November 2020 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 advanced 0.1 percent in November, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.3 percent in October and 0.4 percent in September. (See table A.) On an unadjusted basis, the final demand index increased 0.8 percent for the 12 months ended in November, the largest advance since moving up 1.1 percent for the 12 months ended in February.

In November, the rise in the final demand index can be traced to a 0.4-percent increase in prices for final demand goods. The index for final demand services was unchanged.

The index for final demand less foods, energy, and trade services advanced 0.1 percent in November, the seventh consecutive increase. For the 12 months ended in November, prices for final demand less foods, energy, and trade services moved up 0.9 percent, the largest rise since a 1.0-percent increase for the 12 months ended in March.

Final Demand

Final demand goods: The index for final demand goods rose 0.4 percent in November, the seventh consecutive advance. Nearly half of the broad-based November increase can be traced to prices for final demand energy, which moved up 1.2 percent. The indexes for final demand goods less foods and energy and for final demand foods rose 0.2 percent and 0.5 percent, respectively.

Product detail: In November, a major factor in the increase in prices for final demand goods was the index for diesel fuel, which advanced 8.4 percent. Prices for meats, processed young chickens, residential electric power, residential natural gas, and tobacco products also moved higher. In contrast, the gasoline index fell 1.9 percent. Prices for fresh fruits and melons and for pharmaceutical preparations also decreased. (See table 4.)

Final demand services: The index for final demand services was unchanged in November after advancing 0.2 percent in October. In November, prices for final demand services less trade, transportation, and warehousing climbed 0.2 percent. Conversely, the indexes for final demand trade services and for final demand transportation and warehousing services decreased 0.3 percent and 0.9 percent, respectively. (Trade indexes measure changes in margins received by wholesalers and retailers.)

Product detail: In November, prices for outpatient care (partial) increased 0.4 percent. The indexes for apparel, jewelry, footwear, and accessories retailing; machinery and equipment parts and supplies wholesaling; truck transportation of freight; and chemicals and allied products wholesaling also moved higher. In contrast, margins for machinery and vehicle wholesaling fell 7.6 percent. The indexes for transportation of passengers (partial); fuels and lubricants retailing; hardware, building materials, and supplies retailing; and securities brokerage, dealing, and investment advice also decreased.

Intermediate Demand by Commodity Type

Within intermediate demand in November, prices for processed goods advanced 1.4 percent, the index for unprocessed goods jumped 7.3 percent, and prices for services edged down 0.1 percent. (See tables B and C.)

Processed goods for intermediate demand: The index for processed goods for intermediate demand rose 1.4 percent in November, the largest increase since moving up 1.4 percent in July. Three-quarters of the broad-based November advance can be traced to prices for processed energy goods, which jumped 6.0 percent. The indexes for processed foods and feeds and for processed materials less foods and energy moved up 2.8 percent and 0.1 percent, respectively. For the 12 months ended in November, prices for processed goods for intermediate demand fell 0.3 percent.

Product detail: One-third of the November increase in prices for processed goods for intermediate demand is attributable to the index for utility natural gas, which jumped 22.6 percent. Prices for diesel fuel, steel mill products, meats, residual fuels, and ethanol also moved higher. Conversely, the index for softwood lumber fell 17.8 percent. Prices for gasoline and lubricating oil base stocks also declined. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand climbed 7.3 percent in November, the largest increase since rising 8.6 percent in May. Nearly 70 percent of the broad-based November advance can be traced to a 16.5-percent jump in prices for unprocessed energy materials. The indexes for unprocessed foodstuffs and feedstuffs and for unprocessed nonfood materials less energy rose 3.9 percent and 2.3 percent, respectively. For the 12 months ended in November, prices for unprocessed goods for intermediate demand moved up 0.6 percent, the first advance since increasing 3.7 percent for the 12 months ended December 2018.

Product detail: Two-thirds of the November increase in the index for unprocessed goods for intermediate demand can be attributed to a 48.9-percent jump in prices for natural gas. The indexes for raw milk; hay, hayseeds, and oilseeds; grains; slaughter chickens; and nonferrous metals also moved higher. In contrast, prices for avocados fell 31.3 percent. The indexes for slaughter steers and heifers and for high grade recyclable paper also declined.

Services for intermediate demand: The index for services for intermediate demand edged down 0.1 percent in November, the first decline since falling 0.3 percent in May. The November decrease is attributable to prices for transportation and warehousing services for intermediate demand, which moved down 0.5 percent. Conversely, margins for trade services for intermediate demand advanced 0.4 percent. Prices for services less trade, transportation, and warehousing for intermediate demand were unchanged. For the 12 months ended in November, the index for services for intermediate demand rose 1.6 percent.

