March 1994 Producer Price Index

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The Producer Price Index for Finished Goods moved up 0.2 percent seasonally adjusted from February to March, the Bureau of Labor Statistics of the U. S. Department of Labor reported today. This followed a 0.5 percent advance in February and a rise of 0.2 percent in January. Prices received by domestic producers of intermediate goods increased 0.2 percent over the month, half as much as February's rise of 0.4 percent. After dropping 1.3 percent in February, the Crude Goods Price Index turned up 2.8 percent in March. (See table A.)

_ The slowdown in the Finished Goods Price Index over the month reflected the behavior of the index for finished energy goods, which showed no change in March in the wake of a steep climb a month earlier. By contrast, prices for consumer foods turned up moderately following 2 months of small declines. The index for finished goods other than foods and energy moved up 0.2 percent in March, more than in February but less than in January.

have been revised to reflect the availability of late reports and corrections by respondents.

During the first quarter of 1994, the Finished Goods Price Index moved up at a seasonally adjusted annual rate of 3.9 percent following a marginal decrease at a 0.3 percent annual rate during the fourth quarter of 1993. The first quarter upturn was partly due to the energy goods index, which advanced at a rate of 15.3 percent after falling at about the same rate in the last 3 months of 1993. In addition, the increase in prices for finished goods other than foods and energy accelerated from a 0.9 percent rate in the final quarter of 1993 to a rate of 3.3 percent in the opening quarter of 1994; the acceleration was led by indexes for capital equipment and for consumer durable goods, while the acceleration in consumer nondurables was much more modest. Consumer food prices turned down at a rate of 0.9 percent from December 1993 to March 1994, in contrast with their 5.2 percent rate of advance in the preceding 3 months.

Before seasonal adjustment, the Producer Price Index for Finished Goods moved up 0.2 percent in March to 125.0 (1982=100). From March 1993 to March 1994, the Finished Goods Price Index edged up 0.2 percent. During this same period, consumer food prices increased 2.2 percent, the index for finished energy goods declined 3.5 percent, and prices for finished goods other than foods and energy rose 0.4 percent. The Intermediate Goods Price Index was 0.7 percent higher in March 1994 than in the same month a year earlier, and prices for crude materials for further processing advanced 2.1 percent over the year.

Finished goods

The Producer Price Index for finished energy goods was unchanged from February to March on a seasonally adjusted basis; a month before, energy prices had climbed 2.8 percent. Gasoline prices were down 1.8 percent in March after advancing more than 6 percent in each of the previous 2 months. Similarly, the home heating oil index declined 0.7 percent in March after an upward surge of 23.5 percent in February. The residential gas index, however, increased 1.9 percent over the month following a rise of 1.2 percent in February.

Prices for finished consumer foods moved up 0.5 percent in March after falling 0.4 percent in the prior month. The upturn was chiefly due to the fresh and dry vegetables index, which advanced 9.8 percent following sharp decreases in both January and February. Prices for fish and for beef and veal also turned up after declining a month earlier, and processed chicken prices rose more than in February. By contrast, pork prices moved down 4.4 percent after increasing substantially in each of the previous 2 months. Indexes for shortening and cooking oils and for pasta also turned down in March, and prices for fresh fruits and chicken eggs rose less than in February.

The index for consumer goods other than foods and energy inched up 0.1 percent over the month after a 0.2 percent rise in February. From December 1993 to March 1994, this index increased at a seasonally adjusted annual rate of 2.6 percent, more than twice as much as the 1.2 percent rate registered from September to December 1993. In March, advances were led by tobacco products, photographic equipment, passenger cars, mobile homes, and household furniture. The alcoholic beverages index decreased, however.

