Producer Price Indexes - October 2021

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8:30 a.m. (ET), Tuesday, November 9, 2021

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USDL 21-1972

PRODUCER PRICE INDEXES ? OCTOBER 2021

The Producer Price Index for final demand increased 0.6 percent in October, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices moved up 0.5 percent in September and 0.7 percent in August. (See table A.) On an unadjusted basis, the final demand index rose 8.6 percent for the 12 months ended in October.

Over 60 percent of the October increase in the index for final demand can be traced to a 1.2-percent rise in prices for final demand goods. The index for final demand services moved up 0.2 percent, and prices for final demand construction advanced 6.6 percent.

Prices for final demand less foods, energy, and trade services moved up 0.4 percent in October after increasing 0.1 percent in September. For the 12 months ended in October, the index for final demand less foods, energy, and trade services rose 6.2 percent.

Chart 1. One-month percent changes in selected PPI final demand price indexes, seasonally adjusted

Percent change 2.0

1.5

1.0

0.5

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-0.5

Oct'20 Nov

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Feb

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Apr

May

June

July

Aug

Sep

Final demand

Final demand goods

Final demand services

Chart 2. Twelve-month percent changes in selected PPI final demand price indexes, not seasonally adjusted

Percent change 15.0

Oct'21

12.0

9.0

6.0

3.0

0.0

-3.0

Oct'20 Nov

Dec

Jan

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Apr

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June

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Aug

Sep Oct'21

Final demand

Final demand goods

Final demand services

Final Demand Final demand goods: The index for final demand goods moved up 1.2 percent in October following a 1.3percent increase in September. In October, three-quarters of the advance can be attributed to a 4.8-percent jump in prices for final demand energy. The index for final demand goods less foods and energy moved up 0.5 percent. Conversely, prices for final demand foods decreased 0.1 percent. Product detail: One-third of the October advance in the index for final demand goods can be traced to prices for gasoline, which rose 6.7 percent. The indexes for diesel fuel, fresh and dry vegetables, gas fuels, jet fuel, and plastic resins and materials also moved higher. In contrast, prices for beef and veal decreased 10.3 percent. The indexes for light motor trucks and for residential electric power also fell. (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 2022 Model Vehicles at web/ppi/ppimotveh.htm.) Final demand services: Prices for final demand services moved up 0.2 percent in October, the tenth consecutive advance. Nearly two-thirds of the increase in October can be attributed to the index for final demand trade services, which rose 0.4 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand transportation and warehousing services advanced 1.7 percent. Conversely, the index for final demand services less trade, transportation, and warehousing fell 0.1 percent. Product detail: Over 80 percent of the October increase in prices for final demand services can be traced to margins for automobiles and automobile parts retailing, which rose 8.9 percent. The indexes for apparel, footwear, and accessories retailing; truck transportation of freight; food and alcohol retailing; hospital outpatient care; and machinery and equipment parts and supplies wholesaling also moved up. In contrast, prices for securities brokerage, dealing, investment advice, and related services fell 6.6 percent. The indexes for fuels and lubricants retailing and for portfolio management also declined. (See table 4.)

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Intermediate Demand by Commodity Type Within intermediate demand in October, prices for processed goods moved up 2.1 percent, the index for unprocessed goods increased 8.4 percent, and prices for services rose 0.2 percent. (See tables B and C.) Processed goods for intermediate demand: The index for processed goods for intermediate demand advanced 2.1 percent in October, the largest rise since climbing 2.9 percent in May. About two-thirds of the October increase can be traced to prices for processed energy goods, which moved up 7.3 percent. The index for processed materials less foods and energy rose 1.1 percent. Conversely, prices for processed foods and feeds fell 0.9 percent. For the 12 months ended in October, the index for processed goods for intermediate demand advanced 25.4 percent, the largest 12-month increase since jumping 26.3 percent in January 1975. Product detail: Nearly 30 percent of the October increase in the index for processed goods for intermediate demand can be attributed to a 14.2-percent rise in prices for diesel fuel. The indexes for utility natural gas, cold rolled steel sheet and strip, gasoline, jet fuel, and hot rolled steel sheet and strip also moved higher. In contrast, prices for beef and veal fell 10.3 percent. The indexes for primary basic organic chemicals and for commercial electric power also decreased. (See table 5.) Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand rose 8.4 percent in October, the seventh consecutive increase. Leading the advance in October, prices for unprocessed energy materials jumped 23.3 percent. The index for unprocessed nonfood materials less energy moved up 1.1 percent. Conversely, prices for unprocessed foodstuffs and feedstuffs fell 3.8 percent. For the 12 months ended in October, the index for unprocessed goods for intermediate demand surged 56.6 percent. Product detail: In October, nearly three-fourths of the rise in prices for unprocessed goods for intermediate demand can be traced to a 33.7-percent jump in the index for natural gas. Prices for crude petroleum, recyclable paper, raw cotton, coal, and fresh vegetables (except potatoes) also moved higher. In contrast, the index for corn decreased 7.6 percent. Prices for slaughter hogs and for hides and skins also declined.

