September 1994 Producer Price Index

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The Producer Price Index for Finished Goods declined 0.5 percent seasonally adjusted from August to September, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The September decline followed increases in each of the 3 preceding months. Prices received by domestic producers of intermediate goods rose 0.3 percent over the month following a 0.7 percent advance in August. Crude material prices fell 1.6 percent, the third consecutive monthly decrease. (See table A.)

Among finished goods, the index for finished goods less foods and energy inched up 0.1 percent after rising 0.4 percent in August. In contrast, the indexes for energy goods and consumer foods declined after rising a month earlier.

Change in Except finished Inter- goods foods from 12 mediateCrude and months Month Total Foods Energy energy ago goods goods (unadj.) 1993 Sept. 0.2 0.6 -0.1 0.1 0.4 0 0.7 Oct. -0.1 -0.2 0.8 -0.3 0.2 0.1 2.2 Nov. 0.1 0.8 -2.1 0.4 0.4 0.2 -0.3 Dec. -0.1 0.6 -2.9 0.1 0.2 -0.3 -1.5

reported because data for May 1994 have been revised to reflect the availability of late reports and corrections by respondents.

During the third quarter of 1994, prices received by domestic producers of finished goods advanced at a seasonally adjusted annual rate of 2.6 percent, after inching down at an annual rate of 0.3 percent from March to June. The index for finished goods other than foods and energy rose at a seasonally adjusted annual rate of 2.1 percent, the same amount posted in the second quarter. The index for finished energy goods rose moderately from June to September after falling from March to June. After two consecutive quarterly declines, the consumer foods index increased in the third quarter. Prices for intermediate goods increased much faster in the third quarter than they had in each of the 2 previous quarters, and the Crude Goods Price Index fell much more in the third quarter than it had in the second quarter.

Before seasonal adjustment, the Producer Price Index for Finished Goods declined 0.9 percent in September to 125.5 (1982=100). From September 1993 to September 1994, this index increased 1.4 percent. During this same period, consumer food prices rose 0.6 percent, the index for finished energy goods was unchanged, and the prices for finished goods other than foods and energy advanced 1.9 percent. The Intermediate Goods Price index increased 2.7 percent during the 12 months ended in September 1994, and crude material prices were 1.5 percent lower than a year earlier.

Finished goods

Prices for finished energy goods turned down 2.9 percent in September on a seasonally adjusted basis, after rising 1.7 percent a month earlier. During the third quarter, this index rose at a 4.8 percent annual rate following a decline at a 2.6 percent annual rate from March to June. Gasoline prices turned down in September after sizable advances in July and August. Prices also declined after rising a month earlier for residential electric power, and home heating oil prices declined after showing no change in August. The index for residential gas fell for the second consecutive month.

Prices for finished consumer foods moved down 0.2 percent over the month following a 0.7 percent rise in August. After falling at a seasonally adjusted annual rate of 5.8 percent in the second quarter and 0.6 percent in the first quarter, this index turned up at a 4.2 percent rate from June to September. In September, prices turned down after rising in August for beef and veal, roasted coffee (-10.3 vs. 12.0 percent), pork, finfish and shellfish, eggs for fresh use, processed fruits and vegetables, and dairy products. Pasta prices fell more than they had in the previous month. By contrast, prices turned up after falling in the previous month for fresh and dry vegetables, processed young chickens, fresh fruits and melons, shortening and cooking oils, bakery products, and milled rice. Prices continued to rise for turkeys.

Prices for finished consumer goods other than foods and energy moved up 0.1 percent from August to September following a 0.4 percent rise in the previous month. This index rose at a seasonally adjusted annual rate of 2.0 percent in the third quarter following an increase at a 1.5 percent rate in the second quarter. The deceleration in price increases from August to September was led by the index for passenger cars, which fell 1.1 percent (-4.0 percent before seasonal adjustment) after rising 0.7 percent in the previous month. Prices also decreased in September after increasing in August for cosmetics and women's apparel. Price increases slowed for sanitary papers, newspaper circulation, light trucks, and household glassware. The index for home electronic equipment was unchanged after rising in August, and prices for floor coverings fell slightly more than in the previous month. By contrast, the tobacco products index increased 2.0 percent after rising 1.4 percent in August. Price increases also accelerated for prescription drugs, book publishing, alcoholic beverages, mobile homes, household furniture, over the counter drugs, and gold jewelry. Prices turned up after declining a month earlier for tires and tubes, sporting and athletic goods, footwear, and for lawn and garden equipment. Prices were unchanged in September after moving down in August for household appliances and girls' apparel.

