September 1997 Producer Price Index

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The Producer Price Index for Finished Goods increased 0.5 percent in September, seasonally adjusted, the Bureau of Labor Statistics of the U. S. Department of Labor reported today. This followed a rise of 0.3 percent in August. Prices for finished goods other than foods and energy increased 0.4 percent in September after inching up 0.1 percent in the prior month. Prices received by domestic producers of intermediate goods rose 0.3 percent in September after increasing 0.1 percent in the previous month. The index for crude materials increased 0.6 percent after rising 0.7 percent in August. (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 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

The September increase in the index for finished goods was led by a 1.5 percent rise in finished energy goods. Increases in the indexes for consumer goods other than foods and energy and for capital equipment also contributed to the September rise. Much of the advance in these latter indexes was due to a seasonally-adjusted increase of 1.2 percent in motor vehicle prices. The index for finished consumer foods rose less than a month ago.

For the first nine months of 1997, the Producer Price Index for Finished Goods declined at a 1.4-percent seasonally-adjusted annual rate (SAAR). This compares with a 2.8-percent increase during all of 1996. Prices for finished goods other than foods and energy increased at a 0.3- percent SAAR for the first nine months of 1997 after rising 0.6 percent in the prior year.

During the third quarter of 1997, the Finished Goods Price Index rose at a seasonally-adjusted annual rate of 2.8 percent following a 3.6-percent rate of decline during the second quarter. The index for finished energy goods increased at a 12.4-percent annual rate from June 1997 to September 1997 after falling at a 15.1-percent rate during the second quarter of 1997. The annualized rate of increase for the finished goods less food and energy index was 1.4 percent during the third quarter following a decline of 0.8 percent in the previous quarter. Prices for finished consumer foods advanced at a seasonally-adjusted annual rate of 0.6 percent from June to September after decreasing at a 3.5-percent rate during the second quarter. The index for capital equipment turned up 0.9 percent on a SAAR basis after falling at a 1.2 percent rate in the previous quarter.

Before seasonal adjustment, the Producer Price Index for Finished Goods increased 0.1 percent in September to stand at 131.8 (1982=100). From September 1996 to September 1997, the finished goods index showed no change. During this same period, prices for finished energy goods fell 0.1 percent, finished consumer foods prices declined 0.6 percent, and prices for finished goods other than foods and energy rose 0.4 percent. Prices received by domestic producers of intermediate goods moved down 0.6 percent during the 12 months ended in September 1997, and crude materials prices fell 4.2 percent over the same period.

Finished goods

The Producer Price Index for Finished Energy Goods rose 1.5 percent, seasonally adjusted, in September after increasing 1.4 percent a month ago. Price increases for residential electric power, gasoline, residential natural gas, and finished lubricants outweighed price decreases for fuel oil #2.

The index for finished consumer goods other than foods and energy rose 0.5 percent in September following a 0.1-percent increase in the prior month. Prices for passenger cars rose 1.4 percent after gaining 0.5 percent in the previous month. Before seasonal adjustment, the index for passenger cars fell 1.8 percent in September to a point 2.1 percent below its year-ago level. The indexes for light trucks and tobacco products turned up after falling in August. By contrast, the index for alcoholic beverages turned down 1.0 percent following a 0.4-percent increase in the prior month. Prices for book publishing also turned down after rising a month ago.

The index for capital equipment increased 0.3 percent in September after showing no change in August. Prices for light motor trucks turned up 1.5 percent after declining 0.1 percent a month ago. The index for communication and related equipment showed no change after falling in August. Prices for commercial furniture rose after showing no change in the prior month.

The index for finished consumer foods increased 0.1 percent in September. Rising prices for fresh fruits and melons, eggs for fresh use, finfish and shellfish, and dairy products were key factors behind this month's advance. The September increase for finished consumer foods followed a 0.3-percent increase in the previous month. This deceleration was led by the index for fresh and dry vegetables, which fell 5.1 percent after rising 17.5 percent in August. Prices for beef and veal and for roasted coffee also turned down after increasing in the prior month. The index for processed young chickens fell more than a month ago.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components increased 0.3 percent in September, seasonally adjusted. This advance can be traced primarily to price increases for intermediate energy goods, intermediate foods and feeds, and materials for nondurable manufacturing. By contrast, the index for materials and components for construction fell slightly in September. Prices for materials for durable manufacturing were unchanged over the month. The index for intermediate goods excluding foods and energy showed no change after rising 0.1 percent in August. (See Table B.)

