October 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 October, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.3 percent in September and were unchanged in August. (See table A.) On an unadjusted basis, the final demand index increased 0.8 percent for the 12 months ended in October, the largest 12-month rise since advancing 0.9 percent in December 2014.

Within final demand in October, a 0.4-percent increase in the index for final demand goods offset a 0.3-percent decline in prices for final demand services.

Prices for final demand less foods, energy, and trade services edged down 0.1 percent in October after rising 0.3 percent in both August and September. For the 12 months ended in October, the index for final demand less foods, energy, and trade services advanced 1.6 percent, the largest increase since climbing 1.7 percent for the 12 months ended September 2014.

Final Demand

Final demand goods: Prices for final demand goods moved up 0.4 percent in October, the second straight increase. Most of the October advance can be attributed to a 2.5-percent rise in the index for final demand energy. Prices for final demand goods less foods and energy inched up 0.1 percent. In contrast, the index for final demand foods declined 0.8 percent.

Product detail: The October increase in the index for final demand goods can be traced primarily to a 9.7-percent jump in gasoline prices. The indexes for light motor trucks, beef and veal, industrial chemicals, jet fuel, and liquefied petroleum gas also advanced. (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 2017 Model Vehicles, at www.bls.gov/web/ppi/ppimotveh.htm.) Conversely, the index for fresh and dry vegetables fell 5.0 percent. Prices for electric power and for iron and steel scrap also decreased. (See table 4.)

Final demand services: In October, prices for final demand services fell 0.3 percent following a 0.1- percent rise in both August and September. The decrease was led by the index for final demand services less trade, transportation, and warehousing, which declined 0.3 percent. Prices for final demand trade services also fell 0.3 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) In contrast, the index for final demand transportation and warehousing services increased 0.2 percent.

Product detail: A major factor in the October decrease in the index for final demand services was prices for securities brokerage, dealing, investment advice, and related services, which fell 5.7 percent. The indexes for food and alcohol retailing; fuels and lubricants retailing; apparel, jewelry, footwear, and accessories retailing; consumer loans (partial); and hospital outpatient care also moved lower. Conversely, prices for truck transportation of freight increased 0.3 percent. The indexes for machinery, equipment, parts, and supplies wholesaling and guestroom rental also advanced.

Intermediate Demand by Commodity Type

Within intermediate demand in October, prices for processed goods advanced 0.3 percent, the index for unprocessed goods fell 0.6 percent, and prices for services decreased 0.6 percent. (See tables B and C.)

Processed goods for intermediate demand: The index for processed goods for intermediate demand moved up 0.3 percent in October, the second consecutive increase. Nearly two-thirds of the rise in October can be traced to prices for processed energy goods, which climbed 1.2 percent. The index for processed materials less foods and energy advanced 0.2 percent. In contrast, prices for processed foods and feeds declined 0.7 percent. For the 12 months ended in October, the index for processed goods for intermediate demand fell 0.5 percent.

Product detail: Contributing to the October advance in the index for processed goods for intermediate demand, jet fuel prices increased 7.2 percent. The indexes for gasoline, industrial chemicals, plastic resins and materials, liquefied petroleum gas, and beef and veal also moved higher. Conversely, prices for natural cheese, except cottage cheese, dropped 5.8 percent. The indexes for electric power and biological products for human use also decreased. (See table 5.)

Unprocessed goods for intermediate demand: Prices for unprocessed goods for intermediate demand fell 0.6 percent in October following a 1.3-percent rise in September. Most of the decrease is attributable to a 5.7-percent drop in the index for unprocessed foodstuffs and feedstuffs. Prices for unprocessed nonfood materials less energy fell 1.1 percent. In contrast, the index for unprocessed energy materials increased 5.8 percent. For the 12 months ended in October, prices for unprocessed goods for intermediate demand decreased 4.2 percent.

Product detail: Most of the October decrease in the index for unprocessed goods for intermediate demand can be traced to prices for slaughter livestock, which fell 11.5 percent. The indexes for slaughter poultry, iron and steel scrap, raw milk, hay and hayseeds, and tree nuts also declined. Conversely, prices for crude petroleum rose 10.4 percent. The indexes for corn and wastepaper also moved higher.

Services for intermediate demand: The index for services for intermediate demand fell 0.6 percent in October, the largest decline since the inception of the index in November 2009. Almost 90 percent of the October decline can be traced to prices for services less trade, transportation, and warehousing for intermediate demand, which decreased 0.8 percent. Margins for trade services for intermediate demand fell 0.5 percent. In contrast, transportation and warehousing services for intermediate demand rose 0.2 percent. For the 12 months ended in October, the index for services for intermediate demand moved up 2.3 percent.

