November 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 edged up 0.1 percent in November, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices advanced 0.6 percent in October and 0.2 percent in September. (See table A.) On an unadjusted basis, the final demand index moved up 2.5 percent for the 12 months ended in November.

In November, the rise in the final demand index can be traced to a 0.3-percent increase in prices for final demand services. In contrast, the index for final demand goods decreased 0.4 percent.

The index for final demand less foods, energy, and trade services moved up 0.3 percent in November, the third consecutive increase. For the 12 months ended in November, 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 moved up 0.3 percent in November, the third straight rise. The broad-based November advance was led by a 0.3-percent increase in the index for final demand trade services. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand transportation and warehousing services climbed 1.2 percent, and the index for final demand services less trade, transportation, and warehousing inched up 0.1 percent.

Product detail: Most of the November advance in prices for final demand services can be traced to margins for fuels and lubricants retailing, which jumped 25.9 percent. The indexes for health, beauty, and optical goods retailing; cellular phone and other wireless telecommunications services; airline passenger services; food wholesaling; and truck transportation of freight also moved higher. Conversely, prices for guestroom rental fell 3.5 percent. The indexes for machinery and equipment wholesaling and for portfolio management also declined. (See table 4.)

Final demand goods: The index for final demand goods moved down 0.4 percent in November, the largest decrease since falling 0.5 percent in May 2017. The November decline was the result of a 5.0- percent drop in the index for final demand energy. In contrast, prices for final demand goods less foods and energy climbed 0.3 percent, and the index for final demand foods advanced 1.3 percent.

Product detail: Leading the November decrease in the index for final demand goods, gasoline prices dropped 14.0 percent. The indexes for liquefied petroleum gas, electric power, fresh fruits and melons, jet fuel, and primary basic organic chemicals also moved down. Conversely, the index for pharmaceutical preparations rose 1.5 percent. Prices for fresh and dry vegetables and for residential natural gas also increased.

Intermediate Demand by Commodity Type

Within intermediate demand in November, prices for processed goods declined 0.7 percent, the index for unprocessed goods decreased 5.3 percent, and prices for services advanced 0.2 percent. (See tables B and C.)

Processed goods for intermediate demand: The index for processed goods for intermediate demand moved down 0.7 percent in November, the largest decline since falling 0.9 percent in February 2016. Over three-fourths of the November decrease can be traced to prices for processed energy goods, which declined 2.5 percent. The index for processed materials less foods and energy fell 0.2 percent. In contrast, prices for processed foods and feeds rose 0.4 percent. For the 12 months ended in November, the index for processed goods for intermediate demand increased 4.3 percent.

Product detail: In November, a major factor in the decline in the index for processed goods for intermediate demand was prices for liquefied petroleum gas, which dropped 27.9 percent. The indexes for gasoline, primary basic organic chemicals, commercial electric power, lubricating oil base stocks, and lumber also moved lower. Conversely, prices for beef and veal rose 2.7 percent. The indexes for utility natural gas and for hot rolled steel sheet and strip also advanced. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand moved down 5.3 percent in November, the largest decrease since a 9.7-percent drop in January 2015. Leading the November decline, prices for unprocessed energy materials fell 11.5 percent. The index for unprocessed foodstuffs and feedstuffs decreased 1.0 percent. In contrast, prices for unprocessed nonfood materials less energy increased 2.4 percent. For the 12 months ended in November, the index for unprocessed goods for intermediate demand moved down 0.7 percent, the first decline since falling 4.4 percent for the 12 months ended October 2016.

Product detail: Leading the November decrease in the index for unprocessed goods for intermediate demand, crude petroleum prices fell 29.5 percent. The indexes for raw milk, slaughter barrows and gilts, fresh fruits and melons, slaughter cows and bulls, and stainless and other alloy steel scrap also moved lower. Conversely, prices for carbon steel scrap climbed 9.5 percent. The indexes for natural gas and corn also rose.

Services for intermediate demand: The index for services for intermediate demand rose 0.2 percent in November, the third consecutive increase. In November, most of the advance can be traced to prices for services less trade, transportation, and warehousing for intermediate demand, which moved up 0.3 percent. The index for transportation and warehousing services for intermediate demand climbed 0.5 percent. In contrast, margins for trade services for intermediate demand declined 0.2 percent. For the 12 months ended in November, the index for services for intermediate demand increased 3.1 percent.

Product detail: In November, over two-thirds of the rise in the index for services for intermediate demand can be traced to prices for business loans (partial), which jumped 4.5 percent. The indexes for machinery and equipment parts and supplies wholesaling, fuels and lubricants retailing, cellular phone and other wireless telecommunication services, nonresidential real estate services, and airline passenger services also moved higher. Conversely, margins for metals, minerals, and ores wholesaling fell 7.4 percent. The indexes for portfolio management and for chemicals and allied products wholesaling also declined.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: Prices for stage 4 intermediate demand edged down 0.1 percent in November following two consecutive increases. In November, the index for total goods inputs to stage 4 intermediate demand decreased 0.3 percent. In contrast, prices for total services inputs inched up 0.1 percent. (See table D.) Declines in the indexes for gasoline; portfolio management; metals, minerals, and ores wholesaling; chemicals and allied products wholesaling; and commercial electric power outweighed increases in the indexes for machinery and equipment parts and supplies wholesaling, business loans (partial), nonresidential real estate services, and diesel fuel. (See table 6.) For the 12 months ended in November, the index for stage 4 intermediate demand moved up 3.2 percent.

Stage 3 intermediate demand: The index for stage 3 intermediate demand fell 0.8 percent in November following a 1.6-percent increase in October. In November, prices for total goods inputs to stage 3 intermediate demand dropped 2.1 percent. Conversely, the index for total services inputs climbed 0.3 percent. Decreases in the indexes for gasoline; raw milk; primary basic organic chemicals; slaughter barrows and gilts; metals, minerals, and ores wholesaling; and jet fuel outweighed increases in the indexes for machinery and equipment parts and supplies wholesaling, slaughter poultry, and business loans (partial). For the 12 months ended in November, the index for stage 3 intermediate demand rose 3.2 percent.

Stage 2 intermediate demand: Prices for stage 2 intermediate demand dropped 2.3 percent in November after a 0.8-percent increase in October. In November, the index for total goods inputs to stage 2 intermediate demand fell 5.0 percent, while prices for total services inputs were unchanged. Declines in the indexes for crude petroleum, liquefied petroleum gas, portfolio management, guestroom rental, primary basic organic chemicals, and gasoline outweighed advances in prices for natural gas, wireless telecommunication services, and temporary help services. For the 12 months ended in November, the index for stage 2 intermediate demand rose 2.7 percent.

Stage 1 intermediate demand: The index for stage 1 intermediate demand moved down 0.3 percent in November following a 1.1-percent advance in October. In November, prices for total goods inputs to stage 1 intermediate demand decreased 0.6 percent. In contrast, the index for total services inputs rose 0.3 percent. Decreases in the indexes for crude petroleum; primary basic organic chemicals; gasoline; metals, minerals, and ores wholesaling; chemicals and allied products wholesaling; and commercial electric power outweighed increases in prices for business loans (partial), carbon steel scrap, and natural gas. For the 12 months ended in November, the index for stage 1 intermediate demand advanced 4.8 percent.

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.