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The Producer Price Index for final demand increased 0.5 percent in June, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.4 percent in May and 0.2 percent in April. On an unadjusted basis, the final demand index advanced 0.3 percent for the 12 months ended in June, the largest 12-month increase since moving up 0.9 percent in December 2014. (See table A.)
In June, the advance in the final demand index was led by prices for final demand services, which rose 0.4 percent. The index for final demand goods advanced 0.8 percent.
Prices for final demand less foods, energy, and trade services rose 0.3 percent in June after declining 0.1 percent in May. For the 12 months ended in June, the index for final demand less foods, energy, and trade services increased 0.9 percent.
Final Demand
Final demand services: The index for final demand services advanced 0.4 percent in June, the third consecutive rise. The broad-based June increase was led by prices for final demand services less trade, transportation, and warehousing, which also moved up 0.4 percent. The indexes for final demand trade services and for final demand transportation and warehousing services rose 0.7 percent and 0.5 percent, respectively. (Trade indexes measure changes in margins received by wholesalers and retailers.)
Product detail: A major factor in the increase in prices for final demand services was the index for services related to securities brokerage and dealing, which rose 7.7 percent. The indexes for automotive fuels and lubricants retailing; machinery, equipment, parts, and supplies wholesaling; traveler accommodation services; airline passenger services; and health, beauty, and optical goods retailing also increased. In contrast, margins for apparel, footwear, and accessories retailing declined 2.6 percent. The indexes for long-distance motor carrying and residential real estate loans (partial) also fell. (See table 4.)
Final demand goods: The index for final demand goods advanced 0.8 percent in June, the largest rise since a 1.2-percent jump in May 2015. Over three-quarters of the June increase can be traced to prices for final demand energy, which climbed 4.1 percent. The index for final demand foods moved up 0.9 percent. Prices for final demand goods less foods and energy were unchanged.
Product detail: Nearly half of the increase in the index for final demand goods is attributable to gasoline prices, which climbed 9.9 percent. Prices for meats, jet fuel, electric power, home heating oil, and cigarettes also moved higher. Conversely, the index for chicken eggs dropped 29.9 percent. Prices for carbon steel scrap and residential natural gas also decreased.
Intermediate Demand by Commodity Type
Within intermediate demand in June, prices for processed goods increased 0.9 percent, the index for unprocessed goods rose 2.8 percent, and prices for services climbed 0.8 percent. (See tables B and C.)
Processed goods for intermediate demand: The index for processed goods for intermediate demand moved up 0.9 percent in June, the largest advance since a 0.9-percent rise in January 2014. About 70 percent of the broad-based increase in June can be traced to prices for processed energy goods, which jumped 4.0 percent. The indexes for processed materials less foods and energy and for processed foods and feeds moved up 0.2 percent and 1.7 percent, respectively. For the 12 months ended in June, prices for processed goods for intermediate demand fell 4.1 percent, the smallest 12- month decrease since a 2.6-percent decline in December 2014.
Product detail: Contributing to the June advance in the index for processed goods for intermediate demand, electric power prices increased 1.4 percent. The indexes for gasoline, diesel fuel, prepared animal feeds, jet fuel, and basic organic chemicals also moved higher. In contrast, prices for processed eggs dropped 30.9 percent. The indexes for automotive job stampings and natural gas to electric utilities also decreased. (See table 5.)
Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand climbed 2.8 percent in June, the fourth consecutive rise. Most of the increase in June can be traced to an 8.5-percent advance in prices for unprocessed energy goods. The index for unprocessed foodstuffs and feedstuffs moved up 0.4 percent. Conversely, prices for unprocessed nonfood materials less energy declined 0.3 percent. For the 12 months ended in June, the index for unprocessed goods for intermediate demand fell 11.4 percent, the smallest 12-month decrease since an 8.7-percent decline in December 2014.
Product detail: Ninety percent of the June increase in prices for unprocessed goods for intermediate demand is attributable to the index for crude petroleum, which surged 17.0 percent. Prices for slaughter poultry; corn; hay, hayseeds, and oilseeds; coal; and hides and skins also moved higher. In contrast, the index for carbon steel scrap dropped 6.6 percent. Prices for slaughter steers and heifers and for natural gas also declined.
Services for intermediate demand: The index for services for intermediate demand rose 0.8 percent in June, the largest increase since a 1.3-percent jump in January. Accounting for 70 percent of the advance in June, prices for services less trade, transportation, and warehousing for intermediate demand climbed 0.8 percent. The indexes for trade services for intermediate demand and for transportation and warehousing services for intermediate demand rose 1.1 percent and 0.4 percent, respectively. For the 12 months ended in June, prices for services for intermediate demand advanced 1.6 percent.