After edging up 0.1 percent in February, capital equipment prices rose 0.3 percent in March. This index moved up at a seasonally adjusted annual rate of 4.0 percent during the first quarter of 1994, considerably more than the 0.9 percent rate recorded for the final quarter of 1993. The acceleration from February to March was paced by the heavy trucks index, which climbed 2.2 percent after showing no change a month before. In addition, prices for civilian aircraft, light motor trucks, and construction machinery turned up following February decreases.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components increased 0.2 percent seasonally adjusted in March following a 0.4 percent rise in February. During the first 3 months of 1994, this index rose at a 3.1 percent annual rate after edging down at a 0.3 percent rate in the final quarter of 1993. The index for energy goods advanced slightly in March after rising much more in February, and prices for foods and feeds declined after rising in the previous month. The index for nondurable manufacturing materials turned up, however. (See table B.)

The index for intermediate energy goods edged up 0.1 percent in March after a February climb of 3.1 percent. Prices for energy goods rose at a 14.1 percent annual rate during the first 3 months of 1994 after declining at a 15.2 percent rate in the final quarter of 1993. In March, the diesel fuel index rose 3.3 percent after climbing 18.1 percent in February. The liquefied petroleum gas index also rose much less than in the prior month, and indexes for gasoline and jet fuels declined moderately in March after advancing substantially in February. Indexes for residual fuel and commercial natural gas rose more than in the previous month, however.

After rising 0.8 percent in February, prices for intermediate foods and feeds fell 0.3 percent. Food and feed prices rose at a seasonally adjusted annual rate of 2.4 percent from December 1993 to March 1994, much less than the 14.5 percent rate of advance during the last 3 months of 1993. Prices for prepared animal feeds, pork, and fluid milk products dropped in March after rising in February, and flour prices fell more than in the preceding month. Conversely, indexes for beef and veal, confectionery materials, liquid milk products, and dry milk products turned up after falling in the previous month.

Prices for nondurable manufacturing materials rose 0.5 percent in March following a February decline of 0.2 percent. This index advanced at a 0.7 percent annual rate during the first 3 months of 1994 after declining at a 2.4 percent rate in each of the 2 previous quarters. Prices for miscellaneous basic organic chemicals were unchanged in March following a February decline. Indexes for petrochemicals, paint materials, synthetic rubber, and leather turned up in March, and prices for paperboard and for plastic resins and materials rose more than in February. In contrast, indexes for basic inorganic chemicals and for processed yarns and threads turned down in March after rising in the prior month.

The Producer Price Index for construction materials was unchanged in March after falling 0.2 percent in February. Prices for construction materials rose at a 0.6 percent rate during the first quarter of 1994, far less than their 7.5 percent rate of advance in the fourth quarter of 1993. The softwood lumber index declined 2.0 percent in March after dropping 6.9 percent in February, and indexes for plywood and plastic construction products also fell much less than a month before. Prices for gypsum products rose substantially more than in the previous month, and the index for wiring devices turned up. Nonferrous wire and cable prices rose far less than in February, however, and the millwork index decreased more in March than in the prior month.

The index for durable manufacturing materials advanced 0.5 percent in March after rising 0.4 percent in February. This index climbed at a 4.7 percent seasonally adjusted annual rate from December 1993 to March 1994, about the same as in the preceding 3 months. Prices for aluminum mill shapes, primary aluminum, cold rolled steel sheet and strip, copper cathode, and flat glass rose in March. In contrast, lower prices were recorded for hot rolled steel sheet and strip and for plywood.

Crude goods

The Producer Price Index for Crude Materials for Further Processing turned up 2.8 percent in March seasonally adjusted following a decline of 1.3 percent in the preceding month. During the first quarter, crude material prices increased at a seasonally adjusted annual rate of 11.5 percent, following a 1.2 percent rate of decline in the previous 3 months. The March upturn was due to the index for crude energy goods, which advanced substantially after a sharp decline in February. In contrast, the crude foodstuffs and feedstuffs index turned down after rising in the prior month, and the basic industrial materials index rose somewhat less than in other recent months. (See table B.)

