February 2017 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 increased 0.3 percent in February, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.6 percent in January and 0.2 percent in December. (See table A.) On an unadjusted basis, the final demand index climbed 2.2 percent for the 12 months ended February 2017, the largest advance since a 2.4-percent increase in the 12 months ended March 2012.

In February, over 80 percent of the advance in the final demand index is attributable to a 0.4- percent increase in prices for final demand services. The index for final demand goods moved up 0.3 percent.

Prices for final demand less foods, energy, and trade services rose 0.3 percent in February, the largest increase since a 0.3-percent advance in April 2016. For the 12 months ended in February, the index for final demand less foods, energy, and trade services climbed 1.8 percent.

Final Demand

Final demand services: The index for final demand services moved up 0.4 percent in February, the largest advance since a 0.4-percent increase in June 2016. Nearly 70 percent of the February rise can be traced to prices for final demand services less trade, transportation, and warehousing, which climbed 0.5 percent. The indexes for final demand trade services and for final demand transportation and warehousing services advanced 0.4 percent and 0.3 percent, respectively.

Product detail: In February, a major factor in the increase in prices for final demand services was the index for traveler accommodation services, which rose 4.3 percent. The indexes for chemicals and allied products wholesaling; legal services; apparel wholesaling; health, beauty, and optical goods retailing; and architectural and engineering services also moved higher. In contrast, the index for automotive fuels and lubricants retailing fell 10.0 percent. Prices for wireless telecommunication services and for securities brokerage, dealing, and investment advice also decreased. (See table 4.)

Final demand goods: Prices for final demand goods moved up 0.3 percent in February, the sixth consecutive rise. Over half of the broad-based February increase can be traced to the index for final demand energy, which advanced 0.6 percent. Prices for final demand foods and for final demand goods less foods and energy moved up 0.3 percent and 0.1 percent, respectively.

Product detail: Nearly 70 percent of the February increase in prices for final demand goods is attributable to the index for electric power, which climbed 1.6 percent. Prices for fresh and dry vegetables, jet fuel, liquefied petroleum gas, pharmaceutical preparations, and residual fuels also rose. Conversely, the index for gasoline fell 2.5 percent. Prices for beef and veal and for search, detection, navigation, and guidance systems and equipment also decreased.

Intermediate Demand by Commodity Type

Within intermediate demand in February, prices for processed goods advanced 0.4 percent, the index for unprocessed goods fell 0.2 percent, and prices for services climbed 0.5 percent. (See tables B and C.)

Processed goods for intermediate demand: The index for processed goods for intermediate demand moved up 0.4 percent in February, the sixth consecutive increase. About 80 percent of the February rise is attributable to a 0.5-percent advance in prices for processed materials less foods and energy. The index for processed energy goods climbed 0.6 percent. In contrast, prices for processed foods and feeds edged down 0.1 percent. For the 12 months ended in February, prices for processed goods for intermediate demand increased 5.0 percent, the largest advance since a 5.7-percent rise in the 12 months ended December 2011.

Product detail: A major factor in the February advance in the index for processed goods for intermediate demand was prices for primary basic organic chemicals, which increased 4.3 percent. The indexes for electric power, cold rolled steel sheet and strip, residual fuels, rubber and rubber products, and lubricating oil base stocks also moved higher. Conversely, prices for beef and veal fell 3.7 percent. The indexes for gasoline and ethanol also decreased. (See table 5.)

Unprocessed goods for intermediate demand: Prices for unprocessed goods for intermediate demand declined 0.2 percent in February following a 3.8-percent rise in January. The decrease can be attributed to a 4.3-percent drop in the index for unprocessed energy materials. In contrast, prices for unprocessed foodstuffs and feedstuffs and for unprocessed nonfood materials less energy advanced 2.2 percent and 1.4 percent, respectively. For the 12 months ended in February, the index for unprocessed goods for intermediate demand jumped 19.4 percent, the largest 12-month advance since a 20.0-percent rise in September 2011.

Product detail: Leading the February decrease in the index for unprocessed goods for intermediate demand, prices for natural gas fell 18.0 percent. The indexes for coal, hay and hayseeds, raw milk, ungraded chicken eggs, and strawberries also moved lower. Conversely, prices for slaughter barrows and gilts advanced 18.2 percent. The indexes for crude petroleum and wastepaper also increased.

