August 2019 Producer Price Index

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The Producer Price Index for final demand rose 0.1 percent in August, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices moved up 0.2 percent in July and 0.1 percent in June. (See table A.) On an unadjusted basis, the final demand index rose 1.8 percent for the 12 months ended in August.

In August, the advance 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 fell 0.5 percent.

The index for final demand less foods, energy, and trade services rose 0.4 percent in August following a 0.1-percent decline in July. For the 12 months ended in August, prices for final demand less foods, energy, and trade services moved up 1.9 percent.

Final Demand

Final demand services: The index for final demand services advanced 0.3 percent in August after edging down 0.1 percent in July. Almost 80 percent of the broad-based increase can be traced to prices for final demand services less trade, transportation, and warehousing, which climbed 0.5 percent. Margins for final demand trade services rose 0.2 percent, and prices for final demand transportation and warehousing services advanced 0.3 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: A major factor in the increase in prices for final demand services was the index for guestroom rental, which moved up 6.4 percent. The indexes for fuels and lubricants retailing; apparel, footwear, and accessories retailing; chemicals and allied products wholesaling; gaming receipts (partial); and insurance also advanced. Conversely, margins for machinery and vehicle wholesaling declined 4.2 percent. The indexes for health, beauty, and optical goods retailing and for support activities for oil and gas operations also decreased. (See table 4.)

Final demand goods: The index for final demand goods moved down 0.5 percent in August, the largest decrease since falling 0.6 percent in January. Over 80 percent of the August decline can be attributed to prices for final demand energy, which dropped 2.5 percent. The index for final demand foods moved down 0.6 percent, while prices for final demand goods less foods and energy were unchanged.

Product detail: Almost two-thirds of the August decline in the index for final demand goods can be traced to prices for gasoline, which dropped 6.6 percent. The indexes for fresh and dry vegetables, diesel fuel, corn, home heating oil, and ethanol also moved lower. In contrast, prices for meats advanced 3.0 percent. The indexes for iron and steel scrap and for residential electric power also increased.

Intermediate Demand by Commodity Type

Within intermediate demand in August, the index for processed goods decreased 0.7 percent, prices for unprocessed goods fell 1.0 percent, and the index for services moved up 0.5 percent. (See tables B and C.)

Processed goods for intermediate demand: The index for processed goods for intermediate demand decreased 0.7 percent in August after rising 0.2 percent in July. Sixty percent of the decline can be attributed to prices for processed energy goods, which dropped 2.2 percent. The index for processed materials less foods and energy fell 0.4 percent. Conversely, prices for processed foods and feeds increased 0.3 percent. For the 12 months ended in August, the index for processed goods for intermediate demand declined 2.8 percent, the largest decrease since dropping 3.0 percent for the 12 months ended August 2016.

Product detail: Nearly 30 percent of the decline in the index for processed goods for intermediate demand can be traced to prices for diesel fuel, which fell 5.7 percent. The indexes for gasoline, primary basic organic chemicals, ethanol, lubricating oil base stocks, and hot rolled steel sheet and strip also moved lower. In contrast, prices for meats rose 3.0 percent. The indexes for industrial electric power and fabricated structural metal also increased. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand fell 1.0 percent in August following a 1.6-percent advance in July. Over 80 percent of the decrease can be attributed to prices for unprocessed energy materials, which moved down 2.2 percent. The index for unprocessed foodstuffs and feedstuffs fell 0.5 percent. Conversely, prices for unprocessed nonfood materials less energy edged up 0.1 percent. For the 12 months ended in August, the index for unprocessed goods for intermediate demand decreased 7.8 percent.

Product detail: A major factor in the decline in prices for unprocessed goods for intermediate demand was the index for natural gas, which fell 4.5 percent. Prices for corn, slaughter steers and heifers, crude petroleum, fresh vegetables (except potatoes), and nonferrous scrap also moved down. In contrast, the index for iron and steel scrap rose 8.3 percent. Prices for slaughter hogs and hay, hayseeds, and oilseeds also advanced.

