November 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 0.4 percent in November, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices also moved up 0.4 percent in both October and September. (See table A.) On an unadjusted basis, the final demand index rose 3.1 percent for the 12 months ended in November, the largest advance since a 3.1-percent increase for the 12 months ended January 2012.

In November, three-fourths of the rise in the final demand index is attributable to a 1.0-percent increase in prices for final demand goods. The index for final demand services climbed 0.2 percent.

The index for final demand less foods, energy, and trade services rose 0.4 percent in November, the largest advance since increasing 0.6 percent in April. For the 12 months ended in November, prices for final demand less foods, energy, and trade services moved up 2.4 percent.

Final Demand

Final demand goods: The index for final demand goods jumped 1.0 percent in November, the largest advance since a 1.0-percent increase in January. Over three-fourths of the broad-based November rise can be traced to prices for final demand energy, which climbed 4.6 percent. The indexes for final demand goods less foods and energy and for final demand foods both advanced 0.3 percent.

Product detail: Over two-thirds of the November increase in the index for final demand goods is attributable to prices for gasoline, which jumped 15.8 percent. The indexes for light motor trucks, pharmaceutical preparations, beef and veal, residential electric power, and jet fuel also moved higher. In contrast, prices for processed young chickens fell 5.7 percent. The indexes for ethanol and commercial electric power also declined. (See table 4.)

Final demand services: Prices for final demand services advanced 0.2 percent in November, the third consecutive rise. Leading the November increase, the index for final demand services less trade, transportation, and warehousing moved up 0.4 percent. Prices for final demand transportation and warehousing services climbed 0.6 percent. Conversely, margins for final demand trade services decreased 0.3 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: About half of the November rise in the index for final demand services can be traced to prices for loan services (partial), which increased 3.1 percent. The indexes for traveler accommodation services; health, beauty, and optical goods retailing; food and alcohol retailing; chemicals and allied products wholesaling; and apparel, footwear, and accessories retailing also moved higher. In contrast, margins for machinery and equipment wholesaling declined 1.9 percent. The indexes for fuels and lubricants retailing and for bundled wired telecommunication access services also fell.

Intermediate Demand by Commodity Type

Within intermediate demand in November, prices for processed goods advanced 0.5 percent, the index for unprocessed goods rose 3.2 percent, and prices for services moved up 0.7 percent. (See tables B and C.)

Processed goods for intermediate demand: The index for processed goods for intermediate demand increased 0.5 percent in November, the fourth straight advance. Over half of the rise in November can be traced to prices for processed energy goods, which moved up 1.7 percent. The indexes for processed materials less foods and energy and for processed foods and feeds both increased 0.3 percent. For the 12 months ended in November, prices for processed goods for intermediate demand jumped 5.3 percent, the largest advance since a 5.4-percent rise in April.

Product detail: A major factor in the November increase in prices for processed goods for intermediate demand was the index for diesel fuel, which rose 1.8 percent. Prices for gasoline, primary basic organic chemicals, plastic construction products, plastic resins and materials, and beef and veal also moved higher. Conversely, the index for commercial electric power fell 2.5 percent. Prices for ethanol and processed young chickens also declined. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand jumped 3.2 percent in November, the largest rise since climbing 3.8 percent in January. Nearly 60 percent of the November increase in prices for unprocessed goods for intermediate demand can be attributed to the index for unprocessed energy materials, which advanced 5.5 percent. Prices for unprocessed foodstuffs and feedstuffs moved up 2.7 percent, and the index for unprocessed nonfood materials less energy rose 0.8 percent. For the 12 months ended in November, prices for unprocessed goods for intermediate demand climbed 10.6 percent, the largest 12-month increase since a 12.8-percent jump in April.

Product detail: In November, over half of the rise in prices for unprocessed goods for intermediate demand can be traced to the index for crude petroleum, which increased 11.0 percent. Prices for slaughter hogs, slaughter steers and heifers, natural gas, wastepaper, and nonferrous scrap also advanced. In contrast, the index for slaughter chickens fell 5.7 percent. Prices for carbon steel scrap and for coal also moved lower.

Services for intermediate demand: The index for services for intermediate demand climbed 0.7 percent in November, the largest increase since a 1.3-percent advance in January 2016. Nearly two- thirds of the broad-based rise in November can be traced to prices for services less trade, transportation, and warehousing for intermediate demand, which moved up 0.6 percent. The indexes for trade services for intermediate demand and for transportation and warehousing services for intermediate demand climbed 1.0 percent and 0.5 percent, respectively. For the 12 months ended in November, prices for services for intermediate demand increased 3.2 percent, the largest rise since a 3.2-percent advance in November 2012.