Services for intermediate demand: The index for services for intermediate demand moved up 0.5 percent in February, the largest increase since a 1.3-percent advance in January 2016. Two-thirds of the broad-based rise in February can be traced to prices for services less trade, transportation, and warehousing for intermediate demand, which climbed 0.5 percent. The indexes for trade services for intermediate demand and for transportation and warehousing services for intermediate demand both increased 0.6 percent. For the 12 months ended in February, prices for services for intermediate demand rose 2.0 percent.

Product detail: About one-quarter of the February advance in the index for services for intermediate demand is attributable to a 2.6-percent jump in prices for legal services. The indexes for chemicals and allied products wholesaling, business loans (partial), architectural and engineering services, nonresidential real estate rents, and U.S. postal services also moved higher. In contrast, prices for securities brokerage, dealing, and investment advice fell 1.4 percent. The indexes for television advertising time sales and for hardware, building materials, and supplies retailing also declined.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: Prices for stage 4 intermediate demand increased 0.5 percent in February, the sixth straight rise. In February, the index for total services inputs to stage 4 intermediate demand climbed 0.8 percent, and prices for total goods inputs moved up 0.3 percent. (See table D.) Advances in the indexes for chemicals and allied products wholesaling, legal services, architectural and engineering services, electric power, business loans (partial), and nonresidential real estate rents outweighed decreases in the indexes for securities brokerage, dealing, and investment advice; hardware, building materials, and supplies retailing; and gasoline. (See table 6.) For the 12 months ended in February, prices for stage 4 intermediate demand increased 2.6 percent, the largest rise since a 2.9-percent jump in the 12 months ended February 2012.

Stage 3 intermediate demand: Prices for stage 3 intermediate demand climbed 0.8 percent in February, the fourth consecutive advance. In February, the index for total goods inputs to stage 3 intermediate demand jumped 1.1 percent, and prices for total services inputs moved up 0.6 percent. Increases in the indexes for slaughter barrows and gilts, slaughter chickens, chemicals and allied products wholesaling, primary basic organic chemicals, jet fuel, and asphalt outweighed declines in prices for gasoline; raw milk; and securities brokerage, dealing, and investment advice. For the 12 months ended in February, the index for stage 3 intermediate demand rose 3.9 percent, the largest advance since a 4.3-percent jump in the 12 months ended January 2012.

Stage 2 intermediate demand: The index for stage 2 intermediate demand was unchanged in February following a 1.2-percent increase a month earlier. In February, prices for total services inputs to stage 2 intermediate demand rose 0.4 percent. Conversely, the index for total goods inputs fell 0.5 percent. Higher prices for legal services, crude petroleum, cold rolled steel sheet and strip, liquefied petroleum gas, and plastic resins and materials offset lower prices for natural gas; securities brokerage, dealing, and investment advice; coal; wireless telecommunication services; and cable network advertising time sales. For the 12 months ended in February, the index for stage 2 intermediate demand climbed 8.5 percent, the largest advance since surging 11.8 percent in September 2011.

Stage 1 intermediate demand: The index for stage 1 intermediate demand moved up 0.6 percent in February, the fourth straight increase. In February, the indexes for both total goods and total services inputs to stage 1 intermediate demand rose 0.6 percent. Advances in the indexes for primary basic organic chemicals, chemicals and allied products wholesaling, business loans (partial), wastepaper, electric power, and nonferrous scrap outweighed declining prices for natural gas, ethanol, and wireless telecommunication services. For the 12 months ended in February, the index for stage 1 intermediate demand rose 6.8 percent, the largest increase since an 8.1-percent rise in the 12 months ended October 2011.

Resampling of Industries

Effective with the release of data for February 2017, the Producer Price Index (PPI) includes data for 23 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 index additions, deletions, and recodes effective February 2017, see the current issue of the PPI Detailed Report at www.bls.gov/ppi/ppidr201702.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 221110 Electric power generation 221122 Electric power distribution 311911 Roasted nuts and peanut butter manufacturing 315280 Other cut and sew apparel manufacturing 321992 Prefabricated wood building manufacturing 322291 Sanitary paper product manufacturing 325194 Cyclic crude, intermediate, and gum and wood chemical manufacturing 326291 Rubber product manufacturing for mechanical use 331523 Nonferrous metal die-casting foundries 333517 Machine tool manufacturing 334111 Electronic computer manufacturing 334310 Audio and video equipment manufacturing 334417 Electronic connector manufacturing 339920 Sporting and athletic goods manufacturing 444130 Hardware stores 444190 Other building material dealers 445110 Supermarkets and other grocery stores 448210 Shoe stores 523920 Portfolio management 532111 Passenger car rental 532120 Truck, utility trailer, and RV rental and leasing 541219 Other accounting services 713910 Golf courses and country clubs