October 1995 Producer Price Index

Historical release narrative reproduced from the official public-domain source. Statistical tables, standard technical appendices, administrative material and attendance rosters are omitted; formatting is adapted for reading. Figures retain the release's historical context and may have been revised. Consult the linked source for the complete document.

The Producer Price Index for Finished Goods decreased 0.1 percent seasonally adjusted from September to October, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This followed an increase of 0.3 percent in September and a 0.1 percent decline in August. Prices received by domestic producers of intermediate goods fell 0.2 percent over the month after edging down 0.1 percent in the previous month. Crude material prices rose 0.3 percent after advancing 1.9 percent in September. (See table A.)

Among finished goods, the index for finished foods was unchanged in October after increasing 1.0 percent in September. After falling 0.5 percent in September, the index for finished energy goods fell 0.9 percent

Change in Except finished Inter- goods foods from 12 mediateCrude and months Month Total Foods Energy energy ago goods goods (unadj.) 1994 Oct. -0.4 -0.1 -1.3 -0.4 1.0 0.3 -0.6 Nov. 0.6 1.0 2.2 0.2 1.3 0.8 0.6 Dec. 0.3 1.3 -0.9 0.2 1.7 0.4 0.5

in October. Prices for finished goods less foods and energy were unchanged after increasing 0.2 percent in September.

Before seasonal adjustment, the Producer Price Index for Finished Goods advanced 0.5 percent in October to 128.5 (1982=100). From October 1994 to October 1995, this index increased 2.1 percent. During this same period, consumer food prices rose 2.9 percent, the index for finished energy goods fell 0.4 percent, and prices for finished goods other than foods and energy advanced 2.4 percent. The index for intermediate goods increased 4.4 percent during the 12 months ended in October 1995, and crude material prices were 3.5 percent higher than a year earlier.

Finished goods

Prices for finished energy goods declined 0.9 percent on a seasonally adjusted basis, after moving down 0.5 percent in September. This was the fifth consecutive monthly decline for this index. In October, prices for home heating oil turned down 11.1 percent after moving up 0.9 percent in the previous month. Gasoline prices fell somewhat more in October (2.7 percent) than in September (2.0 percent). Prices for residential natural gas turned down after inching up a month earlier. By contrast, the index for residential electric power turned up in October after falling in September.

The index for finished consumer foods was unchanged in October after increasing 1.0 percent in September. Prices for fresh and dried vegetables dropped 19.1 percent after advancing 38.6 percent a month earlier. Indexes also turned down after rising in the previous month for both processed young chickens and turkeys. Price increases slowed from September to October for eggs for fresh use, pasta products, shortening and cooking oils, processed fruits and vegetables, and bakery products. By contrast, prices turned up after falling in September for beef and veal, roasted coffee, and soft drinks. Price increases accelerated in October for dairy products and milled rice. Pork prices rose 2.0 percent, the same as in September. Prices for finfish and shellfish fell much less than in the prior month.

Prices for finished consumer goods other than foods and energy

increased 0.1 percent in October following a 0.3 percent rise in the previous month. Prices turned down after increasing in the previous month for newspapers, cosmetics, over-the-counter drugs, and floor coverings. Prices for light trucks fell more than in the previous month. Prices for passenger cars increased 0.4 percent, after increasing 0.5 percent in September. Before seasonal adjustment, the passenger car index for October was up 7.8 percent. The October new car index was 1.0 percent higher than it had been a year earlier. In accordance with our usual practice, new model year passenger cars and light trucks were introduced into the PPI in October. (See "Report on Quality Changes for 1996 Model Passenger Cars," issued today.) Price increases also slowed in October for household furniture. By contrast, prices turned up after falling a month earlier for women's apparel, household appliances, leather footwear, and gold jewelry. The index for home electronic equipment was unchanged after falling 2.0 percent in September. Price increases accelerated for books, periodicals, and prescription drugs.

In October, the capital equipment index edged down 0.1 percent after increasing 0.1 percent in both August and September. In October, the index for light motor trucks fell 1.8 percent after declining 0.2 percent a month earlier. Among other capital goods in October, prices also declined for ships and electronic computers, while prices advanced for pumps and compressors, oil field machinery, transformers, construction machinery, and heavy motor trucks.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components declined 0.2 percent, seasonally adjusted, after falling 0.1 percent in the previous month. Price declines for both nondurable and durable manufacturing materials, as well as for energy goods and construction materials outweighed increases for foods and feeds. Excluding food and energy prices, this index declined 0.3 percent after increasing 0.1 percent in each of the last 2 months. (See table B.)

The index for nondurable manufacturing materials declined 0.8 percent in October after remaining unchanged a month earlier. The index for miscellaneous basic organic chemicals turned down 2.3 percent after rising 0.9 percent in the previous month. Prices for gray fabrics, basic inorganic chemicals, and finished fabrics also declined after increasing in September. Indexes for primary basic organic chemicals, paperboard, and for plastic resins and materials fell more than a month ago. In addition, the index for paper rose less than in September. By contrast, the decline in the nitrogenates index slowed to 0.1 percent from 3.9 percent a month earlier.

