August 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 was unchanged in August, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices declined 0.4 percent in July and rose 0.5 percent in June. On an unadjusted basis, the final demand index was unchanged for the 12 months ended in August. (See table A.)

In August, a 0.1-percent advance in the index for final demand services offset a 0.4-percent decrease in prices for final demand goods.

Prices for final demand less foods, energy, and trade services increased 0.3 percent in August after no change in July. For the 12 months ended in August, the index for final demand less foods, energy, and trade services moved up 1.2 percent, the largest rise since climbing 1.3 percent for the 12 months ended December 2014.

Final Demand

Final demand services: The index for final demand services edged up 0.1 percent in August following a 0.3-percent decline in July. The advance can be traced to prices for final demand services less trade, transportation, and warehousing, which increased 0.5 percent. In contrast, the index for final demand trade services fell 0.6 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand transportation and warehousing services moved down 0.4 percent.

Product detail: Within the index for final demand services in August, prices for outpatient care (partial) advanced 0.5 percent. The indexes for apparel, jewelry, footwear, and accessories retailing; guestroom rental; portfolio management; and residential real estate services (partial) also moved higher. Conversely, margins for machinery and equipment wholesaling decreased 2.9 percent. The indexes for chemicals and allied products wholesaling, services related to securities brokerage and dealing, and airline passenger services also declined. (See table 4.)

Final demand goods: The index for final demand goods fell 0.4 percent in August, the same as in July. Eighty percent of the August decrease can be traced to a 1.6-percent drop in prices for final demand foods. Also contributing to the decline in the index for final demand goods, prices for final demand energy moved down 0.8 percent. In contrast, the index for final demand goods less foods and energy inched up 0.1 percent.

Product detail: Thirty percent of the August decrease in the index for final demand goods is attributable to a 3.6-percent drop in prices for meats. The indexes for gasoline, fresh and dry vegetables, jet fuel, chicken eggs, and diesel fuel also fell. Conversely, prices for pharmaceutical preparations increased 1.0 percent. The indexes for electric power and natural, processed, and imitation cheese also rose.

Intermediate Demand by Commodity Type

Within intermediate demand in August, prices for processed goods inched down 0.1 percent, the index for unprocessed goods fell 2.8 percent, and prices for services were unchanged. (See tables B and C.)

Processed goods for intermediate demand: The index for processed goods for intermediate demand edged down 0.1 percent in August following four straight increases. Leading the decrease, prices for processed energy goods fell 1.1 percent. The index for processed foods and feeds declined 1.9 percent. In contrast, prices for processed materials less foods and energy advanced 0.3 percent. For the 12 months ended in August, the index for processed goods for intermediate demand fell 3.1 percent.

Product detail: Leading the August decline in the index for processed goods for intermediate demand, prices for diesel fuel decreased 6.1 percent. The indexes for prepared animal feeds, jet fuel, meats, and semifinished steel mill products also moved lower. Conversely, prices for primary basic organic chemicals advanced 8.5 percent. The indexes for electric power; cold rolled steel sheet and strip; and natural, processed, and imitation cheese also increased. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand moved down 2.8 percent in August, the largest decline since falling 3.9 percent in December 2015. Nearly 80 percent of the August decrease can be traced to a 6.8-percent drop in the index for unprocessed energy materials. Prices for unprocessed foodstuffs and feedstuffs moved down 1.8 percent. In contrast, the index for unprocessed nonfood materials less energy advanced 0.8 percent. For the 12 months ended in August, the index for unprocessed goods for intermediate demand fell 8.4 percent.

Product detail: Nearly half of the August decline in prices for unprocessed goods for intermediate demand is attributable to the index for crude petroleum, which fell 9.1 percent. Prices for natural gas, slaughter poultry, slaughter barrows and gilts, coal, and carbon steel scrap also moved lower. Conversely, the index for nonferrous metal ores advanced 4.1 percent. Prices for raw milk and corn also moved higher.

Services for intermediate demand: The index for services for intermediate demand was unchanged in August following two consecutive increases. In August, prices for services less trade, transportation, and warehousing for intermediate demand rose 0.4 percent and the index for transportation and warehousing services for intermediate demand edged up 0.1 percent. In contrast, margins for trade services for intermediate demand declined 1.3 percent. For the 12 months ended in August, the index for services for intermediate demand increased 1.4 percent.

Product detail: In August, prices for portfolio management climbed 2.8 percent. The indexes for loan services (partial); broadcast and network television advertising time sales; courier, messenger, and U.S. postal services; and machinery and equipment parts and supplies wholesaling also advanced. Conversely, margins for chemicals and allied products wholesaling fell 5.2 percent. The indexes for services related to securities brokerage and dealing; metals, minerals, and ores wholesaling; food wholesaling; and airline passenger services also declined.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: The index for stage 4 intermediate demand was unchanged in August, the same as in July. In August, prices for total services inputs to stage 4 intermediate demand edged up 0.1 percent. The index for total goods inputs was unchanged. (See table D.) Increases in the indexes for portfolio management; loan services (partial); legal services; machinery and equipment parts and supplies wholesaling; and natural, processed, and imitation cheese offset declines in the indexes for chemicals and allied products wholesaling; diesel fuel; services related to securities brokerage and dealing; meats; and metals, minerals, and ores wholesaling. (See table 6.) For the 12 months ended in August, the index for stage 4 intermediate demand fell 0.3 percent.

Stage 3 intermediate demand: The index for stage 3 intermediate demand declined 0.6 percent in August, the first decrease since falling 0.8 percent in February. In August, prices for total goods inputs to stage 3 intermediate demand moved down 0.7 percent and the index for total services inputs declined 0.3 percent. Decreases in the indexes for slaughter poultry, jet fuel, slaughter barrows and gilts, gasoline, chemicals and allied products wholesaling, and services related to securities brokerage and dealing outweighed increases in prices for raw milk, primary basic organic chemicals, and loan services (partial). For the 12 months ended in August, the index for stage 3 intermediate demand decreased 3.9 percent.

Stage 2 intermediate demand: The index for stage 2 intermediate demand declined 0.7 percent in August following five consecutive increases. In August, prices for total goods inputs to stage 2 intermediate demand fell 1.9 percent. In contrast, the index for total services inputs edged up 0.1 percent. Lower prices for crude petroleum, gas fuels, services related to securities brokerage and dealing, prepared animal feeds, thermoplastic resins and materials, and semifinished steel mill products outweighed increases in the indexes for portfolio management, legal services, and cold rolled steel sheet and strip. For the 12 months ended in August, the index for stage 2 intermediate demand inched down 0.1 percent.

Stage 1 intermediate demand: The index for stage 1 intermediate demand declined 0.3 percent in August, the first decrease since dropping 0.8 percent in February. In August, prices for total services inputs to stage 1 intermediate demand fell 0.4 percent and the index for total goods inputs moved down 0.3 percent. Declines in the indexes for chemicals and allied products wholesaling; diesel fuel; carbon steel scrap; metals, minerals, and ores wholesaling; services related to securities brokerage and dealing; and crude petroleum outweighed increases in prices for primary basic organic chemicals, loan services (partial), and wastepaper. For the 12 months ended in August, the stage 1 intermediate demand index decreased 2.5 percent.