April 2017 Producer Price Index

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The Producer Price Index for final demand advanced 0.5 percent in April, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices edged down 0.1 percent in March and climbed 0.3 percent in February. (See table A.) On an unadjusted basis, the final demand index rose 2.5 percent for the 12 months ended April 2017, the largest increase since moving up 2.8 percent for the 12 months ended February 2012.

In April, almost two-thirds of the advance in the final demand index is attributable to prices for final demand services, which moved up 0.4 percent. The index for final demand goods climbed 0.5 percent.

Prices for final demand less foods, energy, and trade services increased 0.7 percent in April. For the 12 months ended in April, the index for final demand less foods, energy, and trade services climbed 2.1 percent.

Final Demand

Final demand services: The index for final demand services moved up 0.4 percent in April after edging down 0.1 percent in March. Most of the increase can be traced to prices for final demand services less trade, transportation, and warehousing, which advanced 0.8 percent. The index for final demand transportation and warehousing services increased 0.7 percent. Conversely, margins for final demand trade services moved down 0.3 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: Over a quarter of the April advance in the index for final demand services is attributable to prices for securities brokerage, dealing, investment advice, and related services, which increased 6.6 percent. The indexes for guestroom rental; loan services (partial); machinery, equipment, parts, and supplies wholesaling; portfolio management; and airline passenger services also moved higher. In contrast, margins for fuels and lubricants retailing dropped 14.6 percent. The indexes for food and alcohol retailing and for deposit services (partial) also fell. (See table 4.)

Final demand goods: Prices for final demand goods increased 0.5 percent in April following a 0.1- percent decline in March. Nearly 40 percent of the broad-based advance can be attributed to the index for final demand goods less foods and energy, which rose 0.3 percent. The indexes for final demand foods and final demand energy climbed 0.9 percent and 0.8 percent, respectively.

Product detail: In April, the index for cigarettes moved up 2.2 percent. Prices for gasoline, fresh and dry vegetables, fresh fruits and melons, residential natural gas, and pharmaceutical preparations also advanced. Conversely, the index for jet fuel fell 6.1 percent. Prices for carbon steel scrap and oilseeds also declined.

Intermediate Demand by Commodity Type

Within intermediate demand in April, prices for processed goods increased 0.5 percent, the index for unprocessed goods rose 3.3 percent, and prices for services climbed 0.9 percent. (See tables B and C.)

Processed goods for intermediate demand: The index for processed goods for intermediate demand advanced 0.5 percent in April, the eighth consecutive increase. About two-thirds of the April rise is attributable to prices for processed materials less foods and energy, which also moved up 0.5 percent. Additionally, the index for processed energy goods climbed 1.3 percent. In contrast, prices for processed foods and feeds declined 0.6 percent. For the 12 months ended in April, the index for processed goods for intermediate demand rose 5.4 percent, the largest advance since increasing 5.7 percent for the 12 months ended December 2011.

Product detail: In April, the index for plastic resins and materials climbed 1.8 percent. Prices for utility natural gas, gasoline, paperboard, steel pipe and tube, and softwood lumber also moved higher. Conversely, the index for prepared animal feeds fell 1.3 percent. Prices for primary basic organic chemicals and jet fuel also decreased. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand rose 3.3 percent in April following a 4.2-percent drop in March. The increase can be traced to prices for unprocessed energy materials, which jumped 14.1 percent. In contrast, the indexes for unprocessed foodstuffs and feedstuffs and for unprocessed nonfood materials less energy declined 2.3 percent and 0.7 percent, respectively. For the 12 months ended in April, prices for unprocessed goods for intermediate demand climbed 13.9 percent.

Product detail: About 70 percent of the April advance in the index for unprocessed goods for intermediate demand is attributable to a 15.7-percent rise in crude petroleum prices. The indexes for natural gas, fresh fruits and melons, fresh vegetables (except potatoes), coal, and gold ores also moved higher. Conversely, prices for slaughter barrows and gilts fell 12.7 percent. The indexes for oilseeds and carbon steel scrap also decreased.

