May 2017 Producer Price Index

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The Producer Price Index for final demand was unchanged in May, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.5 percent in April and edged down 0.1 percent in March. (See table A.) On an unadjusted basis, the final demand index increased 2.4 percent for the 12 months ended in May.

Within final demand in May, a 0.3-percent increase in the index for final demand services offset a 0.5-percent decline in prices for final demand goods.

Prices for final demand less foods, energy, and trade services fell 0.1 percent in May, the first decline since a similar 0.1-percent decrease in May 2016. For the 12 months ended May 2017, the index for final demand less foods, energy, and trade services moved up 2.1 percent.

Final Demand

Final demand services: Prices for final demand services rose 0.3 percent in May following a 0.4- percent advance in April. The May increase can be attributed to the index for final demand trade services, which moved up 1.1 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) In contrast, prices for final demand services less trade, transportation, and warehousing fell 0.1 percent, and the index for final demand transportation and warehousing services declined 0.5 percent.

Product detail: About half of the May increase in the index for final demand services can be traced to margins for fuels and lubricants retailing, which rose 16.1 percent. The indexes for apparel, footwear, and accessories retailing; machinery and equipment wholesaling; residential real estate loans (partial); automobiles and automobile parts retailing; and food wholesaling also moved higher. Conversely, prices for guestroom rental decreased 5.2 percent. The indexes for airline passenger services and food retailing also moved lower. (See table 4.)

Final demand goods: Prices for final demand goods moved down 0.5 percent in May, the largest decrease since a 0.6-percent drop in February 2016. Most of the May decline can be attributed to the index for final demand energy, which fell 3.0 percent. Prices for final demand foods decreased 0.2 percent. In contrast, the index for final demand goods less foods and energy edged up 0.1 percent.

Product detail: The May decrease in the index for final demand goods was led by an 11.2-percent drop in gasoline prices. The indexes for fresh and dry vegetables, jet fuel, fresh fruits and melons, motor vehicles, and home heating oil also fell. Conversely, the index for pharmaceutical preparations rose 0.6 percent. Prices for beef and veal and for electric power also increased.

Intermediate Demand by Commodity Type

Within intermediate demand in May, prices for processed goods inched up 0.1 percent, the index for unprocessed goods fell 3.0 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 rose 0.1 percent in May, the ninth consecutive increase. Most of the advance is attributable to prices for processed materials less foods and energy, which climbed 0.2 percent. Additionally, the index for processed foods and feeds rose 0.5 percent. In contrast, prices for processed energy goods moved down 0.3 percent. For the 12 months ended in May, the index for processed goods for intermediate demand increased 4.8 percent.

Product detail: Within the index for processed goods for intermediate demand in May, prices for thermoplastic resins and materials rose 2.7 percent. The indexes for diesel fuel, commercial electric power, beef and veal, and lubricating oil base stocks also moved higher. Conversely, prices for gasoline fell 11.2 percent. The indexes for jet fuel, prepared animal feeds, and primary basic organic chemicals also declined. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand decreased 3.0 percent in May following a 3.3-percent rise in April. The decrease can be traced primarily to prices for unprocessed energy materials, which fell 9.3 percent. The index for unprocessed nonfood materials less energy moved down 0.7 percent. In contrast, prices for unprocessed foodstuffs and feedstuffs advanced 1.8 percent. For the 12 months ended in May, the index for unprocessed goods for intermediate demand climbed 7.5 percent.

Product detail: Leading the May decline in the index for unprocessed goods for intermediate demand, prices for crude petroleum decreased 19.6 percent. The indexes for coal, fresh and dry vegetables, raw milk, berries, and wastepaper also moved lower. Conversely, prices for slaughter steers and heifers jumped 9.1 percent. The indexes for natural gas and aluminum base scrap also increased.

Services for intermediate demand: The index for services for intermediate demand was unchanged in May after advancing 0.9 percent in April. In May, margins for trade services for intermediate demand increased 1.1 percent. In contrast, prices for services less trade, transportation, and warehousing for intermediate demand decreased 0.3 percent, and the index for transportation and warehousing services for intermediate demand inched down 0.1 percent. For the 12 months ended in May, prices for services for intermediate demand climbed 2.8 percent, the largest rise since moving up 2.9 percent for the 12 months ended December 2012.

Product detail: In May, margins for paper and plastics products wholesaling jumped 5.4 percent. The indexes for portfolio management; hardware, building materials, and supplies retailing; building materials, paint, and hardware wholesaling; and legal services also moved higher. Conversely, prices for services related to securities brokerage and dealing fell 4.5 percent. The indexes for deposit services (partial), business loans (partial), machinery and equipment parts and supplies wholesaling, and airline passenger services also declined.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: The index for stage 4 intermediate demand moved up 0.2 percent in May following a 0.6-percent increase in April. In May, prices for total goods inputs to stage 4 intermediate demand rose 0.3 percent, and the index for total services inputs edged up 0.1 percent. (See table D.) Advances in the indexes for diesel fuel, paper and plastics products wholesaling, beef and veal, portfolio management, commercial electric power, and unprocessed finfish outweighed decreases in prices for gasoline, services related to securities brokerage and dealing, and berries. (See table 6.) For the 12 months ended in May, the index for stage 4 intermediate demand climbed 3.0 percent.

Stage 3 intermediate demand: Prices for stage 3 intermediate demand fell 0.2 percent in May, the first decline since a 0.5-percent decrease in October 2016. In May, the index for total goods inputs to stage 3 intermediate demand moved down 0.4 percent, while prices for total services inputs were unchanged. Lower prices for gasoline, jet fuel, raw milk, services related to securities brokerage and dealing, slaughter barrows and gilts, and advertising space sales in printed materials outweighed increases in the indexes for slaughter steers and heifers, slaughter chickens, and paper and plastics products wholesaling. For the 12 months ended in May, prices for stage 3 intermediate demand rose 4.0 percent.

Stage 2 intermediate demand: The index for stage 2 intermediate demand decreased 1.0 percent in May after advancing 2.2 percent in April. In May, prices for total goods inputs to stage 2 intermediate demand dropped 2.4 percent, while the index for total services inputs was unchanged. Falling prices for crude petroleum, services related to securities brokerage and dealing, coal, guestroom rental, airline passenger services, and prepared animal feeds outweighed increases in the indexes for thermoplastic resins and materials, natural gas, and portfolio management. For the 12 months ended in May, prices for stage 2 intermediate demand rose 5.0 percent.

Stage 1 intermediate demand: Prices for stage 1 intermediate demand moved down 0.3 percent in May following a 0.9-percent increase in April. In May, the index for total services inputs to stage 1 intermediate demand declined 0.3 percent, and prices for total goods inputs inched down 0.1 percent. Decreases in the indexes for guestroom rental, crude petroleum, gasoline, wastepaper, carbon steel scrap, and primary basic organic chemicals outweighed advances in the indexes for diesel fuel, paper and plastics products wholesaling, and commercial electric power. For the 12 months ended in May, prices for stage 1 intermediate demand increased 5.4 percent.