Transmission of material in this release is embargoed until                          USDL 17-1099 
8:30 a.m. (EDT), Thursday, August 10, 2017

Technical information:      (202) 691-7705  *  ppi-info@bls.gov  *  www.bls.gov/ppi
Media contact:              (202) 691-5902  *  PressOffice@bls.gov                                    


                               PRODUCER PRICE INDEXES - JULY 2017


The Producer Price Index for final demand declined 0.1 percent in July, seasonally adjusted, the 
U.S. Bureau of Labor Statistics reported today. Final demand prices inched up 0.1 percent in 
June and were unchanged in May. (See table A.) On an unadjusted basis, the final demand index 
increased 1.9 percent for the 12 months ended in July.

Over 80 percent of the July decrease in final demand prices is attributable to the index for final 
demand services, which fell 0.2 percent. Prices for final demand goods edged down 0.1 percent.

The index for final demand less foods, energy, and trade services was unchanged in July 
following a 0.2-percent advance in June. For the 12 months ended in July, prices for final 
demand less foods, energy, and trade services rose 1.9 percent.

Final Demand

Final demand services: The index for final demand services moved down 0.2 percent in July, the 
first decline since a 0.3-percent drop in February. Most of the July decrease can be traced to margins 
for final demand trade services, which fell 0.5 percent. (Trade indexes measure changes in margins 
received by wholesalers and retailers.) Additionally, prices for final demand transportation and 
warehousing services declined 0.8 percent. In contrast, the index for final demand services less trade, 
transportation, and warehousing advanced 0.2 percent. 

Product detail: About 60 percent of the July decrease in prices for final demand services is 
attributable to a 5.8-percent drop in margins for chemicals and allied products wholesaling. The 
indexes for machinery and equipment wholesaling; portfolio management; apparel, footwear, and 
accessories retailing; airline passenger services; and fuels and lubricants retailing also moved lower. 
Conversely, prices for traveler accommodation services rose 2.2 percent. The indexes for apparel 
wholesaling and hospital outpatient care also increased. (See table 4.)

Final demand goods: Prices for final demand goods edged down 0.1 percent in July after inching up 
0.1 percent in June. In July, the index for final demand energy fell 0.3 percent, and prices for final 
demand goods less foods and energy declined 0.1 percent. The index for final demand foods was 
unchanged.

Product detail: A major factor in the July decrease in prices for final demand goods was the index 
for gasoline, which moved down 1.4 percent. Prices for beef and veal, utility natural gas, motor 
vehicles, and basic organic chemicals also fell. In contrast, the index for grains jumped 17.1 percent. 
Prices for diesel fuel; pork; and consumer, institutional, and commercial plastic products also moved 
higher. 

Intermediate Demand by Commodity Type

Within intermediate demand in July, prices for processed goods moved down 0.1 percent, the index 
for unprocessed goods fell 0.4 percent, and prices for services decreased 0.3 percent. (See tables B 
and C.)

Processed goods for intermediate demand: The index for processed goods for intermediate 
demand edged down 0.1 percent in July after declining 0.2 percent in June. Most of the July decrease 
is attributable to prices for processed materials less foods and energy, which moved down 0.3 
percent. Additionally, the index for processed foods and feeds fell 0.5 percent. Conversely, prices for 
processed energy goods increased 0.8 percent. For the 12 months ended in July, the index for 
processed goods for intermediate demand rose 3.5 percent. 

Product detail: Leading the July decline in the index for processed goods for intermediate demand, 
prices for basic organic chemicals fell 3.3 percent. The indexes for beef and veal, natural gas to 
electric utilities, gasoline, and residual fuels also moved lower. Conversely, the index for diesel fuel 
jumped 9.8 percent. Prices for industrial electric power, inedible fats and oils, and soybean cake and 
meal also increased. (See table 5.)

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate 
demand declined 0.4 percent in July following a 1.5-percent advance in June. The decrease can be 
attributed to prices for unprocessed energy materials, which fell 5.1 percent. In contrast, the indexes 
for unprocessed foodstuffs and feedstuffs and for unprocessed nonfood materials less energy moved 
up 2.4 percent and 1.2 percent, respectively. For the 12 months ended in July, the index for 
unprocessed goods for intermediate demand climbed 5.2 percent.

Product detail: Leading the July decline in the index for unprocessed goods for intermediate demand, 
prices for crude petroleum decreased 8.1 percent. The indexes for slaughter steers and heifers, natural 
gas, slaughter cows and bulls, raw cotton, and unprocessed finfish also fell. Conversely, prices for 
grains jumped 17.1 percent. The indexes for coal and copper ores also rose.

Services for intermediate demand: The index for services for intermediate demand fell 0.3 percent 
in July, the largest decline since a 0.5-percent decrease in October 2015. Over 60 percent of the July 
drop can be traced to prices for services less trade, transportation, and warehousing for intermediate 
demand, which moved down 0.2 percent. The index for transportation and warehousing services for 
intermediate demand fell 0.4 percent, and margins for trade services for intermediate demand 
declined 0.3 percent. For the 12 months ended in July, the index for services for intermediate demand 
rose 2.2 percent.