Product detail: A major factor in the increase in the index for services for intermediate demand was prices for loan services (partial), which advanced 1.7 percent. The indexes for services related to securities brokerage and dealing; machinery and equipment parts and supplies wholesaling; metals, minerals, and ores wholesaling; portfolio management; and airline passenger services also moved higher. Conversely, margins for chemicals and allied products wholesaling fell 3.6 percent. The indexes for staffing services and long-distance motor carrying also declined.
Intermediate Demand by Production Flow
Stage 4 intermediate demand: The index for stage 4 intermediate demand increased 0.7 percent in June, the largest rise since jumping 0.8 percent in April 2011. In June, prices for total services inputs to stage 4 intermediate demand advanced 0.8 percent, and the index for total goods inputs climbed 0.7 percent. (See table D.) Increases in the indexes for machinery and equipment parts and supplies wholesaling, services related to securities brokerage and dealing, diesel fuel, portfolio management, gasoline, and electric power outweighed declines in the indexes for chemical and allied products wholesaling, staffing services, and automotive job stampings. (See table 6.) For the 12 months ended in June, prices for stage 4 intermediate demand moved down 0.5 percent.
Stage 3 intermediate demand: The index for stage 3 intermediate demand increased 0.9 percent in June, the largest rise since a 1.2-percent jump in May 2015. In June, prices for total goods inputs to stage 3 intermediate demand advanced 1.2 percent, and prices for total services inputs moved up 0.7 percent. Rising indexes for gasoline, slaughter poultry, jet fuel, services related to securities brokerage and dealing, machinery and equipment parts and supplies wholesaling, and diesel fuel outweighed decreases in the indexes for slaughter steers and heifers, raw milk, and chemicals and allied products wholesaling. For the 12 months ended in June, prices for stage 3 intermediate demand decreased 4.2 percent.
Stage 2 intermediate demand: The index for stage 2 intermediate demand increased 1.5 percent in June, the largest advance since a 3.5-percent jump in February 2014. In June, prices for total goods inputs to stage 2 intermediate demand rose 2.9 percent, and the index for total services inputs moved up 0.6 percent. Higher prices for crude petroleum; services related to securities brokerage and dealing; prepared animal feeds; hay, hayseeds, and oilseeds; corn; and portfolio management outweighed decreases in the indexes for staffing services; hot rolled steel bars, plates, and structural shapes; and carbon steel scrap. For the 12 months ended in June, the index for stage 2 intermediate demand fell 1.9 percent.
Stage 1 intermediate demand: The index for stage 1 intermediate demand increased 1.2 percent in June, the largest advance since a 1.5-percent rise in January 2014. In June, prices for both total goods and total services inputs to stage 1 intermediate demand moved up 1.2 percent. Higher prices for diesel fuel, basic organic chemicals, services related to securities brokerage and dealing, crude petroleum, gasoline, and corn outweighed decreases in the indexes for carbon steel scrap; chemicals and allied products wholesaling; and truck, trailer, and bus rental. For the 12 months ending in June, prices for stage 1 intermediate demand moved down 3.4 percent.
Resampling of Industries
Effective with the release of data for June 2016, the Producer Price Index (PPI) includes data for 19 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 June 2016, see the current issue of the PPI Detailed Report online at www.bls.gov/ppi/ppidr201606.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 236211 New industrial building construction 311991 Perishable prepared food manufacturing 315190 Other apparel knitting mills 324191 Petroleum lubricating oil and grease manufacturing 325320 Pesticide and other agricultural chemical manufacturing 325613 Surface active agent manufacturing 332311 Prefabricated metal building and component manufacturing 332321 Metal window and door manufacturing 332510 Hardware manufacturing 332613 Spring manufacturing 332812 Metal coating and nonprecious engraving 333618 Other engine equipment manufacturing 333992 Welding and soldering equipment manufacturing 335220 Major household appliance manufacturing* 336510 Railroad rolling stock manufacturing 336999 All other transportation equipment manufacturing 339991 Gasket, packing, and sealing device manufacturing 519130 Internet publishing and web search portals 713110 Amusement and theme parks
* This industry encompasses data previously published under NAICS codes 335221, 335222, 335224, and 335228.
Source: U.S. Bureau of Labor Statistics · Original release Jul 14, 2016.
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