Product detail: A major factor in the November increase in the index for services for intermediate demand was prices for securities brokerage, dealing, investment advice, and related services, which moved up 1.5 percent. The indexes for loan services (partial), business wired telecommunication services, machinery and equipment parts and supplies wholesaling, portfolio management, and legal services also moved higher. Conversely, prices for bundled wired telecommunication access services fell 3.1 percent. The indexes for deposit services (partial) and for fuels and lubricants retailing also declined.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: The index for stage 4 intermediate demand moved up 0.6 percent in November, the largest rise since a 0.6-percent advance in January. In November, prices for total services inputs to stage 4 intermediate demand climbed 0.8 percent, and the index for total goods inputs moved up 0.5 percent. (See table D.) Increases in the indexes for machinery and equipment parts and supplies wholesaling; gasoline; loan services (partial); portfolio management; securities brokerage, dealing, investment advice, and related services; and legal services outweighed declines in the indexes for commercial electric power, processed young chickens, and gross rents for office buildings. (See table 6.) For the 12 months ended in November, prices for stage 4 intermediate demand climbed 3.7 percent, the largest 12-month rise since a 4.1-percent increase in November 2011.

Stage 3 intermediate demand: Prices for stage 3 intermediate demand jumped 1.4 percent in November, the largest advance since a 1.4-percent rise in April 2011. In November, the index for total goods inputs to stage 3 intermediate demand climbed 2.1 percent, and prices for total services inputs advanced 0.7 percent. Increases in the indexes for gasoline, slaughter hogs, slaughter steers and heifers, jet fuel, primary basic organic chemicals, and loan services (partial) outweighed decreases in the indexes for slaughter chickens, asphalt, and bundled wired telecommunication access services. For the 12 months ended in November, prices for stage 3 intermediate demand rose 5.4 percent, the largest 12-month advance since a 5.4-percent jump in December 2011.

Stage 2 intermediate demand: The index for stage 2 intermediate demand advanced 1.1 percent in November, the fifth consecutive rise. In November, prices for total goods inputs to stage 2 intermediate demand increased 1.9 percent, and the index for total services inputs moved up 0.5 percent. Higher prices for crude petroleum; gas fuels; securities brokerage, dealing, investment advice, and related services; legal services; portfolio management; and plastic resins and materials outweighed declines in the indexes for cable network advertising time sales; hot rolled steel bars, plates, and structural shapes; and coal. For the 12 months ended in November, prices for stage 2 intermediate demand climbed 5.1 percent.

Stage 1 intermediate demand: Prices for stage 1 intermediate demand moved up 0.7 percent in November, the sixth consecutive increase. In November, the index for total goods inputs to stage 1 intermediate demand advanced 0.7 percent, and prices for total services inputs rose 0.8 percent. Higher prices for gasoline, loan services (partial), primary basic organic chemicals, wastepaper, diesel fuel, and crude petroleum outweighed decreases in the indexes for carbon steel scrap, commercial electric power, and bundled wired telecommunication access services. For the 12 months ended in November, prices for stage 1 intermediate demand climbed 6.7 percent.

Recalculated Seasonal Adjustment Factors and Relative Importance Figures to be Available on February 13, 2018

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 13, 2018 (2 workdays prior to the release of PPI data for January 2018 on February 15, 2018):

* Direct seasonal factors for PPI commodity indexes for the year 2018, * Recalculated seasonal factors for the last 5 years (2013-2017) for PPI commodity indexes, * Recalculated seasonal factors for the last 5 years (2013-2017) for PPI Final Demand- Intermediate Demand indexes, * Recalculated seasonal index data for the last 5 years (2013-2017) 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, which include values for December 2017, will be available on February 13, 2018:

* 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

This information will be available on the PPI website at www.bls.gov/ppi or by contacting the PPI Section of Index Analysis and Public Information at ppi-info@bls.gov or (202)691-7705.

PPI Weights to be Updated

In February 2018, with the release of January 2018 Producer Price Index (PPI) data, the Bureau of Labor Statistics will update PPI value weights to more accurately reflect recent production and marketing patterns. The updated weights will be based on shipment values from the year 2012. These value weights come from the Census of Manufactures, the Census of Mining, the Census of Services, and the Census of Agriculture. PPI weights have been based on 2007 Census shipment values since January 2012.

All PPIs will be affected by this weight update, including all the industry net output indexes, as well as indexes for traditional commodity groupings. In addition, weights will be updated from the 2007 to the 2012 Census for all Final demand-Intermediate demand (FD-ID) indexes, durability of product indexes, special commodity-grouping indexes, and input to industry indexes. This weight revision will not change any arithmetic reference bases for indexes, the dates when PPIs were set to 100.

It is important to note that the basic structures of the PPI commodity and FD-ID classification systems will not change as a result of the weight revision. The PPIs classified according to the North American Industry Classification System (NAICS), however, will be updated to reflect 2017 NAICS definitions, as established by the U.S. Census Bureau. The weight update will also result in significant shifts in the relative importance of various industries and products. These shifts will impact aggregate indexes in a manner commensurate with the relative gains and losses in value weights from 2007 to 2012.

In addition, the PPI sample updates normally occurring with the release of October and February data will be combined and released in conjunction with the weight update in February 2018. Commodity and FD-ID relative importance figures for December 2017 will be available two business days prior to the release of January 2018 PPI data. This information will be available on the PPI website at www.bls.gov/ppi or by contacting the PPI Section of Index Analysis and Public Information at ppi- info@bls.gov or (202)691-7705.