May 2019 Producer Price Index

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The Producer Price Index for final demand rose 0.1 percent in May, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices advanced 0.2 percent in April and 0.6 percent in March. (See table A.) On an unadjusted basis, the final demand index increased 1.8 percent for the 12 months ended in May.

In May, the rise in final demand prices is attributable to a 0.3-percent increase in the index for final demand services. In contrast, prices for final demand goods declined 0.2 percent.

The index for final demand less foods, energy, and trade services moved up 0.4 percent in May, the same as in April. For the 12 months ended in May, prices for final demand less foods, energy, and trade services advanced 2.3 percent.

Final Demand

Final demand services: Prices for final demand services moved up 0.3 percent in May, the fourth consecutive increase. Most of the May advance can be traced to the index for final demand services less trade, transportation, and warehousing, which rose 0.5 percent. Prices for final demand transportation and warehousing services climbed 0.7 percent. Conversely, margins for final demand trade services fell 0.5 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: Nearly 80 percent of the May advance in the index for final demand services is attributable to prices for guestroom rental, which jumped 10.1 percent. The indexes for fuels and lubricants retailing, outpatient care (partial), inpatient care, portfolio management, and transportation of passengers (partial) also moved higher. In contrast, margins for apparel, footwear, and accessories retailing declined 5.2 percent. The indexes for machinery, equipment, parts, and supplies wholesaling and for loan services (partial) also decreased. (See table 4.)

Final demand goods: The index for final demand goods moved down 0.2 percent in May following three consecutive increases. About three-quarters of the decrease can be traced to prices for final demand energy, which fell 1.0 percent. The index for final demand foods declined 0.3 percent, while prices for final demand goods less foods and energy were unchanged.

Product detail: Nearly 40 percent of the May decrease in the index for final demand goods is attributable to prices for gasoline, which fell 1.7 percent. The indexes for diesel fuel, iron and steel scrap, chicken eggs, beef and veal, and fresh fruits and melons also moved lower. Conversely, prices for prepared poultry products increased 7.0 percent. The indexes for light motor trucks and jet fuel also advanced.

Intermediate Demand by Commodity Type

Within intermediate demand in May, prices for processed goods declined 0.2 percent, the index for unprocessed goods fell 5.1 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 moved down 0.2 percent in May, the largest decrease since falling 0.9 percent in January. Leading the May decline, prices for processed energy goods dropped 1.4 percent. The index for processed foods and feeds fell 0.5 percent. In contrast, prices for processed goods less foods and energy inched up 0.1 percent. For the 12 months ended in May, the index for processed goods for intermediate demand decreased 0.6 percent, the first decline since falling 0.6 percent for the 12 months ended October 2016.

Product detail: Leading the May decline in the index for processed goods for intermediate demand, diesel fuel prices dropped 5.7 percent. The indexes for gasoline, prepared animal feeds, natural gas to electric utilities, asphalt, and lumber also moved lower. Conversely, prices for primary basic organic chemicals increased 5.8 percent. The indexes for commercial electric power and prepared poultry products also advanced. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand fell 5.1 percent in May, the largest decrease since dropping 9.6 percent in January 2015. Two-thirds of the broad-based May decline can be traced to prices for unprocessed energy materials, which moved down 8.2 percent. The indexes for unprocessed nonfood materials less energy and for unprocessed foodstuffs and feedstuffs fell 4.5 percent and 1.9 percent, respectively. For the 12 months ended in May, prices for unprocessed goods for intermediate demand decreased 8.9 percent, the largest decline since dropping 10.8 percent for the 12 months ended June 2016.

Product detail: Over one-third of the decrease in the index for unprocessed goods for intermediate demand can be attributed to natural gas prices, which dropped 15.2 percent. The indexes for crude petroleum, slaughter steers and heifers, iron and steel scrap, oilseeds, and nonferrous scrap also moved lower. In contrast, raw milk prices climbed 5.0 percent. The indexes for slaughter cows and bulls and for industrial sand also advanced.

Services for intermediate demand: The index for services for intermediate demand was unchanged in May after rising 0.3 percent in April. In May, a 0.4-percent increase in prices for transportation and warehousing services for intermediate demand offset a 0.6-percent decline in the index for trade services for intermediate demand. Prices for services less trade, transportation, and warehousing for intermediate demand were unchanged. For the 12 months ended in May, the index for services for intermediate demand moved up 2.5 percent.

Product detail: In May, prices for transportation of passengers (partial) moved up 1.7 percent. The indexes for portfolio management; staffing services; guestroom rental; and building materials, paint, and hardware wholesaling also rose. Conversely, margins for machinery and equipment parts and supplies wholesaling declined 1.2 percent. The indexes for gross rents of retail properties; loan services (partial); deposit services (partial); and hardware, building materials, and supplies retailing also moved lower.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: The index for stage 4 intermediate demand fell 0.2 percent in May following three consecutive increases. In May, the index for total goods inputs to stage 4 intermediate demand declined 0.2 percent, and prices for total services inputs edged down 0.1 percent. (See table D.) Decreases in the indexes for diesel fuel; gross rents of retail properties; machinery and equipment parts and supplies wholesaling; loan services (partial); hardware, building materials, and supplies retailing; and marketing consulting services outweighed higher prices for portfolio management, staffing services, and primary basic organic chemicals. (See table 6.) For the 12 months ended in May, the index for stage 4 intermediate demand increased 1.8 percent.

Stage 3 intermediate demand: The index for stage 3 intermediate demand moved down 0.3 percent in May after advancing 0.9 percent in April. In May, prices for total goods inputs to stage 3 intermediate demand fell 0.5 percent, and the index for total services inputs decreased 0.2 percent. Declining prices for slaughter steers and heifers, diesel fuel, gasoline, slaughter barrows and gilts, gross rents of retail properties, and asphalt outweighed increases in the indexes for raw milk; primary basic organic chemicals; and building materials, paint, and hardware wholesaling. For the 12 months ended in May, prices for stage 3 intermediate demand moved up 0.6 percent.

Stage 2 intermediate demand: The index for stage 2 intermediate demand fell 1.1 percent in May after increasing 0.5 percent in April. In May, prices for total goods inputs to stage 2 intermediate demand dropped 3.4 percent. In contrast, the index for total services inputs advanced 0.5 percent. Lower prices for gas fuels, crude petroleum, oilseeds, prepared animal feeds, coal, and marketing consulting services outweighed increasing prices for guestroom rental, portfolio management, and thermoplastic resins and materials. For the 12 months ended in May, the index for stage 2 intermediate demand moved down 2.1 percent, the largest decline since falling 2.9 percent in the 12 months ended May 2016.

Stage 1 intermediate demand: The index for stage 1 intermediate demand decreased 1.0 percent in May, the largest decline since falling 1.3 percent in January. In May, prices for total goods inputs to stage 1 intermediate demand dropped 1.9 percent. The index for total services inputs was unchanged. Lower prices for diesel fuel, iron and steel scrap, nonferrous scrap, wastepaper, gas fuels, and gross rents of retail properties outweighed increases in the indexes for primary basic organic chemicals, guestroom rental, and support activities for oil and gas operations. For the 12 months ended in May, prices for stage 1 intermediate demand declined 1.3 percent, the largest decrease since falling 2.5 percent in the 12 months ended August 2016.