October 2019 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 increased 0.4 percent in October, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices fell 0.3 percent in September and edged up 0.1 percent in August. (See table A.) On an unadjusted basis, the final demand index advanced 1.1 percent for the 12 months ended in October, the smallest rise since a 1.1-percent increase in the 12 months ended October 2016.

In October, the index for final demand services rose 0.3 percent, and prices for final demand goods increased 0.7 percent.

The index for final demand less foods, energy, and trade services inched up 0.1 percent in October after no change in September. For the 12 months ended in October, prices for final demand less foods, energy, and trade services advanced 1.5 percent.

Final Demand

Final demand services: The index for final demand services moved up 0.3 percent in October following a 0.2-percent decline in September. Over 70 percent of the broad-based increase can be traced to a 0.8-percent advance in margins for final demand trade services. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand services less trade, transportation, and warehousing edged up 0.1 percent, and the index for final demand transportation and warehousing services increased 0.3 percent.

Product detail: A major factor in the advance in the index for final demand services were margins for apparel, jewelry, footwear, and accessories retailing, which rose 2.6 percent. The indexes for outpatient care (partial), inpatient care, food wholesaling, food and alcohol retailing, and truck transportation of freight also moved higher. In contrast, prices for securities brokerage, dealing, investment advice, and related services dropped 8.4 percent. The indexes for machinery and vehicle wholesaling and for loan services (partial) also moved lower. (See table 4.)

Final demand goods: The index for final demand goods advanced 0.7 percent in October, the largest increase since a 1.0-percent jump in March. Seventy percent of the October rise is attributable to prices for final demand energy, which moved up 2.8 percent. The index for final demand foods advanced 1.3 percent, while prices for final demand goods less foods and energy were unchanged.

Product detail: Almost half of the October advance in the index for final demand goods can be traced to prices for gasoline, which moved up 7.3 percent. The indexes for fresh and dry vegetables, residential electric power, basic organic chemicals, corn, and diesel fuel also increased. Conversely, prices for iron and steel scrap fell 15.7 percent. The indexes for chicken eggs and passenger cars also declined. (In accordance with usual practice, most new-model-year passenger cars and light motor trucks were introduced into the PPI in October. See Report on Quality Changes for 2020 Model Vehicles at www.bls.gov/web/ppi/ppimotveh.htm.)

Intermediate Demand by Commodity Type

Within intermediate demand in October, the index for processed goods increased 0.4 percent, prices for unprocessed goods rose 1.0 percent, and the index 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 0.4 percent in October following two consecutive declines. Three-quarters of the broad-based increase is attributable to prices for processed energy goods, which rose 1.8 percent. The indexes for processed materials less foods and energy and for processed foods and feeds advanced 0.1 percent and 0.4 percent, respectively. For the 12 months ended in October, the index for processed goods for intermediate demand fell 3.7 percent, the largest decline since decreasing 3.7 percent for the 12 months ended July 2016.

Product detail: A major factor in the October increase in prices for processed goods for intermediate demand was the index for diesel fuel, which rose 2.9 percent. Prices for basic organic chemicals, gasoline, prepared animal feeds, jet fuel, and industrial electric power also advanced. In contrast, the index for steel mill products fell 3.0 percent. Prices for commercial electric power and boxed meat also declined. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand moved up 1.0 percent in October, the largest rise since a 1.7-percent increase in April. The October advance can be traced to prices for unprocessed foodstuffs and feedstuffs, which jumped 6.4 percent. Conversely, the indexes for unprocessed energy materials and unprocessed nonfood materials less energy declined 3.0 percent and 1.3 percent, respectively. For the 12 months ended in October, prices for unprocessed goods for intermediate demand dropped 12.3 percent, the largest decrease since falling 12.8 percent for the 12 months ended May 2016.

Product detail: Leading the October rise in prices for unprocessed goods for intermediate demand, the index for slaughter steers and heifers jumped 10.8 percent. The indexes for natural gas; corn; slaughter poultry; hay, hayseeds, and oilseeds; and fresh vegetables, except potatoes also advanced. In contrast, prices for crude petroleum fell 9.3 percent. The indexes for iron and steel scrap and for ungraded chicken eggs also declined.

Services for intermediate demand: Prices for services for intermediate demand fell 0.2 percent in October after inching up 0.1 percent in September. Leading the decline, the index for services less trade, transportation, and warehousing for intermediate demand decreased 0.5 percent. Prices for transportation and warehousing services for intermediate demand edged down 0.1 percent. Conversely, margins for trade services for intermediate demand climbed 0.8 percent. For the 12 months ended in October, the index for services for intermediate demand advanced 1.6 percent, the smallest increase since rising 1.3 percent in the 12 months ended August 2016.

