October 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 rose 0.6 percent in October, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices advanced 0.2 percent in September and declined 0.1 percent in August. (See table A.) On an unadjusted basis, the final demand index increased 2.9 percent for the 12 months ended in October.

In October, over 60 percent of the rise in final demand prices can be traced to a 0.7-percent advance in the index for final demand services. Prices for final demand goods moved up 0.6 percent.

The index for final demand less foods, energy, and trade services rose 0.2 percent in October after climbing 0.4 percent in September. For the 12 months ended in October, prices for final demand less foods, energy, and trade services advanced 2.8 percent.

Final Demand

Final demand services: The index for final demand services increased 0.7 percent in October, the largest advance since climbing 0.8 percent in January 2016. Nearly three-fourths of the broad-based October rise can be traced to margins for final demand trade services, which moved up 1.6 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand services less trade, transportation, and warehousing and for final demand transportation and warehousing services increased 0.2 percent and 0.6 percent, respectively.

Product detail: About one-fifth of the October advance in prices for final demand services is attributable to a 1.2-percent rise in margins for machinery, equipment, parts, and supplies wholesaling. The indexes for food and alcohol retailing; health, beauty, and optical goods retailing; inpatient care; apparel, jewelry, footwear, and accessories retailing; and traveler accommodation services also moved higher. In contrast, prices for loan services (partial) fell 0.5 percent. The indexes for hospital outpatient care and furniture retailing also declined. (See table 4.)

Final demand goods: The index for final demand goods climbed 0.6 percent in October, the largest rise since advancing 0.9 percent in May. Nearly three-fourths of the October increase can be traced to prices for final demand energy, which moved up 2.7 percent. The index for final demand foods rose 1.0 percent. Prices for final demand goods less foods and energy were unchanged.

Product detail: Over 60 percent of the October increase in prices for final demand goods is attributable to the gasoline index, which jumped 7.6 percent. Prices for diesel fuel, fresh and dry vegetables, beef and veal, cigarettes, and jet fuel also moved higher. Conversely, the motor vehicles index fell 0.7 percent. (In accordance with usual practice, most new-model-year passenger car and light motor trucks were introduced into the PPI in October. See Report on Quality Changes for 2019 Model Vehicles at www.bls.gov/web/ppi/ppimotveh.htm.) Prices for liquefied petroleum gas and for fresh fruits and melons also decreased.

Intermediate Demand by Commodity Type

Within intermediate demand in October, prices for processed goods rose 0.8 percent, the index for unprocessed goods increased 3.6 percent, and prices for services moved up 0.4 percent. (See tables B and C.)

Processed goods for intermediate demand: The index for processed goods for intermediate demand increased 0.8 percent in October after no change in each of the previous two months. In October, the broad-based rise was led by prices for processed energy goods, which advanced 2.6 percent. The indexes for processed materials less foods and energy and for processed foods and feeds both moved up 0.4 percent. For the 12 months ended in October, the index for processed goods for intermediate demand climbed 5.9 percent.

Product detail: In October, a major factor in the rise in prices for processed goods for intermediate demand was the index for diesel fuel, which jumped 5.4 percent. The indexes for basic organic chemicals, gasoline, utility natural gas, jet fuel, and beef and veal also increased. In contrast, prices for softwood lumber dropped 10.3 percent. The indexes for liquefied petroleum gas and natural, processed, and imitation cheese also fell. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand moved up 3.6 percent in October, the largest increase since a 3.6-percent rise in January 2017. Over half of the October advance is attributable to a 5.8-percent jump in the index for unprocessed foodstuffs and feedstuffs. Prices for unprocessed energy materials climbed 3.6 percent, while the index for unprocessed nonfood materials less energy was unchanged. For the 12 months ended in October, prices for unprocessed goods for intermediate demand rose 7.8 percent.

Product detail: A major factor in the October increase in prices for unprocessed goods for intermediate demand was the index for slaughter livestock, which jumped 9.6 percent. Prices for crude petroleum, raw milk, slaughter chickens, oilseeds, and copper base scrap also moved higher. Conversely, the index for natural gas declined 1.0 percent. Prices for citrus fruits and aluminum base scrap also moved lower.

Services for intermediate demand: The index for services for intermediate demand rose 0.4 percent in October after a 0.5-percent increase in September. In October, over 60 percent of the broad-based advance can be traced to margins for trade services for intermediate demand, which climbed 1.5 percent. The index for services less trade, transportation, and warehousing for intermediate demand moved up 0.2 percent, and prices for transportation and warehousing services for intermediate demand rose 0.3 percent. For the 12 months ended in October, the index for services for intermediate demand increased 3.2 percent.