In September, the capital equipment index increased 0.1 percent for the third consecutive month. This index moved up at a seasonally adjusted annual rate of 1.8 percent from June to September, half as much as in the second quarter. In September, increases were registered for truck trailers, heavy motor trucks, metal cutting machine tools, transformers and power regulators, and for office and store machines and equipment. Declines occurred for commercial furniture, communication equipment, and for pumps and compressors.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components increased 0.3 percent seasonally adjusted in September following a 0.7 percent rise in August. During the third quarter, this index rose at a 5.9 percent seasonally adjusted annual rate after increasing at a 2.1 percent rate in the second quarter. The index for energy goods turned down in September by about the same amount it rose in August. By contrast, indexes for nondurable manufacturing and construction products rose more than in August. In addition, prices for durable manufacturing and for foods and feeds rose about the same amount as in the previous month. (See table B.)

The index for intermediate energy goods turned down 2.0 percent in September after three consecutive monthly increases. Prices for energy goods rose at a 7.5 percent seasonally adjusted annual rate in the last 3 months after declining at a 5.7 percent rate from March to June. In September, the gasoline index fell 7.5 percent after climbing 6.8 percent in August. Indexes for residual fuel, jet fuels, and industrial natural gas also turned down after advancing in August. Prices for diesel fuel and liquefied petroleum gas fell more than in the previous month. In addition, the commercial electric power index rose less than in August. In contrast, prices for miscellaneous petroleum and coal products as well as coke oven products fell less than in August.

Prices for nondurable manufacturing materials registered a 1.7 percent advance in September following August's increase of 1.4 percent. Nondurable manufacturing material prices rose at a seasonally adjusted annual rate of 17.0 percent from June to September, much more than the 8.6

percent rate of increase in the second quarter. In September, indexes for plastic resins and materials, paper, and intermediate organic chemicals rose more than a month earlier. In addition, phosphate prices turned up after falling in August. Prices for paperboard, woodpulp, and alkalies and chlorine, however, rose less than in August. In addition, the synthetic fiber index turned down after rising a month earlier.

The index for construction materials moved up 0.5 percent in September after an August increase of 0.3 percent. This index advanced at a 4.5 percent seasonally adjusted annual rate during the third quarter after increasing at a 3.0 percent rate in the second quarter. The nonferrous wire and cable index turned up 2.4 percent in September after decreasing 0.9 percent a month earlier. The index for plumbing fixtures and brass fittings also rose after falling in August. In addition, prices for fabricated structural metal products and plastic construction products rose more than a month ago. In contrast, the rise in the index for softwood lumber slowed to 0.7 percent after increasing 4.1 percent in the previous month. Prices for plywood and concrete products also rose less than a month earlier. In addition, the index for asphalt felts and coatings turned down after rising the prior month.

The Producer Price Index for durable manufacturing materials rose 0.8 percent after increasing 0.7 percent a month earlier. From June to September, prices for durable manufacturing materials rose at an 8.6 percent seasonally adjusted annual rate, slightly more than the 8.1 percent rate of advance from March to June. In September, prices advanced for copper and brass mill shapes, copper, aluminum, silver, and lead. Conversely, indexes for flat glass, hot rolled steel sheet and strip, hardwood lumber, and cold finished steel bars declined.

The index for intermediate foods and feeds moved up 0.4 percent in September, the same as the month before. This index fell at a 4.4 percent seasonally adjusted annual rate from June to September, after declining at a 9.5 percent rate in the preceding 3 months. From August to September, increases for crude vegetables oils, flour, natural and processed cheese, and miscellaneous beverage materials outweighed declines for prepared animal feeds, pork, condensed and evaporated milk products, and butter.

Crude goods

The Producer Price Index for Crude Materials for Further Processing moved down 1.6 percent in September after falling 0.4 percent in August. During the third quarter, crude material prices decreased at a seasonally adjusted annual rate of 10.8 percent, following a 1.9 percent rate of decline in the previous 3 months. In September, the index for crude energy materials fell much more than a month earlier, and basic industrial material prices rose about the same amount as in July. In contrast, the crude foodstuffs and feedstuffs index turned up after falling for 6 consecutive months. (See table B.)

The decline in the crude energy materials index accelerated to 5.3 percent in September from 0.1 percent a month earlier. From June to September, this index moved down at an annual rate of 24.2 percent, mostly offsetting a slightly larger rate of increase in the second quarter. The September decline was broad-based. The crude petroleum index fell 11.1

percent after dropping 3.4 percent in August. Natural gas prices turned down after rising a month earlier, and coal prices were unchanged after increasing in 5 of the previous 6 months.

