September 2019 Producer Price Index

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The Producer Price Index for final demand decreased 0.3 percent in September, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.1 percent in August and 0.2 percent in July. (See table A.) On an unadjusted basis, the final demand index advanced 1.4 percent for the 12 months ended in September.

In September, the index for final demand services decreased 0.2 percent, and prices for final demand goods dropped 0.4 percent.

The index for final demand less foods, energy, and trade services was unchanged in September after rising 0.4 percent in August. For the 12 months ended in September, prices for final demand less foods, energy, and trade services advanced 1.7 percent.

Final Demand

Final demand services: The index for final demand services fell 0.2 percent in September following a 0.3-percent increase in August. Leading the decline, the index for final demand trade services decreased 1.0 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand transportation and warehousing services also moved down 1.0 percent. In contrast, the index for final demand services less trade, transportation, and warehousing climbed 0.3 percent.

Product detail: Nearly half of the September decline in prices for final demand services can be traced to the index for machinery and vehicle wholesaling, which fell 2.7 percent. The indexes for automotive fuels and lubricants retailing; apparel, jewelry, footwear, and accessories retailing; airline passenger services; gaming receipts (partial); and professional and commercial equipment wholesaling also moved lower. Conversely, prices for hospital outpatient care rose 1.1 percent. The indexes for bundled wired telecommunications access services and for food and alcohol wholesaling also advanced. (See table 4.)

Final demand goods: The index for final demand goods decreased 0.4 percent in September after a 0.5-percent drop in August. Most of the September decline is attributable to prices for final demand energy, which fell 2.5 percent. The index for final demand goods less foods and energy edged down 0.1 percent. In contrast, prices for final demand foods moved up 0.3 percent.

Product detail: Three-fourths of the September decrease in the index for final demand goods can be traced to prices for gasoline, which fell 7.2 percent. The indexes for electric power, iron and steel scrap, basic organic chemicals, fresh and dry vegetables, and light motor trucks also moved lower. Conversely, prices for meats rose 1.9 percent. The indexes for liquefied petroleum gas and pharmaceutical preparations also increased.

Intermediate Demand by Commodity Type

Within intermediate demand in September, the index for processed goods decreased 0.4 percent, prices for unprocessed goods fell 1.4 percent, and the index for services edged up 0.1 percent. (See tables B and C.)

Processed goods for intermediate demand: The index for processed goods for intermediate demand moved down 0.4 percent in September following a 0.7-percent decrease in August. Almost three-quarters of the September decline can be attributed to prices for processed materials less foods and energy, which fell 0.3 percent. The index for processed energy goods moved down 0.7 percent. In contrast, prices for processed foods and feeds advanced 0.7 percent. For the 12 months ended in September, the index for processed goods for intermediate demand decreased 3.4 percent, the largest decline since dropping 3.7 percent for the 12 months ended July 2016.

Product detail: Over half of the September decline in the index for processed goods for intermediate demand can be traced to prices for basic organic chemicals, which fell 3.8 percent. The indexes for gasoline, commercial electric power, fabricated structural metal, agricultural chemicals and chemical products, and residual fuels also moved lower. Conversely, prices for prepared animal feeds advanced 0.9 percent. The indexes for diesel fuel and for hot rolled steel sheet and strip also increased. (See table 5.)

Unprocessed goods for intermediate demand: Prices for unprocessed goods for intermediate demand fell 1.4 percent in September following a 1.0-percent decline in August. Over half of the broad-based decrease in September can be attributed to the index for unprocessed foodstuffs and feedstuffs, which moved down 1.9 percent. Prices for unprocessed nonfood materials less energy fell 1.6 percent, and the index for unprocessed energy materials declined 0.8 percent. For the 12 months ended in September, the index for unprocessed goods for intermediate demand dropped 10.1 percent.