The decline in the index for durable manufacturing materials accelerated to 0.8 percent from 0.1 percent in each of the previous 2 months. The index for plywood turned down 1.7 percent after rising 2.1 percent in September. Prices for aluminum mill shapes also fell after increasing a month earlier. Indexes for copper and brass mill shapes, cold rolled steel sheet and strip, and aluminum fell more than in the prior month. In addition, prices for building paper and board rose less than a month ago. Conversely, the decline in the copper index slowed to 3.5 percent from 6.2 percent in September. Prices for hot rolled steel sheet and strip also fell less than in the previous month. The index for prepared paints turned up after declining a month earlier.

The index for intermediate energy goods fell 0.9 percent after declining 1.4 percent in September. The index for industrial electric power turned up 1.0 percent after falling 1.6 percent in the prior month. Prices for commercial electric power and industrial natural gas also rose after declining in September. The index for residual fuel fell less than in the previous month. The decline in the diesel fuel index, however, accelerated to 8.8 percent from 0.2 percent in the previous month. Prices for gasoline also fell more than a month earlier. Indexes for jet fuels and liquid asphalt turned down after rising a month ago.

The index for construction materials fell 0.3 percent after rising the same amount in September. The index for softwood lumber turned down 0.5 percent after rising 2.6 percent in the previous month. Prices for plywood and switchgear also fell after increasing in the prior month. Indexes for fabricated structural metal products, concrete products, and wiring devices rose less than a month earlier. In addition, prices for millwork and for plumbing fixtures and brass fittings remained unchanged after rising in September. On the other hand, the decline in the plastic construction products index slowed to 0.7 percent from 1.0 percent a month earlier.

The rise in the index for intermediate foods and feeds accelerated to 3.0 percent from 0.9 percent in September; October was the fifth consecutive monthly advance. The index for prepared animal feeds increased 4.2 percent after rising 1.6 percent in the previous month. Prices for fluid milk products also rose more than in the prior month. Indexes for confectionery materials, beef and veal, crude vegetable oils, and refined sugar turned up after falling a month earlier. On the other hand, the rise in the index for natural and processed cheese slowed to 1.6 percent from 3.2 percent in September. Prices for condensed and evaporated milk remained unchanged after rising a month earlier.

Crude Goods

The Producer Price Index for Crude Materials for Further Processing rose 0.3 percent, seasonally adjusted, in October, after rising 1.9 percent during the prior month. Indexes for crude energy and crude foodstuffs and feedstuffs rose less in October than in September. The index for basic industrial materials fell more than in September.

Price increases for crude energy goods slowed to 0.1 percent from 2.1 percent in the previous month. Prices for crude petroleum turned down 6.1 percent, after increasing 4.5 percent last month. By contrast, prices for both natural gas and coal rose more than in September.

The crude foodstuffs and feedstuffs index increased 2.1 percent in October, compared with a September rise of 4.2 percent. In October, prices turned down after rising a month earlier for fresh and dried vegetables, slaughter hogs, and slaughter broilers. In addition, price increases slowed for slaughter cattle, alfalfa hay, and fluid milk. Conversely, indexes for corn, soybeans, and Louisiana rough rice rose more in October than in September and price declines slowed for both wheat and unprocessed finfish.

The index for crude nonfood materials less energy fell 2.6 percent in October, after dropping 2.1 percent in September. Prices fell more in October than in September for wastepaper, softwood logs, bolts, and timber, and cattle hides. Additionally, the rise in the index for raw cotton slowed to 0.5 percent from 7.9 percent in the preceding month. By contrast, price declines for iron and steel scrap slowed in October. The index for gold ores rose 0.3 percent, after showing no change in September. Phosphate prices rose 1.7 percent following a 1.4 percent gain last month.

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

Mining. The Producer Price Index for the net output of the domestic mining sector rose 0.7 percent in October after rising 2.4 percent in the preceding month. (Net output price indexes are not seasonally adjusted.) Price increases for the oil and gas extraction industry group slowed from 3.6 percent in the previous month to 0.6 percent in October. Prices for the nonmetallic minerals mining industry group edged down somewhat after several months of modest increases. The index for the industry group for bituminous coal and lignite mining advanced much more than it had a month earlier. The metal mining industry group index fell about as much as in the previous month. In October, the Producer Price Index for total mining stood at 69.1 (December 1984=100), 2.7 percent lower than a year earlier.