Product detail: Nearly half of the July decline in the index for services for intermediate demand can 
be traced to prices for portfolio management, which fell 3.2 percent. The indexes for chemicals and 
allied products wholesaling; business loans (partial); securities brokerage, dealing, and investment 
advice; airline passenger services; and television advertising time sales also moved down. In contrast, 
margins for metals, minerals, and ores wholesaling increased 3.5 percent. The indexes for 
architectural and engineering services and for legal services also increased.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: The index for stage 4 intermediate demand was unchanged in July 
following a 0.3-percent increase a month earlier. In July, prices for total goods inputs to stage 4 
intermediate demand rose 0.3 percent. Conversely, prices for total services inputs fell 0.3 percent. 
Advances in the indexes for diesel fuel; grains; metals, minerals, and ores wholesaling; architectural 
and engineering services; and legal services offset declining indexes for portfolio management; 
chemicals and allied products wholesaling; beef and veal; business loans (partial); and basic organic 
chemicals. For the 12 months ended in July, prices for stage 4 intermediate demand increased 2.6 
percent.

Stage 3 intermediate demand: Prices for stage 3 intermediate demand fell 0.1 percent in July 
following a 0.3-percent increase in the previous month. In July, the index for total services inputs to 
stage 3 intermediate demand decreased 0.1 percent. Prices for total goods inputs were unchanged. 
Declines in the indexes for chemicals and allied products wholesaling, slaughter steers and heifers, 
basic organic chemicals, gasoline, and business loans (partial) outweighed increases in the indexes 
for raw milk; slaughter chickens; slaughter hogs; and metals, minerals, and ores wholesaling. For the 
12 months ended in July, prices for stage 3 intermediate demand advanced 3.2 percent.

Stage 2 intermediate demand: The index for stage 2 intermediate demand moved down 0.7 percent 
in July following a 0.5-percent increase in the prior month. In July, prices for total goods inputs to 
stage 2 intermediate demand fell 1.4 percent, and the index for total services inputs moved down 0.3 
percent. Decreases in prices for crude petroleum, natural gas, portfolio management, basic organic 
chemicals, plastic resins and materials, and airline passenger services outweighed advances in the 
indexes for grains; hay, hayseeds, and oilseeds; and legal services. For the 12 months ended in July, 
prices for stage 2 intermediate demand rose 2.6 percent.

Stage 1 intermediate demand: The index for stage 1 intermediate demand fell 0.1 percent in July 
following a 0.2-percent increase in the preceding month. In July, prices for total services inputs to 
stage 1 intermediate demand moved down 0.5 percent. In contrast, the index for total goods inputs 
rose 0.2 percent. Declines in the indexes for chemicals and allied products wholesaling, basic organic 
chemicals, business loans (partial), airline passenger services, and crude petroleum outweighed 
advances in the indexes for diesel fuel; grains; metals, minerals, and ores wholesaling; and 
wastepaper. For the 12 months ended in July, prices for stage 1 intermediate demand rose 4.4 
percent.

________________
The Producer Price Index for August 2017 is scheduled to be released on Wednesday, 
September 13, 2017 at 8:30 a.m. (EDT).


                                          *****

                                 PPI Weights to be Updated
 
In February 2018, with the release of January 2018 Producer Price Index (PPI) data, the Bureau of 
Labor Statistics will update PPI value weights to more accurately reflect recent production and 
marketing patterns. The updated weights will be based on shipment values from the year 2012. These 
value weights come from the Census of Manufactures, the Census of Mining, the Census of Services, 
and the Census of Agriculture. PPI weights have been based on 2007 Census shipment values since 
January 2012.
 
All PPIs will be affected by this weight update, including all the industry net output indexes, as well 
as indexes for traditional commodity groupings. In addition, weights will be updated from the 2007 
to the 2012 Census for all Final demand-Intermediate demand (FD-ID) indexes, durability of product 
indexes, special commodity-grouping indexes, and input to industry indexes. This weight revision 
will not change any arithmetic reference bases for indexes, the dates when PPIs were set to 100.
 
It is important to note that the basic structures of the PPI commodity and FD-ID classification 
systems will not change as a result of the weight revision. The PPIs classified according to the North 
American Industry Classification System (NAICS), however, will be updated to reflect 2017 NAICS 
definitions, as established by the U.S. Census Bureau. The weight update will also result in 
significant shifts in the relative importance of various industries and products. These shifts will 
impact aggregate indexes in a manner commensurate with the relative gains and losses in value 
weights from 2007 to 2012.
 
In addition, the PPI sample updates normally occurring with the release of October and February data 
will be combined and released in conjunction with the weight update in February 2018. Commodity 
and FD-ID relative importance figures for December 2017 will be available two business days prior 
to the release of January 2018 PPI data.  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.  
                       

                                         *****


                             Variance Estimates for the PPI

The Producer Price Index (PPI) program recently published variance estimates for 2016. These 
variance estimates measure the uncertainty caused by using a sample, rather than the entire 
population, to calculate PPI indexes. Variance estimates are available on the PPI website at 
www.bls.gov/ppi/ppivariance.htm or by contacting the PPI Section of Index Analysis and Public 
Information at ppi-info@bls.gov or (202)691-7705.


                                         *****


           Beyond the Numbers: Nailing down the price of nonresidential construction

The Producer Price Index (PPI) has created a new set of special indexes to provide nonresidential 
construction data by region and type of contractor. This Beyond the Numbers article explains how 
these indexes are calculated, what their structures are, and how analysts can use the data to better 
understand price movements in the nonresidential building sector of the U.S. economy. This article is 
available on the Bureau of Labor Statistics website at www.bls.gov/opub/btn/volume-6/nailing-
down-the-price-of-new-nonresidential-building-construction.htm or by contacting the PPI 
Section of Index Analysis and Public Information at: ppi-info@bls.gov or (202)691-7705.