January 2018 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 January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices were unchanged in December and moved up 0.4 percent in November. (See table A.) On an unadjusted basis, the final demand index rose 2.7 percent for the 12 months ended in January.

In January, the rise in the index for final demand is attributable to a 0.3-percent increase in prices for final demand services and a 0.7-percent advance in the index for final demand goods.

The index for final demand less foods, energy, and trade services rose 0.4 percent in January, the largest advance since increasing 0.5 percent in April 2017. For the 12 months ended in January, prices for final demand less foods, energy, and trade services moved up 2.5 percent, the largest rise since 12-month percent change data were available in August 2014.

Final Demand

Final demand services: Prices for final demand services advanced 0.3 percent in January following a 0.1-percent decline a month earlier. Nearly two-thirds of the broad-based increase is attributable to the index for final demand services less trade, transportation, and warehousing, which moved up 0.4 percent. Margins for final demand trade services rose 0.3 percent, and prices for final demand transportation and warehousing services advanced 0.4 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: A major factor in the January increase in prices for final demand services was the index for hospital outpatient care, which rose 1.0 percent. The indexes for apparel, footwear, and accessories retailing; health, beauty, and optical goods retailing; residential real estate services (partial); long-distance motor carrying; and hospital inpatient care also moved higher. In contrast, margins for chemicals and allied products wholesaling declined 2.3 percent. Prices for wireless telecommunication services and airline passenger services also fell. (See table 4.)

Final demand goods: The index for final demand goods jumped 0.7 percent in January, the sixth consecutive increase. Over 80 percent of the January advance can be traced to prices for final demand energy, which climbed 3.4 percent. The index for final demand goods less foods and energy rose 0.2 percent. Conversely, prices for final demand foods fell 0.2 percent.

Product detail: Nearly half of the January increase in the index for final demand goods is attributable to prices for gasoline, which climbed 7.1 percent. The indexes for residential electric power, iron and steel scrap, diesel fuel, jet fuel, and fresh and dry vegetables also moved higher. In contrast, prices for chicken eggs fell 38.9 percent. The indexes for residential natural gas and for power cranes, draglines, and shovels also declined.

Intermediate Demand by Commodity Type

Within intermediate demand in January, prices for processed goods increased 0.7 percent, the index for unprocessed goods advanced 0.9 percent, and prices for services edged up 0.1 percent. (See tables B and C.)

Processed goods for intermediate demand: The index for processed goods for intermediate demand climbed 0.7 percent in January, the sixth straight rise. Seventy percent of the January advance is attributable to a 2.5-percent increase in prices for processed energy goods. The index for processed materials less foods and energy also moved higher, rising 0.3 percent. Conversely, prices for processed foods and feeds moved down 0.3 percent. For the 12 months ended in January, the index for processed goods for intermediate demand advanced 4.6 percent.

Product detail: A major factor in the January increase in prices for processed goods for intermediate demand was the index for diesel fuel, which rose 5.1 percent. Prices for gasoline, commercial electric power, jet fuel, primary nonferrous metals, and copper and brass mill shapes also moved higher. In contrast, the processed eggs index fell 13.2 percent. Prices for utility natural gas and ethanol also declined. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand increased 0.9 percent in January, the third straight advance. Most of the January rise can be attributed to the index for unprocessed nonfood materials less energy, which climbed 3.8 percent. The index for unprocessed energy materials advanced 0.5 percent. Conversely, prices for unprocessed foodstuffs and feedstuffs declined 0.8 percent. For the 12 months ended in January, the index for unprocessed goods for intermediate demand climbed 2.5 percent.

Product detail: A major factor in the January increase in the index for unprocessed goods for intermediate demand was prices for iron and steel scrap, which jumped 12.9 percent. The indexes for crude petroleum, slaughter barrows and gilts, slaughter chickens, corn, and nonferrous scrap also moved higher. In contrast, prices for slaughter cattle fell 4.9 percent. The indexes for natural gas and wastepaper also moved lower.

Services for intermediate demand: Prices for services for intermediate demand inched up 0.1 percent in January following no change in December. Leading the increase, the index for services less trade, transportation, and warehousing for intermediate demand advanced 0.1 percent. Prices for transportation and warehousing services for intermediate demand rose 0.3 percent. Conversely, margins for trade services for intermediate demand declined 0.3 percent. For the 12 months ended in January, the index for services for intermediate demand climbed 2.9 percent.

Product detail: A 2.7-percent increase in the index for business loans (partial) was a leading factor in the January rise in prices for services for intermediate demand. The indexes for securities brokerage, dealing, investment advice, and related services; network compensation from broadcast and cable television; paper and plastics products wholesaling; and long-distance motor carrying also moved higher. In contrast, margins for chemicals and allied products wholesaling fell 2.3 percent. The indexes for machinery and equipment parts and supplies wholesaling, internet advertising (sold by non-print publishers), and airline passenger services also decreased.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: Prices for stage 4 intermediate demand advanced 0.3 percent in January after no change in December. In January, the index for total goods inputs to stage 4 intermediate demand climbed 0.7 percent, while prices for total services inputs were unchanged. (See table D.) Increases in the indexes for diesel fuel, gasoline, commercial electric power, business loans (partial), legal services, and paper and plastics products wholesaling outweighed declines in the indexes for machinery and equipment parts and supplies wholesaling, chemicals and allied products wholesaling, and prepared poultry. (See table 6.) For the 12 months ended in January, prices for stage 4 intermediate demand moved up 3.1 percent.

