September 2020 Producer Price Index

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The Producer Price Index for final demand advanced 0.4 percent in September, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.3 percent in August and 0.6 percent in July. (See table A). On an unadjusted basis, the final demand index increased 0.4 percent for the 12 months ended in September, the first advance since moving up 0.3 percent for the 12 months ended in March.

In September, nearly two-thirds of the rise in prices for final demand is attributable to a 0.4- percent increase in the index for final demand services. Prices for final demand goods also moved up 0.4 percent.

The index for final demand less foods, energy, and trade services advanced 0.4 percent in September, the largest increase since rising 0.4 percent in April 2019. For the 12 months ended in September, prices for final demand less foods, energy, and trade services moved up 0.7 percent, the largest advance since increasing 1.0 percent for the 12 months ended in March.

Final Demand

Final demand services: The index for final demand services rose 0.4 percent in September, the third consecutive advance. Over 80 percent of the broad-based September increase can be traced to prices for final demand services less trade, transportation, and warehousing, which climbed 0.5 percent. The indexes for final demand trade services and for final demand transportation and warehousing services also moved higher, rising 0.2 percent and 0.4 percent, respectively. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: A 3.9-percent advance in the index for traveler accommodation services was a major factor in the September rise in prices for final demand services. The indexes for hardware, building materials, and supplies retailing; fuels and lubricants retailing; transportation of passengers (partial); food wholesaling; and hospital inpatient care also moved higher. In contrast, the index for food retailing fell 3.2 percent. Prices for truck transportation of freight and deposit services (partial) also decreased. (See table 4.)

Final demand goods: The index for final demand goods increased 0.4 percent in September, the fifth consecutive rise. Nearly two-thirds of the September advance is attributable to prices for final demand goods less foods and energy, which climbed 0.4 percent. The index for final demand foods jumped 1.2 percent. Conversely, prices for final demand energy declined 0.3 percent.

Product detail: A 14.7-percent rise in prices for iron and steel scrap was a major factor in the September advance in the index for final demand goods. Prices for fresh and dry vegetables, residential electric power, corn, beef and veal, and oilseeds also moved higher. In contrast, the gasoline index fell 2.8 percent. Prices for natural, processed, and imitation cheese and for household refrigeration equipment also decreased.

Intermediate Demand by Commodity Type

Within intermediate demand in September, prices for processed goods rose 1.0 percent, the index for unprocessed goods increased 3.9 percent, and prices for services advanced 1.0 percent. (See tables B and C.)

Processed goods for intermediate demand: The index for processed goods for intermediate demand rose 1.0 percent in September, the fourth consecutive increase. Most of the September advance can be traced to prices for processed materials less foods and energy, which climbed 1.3 percent. The index for processed energy goods moved up 0.2 percent. Prices for processed foods and feeds were unchanged. For the 12 months ended in September, the index for processed goods for intermediate demand decreased 1.5 percent.

Product detail: One-fourth of the September increase in prices for processed goods for intermediate demand is attributable to the index for lumber, which jumped 21.4 percent. Prices for primary basic organic chemicals, electric power, utility natural gas, particleboard and fiberboard, and prepared animal feeds also advanced. Conversely, the index for diesel fuel declined 4.9 percent. Prices for natural, processed, and imitation cheese and for cyclic intermediate chemicals and dyes also fell. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand climbed 3.9 percent in September following a 7.0-percent increase in August. Nearly 60 percent of the September advance can be traced to a 5.6-percent rise in prices for unprocessed foodstuffs and feedstuffs. The index for unprocessed nonfood materials less energy jumped 7.2 percent. In contrast, the index for unprocessed energy materials decreased 0.7 percent. For the 12 months ended in September, prices for unprocessed goods for intermediate demand fell 5.4 percent.

Product detail: One-third of the September increase in the index for unprocessed goods for intermediate demand can be attributed to a 55.9-percent jump in prices for slaughter barrows and gilts. The indexes for natural gas, corn, oilseeds, iron and steel, and nonferrous metal ores also moved higher. Conversely, prices for crude petroleum decreased 9.8 percent. The indexes for raw milk and high grade recyclable paper also fell.

Services for intermediate demand: Prices for services for intermediate demand rose 1.0 percent in September, the largest increase since a 1.0-percent jump in January 2016. Almost half of the broad- based September advance can be traced to the index for services less trade, transportation, and warehousing for intermediate demand, which climbed 0.6 percent. Margins for trade services for intermediate demand moved up 2.1 percent, and the index for transportation and warehousing services for intermediate demand rose 0.9 percent. For the 12 months ended in September, prices for services for intermediate demand increased 0.3 percent, the first advance since climbing 1.1 percent in March.

Product detail: A major factor in the September advance in prices for services for intermediate demand was the index for gross rents for retail properties, which increased 7.9 percent. The indexes for hardware, building materials, and supplies retailing; investment banking; securities brokerage, dealing, investment advice, and related services; loan services (partial); and arrangement of freight and cargo transportation also rose. Conversely, prices for cable network advertising time sales fell 12.7 percent. The indexes for metals, minerals, and ores wholesaling and for truck transportation of freight also decreased.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: Prices for stage 4 intermediate demand advanced 1.0 percent in September, the fifth consecutive increase. In September, prices for total services inputs to stage 4 intermediate demand climbed 1.2 percent, and the index for total goods inputs moved up 0.8 percent. (See table D.) Increases in the indexes for hardware, building materials, and supplies retailing; gross rents for retail properties; lumber; machinery and equipment parts and supplies wholesaling; portfolio management; and loan services (partial) outweighed falling prices for diesel fuel; natural, processed, and imitation cheese; and temporary help services. (See table 6.) For the 12 months ended in September, the index for stage 4 intermediate demand increased 0.9 percent, the first advance since a 0.2-percent rise for the 12 months ended in March.

Stage 3 intermediate demand: Prices for stage 3 intermediate demand rose 1.1 percent in September, the fifth consecutive increase. In September, the index for total services inputs to stage 3 intermediate demand climbed 1.0 percent, and prices for total goods inputs moved up 0.9 percent. Advances in the indexes for arrangement of freight and cargo transportation, slaughter barrows and gilts, primary basic organic chemicals, gross rents for retail properties, machinery and equipment parts and supplies wholesaling, and investment banking outweighed declines in the indexes for raw milk; gasoline; and metals, minerals, and ores wholesaling. For the 12 months ended in September, prices for stage 3 intermediate demand dropped 2.4 percent.

Stage 2 intermediate demand: Prices for stage 2 intermediate demand increased 1.0 percent in September after rising 1.8 percent in August. In September, the index for total goods inputs to stage 2 intermediate demand advanced 1.8 percent, and prices for total services inputs moved up 0.4 percent. Increases in the indexes for natural gas; oilseeds; hardware, building materials, and supplies retailing; lumber; corn; and investment banking outweighed falling prices for crude petroleum, cable network advertising time sales, and temporary help services. For the 12 months ended in September, the index for stage 2 intermediate demand declined 2.8 percent.

Stage 1 intermediate demand: Prices for stage 1 intermediate demand advanced 1.8 percent in September, the fourth consecutive increase. In September, the index for total goods inputs to stage 1 intermediate demand rose 2.3 percent, and prices for total services inputs moved up 1.3 percent. Increases in the indexes for iron and steel scrap; primary basic organic chemicals; corn; hardware, building materials, and supplies retailing; nonferrous scrap; and gross rents for retail properties outweighed decreases in the indexes for diesel fuel; metals, minerals, and ores wholesaling; and crude petroleum. For the 12 months ended in September, prices for stage 1 intermediate demand declined 1.3 percent.