February 1996 Producer Price Index

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The Producer Price Index for Finished Goods decreased 0.2 percent in February on a seasonally adjusted basis, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. In January, the finished goods index rose 0.3 percent after increasing 0.6 percent in December. Prices received by domestic producers of intermediate goods moved down 0.4 percent in February after rising 0.1 percent in the previous month. Crude material prices decreased 0.7 percent following a 2.1 percent advance in January. (See table A.)

Among finished goods in February, the index for energy goods turned down 0.7 percent after rising 2.7 percent a month earlier. Prices for finished consumer foods declined 0.3 percent after falling 0.2 in January. The index for finished goods other than foods and energy turned up 0.1 percent following a decline of the same amount in January.

because indexes for October 1995 have been recalculated to incorporate late reports and correctionsby respondents. All indexes are subject to revision 4 months after original publication.

Before seasonal adjustment, the Producer Price Index for Finished Goods decreased 0.1 percent in February to 129.4 (1982=100). From February 1995 to February 1996, this index rose 2.0 percent. During the same period, prices for finished goods other than foods and energy moved up 2.1 percent, consumer food prices rose 1.9 percent, and the index for finished energy goods increased 1.8 percent. The index for intermediate materials increased 1.1 percent during the 12 months ended February 1996, and crude materials prices were 4.2 percent higher than a year earlier.

Finished goods

The Producer Price Index for finished energy goods declined 0.7 percent in February, seasonally adjusted, following an increase of 2.7 percent a month earlier. The index for gasoline turned down 4.2 percent after surging 13.3 percent in the prior month. Prices for residential electric power fell more in February than in the previous month. In addition, the index for home heating oil rose less than in January. By contrast, the index for finished lubricants turned up 4.5 percent after declining 3.7 percent a month ago.

The index for finished consumer foods fell 0.3 percent in February after decreasing 0.2 percent in January. Price declines for finfish and shellfish, fresh and dry vegetables, soft drinks, young chickens, beef and veal, shortening and cooking oils, and dairy products outweighed increases for pork, fresh fruits and melons, and bakery products.

The index for finished consumer goods less foods and energy turned up 0.1 percent in February after a fall of the same magnitude a month earlier. The index for passenger cars turned up 0.1 percent after decreasing 1.5 percent in January. Prices for alcoholic beverages, periodicals, sporting goods, and for soap and synthetic detergents also rose after declining in the previous month. The index for prescription drugs, however, turned down 1.1 percent after rising 0.9 percent a month earlier. Prices for women's apparel, cosmetics, household appliances, and tobacco products also fell after advancing in January.

The capital equipment index advanced 0.1 percent following a 0.1 percent decrease in the previous month. The index for heavy trucks turned up 1.1 percent after falling 0.5 percent in January. Prices for commercial furniture and x-ray equipment also increased after declining in the prior month. The index for light trucks fell less than a month earlier. In addition, prices for both agricultural and paper industries machinery rose more than a month ago. On the other hand, the index for civilian aircraft turned down 0.1 percent after rising 0.3 percent in January. Prices for communication equipment rose less than in the previous month. The index for electronic computers fell more than in the prior month. In addition, prices for tools, dies, jigs, fixtures, and industrial molds remained unchanged after increasing a month earlier.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components turned down 0.4 percent in February, seasonally adjusted, after rising 0.1 percent in the previous month. Prices for energy materials and for foods and feeds fell after rising in January. Prices for construction materials remained unchanged after falling in January, and the indexes for both durable and nondurable manufacturing materials fell slightly less than in the prior month. Excluding food and energy, intermediate materials prices fell 0.2 percent, the fifth straight monthly decline. (See table B.)

In February, the index for intermediate energy goods decreased 1.3 percent after rising 2.9 percent in the prior month. The downturn was led by prices for gasoline, which fell 4.2 percent after rising 13.3 percent in January. Indexes for jet fuels, residual fuel, and diesel fuel fell after rising in January. By contrast, the indexes for natural gas to electric utilities and for coke oven products increased after declining in January.

The index for intermediate foods and feeds turned down 0.5 percent in February after rising 0.2 percent in the previous month. The February decline followed eight consecutive monthly increases for this index. The downturn was led by the index for prepared animal feeds, which turned down 0.2 percent after rising 3.5 percent in January. Prices for liquid milk products and refined sugar also fell after rising in the prior month. The index for confectionery materials fell more than a month ago. By contrast, flour prices turned up 5.8 percent in February following a 2.4 percent decline a month earlier. The index for pork also rose after falling in January. In addition, crude vegetable oil prices remained unchanged after falling in the previous month, and the index for beef and veal fell less than in January.

The index for construction materials remained unchanged after falling 0.4 percent in January. Prices for plastic construction products rose 0.9 percent after falling 2.6 percent in the prior month. The index for softwood lumber also rose after falling a month earlier. Prices for plywood and for nonferrous wire and cable fell less than in the previous month. By contrast, the indexes for heating equipment and wiring devices fell 0.1 percent and 0.2 percent after gaining 0.6 percent and 0.3, respectively, in the prior month. The indexes for air conditioning and refrigeration equipment and for plumbing fixtures and brass fittings rose less than in January.