Product detail: A major factor in the September decrease in prices for unprocessed goods for intermediate demand was the index for slaughter cattle, which moved down 3.7 percent. Prices for iron and steel scrap, slaughter barrows and gilts, crude petroleum, slaughter chickens, and raw milk also fell. In contrast, the index for ungraded chicken eggs increased 55.2 percent. Prices for coal and gold ores also advanced.

Services for intermediate demand: Prices for services for intermediate demand inched up 0.1 percent in September after rising 0.5 percent in August. The September advance is attributable to the index for trade services for intermediate demand, which increased 1.2 percent. Conversely, prices for services less trade, transportation, and warehousing for intermediate demand decreased 0.2 percent. The index for transportation and warehousing services for intermediate demand was unchanged. For the 12 months ended in September, prices for services for intermediate demand moved up 2.4 percent.

Product detail: Nearly three-quarters of the September rise in prices for services for intermediate demand can be traced to margins for machinery and equipment parts and supplies wholesaling, which jumped 1.7 percent. The indexes for paper and plastics products wholesaling; bundled wired telecommunications access services; building materials, paint, and hardware wholesaling; and arrangement of freight and cargo transportation also advanced. In contrast, prices for gross rents of retail properties fell 4.4 percent. The indexes for business loans (partial), airline passenger services, and automotive fuels and lubricants retailing also declined.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: Prices for stage 4 intermediate demand were unchanged in September following a 0.2-percent advance in August. In September, a 0.2-percent rise in the index for total services inputs to stage 4 intermediate demand offset a 0.2-percent decrease in prices for total goods inputs. (See table D.) Increases in the indexes for machinery and equipment parts and supplies wholesaling; paper and plastics products wholesaling; diesel fuel; food and alcohol wholesaling; and building materials, paint, and hardware wholesaling offset falling prices for gasoline, gross rents of retail properties, business loans (partial), fabricated structural metal, and basic organic chemicals. (See table 6.) For the 12 months ended in September, the index for stage 4 intermediate demand climbed 1.4 percent.

Stage 3 intermediate demand: The index for stage 3 intermediate demand declined 0.6 percent in September, the fifth consecutive decrease. In September, prices for total goods inputs to stage 3 intermediate demand dropped 1.5 percent. Conversely, the index for total services inputs moved up 0.3 percent. Lower prices for gasoline, slaughter barrows and gilts, slaughter cattle, slaughter chickens, raw milk, and gross rents of retail properties outweighed increases in the indexes for machinery and equipment parts and supplies wholesaling, paper and plastics products wholesaling, and ungraded chicken eggs. For the 12 months ended in September, the index for stage 3 intermediate demand fell 1.2 percent, the largest decrease since declining 1.8 percent for the 12 months ended October 2016.

Stage 2 intermediate demand: The index for stage 2 intermediate demand inched down 0.1 percent in September after falling 0.3 percent in August. In September, prices for total goods inputs to stage 2 intermediate demand edged down 0.1 percent, while the index for total services inputs was unchanged. Lower prices for crude petroleum, television advertising time sales, basic organic chemicals, natural gas, and airline passenger services outweighed increases in the indexes for liquefied petroleum gas, accounting services (partial), hot rolled steel sheet and strip, and thermoplastic resins and materials. For the 12 months ended in September, prices for stage 2 intermediate demand declined 4.2 percent, the largest drop since decreasing 4.7 percent for the 12 months ended February 2016.

Stage 1 intermediate demand: The index for stage 1 intermediate demand fell 0.6 percent in September after declining 0.3 percent in August. In September, prices for total goods inputs to stage 1 intermediate demand decreased 1.1 percent, while the index for total services inputs was unchanged. Lower prices for basic organic chemicals, iron and steel scrap, gasoline, business loans (partial), gross rents of retail properties, and airline passenger services outweighed advances in the indexes for diesel fuel; paper and plastics products wholesaling; and building materials, paint, and hardware wholesaling. For the 12 months ended in September, prices for stage 1 intermediate demand moved down 3.7 percent, the largest decline since dropping 3.7 percent for the 12 months ended May 2016.