Stage 3 intermediate demand: The index for stage 3 intermediate demand rose 0.4 percent in January, the sixth straight advance. In January, prices for total goods inputs to stage 3 intermediate demand increased 0.8 percent. The index for total services inputs was unchanged. Higher prices for gasoline, jet fuel, slaughter barrows and gilts, slaughter chickens, diesel fuel, and business loans (partial) outweighed decreases in the indexes for raw milk, slaughter cattle, and chemicals and allied products wholesaling. For the 12 months ended in January, prices for stage 3 intermediate demand climbed 4.1 percent.

Stage 2 intermediate demand: The index for stage 2 intermediate demand increased 0.5 percent in January, the seventh consecutive rise. In January, prices for total goods inputs to stage 2 intermediate demand moved up 0.5 percent, and the index for total services inputs advanced 0.3 percent. Higher prices for crude petroleum; network compensation from broadcast and cable television; legal services; securities brokerage, dealing, investment advice, and related services; commissions from sales of insurance; and liquefied petroleum gas outweighed declines in the indexes for natural gas, thermoplastic resins and plastics materials, and cable network advertising time sales. For the 12 months ended in January, prices for stage 2 intermediate demand rose 3.0 percent.

Stage 1 intermediate demand: Prices for stage 1 intermediate demand advanced 0.9 percent in January, the eighth straight increase. In January, the index for total goods inputs to stage 1 intermediate demand jumped 1.7 percent. In contrast, prices for total services inputs fell 0.2 percent. Rising prices for iron and steel scrap, diesel fuel, business loans (partial), gasoline, nonferrous scrap, and crude petroleum outweighed declines in the indexes for deposit services (partial), primary basic organic chemicals, and natural gas. For the 12 months ended in January, prices for stage 1 intermediate demand moved up 5.6 percent.

Resampling of Industries

Effective with the release of data for January 2018, the Producer Price Index (PPI) includes data for 31 resampled industries classified according to the 2017 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 January 2018, see the current issue of the PPI Detailed Report online at www.bls.gov/ppi/ppidr201801.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 213115 Support activities for nonmetallic minerals (except fuels) mining 311212 Rice milling 311213 Malt manufacturing 322219 Other paperboard container manufacturing 325193 Ethyl alcohol manufacturing 325510 Paint and coating manufacturing 325520 Adhesive manufacturing 326122 Plastics pipe and pipe fitting manufacturing 326130 Laminated plastics plate, sheet (except packaging), and shape manufacturing 326191 Plastics plumbing fixture manufacturing 326299 All other rubber product manufacturing 331110 Iron and steel mills and ferroalloy manufacturing 331210 Iron and steel pipe and tube manufacturing from purchased steel 331221 Rolled steel shape manufacturing 331222 Steel wire drawing 331313 Alumina refining and primary aluminum production 332114 Custom roll forming 332215 Metal cookware, cutlery, and flatware manufacturing 332618 Other fabricated wire product manufacturing 332722 Bolt, nut, screw, rivet, and washer manufacturing 333924 Industrial truck, trailer, and stacker manufacturing 334517 Irradiation apparatus manufacturing 335911 Storage battery manufacturing 444220 Nursery, garden, and farm supply stores 492110 Couriers and express delivery services 524113 Direct life insurance carriers 524210 Insurance agencies and brokerages 531311 Residential property managers 531312 Nonresidential property managers 541211 Offices of certified public accountants 622110 General medical and surgical hospitals

Recalculation of Seasonal Adjustment Factors

Effective with this release, seasonal adjustment factors have been recalculated to reflect price-movement patterns during 2017 for the Final Demand-Intermediate Demand (FD-ID) System and commodity- grouping indexes. This routine annual recalculation may affect previously published seasonally adjusted indexes and percent changes for January 2013 through December 2017.

Revised seasonally adjusted data for this period, as well as seasonal adjustment factors for directly adjusted commodity indexes to be used through December 2018, were released February 13, 2018. To obtain this information, contact the Division of Industrial Prices and Price Indexes, Section of Index Analysis and Public Information at ppi-info@bls.gov or (202) 691-7705, or visit the Producer Price Index homepage at www.bls.gov/ppi.

Tables E and F below provide monthly seasonally adjusted percent changes for major FD-ID system indexes in 2017, based on former and recalculated seasonal factors. These percent changes include final price data through August 2017 and may differ from values shown in tables A through D of this release, which include final price data through September 2017.

PPI Weights Updated

With the release of January 2018 Producer Price Index (PPI) data on February 15, 2018, the Bureau of Labor Statistics updated PPI value weights to more accurately reflect recent production and marketing patterns. The updated weights are 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 were based on 2007 Census shipment values from January 2012 through December 2017.

All PPIs were affected by this weight update, including all the industry net output indexes, as well as indexes for traditional commodity groupings. In addition, weights were 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 inputs to industry indexes. This weight revision did not result in changes to the arithmetic reference base for indexes, the dates when PPIs are set to 100.

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

In addition, PPI sample updates normally occurring with the release of October and February data were combined and released in conjunction with this weight update. Commodity and FD-ID relative importance figures for December 2017 were released on February 13, 2018, two business days prior to the release of January 2018 PPI data. This information is 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.