The index for nondurable manufacturing materials fell 0.6 percent in February after declining 0.7 percent in January. The February decline was led by a 9.9 percent drop in prices for woodpulp. The indexes for paperboard, plastic resins and materials, paper, and medicinal and botanical chemicals also fell. By contrast, prices for basic organic chemicals rose 0.6 percent. In addition, prices increased for phosphates, basic inorganic chemicals, and finished fabrics.

In February, the index for durable manufacturing materials fell 0.8 percent after declining 0.9 percent a month earlier. The February decline was led by a 2.0 percent decrease in the prices for aluminum mill shapes. The indexes for hot rolled sheet and strip, copper and brass mill shapes, cold rolled sheet and strip, copper, and aluminum also fell. Slightly offsetting these declines, the index for flat glass rose 0.8 percent. In addition, indexes for cement, hardwood lumber, silver, hot rolled bars, plates and structural shapes, and gold also rose in February.

Crude goods

The Producer Price Index for Crude Materials for Further Processing fell 0.7 percent, seasonally adjusted, in February after rising 2.1 percent in the prior month. The index declines were broad-based. Following an increase in January, prices for energy materials turned down. Prices for basic industrial materials declined after remaining unchanged in January. In addition, the index for foodstuffs and feedstuffs fell more than a month earlier. (See table B.)

The index for crude energy materials fell 1.1 percent in February after rising 7.3 percent in the prior month. The increase in the index for natural gas to pipelines slowed to 0.5 percent after a 13.5 percent surge in January. Prices for crude petroleum turned down 5.2 percent following a

7.5 percent increase a month earlier. By contrast, prices for coal advanced 3.2 percent after declining the same amount in January. Prices for crude nonfood materials less energy dropped 0.5 percent in February after remaining unchanged in the previous month. Prices for softwood logs turned down 2.1 percent after rising 1.0 percent in January. Prices for wastepaper and iron and steel scrap rose less than a month earlier. The index for hardwood logs remained unchanged following a rise in January. In contrast, the leaf tobacco index advanced 11.1 percent in February after rising 0.7 percent in the prior month. Prices for raw cotton and copper base scrap fell less than in the previous month. The index for cattle hides turned up in February after falling in the previous month.

The index for crude foodstuffs and feedstuffs declined 0.5 percent in February after falling 0.4 percent in the prior month. Price decreases for slaughter cattle, slaughter broilers, alfalfa hay, and fresh vegetables, except potatoes, outweighed increases for corn, wheat, fluid milk, slaughter turkeys, and Irish potatoes for processing.

Net output price indexes for mining, manufacturing, and other industries Mining. The Producer Price Index for the net output of the domestic mining sector turned down 0.4 percent in February after increasing 6.3 percent in January. (Net output price indexes are not seasonally adjusted.) In February the index for oil and gas extraction declined after rising in the previous month. Prices for the metal mining industry group fell about twice as fast as they had fallen in January. Prices for the non- metallic minerals mining industry group, however, rose more rapidly than a month earlier. The index for the bituminous coal and lignite mining turned up 2.1 percent following a 1.9 percent decrease a month earlier. In February, the Producer Price Index for total mining stood at 75.6 (December 1984=100), 6.2 percent higher than a year earlier.

Manufacturing. Prices received by producers for the net output of the domestic manufacturing sector edged down 0.1 percent in February after rising 0.4 percent in January. In February, the index for the refined petroleum industry group turned down 3.1 percent after advancing 5.3 percent in the previous month. Price increases slowed for the industry groups for measuring instruments and for electrical and electronic machinery. The chemical and allied products, food and kindred products, and apparel industry group indexes were unchanged after increasing in the previous month. By contrast, the index for the transportation equipment industry group inched up 0.1 percent after moving down 0.3 percent in January. Prices fell, but less than in January, for the industry groups for paper and allied products and for primary metal industries. In February, the index for total manufacturing was 125.7 (December 1984=100), 2.1 percent higher than a year earlier.

Other. Among other industries, the index for waste paper collection turned down 0.3 percent in February after rising 13.8 percent in January. Prices for waste materials collection other than metal and paper declined 4.5 percent following no change in the previous month. Prices also decreased in February after moving up or showing no change in January for the following service industries: real estate agents and managers; water transportation of freight, n.e.c.; freight transportation arrangement; electric power utilities; farm produce warehousing and storage; trucking, except local; air cargo transportation; advertising agencies; and nonscheduled air transportation. Indexes continued to fall for airports and airport services. By contrast, prices turned up after falling or showing no change in January for passenger car rental, air passenger transportation, air courier services, local trucking with storage, crude petroleum pipelines, telephone communications except radiotelephone. Price increases accelerated for courier services, except by air; travel agencies; help supply agencies; and truck rental and leasing. Price increases slowed for natural gas utilities, ferrous metal scrap collection, skilled and intermediate care facilities, and other specialty hospitals. The index for nonferrous metal scrap collection fell less than in January; February marked the sixth consecutive month of decline. Prices continued to rise for cable and other pay television services.

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