The crude energy materials index turned up 9.3 percent following a decline of 6.4 percent in February. From December 1993 to March 1994, this index moved up at a seasonally adjusted annual rate of 26.7 percent following a decrease of about the same amount in the fourth quarter of 1993. The March upturn was broadly based. The index for natural gas to pipelines prices rose 17.9 percent after declining more than 10 percent in the preceding month. In addition, the crude petroleum index increased 4.8 percent after falling nearly 4 percent a month earlier. The coal index continued to fall, but not as much as in February.

The crude foodstuffs and feedstuffs index turned down 1.0 percent in March after increasing 1.2 percent in the prior month. These prices fell at an annual rate of 2.5 percent during the first quarter after rising at a 15.5 percent rate during the final 3 months of last year. The corn index dropped 8.2 percent in March after a decrease of 2.4 percent in February. Indexes for slaughter hogs, slaughter cattle, and wheat turned down after February increases. The slaughter broilers index rose considerably less than in the previous month. The index for fresh and dry vegetables, however, turned up nearly 10 percent after falling 25.0 percent in February. The unprocessed finfish index also turned up after declining substantially in the prior month, and the fluid milk and hay indexes rose much more than a month earlier.

The March rise in the crude nonfood materials less energy index slowed to 0.9 percent after an increase of 2.0 percent in February. This index climbed at a seasonally adjusted annual rate of 19.0 percent in the first quarter, nearly as much as its rate of advance in the previous 3 months.

The leaf tobacco index turned down 13.2 percent in March following a 4.0 percent rise in the previous month. The iron and steel scrap index also turned down after increasing in February. In addition, indexes for raw cotton, copper base scrap, aluminum base scrap, and copper ores rose considerably less than they did a month earlier. Conversely, indexes for softwood logs, bolts, and timber and for wastepaper increased more than they had a month earlier. In addition, cattle hide prices turned up after declining in February, and hardwood log prices moved up substantially after showing no change in the previous month.

Net output price indexes for mining, manufacturing, and other industries

Mining. The Producer Price Index for the net output of total domestic mining industries climbed 8.4 percent in March after decreasing 5.4 percent in the preceding month. (Net output price indexes are not seasonally adjusted.) During the first quarter, this index advanced at an annual rate of 45.5 percent; in the final quarter of 1993, by contrast, this index moved down at a rate of 7.2 percent. The upturn from February to March resulted from the oil and gas extraction industry group index, which jumped 12.5 percent after declining 7.6 percent in February. The increase in the metal mining industry group index, however, slowed from 3.3 percent in February to 1.7 percent a month later. The nonmetallic minerals mining industry group index showed no change in March after rising in the previous month. In March, the index for total mining industries stood at 76.0 (December 1984=100), 0.3 percent above its level of a year earlier.

Manufacturing. The Producer Price Index for total domestic manufacturing industries inched up 0.1 percent in March following a 0.5 percent increase in February. From December 1993 to March 1994, this index moved up at an annual rate of 7.3 percent, following a 0.7 percent rate of decrease in the preceding 3 months. The March slowdown principally reflected the drop of 0.3 percent in the petroleum refining industry group index, which had advanced 5.6 percent in February. In addition, the primary metal industries group index moved up 0.5 percent in March, about half as much as its increase of a month before. By contrast, indexes for the lumber and wood products industry group and the leather and leather products industry group turned up modestly after each fell 0.8 percent in February. The index for the net output of the domestic manufacturing sector in March was 119.9 (December 1984=100), an increase of 0.5 percent over the last 12 months.

Other. The index for passenger car rental rates advanced 13.8 percent in March after declining 2.5 percent in the previous month. Indexes for air passenger transportation, Mississippi River freight transportation, domestic deep sea freight transportation, and general warehousing and storage also turned up following February decreases. The tour operators industry index climbed 3.4 percent after showing no change a month earlier, and indexes for hotels and motels, scrap and waste materials, courier services except by air, and travel agencies rose more than in February. Conversely, indexes for freight transportation on the Great Lakes-St. Lawrence Seaway, radio broadcasting, air courier services, and airports and airport services dropped moderately following sizable advances in the preceding month. In addition, indexes for crude petroleum pipe lines and for truck rental and leasing moved up considerably less than in February.

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