighed rising prices for securities brokerage, dealing, investment advice, and related services; co-employment staffing services; and natural gas. For the 12 months ended in February, the index for stage 2 intermediate demand fell 4.6 percent.

Stage 1 intermediate demand: The index for stage 1 intermediate demand moved down 0.6 percent in February, the eighth consecutive decline. In February, prices for total goods inputs to stage 1 intermediate demand fell 1.2 percent. Conversely, prices for total services inputs rose 0.1 percent. Declines in the indexes for diesel fuel, industrial chemicals, gasoline, fuels and lubricants retailing, portfolio management, and deposit services (partial) outweighed rising prices for securities brokerage, dealing, investment advice, and related services; iron and steel scrap; and business loans (partial). For the 12 months ended in February, the index for stage 1 intermediate demand fell 5.5 percent.

Resampling of Industries

Effective with the release of data for February 2016, the Producer Price Index (PPI) includes data for 20 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 February 2016, see the current issue of the PPI Detailed Report online at www.bls.gov/ppi/ppidr201602.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 311221 Wet corn milling 311421 Fruit and vegetable canning 311514 Dry, condensed, and evaporated dairy products 321114 Wood preservation 327331 Concrete block and brick manufacturing 327332 Concrete pipe manufacturing 333244 Printing machinery and equipment manufacturing 333413 Fan, blower, and air purification equipment manufacturing 337212 Custom architectural woodwork and millwork 339930 Doll, toy, and game manufacturing 441310 Automotive parts and accessories stores 441320 Tire dealers 448310 Jewelry stores 452112 Discount department stores 452900 Other general merchandise stores 481211 Nonscheduled air passenger chartering 481212 Nonscheduled air freight chartering 484110 General freight trucking, local 484230 Other specialized trucking, long-distance 492210 Local messengers and local delivery