May 2020 Producer Price Index

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The Producer Price Index for final demand rose 0.4 percent in May, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This increase followed declines of 1.3 percent in April and 0.2 percent in March. (See table A.) On an unadjusted basis, the final demand index decreased 0.8 percent for the 12 months ended in May.

In May, the advance in the final demand index is attributable to prices for final demand goods, which climbed 1.6 percent. In contrast, the index for final demand services fell 0.2 percent.

Prices for final demand less foods, energy, and trade services edged up 0.1 percent in May, following three consecutive declines. For the 12 months ended in May, the index for final demand less foods, energy, and trade services moved down 0.4 percent, the largest 12-month decrease since the index began in August 2013.

Final Demand

Final demand goods: The index for final demand goods rose 1.6 percent in May, the largest increase since the index began in November 2009. Nearly two-thirds of the advance can be traced to prices for final demand foods, which increased 6.0 percent. The index for final demand energy climbed 4.5 percent, while prices for goods less foods and energy were unchanged.

Product detail: Two-thirds of the May increase in the index for final demand goods is attributable to a 40.4-percent jump in meat prices. The indexes for gasoline, processed young chickens, light motor trucks, liquefied petroleum gas, and carbon steel scrap also moved higher. Conversely, prices for chicken eggs fell 41.2 percent. The indexes for diesel fuel and for plastic resins and materials also decreased. (See table 4.)

Final demand services: The index for final demand services fell 0.2 percent in May, the same as in April. The May decrease can be attributed to margins for final demand trade services, which declined 0.8 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) In contrast, prices for final demand transportation and warehousing services advanced 1.5 percent. The index for final demand services less trade, transportation, and warehousing was unchanged.

Product detail: Leading the May decline in the index for final demand services, margins for fuels and lubricants retailing dropped 13.1 percent. The indexes for loan services (partial); securities brokerage, dealing, investment advice, and related services; truck transportation of freight; machinery and vehicle wholesaling; and automobile and automobile parts retailing also moved lower. Conversely, prices for transportation of passengers (partial) rose 12.2 percent. The indexes for dental care and apparel, jewelry, footwear, and accessories retailing also increased.

Intermediate Demand by Commodity Type

Within intermediate demand in May, prices for processed goods rose 0.1 percent, the index for unprocessed goods increased 8.9 percent, and prices for services fell 0.4 percent. (See tables B and C.)

Processed goods for intermediate demand: The index for processed goods for intermediate demand moved up 0.1 percent in May after five consecutive declines. Leading the increase, prices for processed foods and feeds climbed 6.4 percent. The index for processed energy goods rose 0.1 percent. In contrast, prices for processed materials less foods and energy decreased 0.6 percent. For the 12 months ended in May, the index for processed goods for intermediate demand dropped 6.8 percent.

Product Detail: The index for processed young chickens rose 14.4 percent. Prices for meats, gasoline, lubricating oil base stocks, and softwood lumber (not edge worked) also advanced. Conversely, the index for basic organic chemicals declined 5.2 percent. Prices for diesel fuel, steel mill products, and natural cheese (except cottage cheese) also fell.

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand rose 8.9 percent in May, the largest advance since a 9.0-percent increase in February 2007. Three-fourths of the broad-based increase in May can be traced to a 26.5-percent jump in prices for unprocessed energy materials. The indexes for unprocessed foodstuffs and feedstuffs and for unprocessed nonfood materials less energy moved up 4.5 percent and 0.6 percent, respectively. For the 12 months ended in May, prices for unprocessed goods for intermediate demand dropped 19.4 percent.

Product Detail: Over one-third of the May increase in the index for unprocessed goods for intermediate demand can be traced to a 36.5-percent jump in prices for natural gas. The indexes for crude petroleum, slaughter chickens, slaughter barrows and gilts, slaughter steers and heifers, and carbon steel scrap also rose. In contrast, the index for raw milk dropped 22.4 percent. Prices for corn and aluminum base scrap also fell.

Services for intermediate demand: The index for services for intermediate demand moved down 0.4 percent in May, the fourth consecutive decline. The May decrease is attributable to prices for services less trade, transportation, and warehousing for intermediate demand, which fell 0.9 percent. Conversely, the index for trade services for intermediate demand increased 0.6 percent, and prices for transportation and warehousing services for intermediate demand moved up 0.5 percent. For the 12 months ended in May, prices for services for intermediate demand decreased 1.6 percent, the largest 12-month decline since the index began in November 2009.

Product Detail: Seventy percent of the May decrease in prices for services for intermediate demand can be traced to a 10.0-percent decline in the index for securities brokerage, dealing, investment advice, and related services. The indexes for nonresidential real estate rents, loan services (partial), broadcast and network television advertising time sales, truck transportation of freight, and fuels and lubricants retailing also declined. In contrast, margins for machinery and equipment parts and supplies wholesaling rose 1.7 percent. The indexes for portfolio management and transportation of passengers (partial) also increased.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: Prices for stage 4 intermediate demand moved up 0.2 percent in May following three consecutive declines. In May, the index for total goods inputs to stage 4 intermediate demand increased 0.5 percent. Conversely, prices for total services inputs decreased 0.2 percent. (See table D.) Advances in the indexes for beef and veal, portfolio management, gasoline, machinery and equipment parts and supplies wholesaling, transportation of passengers (partial), and staffing services outweighed falling prices for nonresidential real estate rents; diesel fuel; and securities brokerage, dealing, investment advice, and related services. (See table 6.) For the 12 months ended in May, the index for stage 4 intermediate demand decreased 1.7 percent.

Stage 3 intermediate demand: The index for stage 3 intermediate demand rose 0.3 percent in May following four consecutive decreases. In May, prices for total goods inputs to stage 3 intermediate demand moved up 1.2 percent. In contrast, the index for total services inputs fell 0.4 percent. Rising prices for gasoline, slaughter poultry, slaughter barrows and gilts, slaughter steers and heifers, machinery and equipment parts and supplies wholesaling, and beef and veal outweighed decreases in the indexes for securities brokerage, dealing, investment advice, and related services; raw milk; and diesel fuel. For the 12 months ended in May, prices for stage 3 intermediate demand declined 8.0 percent.

Stage 2 intermediate demand: The index for stage 2 intermediate demand moved up 1.9 percent in May, the largest increase since a 2.0-percent rise in December 2016. In May, prices for total goods inputs to stage 2 intermediate demand advanced 5.0 percent, and the index for total services inputs edged up 0.1 percent. Rising prices for gas fuels, crude petroleum, portfolio management, staffing services, transportation of passengers (partial), and lubricating oil base stocks outweighed decreases in the indexes for securities brokerage, dealing, investment advice, and related services; plastic resins and materials; and steel mill products. For the 12 months ended in May, prices for stage 2 intermediate demand declined 8.3 percent.

Stage 1 intermediate demand: The index for stage 1 intermediate demand fell 0.6 percent in May, the fourth consecutive decline. Prices for total goods inputs to stage 1 intermediate demand fell 0.7 percent, and the index for total services inputs decreased 0.7 percent. Declines in the indexes for diesel fuel; basic organic chemicals; loan services (partial); securities brokerage, dealing, investment advice, and related services; nonresidential real estate rents; and fuels and lubricants retailing outweighed increases in prices for transportation of passengers (partial), gasoline, and gas fuels. For the 12 months ended in May, prices for stage 1 intermediate demand fell 8.5 percent.