Product detail: Leading the October decline in the index for services for intermediate demand, prices for securities brokerage, dealing, investment advice, and related services dropped 8.4 percent. The indexes for business loans (partial); television advertising time sales; building materials, paint, and hardware wholesaling; portfolio management; and arrangement of freight and cargo transportation also moved lower. In contrast, margins for metals, minerals, and ores wholesaling increased 4.7 percent. Prices for staffing services and for courier, messenger, and U.S. postal services also rose.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: Prices for stage 4 intermediate demand rose 0.1 percent in October following no change in September. In October, the index for total goods inputs to stage 4 intermediate demand advanced 0.4 percent. Conversely, prices for total services inputs inched down 0.1 percent. (See table D.) Increases in the indexes for gasoline; staffing services; food wholesaling; diesel fuel; and metals, minerals, and ores wholesaling outweighed declines in the indexes for securities brokerage, dealing, investment advice, and related services; portfolio management; building materials, paint, and hardware wholesaling; and steel mill products. (See table 6.) For the 12 months ended in October, prices for stage 4 intermediate demand moved up 0.8 percent.

Stage 3 intermediate demand: Prices for stage 3 intermediate demand increased 0.9 percent in October after five consecutive decreases. In October, the index for total goods inputs to stage 3 intermediate demand jumped 1.7 percent. In contrast, prices for total services inputs edged down 0.1 percent. Advances in the indexes for slaughter steers and heifers, gasoline, slaughter poultry, basic organic chemicals, food wholesaling, and jet fuel outweighed falling prices for securities brokerage, dealing, investment advice, and related services; steel mill products; and arrangement of freight and cargo transportation. For the 12 months ended in October, the index for stage 3 intermediate demand declined 1.9 percent, the largest decrease since moving down 2.0 percent for the 12 months ended September 2016.

Stage 2 intermediate demand: The index for stage 2 intermediate demand fell 0.5 percent in October, the third straight decline. In October, prices for total goods inputs to stage 2 intermediate demand decreased 0.6 percent, and the index for total services inputs moved down 0.4 percent. Lower prices for crude petroleum; securities brokerage, dealing, investment advice, and related services; cable network advertising time sales; steel mill products; portfolio management; and iron and steel scrap outweighed increases in the indexes for gas fuels; staffing services; and hay, hayseeds, and oilseeds. For the 12 months ended in October, prices for stage 2 intermediate demand decreased 5.3 percent, the largest drop since falling 8.3 percent for the 12 months ended December 2015.

Stage 1 intermediate demand: Prices for stage 1 intermediate demand advanced 0.2 percent in October following two consecutive declines. In October, the index for total goods inputs to stage 1 intermediate demand rose 0.5 percent. Conversely, prices for total services inputs fell 0.2 percent. Increases in the indexes for basic organic chemicals; diesel fuel; metals, minerals, and ores wholesaling; corn; gasoline; and gas fuels outweighed falling prices for securities brokerage, dealing, investment advice, and related services; iron and steel scrap; and crude petroleum. For the 12 months ended in October, the index for stage 1 intermediate demand declined 4.6 percent, the largest decrease since moving down 5.2 percent for the 12 months ended March 2016.

Resampling of Industries

Effective with the release of data for October 2019, the Producer Price Index (PPI) includes data for 18 resampled industries classified according to the 2017 North American Industry Classification System (NAICS). The Bureau of Labor Statistics periodically updates the sample of producers providing data for the PPI to reflect current conditions more accurately when the structure, membership, technology, or product mix of an industry shifts. The first results of this systematic process were published in July 1986. Subsequent efforts have been completed at regular intervals.

For information on index additions, deletions, and recodes effective October 2019, see the current issue of the PPI Detailed Report online at www.bls.gov/ppi/ppidr201910.pdf, or contact the PPI Section of Index Analysis and Public Information at ppi-info@bls.gov or (202) 691- 7705.

NAICS Code Industry 311919 Other snack food manufacturing 312113 Ice manufacturing 313220 Narrow fabric mills and schiffli embroidery 313230 Nonwoven fabric mills 321920 Wood container and pallet manufacturing 323113 Commercial screen printing 326199 All other plastics product manufacturing 332710 Machine shops 332911 Industrial valve manufacturing 333131 Mining machinery and equipment manufacturing 335110 Electric lamp bulb and part manufacturing 335991 Carbon and graphite product manufacturing 337127 Institutional furniture manufacturing 515110 Radio broadcasting 541310 Architectural services 541330 Engineering services 622210 Psychiatric and substance abuse hospitals 622310 Other specialty hospitals

Recalculated Seasonal Adjustment Factors and Relative Importance Figures to be Available on February 14, 2020

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 14, 2020 (2 workdays prior to the release of PPI data for January 2020 on February 19, 2020):

* Direct seasonal factors for PPI commodity indexes for the year 2020, * Recalculated seasonal factors for the last 5 years (2015-2019) for PPI commodity indexes, * Recalculated seasonal factors for the last 5 years (2015-2019) for PPI Final Demand- Intermediate Demand indexes, * Recalculated seasonal index data for the last 5 years (2015-2019) 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 2019, will be available on February 14, 2020:

* 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.