August 1997 Producer Price Index

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The Producer Price Index for Finished Goods increased 0.3 percent in August, seasonally adjusted, the Bureau of Labor Statistics of the U. S. Department of Labor reported today. This followed declines in each of the 7 previous months. Prices for finished goods other than foods and energy increased 0.1 percent after falling 0.1 percent in July and rising 0.1 percent in June. Prices received by domestic producers of intermediate goods rose 0.1 percent in August after decreasing 0.2 percent in the previous month. The index for crude goods turned up 0.7 percent after falling 0.1 percent in July. (See table A.)

Change in Except finished Inter- goods foods from 12 mediateCrude and months Month Total Foods Energy energy ago goods goods (unadj.) 1996 Aug. 0.3 0.7 0.6 0.1 3.0 0.2 0.6 Sept. 0.3 0.4 0.7 0.1 3.0 0.4 -2.6 Oct. 0.4 0.8 1.7 -0.1 3.1 -0.2 -0.7 Nov. 0.2 0 0.9 0 3.0 -0.2 2.7 Dec. 0.5 -0.2 3.3 0.1 2.8 0.5 6.2

About two-thirds of the August increase in the finished goods index resulted from a 1.4-percent rise in finished energy prices. This rise compared with a smaller increase in energy prices of 0.1 percent in July and led the overall turnaround in the finished goods index. Also contributing to the finished goods upturn, prices for finished consumer foods and consumer goods other than foods and energy rose in August after falling in the prior month. Prices for capital equipment showed no change after declining 0.1 percent in July.

For the first eight months of 1997, the Producer Price Index for Finished Goods declined at a 2.2-percent seasonally-adjusted annual rate (SAAR). This compares with a 2.8-percent increase during all of 1996. Finished goods other than foods and energy fell at a 0.3-percent SAAR after rising 0.6 percent in the prior year.

Before seasonal adjustment, the Producer Price Index for Finished Goods increased 0.3 percent in August to 131.7 (1982=100). From August 1996 to August 1997, the finished goods index fell 0.2 percent. During this same period, prices for finished energy goods fell 0.7 percent, consumer foods prices declined 0.4 percent, and prices for finished goods other than foods and energy showed no change. Prices received by domestic producers of intermediate goods moved down 0.4 percent during the 12 months ended in August 1997, and crude materials prices fell 7.1 percent over the same period.

Finished goods

The Producer Price Index for Finished Energy Goods rose 1.4 percent in August. This advance was led by a 5.9-percent increase in gasoline prices. The rise in the finished energy goods index was larger in August than in the prior month. This faster rate of increase was primarily caused by gasoline prices, which turned up after decreasing 1.0 percent in the previous month. The index for fuel oil #2 also rose after falling in July.

The index for finished consumer foods increased 0.3 percent in August. Rising prices for fresh and dry vegetables, beef and veal, and dairy products were key factors behind this advance. August's increase for consumer foods followed a 0.2-percent decline in the previous month. This upturn was led by a rise of 3.3 percent in the index for beef and veal following a decrease of 1.3 percent in July. Prices for dairy products also turned up after falling in the previous month. The index for fresh and dry vegetables rose more rapidly than a month ago. By contrast, prices for eggs for fresh use turned down 8.9 percent after advancing 21.7 percent in the prior month.

The index for finished consumer goods other than foods and energy rose 0.1 percent in August. The leading price increases were for passenger cars, sanitary papers, alcoholic beverages, and floor coverings. The August rise in consumer goods excluding foods and energy followed a decline of 0.1 percent in July. This turnabout can be traced to upturns in prices for passenger cars and floor coverings. The index for sanitary paper products rose after showing no change in the previous month. Prices for light motor trucks fell less than a month ago. On the other hand, the index for over-the-counter drugs turned down 2.1 percent following an increase of 0.2 percent in July.

The index for capital equipment showed no change in August after decreasing 0.1 percent in the prior month. Price increases for civilian aircraft, ships, metal cutting machine tools, and construction machinery offset price declines for electronic computers, communication equipment, light trucks, and heavy trucks.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components increased 0.1 percent in August, seasonally adjusted. This increase was due to higher prices for intermediate energy goods and for nondurable manufacturing materials. By contrast, prices for intermediate foods and feeds and construction materials fell in August. Prices for intermediate materials for durable manufacturing were unchanged over the month. The index for intermediate goods excluding foods and energy rose 0.1 percent after showing no change a month earlier. (See table B.)