Services for intermediate demand: The index for services for intermediate demand moved up 0.5 percent in August, the largest increase since rising 0.5 percent in March. In August, over 60 percent of the broad-based advance is attributable to prices for services less trade, transportation, and warehousing for intermediate demand, which climbed 0.5 percent. The indexes for trade services for intermediate demand and for transportation and warehousing services for intermediate demand also moved higher, increasing 0.6 percent and 0.5 percent, respectively. For the 12 months ended in August, prices for services for intermediate demand rose 2.5 percent.

Product detail: About 40 percent of the August advance in the index for services for intermediate demand can be traced to prices for nonresidential real estate services, which climbed 3.3 percent. The indexes for chemicals and allied products wholesaling; securities brokerage, dealing, and investment advice; marketing consulting services; machinery and equipment parts and supplies wholesaling; and arrangement of freight and cargo transportation also moved higher. Conversely, prices for services related to securities brokerage and dealing (partial) fell 6.5 percent. The indexes for accounting services (partial) and metals, minerals, and ores wholesaling also declined.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: Prices for stage 4 intermediate demand increased 0.2 percent in August after edging up 0.1 percent in July. In August, the index for total services inputs to stage 4 intermediate demand rose 0.7 percent. In contrast, prices for total goods inputs decreased 0.4 percent. (See table D.) Advances in the indexes for nonresidential real estate services, chemicals and allied products wholesaling, fabricated structural metal, machinery and equipment parts and supplies wholesaling, marketing consulting services, and meats outweighed falling prices for diesel fuel, gasoline, and services related to securities brokerage and dealing (partial). (See table 6.) For the 12 months ended in August, the index for stage 4 intermediate demand increased 1.5 percent.

Stage 3 intermediate demand: The index for stage 3 intermediate demand inched down 0.1 percent in August, the fourth consecutive decline. In August, prices for total goods inputs to stage 3 intermediate demand decreased 0.8 percent. Conversely, the index for total services inputs climbed 0.5 percent. Falling prices for gasoline, slaughter steers and heifers, primary basic organic chemicals, diesel fuel, and services related to securities brokerage and dealing (partial) outweighed increases in the indexes for nonresidential real estate services, slaughter hogs, chemicals and allied products wholesaling, and arrangement of freight and cargo transportation. For the 12 months ended in August, prices for stage 3 intermediate demand moved down 0.2 percent.

Stage 2 intermediate demand: The index for stage 2 intermediate demand decreased 0.3 percent in August following a 0.5-percent advance in July. In August, prices for total goods inputs to stage 2 intermediate demand fell 1.3 percent. In contrast, the index for total services inputs rose 0.3 percent. Declining prices for gas fuels, crude petroleum, corn, services related to securities brokerage and dealing (partial), accounting services (partial), and thermoplastic resins and materials outweighed increases in the indexes for guestroom rental; hay, hayseeds, and oilseeds; and securities brokerage, dealing, and investment advice. For the 12 months ended in August, prices for stage 2 intermediate demand fell 3.5 percent.

Stage 1 intermediate demand: Prices for stage 1 intermediate demand declined 0.3 percent in August after rising 0.3 percent in July. In August, the index for total goods inputs to stage 1 intermediate demand moved down 1.4 percent. Conversely, prices for total services inputs climbed 0.7 percent. Decreasing prices for diesel fuel, primary basic organic chemicals, corn, ethanol, gasoline, and services related to securities brokerage and dealing (partial) outweighed advances in the indexes for nonresidential real estate services, iron and steel scrap, and chemicals and allied products wholesaling. For the 12 months ended in August, prices for stage 1 intermediate demand fell 2.9 percent, the largest decrease since a 3.1-percent drop in the 12 months ended July 2016.