Services for intermediate demand: The index for services for intermediate demand moved up 0.9 percent in April, the largest increase since a 1.3-percent jump in January 2016. Eighty percent of the broad-based April advance can be traced to a 1.0-percent rise in prices for services less trade, transportation, and warehousing for intermediate demand. The indexes for trade services for intermediate demand and for transportation and warehousing services for intermediate demand also increased 0.7 percent and 0.4 percent, respectively. For the 12 months ended in April, prices for services for intermediate demand climbed 2.6 percent.

Product detail: A major factor in the April increase in prices for services for intermediate demand was the index for loan services (partial), which rose 4.5 percent. The indexes for securities, brokerage, dealing, investment advice, and related services; portfolio management; machinery and equipment parts and supplies wholesaling; chemicals and allied products wholesaling; and airline passenger services also moved higher. In contrast, margins for hardware, building materials, and supplies retailing declined 3.4 percent. The indexes for fuels and lubricants retailing and for deposit services (partial) also fell.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: The index for stage 4 intermediate demand advanced 0.6 percent in April, the largest increase since a 0.6-percent jump in September 2012. In April, prices for total services inputs to stage 4 intermediate demand rose 0.9 percent, and prices for total goods inputs moved up 0.3 percent. (See table D.) Advances in the indexes for securities brokerage, dealing, investment advice, and related services; loan services (partial); portfolio management; machinery and equipment parts and supplies wholesaling; fresh fruits and melons; and chemicals and allied products wholesaling outweighed decreases in the indexes for hardware, building materials, and supplies retailing; fabricated structural metal; and unprocessed finfish. (See table 6.) For the 12 months ended in April, prices for stage 4 intermediate demand climbed 3.0 percent, the largest increase since a 3.3- percent rise in the 12 months ended January 2012.

Stage 3 intermediate demand: Prices for stage 3 intermediate demand edged up 0.1 percent in April, the sixth consecutive advance. In April, the index for total services inputs to stage 3 intermediate demand rose 0.9 percent. Conversely, prices for total goods inputs moved down 0.6 percent. Increases in the indexes for securities brokerage, dealing, investment advice, and related services; gasoline; loan services (partial); machinery and equipment parts and supplies wholesaling; and chemicals and allied products wholesaling outweighed declines in the indexes for slaughter barrows and gilts, raw milk, jet fuel, and fuels and lubricants retailing. For the 12 months ended in April, the index for stage 3 intermediate demand climbed 4.4 percent, the largest advance since a 5.4- percent jump in the 12 months ended December 2011.

Stage 2 intermediate demand: The index for stage 2 intermediate demand rose 2.2 percent in April, the largest advance since a 3.6-perent increase in February 2014. In April, prices for total goods inputs to stage 2 intermediate demand jumped 4.1 percent, and the index for total services inputs climbed 0.8 percent. Higher prices for crude petroleum; gas fuels; securities brokerage, dealing, investment advice, and related services; portfolio management; plastic resins and materials; and guestroom rental outweighed declines in the indexes for oilseeds; hardware, building materials, and supplies retailing; and prepared animal feeds. For the 12 months ended in April, the index for stage 2 intermediate demand surged 7.5 percent.

Stage 1 intermediate demand: The index for stage 1 intermediate demand moved up 0.9 percent in April following a 0.1-percent decline in the prior month. In April, prices for total services inputs to stage 1 intermediate demand climbed 1.3 percent, and the index for total goods inputs rose 0.4 percent. Advances in the indexes for securities brokerage, dealing, investment advice, and related services; loan services (partial); crude petroleum; gas fuels; guestroom rental; and chemicals and allied products wholesaling outweighed declines in the indexes for carbon steel scrap, primary basic organic chemicals, and fuels and lubricants retailing. For the 12 months ended in April, the index for stage 1 intermediate demand climbed 6.5 percent.