Product detail: A major factor in the October decline in the index for services for intermediate demand was prices for business loans (partial), which fell 3.1 percent. The indexes for securities brokerage, dealing, investment advice, and related services; metals, minerals, and ores wholesaling; chemicals and allied products wholesaling; marketing consulting services; and fuels and lubricants retailing also moved lower. Conversely, prices for courier, messenger, and U.S. postal services advanced 0.4 percent. The indexes for broadcast and network television advertising time sales and for machinery and equipment parts and supplies wholesaling also increased.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: The index for stage 4 intermediate demand fell 0.2 percent in October, the first decline since inching down 0.1 percent in March. In October, prices for total services inputs to stage 4 intermediate demand dropped 0.5 percent, and the index for total goods inputs decreased 0.1 percent. (See table D.) Declines in the indexes for securities brokerage, dealing, investment advice, and related services; business loans (partial); electric power; natural cheese, except cottage cheese; chemicals and allied products wholesaling; and metals, minerals, and ores wholesaling outweighed increases in the indexes for gasoline, machinery and equipment parts and supplies wholesaling, and industrial chemicals. For the 12 months ended in October, prices for stage 4 intermediate demand rose 0.6 percent, the largest 12-month increase since a 0.9-percent advance in November 2014.

Stage 3 intermediate demand: The index for stage 3 intermediate demand fell 0.7 percent in October following a 0.6-percent increase in September. In October, prices for total goods inputs to stage 3 intermediate demand moved down 0.7 percent, and the index for total services inputs declined 0.5 percent. Decreases in the indexes for slaughter livestock; slaughter poultry; securities brokerage, dealing, investment advice, and related services; raw milk; business loans (partial); and metals, minerals, and ores wholesaling outweighed rising prices for gasoline; jet fuel; and courier, messenger, and U.S. postal services. For the 12 months ended in October, the index for stage 3 intermediate demand decreased 1.7 percent.

Stage 2 intermediate demand: The index for stage 2 intermediate demand rose 0.6 percent in October after advancing 1.1 percent in September. In October, prices for total goods inputs to stage 2 intermediate demand climbed 2.2 percent. In contrast, the index for total services inputs moved down 0.5 percent. Higher prices for crude petroleum, gas fuels, plastic resins and materials, coal, corn, and staffing services outweighed declines in the indexes for securities brokerage, dealing, investment advice, and related services; iron and steel scrap; and marketing consulting services. For the 12 months ended in October, prices for stage 2 intermediate demand rose 2.9 percent, the largest 12- month advance since a 3.6-percent increase in February 2014.

Stage 1 intermediate demand: The index for stage 1 intermediate demand moved down 0.2 percent in October following a 0.6-percent rise in September. In October, prices for total services inputs to stage 1 intermediate demand fell 0.9 percent. Conversely, the index for total goods inputs rose 0.3 percent. Decreases in the indexes for securities brokerage, dealing, investment advice, and related services; iron and steel scrap; business loans (partial); metals, minerals, and ores wholesaling; chemicals and allied products wholesaling; and electric power outweighed increases in prices for industrial chemicals, gasoline, and wireless telecommunication services. For the 12 months ended in October, the index for stage 1 intermediate demand moved up 0.2 percent, the first 12-month advance since October 2014.

Resampling of Industries

Effective with the release of data for October 2016, the Producer Price Index (PPI) includes data for 15 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 2016, see the current issue of the PPI Detailed Report online at www.bls.gov/ppi/ppidr201610.pdf, or contact the PPI Section of Index Analysis and Public Information at ppi-info@bls.gov or (202) 691-7705.

NAICS Code Industry 221121 Electric bulk power transmission and control 221210 Natural gas distribution 311512 Creamery butter manufacturing 311612 Meat processed from carcasses 311613 Rendering and meat byproduct processing 325180 Other basic inorganic chemical manufacturing 327390 Other concrete product manufacturing 332913 Plumbing fixture fitting and trim manufacturing 333318 Other commercial and service industry machinery manufacturing 333611 Turbine and turbine generator set units manufacturing 339910 Jewelry and silverware manufacturing 441110 New car dealers 515120 Television broadcasting 524114 Direct health and medical insurance carriers 531210 Offices of real estate agents and brokers

Recalculated Seasonal Adjustment Factors and Relative Importance Figures to be Available on February 10, 2017

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 10, 2017 (2 workdays prior to the release of PPI data for January 2017 on February 14):

* Direct seasonal factors for PPI commodity indexes for the year 2017, * Recalculated seasonal factors for the last 5 years (2012-2016) for PPI commodity indexes, * Recalculated seasonal factors for the last 5 years (2012-2016) for PPI Final Demand- Intermediate Demand indexes, * Recalculated seasonal index data for the last 5 years (2012-2016) 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 2016 will be available on February 10, 2017:

* 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, or contact the PPI Section of Index Analysis and Public Information at ppi-info@bls.gov or (202) 691-7705.