July 2019 Producer Price Index

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The Producer Price Index for final demand advanced 0.2 percent in July, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices moved up 0.1 percent in both June and May. (See table A.) On an unadjusted basis, the final demand index rose 1.7 percent for the 12 months ended in July.

In July, the rise in final demand prices was led by a 0.4-percent increase in the index for final demand goods. Prices for final demand construction rose 0.6 percent. In contrast, the index for final demand services declined 0.1 percent.

The index for final demand less foods, energy, and trade services fell 0.1 percent in July, the first decrease since declining 0.1 percent in October 2015. For the 12 months ended in July, prices for final demand less foods, energy, and trade services moved up 1.7 percent.

Final Demand

Final demand goods: The index for final demand goods rose 0.4 percent in July, the largest increase since a 1.0-percent jump in March. Over 80 percent of the broad-based advance is attributable to prices for final demand energy, which rose 2.3 percent. The index for final demand goods less foods and energy inched up 0.1 percent, and prices for final demand foods increased 0.2 percent.

Product detail: Over half of the July rise in the index for final demand goods can be traced to prices for gasoline, which advanced 5.2 percent. The indexes for diesel fuel, electric power, corn, beef and veal, and tobacco products also advanced. Conversely, prices for jet fuel fell 3.5 percent. The indexes for pork and carbon steel scrap also decreased. (See table 4.)

Final demand services: The index for final demand services declined 0.1 percent in July after rising for five consecutive months. The decrease is attributable to prices for final demand services less trade, transportation, and warehousing, which moved down 0.3 percent. In contrast, the indexes for final demand trade services and for final demand transportation and warehousing services both advanced 0.2 percent.

Product detail: A major factor in the decline in prices for final demand services was the index for guestroom rental, which moved down 4.3 percent. The indexes for fuels and lubricants retailing, loan services (partial), machinery and equipment parts and supplies wholesaling, and truck transportation of freight also decreased. Conversely, margins for machinery and vehicle wholesaling advanced 3.0 percent. The indexes for hospital outpatient care; health, beauty, and optical goods retailing; and transportation of passengers (partial) also rose.

Intermediate Demand by Commodity Type

Within intermediate demand in July, prices for processed goods increased 0.2 percent, the index for unprocessed goods climbed 1.6 percent, and prices for services fell 0.2 percent. (See tables B and C.)

Processed goods for intermediate demand: The index for processed goods for intermediate demand moved up 0.2 percent in July, the first increase since rising 0.6 percent in March. The July advance is attributable to prices for processed energy goods, which climbed 2.2 percent. In contrast, the index for processed materials less foods and energy declined 0.2 percent, and prices for processed foods and feeds edged down 0.1 percent. For the 12 months ended in July, the index for processed goods for intermediate demand fell 2.0 percent, the third consecutive 12-month decrease.

Product detail: Leading the July advance in prices for processed goods for intermediate demand, the diesel fuel index jumped 7.9 percent. Prices for gasoline; commercial electric power; lubricating oil base stocks; natural, processed, and imitation cheese; and advertising printing also moved higher. Conversely, the index for steel mill products declined 2.6 percent. Prices for utility natural gas and for soybean cake and meal also fell. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand rose 1.6 percent in July after declining 3.3 percent in June. Three-quarters of the advance can be traced to prices for unprocessed energy materials, which increased 2.8 percent. The index for unprocessed nonfood materials less energy also moved higher, rising 1.9 percent. In contrast, prices for unprocessed foodstuffs and feedstuffs decreased 0.2 percent. For the 12 months ended in July, the index for unprocessed goods for intermediate demand fell 10.4 percent, the seventh straight 12- month decline.

Product detail: Leading the July increase in prices for unprocessed goods for intermediate demand, the crude petroleum index moved up 10.9 percent. Prices for corn, slaughter poultry, gold ores, coal, and unprocessed finfish also moved higher. Conversely, the index for slaughter hogs dropped 16.1 percent. Prices for natural gas and carbon steel scrap also fell.

Services for intermediate demand: The index for services for intermediate demand declined 0.2 percent in July following a 0.2-percent rise in June. Most of the decrease can be attributed to margins for trade services for intermediate demand, which fell 0.8 percent. Prices for services less trade, transportation, and warehousing for intermediate demand edged down 0.1 percent. In contrast, the index for transportation and warehousing services for intermediate demand advanced 0.3 percent. For the 12 months ended in July, the index for services for intermediate demand climbed 2.0 percent.

Product detail: A major factor in the July decline in the index for services for intermediate demand was margins for machinery and equipment parts and supplies wholesaling, which decreased 2.2 percent. The indexes for business loans (partial); paper and plastics products wholesaling; securities brokerage, dealing, and investment advice; fuels and lubricants retailing; and truck transportation of freight also moved down. Conversely, prices for courier, messenger, and U.S. postal services advanced 0.8 percent. The indexes for staffing services and for chemicals and allied products wholesaling also increased.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: The index for stage 4 intermediate demand edged up 0.1 percent in July following a 0.1-percent decline in the previous month. In July, prices for total goods inputs to stage 4 intermediate demand advanced 0.4 percent. In contrast, the index for total services inputs decreased 0.2 percent. (See table D.) Higher prices for diesel fuel, commercial electric power, gasoline, portfolio management, and corn outweighed declines in the indexes for machinery and equipment parts and supplies wholesaling, paper and plastics products wholesaling, business loans (partial), and steel mill products. (See table 6.) For the 12 months ended in July, prices for stage 4 intermediate demand moved up 1.3 percent.

Stage 3 intermediate demand: The index for stage 3 intermediate demand declined 0.2 percent in July, the third consecutive decrease. In July, prices for total services inputs to stage 3 intermediate demand moved down 0.2 percent, and the index for total goods inputs was unchanged. Declines in the indexes for machinery and equipment parts and supplies wholesaling, slaughter hogs, primary basic organic chemicals, jet fuel, steel mill products, and paper and plastics products wholesaling outweighed increases in prices for gasoline; diesel fuel; and courier, messenger, and U.S. postal services. For the 12 months ended in July, the index for stage 3 intermediate demand fell 0.7 percent, the largest 12-month decrease since moving down 1.8 percent in October 2016.

Stage 2 intermediate demand: The index for stage 2 intermediate demand advanced 0.5 percent in July following a 1.3-percent decrease in June. In July, prices for total goods inputs to stage 2 intermediate demand climbed 0.8 percent, and the index for total services inputs moved up 0.3 percent. Higher prices for crude petroleum, cable network advertising time sales, corn, staffing services, portfolio management, and pipeline transportation of petroleum products outweighed declines in the indexes for natural gas, steel mill products, and network compensation for broadcast and cable television. For the 12 months ended in July, prices for stage 2 intermediate demand moved down 3.6 percent, the largest 12-month drop since decreasing 4.0 percent in March 2016.

Stage 1 intermediate demand: The index for stage 1 intermediate demand advanced 0.3 percent in July following a 1.0-percent decline in June. In July, prices for total goods inputs to stage 1 intermediate demand increased 0.8 percent. Conversely, the index for total services inputs fell 0.4 percent. Increases in the indexes for diesel fuel, corn, crude petroleum, ethanol, gasoline, and chemicals and allied products wholesaling outweighed decreases in prices for business loans (partial), primary basic organic chemicals, and carbon steel scrap. For the 12 months ended in July, the index for stage 1 intermediate demand fell 2.7 percent.