The rise in intermediate goods follows a 0.2-percent decline in July. This upswing can be traced to intermediate energy prices, which rose 0.7 percent after falling 1.1 percent in July. The index for materials for durable manufacturing showed no change after declining a month ago. Prices for intermediate foods and feeds fell less rapidly than in the prior month.

Prices for intermediate energy goods increased 0.7 percent in August. This gain was led by a 5.9-percent rise in the gasoline index. Prices also increased for no. 2 diesel fuel, jet fuels, and liquefied petroleum gas. August's increase in intermediate energy goods follows a 1.1-percent decline in July. This upturn was again primarily caused by gasoline prices, which rose after falling 1.0 percent in the previous month. Prices also turned up for no. 2 diesel fuel, jet fuels, and liquefied petroleum gas.

Prices for nondurable manufacturing materials rose 0.2 percent in August, the same as in July. Price increases for paperboard, woodpulp, fertilizer materials, paint materials, and primary basic organic chemicals outweighed price declines for plastic resins and materials, inedible fats and oils, and sodium compounds.

Prices for intermediate foods and feeds fell 0.7 percent in August. This decline was led primarily by a 2.1-percent drop in the index for prepared animal feeds. The decline in the index for intermediate foods and feeds follows a 1.2-percent decrease in the July. This slowing rate of decline was led by an upturn in prices for dairy products, beef and veal, and flour. By contrast, the index for pork turned down after rising a month earlier, and the index for prepared animal feeds fell more than in July.

The index for construction materials moved down 0.1 percent in August, led by a 1.7-percent decline for softwood lumber. Prices also fell for plywood and for nonferrous wire and cable. The decrease in prices of construction materials follows a 0.1-percent increase in July. This downturn can be traced primarily to the softwood lumber index, which fell 1.7 percent after edging down 0.1 percent in the previous month. Prices for millwork and plywood also fell after rising in July. The index for fabricated structural metal rose less than in the prior month. On the other hand, prices for gypsum products fell less than a month ago. The index for plastic construction materials rose after showing no change in the previous month.

The index for durable manufacturing materials was unchanged in August. Decreases for materials such as copper, aluminum, flat glass, plywood, semi- finished steel mill products, cold rolled sheets and strips, and microprocessors offset increases for hot rolled sheets and strip, aluminum mill shapes, and cement. The unchanged index for materials for durable manufacturing follows a 0.6-percent decline in July. This upturn was led by a smaller August decline in prices for copper than in the prior month. The indexes for hot rolled sheet and strip, aluminum mill shapes, and silver rose after falling in the previous month. Conversely, prices for semifinished steel mill products turned down 0.6 percent after rising 2.6 percent in July.

Crude Goods

The Producer Price Index for Crude Materials for Further Processing increased 0.7 percent, seasonally adjusted, in August. Rising prices for crude energy materials led the increase. The August advance in the crude goods index follows a 0.1-percent drop in July. This upturn can be traced to the indexes for crude energy materials and basic industrial materials, which both rose after falling in the prior month. By contrast, prices for foodstuffs and feedstuffs turned down after rising a month earlier. (See table B.)

The index for crude energy materials rose 1.7 percent in August. This increase was due to a 2.4-percent rise for both the natural gas and coal indexes. The August increase in prices for crude energy materials follows a 0.4-percent drop in July. Upturns in the indexes for natural gas and coal were key factors behind this acceleration. Conversely, the index for crude petroleum showed no change after rising in the prior month.

Prices for crude nonfood materials less energy advanced 0.8 percent in August. This increase was primarily due to an 18.5-percent rise in the index for wastepaper. Comparing the past two months, the rise in prices for crude nonfood materials less energy follows a 0.5-percent decline in July. The indexes for wastepaper, gold ores, and aluminum base scrap rose after falling a month ago. Prices for nonferrous metals declined less than in the prior month.

The index for crude foodstuffs and feedstuffs decreased 0.1 percent in August. A 7.9-percent drop in prices for slaughter hogs and a 5.0-percent decline in the index for soybeans were key factors in the decrease. August's decrease for crude foodstuffs and feedstuffs follows a 0.3- percent increase in July. Leading this downturn, prices for slaughter hogs and slaughter cattle fell after rising in July. The index for slaughter broilers and fryers rose less than in the prior month. By contrast, prices for fluid milk and wheat rose after falling in the previous month. The index for Irish potatoes for processing rose strongly after showing no change in July.