The crude nonfood materials less energy index moved up 1.3 percent after rising 1.4 percent in August. These prices rose at a seasonally adjusted annual rate of 20.4 percent in the third quarter after falling at a 2.1 percent rate from March to June. In September, increases in indexes for copper ores, aluminum base scrap, leaf tobacco, and miscellaneous roundwood products outweighed declines for softwood logs, bolts, and timber, silver ores, wastepaper, and pulpwood logs.

The index for crude foodstuffs and feedstuffs moved up 0.2 percent in September following a decrease of 1.4 percent in August. This index fell at a seasonally adjusted annual rate of 12.6 percent in the third quarter following a decrease at a 20.9 percent rate in the previous 3 months. The slaughter broiler index turned up 5.6 percent in September following a decrease of 8.5 percent in August. Prices for wheat, fluid milk, Louisiana rough rice, and for fresh and dry vegetables turned up after falling in the previous month. In addition, the soybean index fell less than in August, and corn prices advanced after showing no change in the previous month. The slaughter cattle index, however, turned down 2.1 percent after rising about 1 percent in August. Prices for slaughter hogs and hay also turned down after rising a month earlier.

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

Mining. The Producer Price Index for the net output of the domestic mining sector declined 3.0 percent in September after rising 0.3 percent in the preceding month. (Net output price indexes are not seasonally adjusted.) From June to September, this index fell at an 18.1 percent annual rate following an increase at a 7.7 percent annual rate in the second quarter. In September, the oil and gas extraction industry group index turned down 4.6 percent following a 0.4 percent increase in August. Price increases slowed for the industry group for bituminous coal and lignite mining. By contrast, the metal mining industry group index turned up 3.7 percent in September after decreasing 0.8 percent in August. The index for the nonmetallic minerals mining group also moved up after falling in the previous month. In September, the Producer Price Index for total mining stood at 72.2 (December 1984=100), 4.0 percent lower than a year earlier.

Manufacturing. Prices received by producers for the net output of the domestic manufacturing sector dropped 0.4 percent in September after moving up 0.6 percent in August. During the third quarter, this index moved up at a 1.7 percent annual rate, somewhat less than the rate posted in the second quarter (2.0 percent). Prices for the transportation equipment industry group fell 1.6 percent after showing no change in the previous month. Prices for the petroleum refining industry group decreased 3.9 percent in

September after increasing 5.8 percent in the previous month. Prices for the food and kindred products industry group also fell after increasing a month earlier. Price increases for the paper and allied products industry slowed from 1.1 percent in August to 1.6 percent in September. The industry group for chemicals and allied products rose 1.1 percent, about the same as in August. By contrast, price increases accelerated for the industry groups for primary metal industries, leather and leather products, lumber and wood products, and for rubber and plastic products. The index for the net output of the domestic manufacturing sector stood at 121.0 in September (December 1984=100), 2.2 percent higher than a year earlier.

Other. Among other industries, the index for passenger car rental turned down 12.1 percent following a 0.9 percent rise in August. Declines also were registered for nonlocal trucking, railroad line haul operations, travel agencies, and natural gas utilities. However, prices advanced for water transportation of freight, n.e.c., tugging and towing services, scrap and waste materials collection, truck rental and leasing, and psychiatric hospitals.

Information in this news release will be made available to sensory impaired individuals upon request. Voice phone: 202-606-7828; TDD phone 202-606- 5897; TDD Message Referral phone number: 1-800-326-2577. Table 1. Producer Price Indexes and percent changes by stage of processing (1982=100)

1/ Comprehensive relative importance figures are computed 6/ Percent of total finished goods. once each year in December. 7/ Percent of total intermediate materials. 2/ Data for May 1994 have been revised to reflect the availability 8/ Formerly titled "Crude materials for of late reports and corrections by respondents. All data are subject further processing, excluding crude to revision 4 months after original publication. foodstuffs and feedstuffs, plant and 3/ Not seasonally adjusted. animal fibers, oilseeds, and leaf tobacco." 4/ Includes crude petroleum. 9/ Percent of total crude materials. 5/ Excludes crude petroleum. Table 2. Producer Price Indexes and percent changes for selected commodity groupings by stage of processing (1982=100 unless otherwise indicated)

See footnotes at end of table. Table 2. Producer Price Indexes and percent changes for selected commodity groupings by stage of processing - Continued (1982=100 unless otherwise indicated)

1/ Data for May 1994 have been revised to reflect 2/ Not seasonally adjusted. the availability of late reports and corrections by respondents. 3/ Not available. All data are subject to revision 4 months after original publication.

1/ Data for May 1994 have been revised to reflect the availability of late reports and corrections by respondents. All data are subject to revision 4 months after original publication.

2/ Prices of some items in this grouping are lagged 1 month.

Table #4 Producer price indexes for the net output of major industry groups