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Services for intermediate demand: The index for services for intermediate demand moved up 0.2 percent in October, the eleventh consecutive advance. Over three-fourths of the October increase can be attributed to a 0.7-percent rise in margins for trade services for intermediate demand. The index for transportation and warehousing services for intermediate demand climbed 0.8 percent. Conversely, prices for services less trade, transportation, and warehousing for intermediate demand edged down 0.1 percent. For the 12 months ended in October, the index for services for intermediate demand advanced 7.4 percent.

Product detail: Over half of the October rise in prices for services for intermediate demand can be traced to a 1.7-percent advance in margins for machinery and equipment parts and supplies wholesaling. The indexes for building materials, paint, and hardware wholesaling; staffing services; business loans (partial); truck transportation of freight; and paper and plastics products wholesaling also increased. In contrast, prices for securities brokerage, dealing, investment advice and related services fell 6.6 percent. The indexes for fuels and lubricants retailing and for services related to air transportation also declined.

Intermediate Demand by Production Flow Stage 4 intermediate demand: The index for stage 4 intermediate demand increased 0.7 percent in October following a 0.4-percent rise in September. In October, prices for total goods inputs to stage 4 intermediate demand advanced 1.2 percent, and the index for total services inputs inched up 0.1 percent. (See table D.) Increases in the indexes for diesel fuel; machinery and equipment parts and supplies wholesaling; gasoline; ornamental and architectural metal work; building materials, paint, and hardware wholesaling; and utility natural gas outweighed decreasing prices for securities brokerage, dealing, investment advice, and related services; portfolio management; and beef and veal. (See table 6.) For the 12 months ended in October, prices for stage 4 intermediate demand jumped 11.8 percent.

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Stage 3 intermediate demand: The index for stage 3 intermediate demand moved up 0.9 percent in October after rising 1.0 percent in September. In October, prices for total goods inputs to stage 3 intermediate demand climbed 1.1 percent, and the index for total services inputs advanced 0.6 percent. Rising prices for diesel fuel, jet fuel, cold rolled steel sheet and strip, hot rolled steel sheet and strip, plastic resins and materials, and staffing services outweighed declining indexes for slaughter hogs, primary basic organic chemicals, and services related to air transportation. For the 12 months ended in October, prices for stage 3 intermediate demand jumped 20.2 percent. Stage 2 intermediate demand: The index for stage 2 intermediate demand advanced 4.7 percent in October, the largest increase since rising 5.4 percent in February. In October, prices for total goods inputs to stage 2 intermediate demand jumped 9.8 percent, and the index for total services inputs inched up 0.1 percent. Rising prices for gas fuels, crude petroleum, business loans (partial), staffing services, paperboard, and recyclable paper outweighed falling indexes for primary basic organic chemicals, fuels and lubricants retailing, and oilseeds. For the 12 months ended in October, prices for stage 2 intermediate demand increased 27.8 percent, the largest advance since 12-month data were first calculated in November 2010. Stage 1 intermediate demand: Prices for stage 1 intermediate demand moved up 1.0 percent in October following a 0.2-percent increase in September. In October, the index for total goods inputs to stage 1 intermediate demand rose 2.1 percent. Conversely, prices for total services inputs fell 0.2 percent. Advances in the indexes for diesel fuel; utility natural gas; cold rolled steel sheet and strip; building materials, paint, and hardware wholesaling; plastic products; and ornamental and architectural metal work outweighed lower prices for securities brokerage, dealing, investment advice, and related services; primary basic organic chemicals; and internet advertising sales (excluding print publishers). For the 12 months ended in October, the index for stage 1 intermediate demand jumped 20.4 percent.