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

Mining. The Producer Price Index for the net output of total domestic mining industries advanced 1.1 percent in August following a 0.3-percent decline in July. (Net output price indexes are not seasonally adjusted.) In August, prices for the metal mining industry group were unchanged following a 4.8-percent decline in the previous month. The index for the coal mining industry group increased 1.0 percent following a 2.8-percent decrease a month ago. Prices for the oil and gas extraction industry group advanced 1.4 percent following a 0.5-percent advance in the prior month. The index for the nonmetallic minerals mining industry group rose 0.2 percent, the same as one month ago. In August, the Producer Price Index for total domestic mining industries stood at 80.4 (December 1984=100), 2.7 percent below its year-ago level.

Manufacturing. The Producer Price Index for the net output of total domestic manufacturing industries advanced 0.2 percent in August following a 0.2-percent decline in July. In August, price increases for the industry groups for petroleum refining and related products, food and kindred products, paper and allied products, textile mill products, miscellaneous manufacturing industries, fabricated metal products (except machinery and transportation equipment), and measuring and controlling instruments more than offset price decreases for the industry groups for electrical and electronic machinery, lumber and wood products, chemicals and allied products, and transportation equipment. In August, the Producer Price Index for the net output of the domestic manufacturing sector stood at 127.3 (December 1984=100), 0.1 percent below its year-ago level.

Other. Among other industries in August, the indexes for scrap and waste materials, water transportation of freight (not elsewhere classified), radio broadcasting, and operators and lessors of nonresidential buildings advanced following declines one month ago. Prices for farm product warehousing and storage and help supply services rose after showing no change in the prior month. The indexes for passenger car rental (without drivers), real estate agents and managers, telephone communications (except radiotelephone), building cleaning and maintenance services, architectural services, and railroads (line-haul operating) increased more than in the previous month. Prices for crude petroleum pipelines and general warehousing and storage were unchanged following declines in July. The index for truck rental and leasing (without drivers) fell less than one month earlier.

By contrast, prices for deep sea foreign transportation of freight, marine cargo handling, freight transportation on the Great Lakes-St. Lawrence Seaway, home health care services, scheduled air cargo transportation, general medical and surgical hospitals, scheduled air passenger transportation, tugging and towing services, and local trucking without storage declined following advances one month ago. The indexes for electric power utilities and air courier services fell after showing no change in the prior month. Prices for hotels and motels and travel agencies fell more than last month. The indexes for refined petroleum pipelines and medical laboratories showed no change following advances in July. Prices for freight transportation arrangement, accounting, auditing, and bookkeeping services, advertising agencies, skilled and intermediate care facilities, natural gas utilities, and cable and other pay television services rose less than the previous month.

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. Table 1. Producer Price Indexes and percent changes by stage of processing (1982=100)

1/ Comprehensive relative importance figures are initially computed 3/ Includes crude petroleum. after the publication of December indexes and are recalculated 4/ Excludes crude petroleum. after final December indexes are available. The first-published 5/ Percent of total finished goods. and final December relative importances initially appear, 6/ Percent of total intermediate materials. respectively, in the release tables containing January and May data. 7/ Formerly titled "Crude materials for 2/ The indexes for April 1997 have been recalculated to incorporate further processing, excluding crude late reports and corrections by respondents. All indexes foodstuffs and feedstuffs, plant and are subject to revision four months after original publication. animal fibers, oilseeds, and leaf tobacco." 8/ Percent of total crude materials. 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.

1/ The indexes for April 1997 have been recalculated 2/ Not seasonally adjusted. to incorporate late reports and corrections by respondents. 3/ Not available. All indexes are subject to revision four months after original publication.

1/ Data for April 1997 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.

1/ Indexes in this table are derived from the net-output-weighted industry price indexes. Because of differences in coverage and aggregation methodology, they will generally not match the movements of similarly-titled indexes which are derived from traditional commodity groupings. 2/ The indexes for Apr. 1997 have been recalculated to incorporate late reports and corrections by respondents. All indexes are subject to revision four months after original publication. 3/ Not available. Table 5. Producer Price Indexes by stage of processing, seasonally adjusted (1982=100)

1/ All seasonally adjusted indexes are subject to change up to 5 years after original publication due to the recalculation of seasonal factors each January. The indexes for April 1997 have been recalculated to incorporate late reports and corrections by respondents. 2/ Includes crude petroleum. 3/ Excludes crude petroleum.