Manufacturing. Prices received by producers for the net output of the domestic manufacturing sector turned up 0.4 percent after edging down 0.1 percent in September. In October, prices for the transportation equipment industry group advanced 3.4 percent after falling 1.5 percent a month earlier. Price increases accelerated for food and kindred products and apparel. By contrast, indexes turned down after increasing in the preceding month for textile mill products, lumber and wood products, and for paper and allied products. After declining 0.4 percent in September, the industry group index for petroleum refining fell 3.9 percent in October. Prices also declined more in October for the primary metal industries group. Price increases slowed for the industry groups for furniture and fixtures and for printing and publishing.

Other. Among other industries, the index for waste paper collection fell 27.0 percent. The index for metal scrap collection decreased about 2.5 percent for the second consecutive month. Prices also declined in October for water transportation of freight not elsewhere classified, scheduled air transportation, radio broadcasting, electric power utilities, truck rental and leasing, natural gas utilities, and passenger car rental. Increases were registered in October for freight transportation along the Great Lakes, tugging and towing services, airports and airport services, travel agencies, offices and clinics of doctors of medicine, general medical and surgical hospitals, psychiatric hospitals, and for accounting and bookkeeping services.

Recalculated Seasonal Adjustment Factors to be Available on

February 11, 1996

Each year with the release of the January PPI, seasonal adjustment factors are recalculated to reflect price movements from the just-completed calendar year. This routine annual recalculation may result in revisions to seasonally adjusted indexes for the previous 5 years. The recalculated seasonal adjustment factors are customarily available around the time of the release of the January data in February. This year, the following information will be available February 11, 1996, 2 days prior to the release of PPI data for January 1995:

- 1996 factors for seasonally adjusted commodity indexes.

- A table of changes to seasonal status of commodity

indexes.

- Recalculated seasonal factors for the last 5 years (1991- 1995) for Stage-of-Processing indexes.

- For the overall and less food and energy finished goods, intermediate materials, and crude materials indexes, a table containing the following information for the previous

2 years (1994 and 1995):

- Former and revised seasonally adjusted indexes,

- Former and revised seasonally adjusted percent

changes,

- Former and recalculated seasonal factors.

To request any of this information, call the Division of Industrial Prices and Price Index, Section of Index Analysis at (202)606-7705.

Producer Price Index data for November 1995 are scheduled for

release on Tuesday, December 12, at 8:30 a.m. (E.S.T.)

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: 1-800-326-2577.

Shannon Martin (202) 606-7746 x 281 USDL 95-464 Elizabeth Spear (202) 606-4603 x 293 TRANSMISSION OF MATERIAL IN THIS RELEASE IS EMBARGOED UNTIL Media contact: Kathryn Hoyle (202) 606-5902 8:30 A.M. (E.S.T.), THURSDAY, NOVEMBER 9, 1995

REPORT ON QUALITY CHANGES FOR 1996 MODEL VEHICLES

Passenger Cars

The value of quality changes for a sample of 20 1996 model domestic passenger cars included in the Producer Price Index for October averaged $167.06, according to estimates by the Bureau of Labor Statistics of the U.S. Department of Labor. This change represents 28.1 percent of the average $593.80 yearly increase in producers' prices.

The retail equivalent of these quality changes averaged $193.03, representing 39.0 percent of the average $494.98 yearly increase in manufacturers' suggested list prices.

The $193.03 estimated retail level of quality change breaks down as follows:

* $59.43 for changes in accordance with 1990 Clean Air Act Amendments, specifically OBD II (On Board Diagnostics, Second Generation) requirements.

* $28.99 for changes in accordance with all other 1990 Clean Air Act Amendments.

* $16.53 for changes in accordance with Federal Motor Vehicle Safety Standard (FMVSS) 214, side impact protection and Federal Motor Vehicle Safety Standard (FMVSS) 208, passive restraints.

* $88.08 for other quality changes such as powertrain improvements, corrosion protection upgrades, and changes in levels of standard or optional equipment.

Light Trucks

The value of quality changes for a sample of 12 1996 model domestic light trucks included in the Producer Price Index for October averaged $430.72. This change represents 53.1 percent of the average $811.92 yearly increase in producers' prices.

The retail equivalent of quality changes for domestic light trucks averaged $513.81, representing 40.5 percent of the average $1,267.44 yearly increase in manufacturers' suggested list prices.

The $513.81 estimated retail level of quality change breaks down as follows:

* $207.87 for changes in accordance with 1990 Clean Air Act Amendments, specifically OBD II (On Board Diagnostics, Second Generation) requirements.

* $155.88 for changes in accordance with all other 1990 Clean Air Act Amendments.

* $150.06 for changes in accordance with Federal Motor Vehicle Safety Standard (FMVSS) 208, passive restraints, and other quality changes such as powertrain improvements, corrosion protection upgrades, and changes in levels of standard or optional equipment.

Estimates of the value of quality change are based on a review by BLS of data supplied by producers for similarly equipped 1995 and 1996 domestic models priced for the Producer Price Index. Most of the estimates of quality changes in this release are derived from information supplied for the Producer Price Index for October.