________________ The Producer Price Index for November 2021 is scheduled to be released on Tuesday, December 14, 2021 at 8:30 a.m. (ET).

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Resampling of Industries

Effective with the release of data for October 2021, the Producer Price Index (PPI) includes data for 11 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 2021, see the current issue of the PPI Detailed Report online at ppi/detailed-report/ppi-detailed-report-october2021.pdf, or contact the PPI Section of Index Analysis and Public Information at ppi-info@ or (202) 691-7705.

NAICS Code 313210 314994 325130 325620 332322 333912 334511 334516 339112 424400 541810

Industry Broadwoven fabric mills Rope, twine, tire cord, and tire fabric mills Synthetic dye and pigment manufacturing Toilet preparation manufacturing Sheet metal work manufacturing Air and gas compressor manufacturing Search, detection, and navigation instrument manufacturing Analytical laboratory instrument manufacturing Surgical and medical instrument manufacturing Grocery and related product merchant wholesalers Advertising agencies

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PPI to Publish Interim Index Values and Publish All Indexes to 3 Decimal Places

Effective with the release of November 2021 Producer Price Index (PPI) data, on December 14, 2021, the Bureau of Labor Statistics will publish interim index values for all preliminary PPI data, starting with values for August through October 2021. Within PPI, interim indexes are defined as recalculated indexes for the 3 months between the initial publication and final revision of PPI data. With this modification, data within the 3-month interim revision period will be updated and published on a monthly basis. This replaces the current policy of only publishing revised data once, when the data have been finalized 4 months after original publication. PPI data will continue to be finalized 4 months after initial publication.

The publication of interim index values will allow for greater transparency regarding PPI revisions, and will align PPI official index publication with Bureau of Economic Analysis use of PPI interim index data as an input to Gross Domestic Product calculations.

In addition, effective with the November 2021 data release in December 2021, the PPI will begin publishing index values to 3 decimal places of precision, starting with finalized data for July 2021. The publication of index levels to 3 decimal places will allow data users greater precision in percent change calculations. Published PPI percent change calculations will continue to be rounded to one decimal place. The change to 3 decimal precision for indexes will apply to all PPI data: Industry, Commodity, FD-ID, and Input indexes.

This change to the level of published precision will impact only the presentation of index numbers. Index values will continue to be calculated from underlying price information in the same manner as in the past, and no systematic upward or downward effect on the data will be introduced. With the implementation of this change, official PPI data prior to July 2021 will not be revised to reflect greater precision.

As a result of the publication of interim index values and index data to 3 decimal places of precision, effective with the publication of November 2021 PPI data in December 2021, PPI will introduce redesigned publication tables for both the PPI News Release and the PPI Detailed Report. For further information on these publication table changes see: ppi/notices/2021/ppi-to-publishinterim-index-values-to-3-decimal-places.htm, or contact the PPI Section of Index Analysis and Public Information at ppi-info@ or (202) 691-7705.

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Recalculated Seasonal Adjustment Factors and Relative Importance Figures to be Available on February 11, 2022

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 11, 2022 (2 workdays prior to the release of PPI data for January 2022 on February 15, 2022): Direct seasonal factors for PPI commodity indexes for the year 2022, Recalculated seasonal factors for the last 5 years (2017-2021) for PPI commodity indexes, Recalculated seasonal factors for the last 5 years (2017-2021) for PPI Final Demand-Intermediate

Demand indexes, Recalculated seasonal index data for the last 5 years (2017-2021) 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 2021, will be available on February 11, 2022: 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 ppi or by contacting the PPI Section of Index Analysis and Public Information at ppi-info@ or (202) 691-7705.

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