Product detail: In October, a quarter of the rise in the index for services for intermediate demand can be traced to margins for metals, minerals, and ores wholesaling, which jumped 7.8 percent. The indexes for broadcast and network television advertising time sales; paper and plastics products wholesaling; services related to securities brokerage and dealing (partial); portfolio management; and management, scientific, and technical consulting services also moved higher. In contrast, gross rents for retail properties fell 4.1 percent. Prices for cable network advertising time sales and passenger car rental also declined.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: Prices for stage 4 intermediate demand advanced 0.5 percent in October, the largest rise since moving up 0.5 percent in May. In October, the index for total goods inputs to stage 4 intermediate demand increased 0.5 percent, and prices for total services inputs climbed 0.4 percent. (See table D.) Advances in the indexes for diesel fuel; metals, minerals, and ores wholesaling; paper and plastics products wholesaling; gasoline; portfolio management; and basic organic chemicals outweighed decreases in prices for gross rents for retail properties, softwood lumber, and citrus fruits. (See table 6.) For the 12 months ended in October, the index for stage 4 intermediate demand moved up 3.6 percent.

Stage 3 intermediate demand: The index for stage 3 intermediate demand moved up 1.6 percent in October, the largest rise since a 1.6-percent increase in February 2011. In October, prices for total goods inputs to stage 3 intermediate demand jumped 2.9 percent, and the index for total services inputs climbed 0.4 percent. Increases in the indexes for slaughter livestock; gasoline; raw milk; jet fuel; slaughter chickens; and metals, minerals, and ores wholesaling outweighed declines in prices for gross rents for retail properties, integrated microcircuits, and passenger car rental. For the 12 months ended in October, the index for stage 3 intermediate demand rose 5.3 percent.

Stage 2 intermediate demand: Prices for stage 2 intermediate demand climbed 0.8 percent in October following a 0.9-percent rise in September. In October, the index for total goods inputs to stage 2 intermediate demand increased 1.4 percent, and prices for total services inputs moved up 0.3 percent. Advances in the indexes for crude petroleum; services related to securities brokerage and dealing (partial); basic organic chemicals; portfolio management; oilseeds; and management, scientific, and technical consulting services outweighed decreases in prices for gas fuels, cable network advertising time sales, and softwood lumber. For the 12 months ended in October, the index for stage 2 intermediate demand rose 6.1 percent.

Stage 1 intermediate demand: The index for stage 1 intermediate demand moved up 1.1 percent in October, the largest rise since a 1.1-percent increase in January. In October, prices for total goods inputs to stage 1 intermediate demand advanced 1.5 percent, and the index for total services inputs climbed 0.5 percent. Increases in the indexes for basic organic chemicals; diesel fuel; metals, minerals, and ores wholesaling; gasoline; crude petroleum; and paper and plastics products wholesaling outweighed declines in prices for aluminum base scrap, gross rents for retail properties, and passenger car rental. For the 12 months ended in October, the index for stage 1 intermediate demand advanced 6.0 percent.

Resampling of Industries

Effective with the release of data for October 2018, the Producer Price Index (PPI) includes data for 21 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 October 2018, see the current issue of the PPI Detailed Report online at www.bls.gov/ppi/ppidr201810.pdf, or contact the PPI Section of Index Analysis and Public Information at ppi-info@bls.gov or (202) 691- 7705.

NAICS Code Industry 311111 Dog and cat food manufacturing 311313 Beet sugar manufacturing 312112 Bottled water manufacturing 314999 All other miscellaneous textile product mills 321999 Miscellaneous wood product manufacturing 322299 All other converted paper product manufacturing 32311K Commercial printing, except screen and books 325211 Plastics material and resins manufacturing 331314 Secondary smelting and alloying of aluminum 333922 Conveyor and conveying equipment manufacturing 334512 Automatic environmental control manufacturing 335121 Residential electric lighting fixture manufacturing 335122 Nonresidential electric lighting fixture manufacturing 336310 Motor vehicle gasoline engine and engine parts manufacturing 336360 Motor vehicle seating and interior trim manufacturing 339993 Fastener, button, needle, and pin manufacturing 444110 Home centers 444120 Paint and wallpaper stores 481111 Scheduled passenger air transportation 531320 Offices of real estate appraisers 621991 Blood and organ banks

Recalculated Seasonal Adjustment Factors and Relative Importance Figures to be Available on February 12, 2019

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 12, 2019 (2 workdays prior to the release of PPI data for January 2019 on February 14, 2019):

* Direct seasonal factors for PPI commodity indexes for the year 2019, * Recalculated seasonal factors for the last 5 years (2014-2018) for PPI commodity indexes, * Recalculated seasonal factors for the last 5 years (2014-2018) for PPI Final Demand- Intermediate Demand indexes, * Recalculated seasonal index data for the last 5 years (2014-2018) 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 2018, will be available on February 12, 2019:

* 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.