Producer Price Indexes - November 2019

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PRODUCER PRICE INDEXES ? NOVEMBER 2019

The Producer Price Index for final demand was unchanged in November, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices increased 0.4 percent in October and fell 0.3 percent in September. (See table A.) On an unadjusted basis, the final demand index advanced 1.1 percent for the 12 months ended in November.

In November, a 0.3-percent rise in prices for final demand goods offset a 0.3-percent decrease in the index for final demand services.

The index for final demand less foods, energy, and trade services was unchanged in November after inching up 0.1 percent in October. For the 12 months ended in November, prices for final demand less foods, energy, and trade services moved up 1.3 percent, the smallest advance since climbing 1.3 percent in the 12 months ended September 2016.

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

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

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Final Demand Final demand goods: The index for final demand goods increased 0.3 percent in November following a 0.7percent advance in October. Half of the broad-based rise in November is attributable to a 1.1-percent advance in prices for final demand foods. The indexes for final demand energy and for final demand goods less foods and energy moved up 0.6 percent and 0.2 percent, respectively. Product detail: A major factor in the increase in prices for final demand goods was the index for meats, which climbed 3.9 percent. Prices for gasoline, chicken eggs, diesel fuel, fresh and dry vegetables, and tobacco products also moved higher. In contrast, the index for residential electric power fell 0.6 percent. Prices for unprocessed finfish and industrial chemicals also declined. (See table 4.) Final demand services: The index for final demand services moved down 0.3 percent in November, the largest decrease since falling 0.3 percent in February 2017. Over two-thirds of the broad-based decline in November can be traced to margins for final demand trade services, which decreased 0.6 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand services less trade, transportation, and warehousing and for final demand transportation and warehousing services fell 0.1 percent and 0.3 percent, respectively. Product detail: Margins for food wholesaling, which dropped 5.0 percent, were a major factor in the November decline in prices for final demand services. The indexes for hospital outpatient care; machinery and vehicle wholesaling; airline passenger services; professional and commercial equipment wholesaling; and securities brokerage, dealing, investment advice, and related services also moved lower. Conversely, prices for traveler accommodation services increased 2.6 percent. The indexes for machinery and equipment parts and supplies wholesaling and for long-distance motor carrying also rose.

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Intermediate Demand by Commodity Type Within intermediate demand in November, the index for processed goods increased 0.2 percent, prices for unprocessed goods rose 3.9 percent, and the index for services edged down 0.1 percent. (See tables B and C.) Processed goods for intermediate demand: Prices for processed goods for intermediate demand moved up 0.2 percent in November following a 0.4-percent increase in October. Leading the November advance, prices for processed energy goods rose 1.3 percent. The index for processed foods and feeds increased 1.4 percent. In contrast, prices for processed materials less foods and energy declined 0.3 percent. For the 12 months ended in November, the index for processed goods for intermediate demand fell 2.9 percent, the seventh consecutive 12-month decrease. Product detail: Eighty percent of the November increase in prices for processed goods for intermediate demand can be traced to the index for diesel fuel, which rose 4.3 percent. Prices for gasoline, meats, natural gas to electric utilities, commercial electric power, and softwood lumber also moved up. Conversely, the index for industrial chemicals fell 1.4 percent. Prices for steel mill products and residual fuels also fell. (See table 5.) Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand rose 3.9 percent in November, the largest monthly increase since moving up 7.1 percent in December 2016. Leading the November advance, prices for unprocessed energy materials jumped 10.8 percent. The index for unprocessed nonfood materials less energy rose 0.3 percent. In contrast, prices for unprocessed foodstuffs and feedstuffs fell 0.2 percent. For the 12 months ended in November, the index for unprocessed goods for intermediate demand decreased 5.5 percent. Product detail: Over half of the November rise in prices for unprocessed goods for intermediate demand can be attributed to the index for natural gas, which jumped 19.5 percent. Prices for crude petroleum, carbon steel scrap, ungraded chicken eggs, slaughter steers and heifers, and wheat also increased. Conversely, the index for corn declined 3.9 percent. Prices for coal and aluminum base scrap also fell.

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Services for intermediate demand: Prices for services for intermediate demand edged down 0.1 percent in November after falling 0.2 percent in October. The November decrease was the result of a 0.2-percent decline in margins for trade services for intermediate demand. In contrast, the index for transportation and warehousing services for intermediate demand inched up 0.1 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 advanced 1.4 percent, the smallest 12-month increase since a 1.3-percent rise in August 2016. Product detail: A major factor in the November decrease in prices for services for intermediate demand was the index for metals, minerals, and ores wholesaling, which fell 2.7 percent. The indexes for securities brokerage, dealing, investment advice, and related services; food wholesaling; loan services (partial); and airline passenger services also moved lower. Conversely, prices for water transportation of freight increased 2.9 percent. The indexes for machinery and equipment parts and supplies wholesaling; portfolio management; and accounting services (partial) also rose.

Intermediate Demand by Production Flow Stage 4 intermediate demand: Prices for stage 4 intermediate demand advanced 0.2 percent in November after edging up 0.1 percent in October. In November, prices for total goods inputs to stage 4 intermediate demand rose 0.1 percent, while the index for total services inputs was unchanged. (See table D.) Increases in the indexes for diesel fuel, machinery and equipment parts and supplies wholesaling, portfolio management, meats, gross rents of retail properties, and accounting services (partial) outweighed declines in the indexes for food wholesaling; securities brokerage, dealing, investment advice, and related services; and avocados. (See table 6.) For the 12 months ended in November, prices for stage 4 intermediate demand increased 1.1 percent.

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Stage 3 intermediate demand: The index for stage 3 intermediate demand was unchanged in November following a 0.9-percent rise in October. In November, prices for total goods inputs to stage 3 intermediate demand edged up 0.1 percent, offsetting a 0.1-percent decrease in the index for total services inputs. Increases in the indexes for ungraded chicken eggs, gasoline, machinery and equipment parts and supplies wholesaling, slaughter steers and heifers, and diesel fuel offset declines in the indexes for food wholesaling; slaughter chickens; securities brokerage, dealing, investment advice, and related services; raw milk; and industrial chemicals. For the 12 months ended in November, prices for stage 3 intermediate demand fell 1.1 percent. Stage 2 intermediate demand: Prices for stage 2 intermediate demand moved up 1.3 percent in November following three consecutive declines. In November, the index for total goods inputs to stage 2 intermediate demand rose 3.3 percent, and prices for total services inputs edged up 0.1 percent. Higher prices for gas fuels, crude petroleum, accounting services (partial), portfolio management, television advertising time sales, and traveler accommodation services outweighed decreases in the indexes for securities brokerage, dealing, investment advice, and related services; hot rolled steel sheet and strip; and airline passenger services. For the 12 months ended in November, prices for stage 2 intermediate demand moved down 2.5 percent. Stage 1 intermediate demand: The index for stage 1 intermediate demand advanced 0.2 percent in November, the same as October. In November, prices for total goods inputs to stage 1 intermediate demand increased 0.6 percent. In contrast, the index for total services inputs declined 0.4 percent. Advances in the indexes for diesel fuel, carbon steel scrap, gas fuels, crude petroleum, machinery and equipment parts and supplies wholesaling, and traveler accommodation services outweighed declining prices for loan services (partial), industrial chemicals; and securities brokerage, dealing, investment advice, and related services. For the 12 months ended in November, the index for stage 1 intermediate demand decreased 3.9 percent.

________________ The Producer Price Index for December 2019 is scheduled to be released on Wednesday, January 15, 2020 at 8:30 a.m. (EST).

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