Product detail: A 6.9-percent drop in the index for transportation of passengers (partial) was a major factor in the decline in prices for services for intermediate demand. The indexes for hardware, building materials, and supplies retailing; securities brokerage, dealing, and investment advice; arrangement of freight and cargo transportation; and staffing services also moved lower. In contrast, margins for machinery and equipment parts and supplies wholesaling increased 4.4 percent. The indexes for gross rents for office buildings, chemicals and allied products wholesaling, and truck transportation of freight also advanced.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: Prices for stage 4 intermediate demand advanced 0.3 percent in November, the seventh consecutive increase. In November, the index for total goods inputs to stage 4 intermediate demand rose 0.4 percent, and prices for total services inputs moved up 0.3 percent. (See table D.) Advances in the indexes for diesel fuel; machinery and equipment parts and supplies wholesaling; gross rents for office buildings; chemicals and allied products wholesaling; meats; and natural, processed, and imitation cheese outweighed decreases in the indexes for hardware, building materials, and supplies retailing; softwood lumber; and building materials, paint, and hardware wholesaling. (See table 6.) For the 12 months ended in November, prices for stage 4 intermediate demand climbed 1.8 percent, the largest increase since rising 2.0 percent for the 12 months ended May 2019.

Stage 3 intermediate demand: Prices for stage 3 intermediate demand rose 0.9 percent in November, after advancing 0.4 percent in October. In November, the index for total goods inputs to stage 3 intermediate demand climbed 1.7 percent, and prices for total services inputs moved up 0.2 percent. Increases in the indexes for raw milk, machinery and equipment parts and supplies wholesaling, slaughter chickens, diesel fuel, steel mill products, and gross rents for office buildings outweighed falling prices for arrangement of freight and cargo transportation, slaughter steers and heifers, and slaughter barrows and gilts. For the 12 months ended in November, the index for stage 3 intermediate demand decreased 1.6 percent.

Stage 2 intermediate demand: The index for stage 2 intermediate demand increased 2.0 percent in November, the largest advance since climbing 2.0 percent in December 2016. In November, prices for total goods inputs to stage 2 intermediate demand jumped 5.7 percent. Conversely, the index for total services inputs declined 0.3 percent. Rising prices for gas fuels; hay, hayseeds, and oilseeds; utility natural gas; prepared animal feeds; steel mill products; and investment banking outweighed decreases in the indexes for transportation of passengers (partial), softwood lumber, and staffing services. For the 12 months ended in November, prices for stage 2 intermediate demand moved up 0.2 percent, the first increase since advancing 0.4 percent for the 12 months ended March 2019.

Stage 1 intermediate demand: Prices for stage 1 intermediate demand moved up 1.1 percent in November, the sixth consecutive rise. In November, the index for total goods inputs to stage 1 intermediate demand increased 2.0 percent. In contrast, prices for total services inputs declined 0.2 percent. Advances in the indexes for diesel fuel, gas fuels, machinery and equipment parts and supplies wholesaling, grains, ethanol, and chemicals and allied products wholesaling outweighed decreases in the indexes for transportation of passengers (partial); hardware, building materials, and supplies retailing; and softwood lumber. For the 12 months ended in November, prices for stage 1 intermediate demand moved up 0.3 percent, the first advance since rising 0.6 percent for the 12 months ended April 2019.

Recalculated Seasonal Adjustment Factors and Relative Importance Figures to be Available on February 12, 2021

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 12, 2021 (2 workdays prior to the release of PPI data for January 2021 on February 17, 2021):

* Direct seasonal factors for PPI commodity indexes for the year 2021, * Recalculated seasonal factors for the last 5 years (2016-2020) for PPI commodity indexes, * Recalculated seasonal factors for the last 5 years (2016-2020) for PPI Final Demand- Intermediate Demand indexes, * Recalculated seasonal index data for the last 5 years (2016-2020) 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 2020, will be available on February 12, 2021:

* 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.

PPI Updates Commodity Weight Allocations for the Final Demand-Intermediate Demand Aggregation Structure

Effective with the release of data for January 2021 on February 17, 2021, the Bureau of Labor Statistics will update the weight allocations used to calculate the Producer Price Index (PPI) Final Demand-Intermediate Demand (FD-ID) indexes to more accurately reflect recent sales patterns. While PPI commodity index weights will continue to be based on shipment values from the 2012 economic census, the proportions of these weights allocated to the various FD-ID categories will change. The new allocations will be based primarily on data from the 2012 Input- Output Accounts produced by the Bureau of Economic Analysis.

It is important to note that the allocation update will not change the PPI commodity classification system, reference base, the FD-ID aggregation structure, or historical index data. It may, however, result in substantial shifts in the relative importance figures of certain commodity components that make up the FD-ID indexes.

Relative importance figure tables for December 2020, which reflect the shift from 2007 to 2012 input-output relationships, will be available on February 12, 2021 on the BLS website at www.bls.gov/ppi. This information also may be requested from the PPI Section of Index Analysis and Public Information through e-mail to ppi-info@bls.gov or by calling (202) 691- 7705. For more information about this update, contact Jonathan Weinhagen at weinhagen.jonathan@bls.gov or (202) 691-7709.