The 0.3-percent rise in prices for intermediate goods in September follows a 0.1-percent gain in the previous month. The key factors in this acceleration were an upturn in prices for foods and feeds and a faster rate of increase for energy goods than in the prior month.

For the third quarter, the Intermediate Goods Price Index advanced at a seasonally-adjusted annual rate of 1.0 percent after declining at a 1.9- percent rate during the second quarter of 1997. The index for intermediate energy goods rose at a seasonally-adjusted annual rate of 3.7 percent in the third quarter after falling at a 14.2-percent rate during the second quarter. The index for intermediate foods and feeds fell at a seasonally- adjusted annual rate of 2.2 percent from June to September after declining at a 1.6-percent rate during the second quarter. The index for intermediate goods other than foods and energy rose at an annual rate of 0.3 percent in the third quarter after increasing at a 0.4-percent rate in the second quarter.

The index for intermediate energy materials rose 1.4 percent in September. This advance was led by a 1.6-percent increase in prices for electric power. Also contributing were rising prices for residual fuel, liquefied petroleum gas, and gasoline. The September rise in the intermediate energy goods index followed a 0.7-percent advance in August. This acceleration was, again, primarily caused by prices for electric power, which increased after falling 0.9 percent in the previous month. The index for residual fuel also turned up after falling in August. By contrast, the index for No. 2 diesel fuel declined 4.8 percent following a 4.3-percent advance one month ago. Prices for jet fuels also fell after rising.

The index for intermediate foods and feeds rose 1.4 percent in September. Key to this advance was a 2.8-percent increase for prepared animal feeds. Increasing prices for confectionery materials, cheese, dairy products, and flour also contributed to the overall index's rise. September's increase in prices for intermediate foods and feeds follows a 0.7-percent decline one month ago. Contributing most to this upturn was the index for prepared animal feeds, which rose 2.8 percent after falling 2.1 percent in the prior month. Prices for confectionery materials and crude vegetable oils also increased after falling last month. By contrast, the index for beef and veal declined 0.6 percent following a 3.3-percent advance in the previous month.

The index for materials for nondurable manufacturing rose 0.4 percent for September. A 4.3-percent increase in prices for paperboard was key to this advance. The increase in the index for nondurable manufacturing materials followed a smaller 0.2-percent advance in August. Contributing to this acceleration was a moderation in the rate of decline in the index for plastic resins. Those prices fell 0.7 percent in September after falling 1.7 percent in August. Prices for paperboard, primary basic organic chemicals, and paper rose more than in the previous month. The index for finished fabrics increased after falling a month earlier. By contrast, the index for alkalies and chlorine decreased 1.6 percent following a 2.8-percent increase in the prior month. Prices for paint materials and nitrogenates also fell after rising in August. The index for woodpulp rose less than a month ago.

The index for materials and components for construction declined 0.1 percent in September, the same as a month ago. Falling prices for softwood lumber, plastic construction products, fabricated structural metal products, and asphalt felts and coatings outweighed advancing prices for air conditioning and refrigeration equipment, plywood, and gypsum products.

The index for materials for durable manufacturing was unchanged in September, the same as in August. Rising prices for aluminum mill shapes; hot rolled bars, plates, and structural shapes; primary aluminum ingot; semi-finished steel mill products; and prepared paint were offset by declining prices for copper cathode and refined copper, copper and brass mill shapes, cold rolled sheet and strip, hot rolled sheet and strip, and flat glass.

Crude goods

The Producer Price Index for Crude Materials for Further Processing rose 0.6 percent, seasonally adjusted, in September following a 0.7-percent gain in August. Price increases for crude energy materials more than offset declines for basic industrial materials and for foodstuffs and feedstuffs. (See table B.)

The index for crude goods turned up at a 4.6-percent seasonally- adjusted annual rate from June 1997 through September 1997 following a 1.9- percent rate of decline in the second quarter of 1997. Prices for crude energy materials rose at a 16.6 percent SAAR in the third quarter after increasing at a 10.2-percent rate between March 1997 and June 1997. The index for basic industrial materials declined at a 3.0-percent SAAR during the third quarter following a 3.5-percent rate of decline in the second quarter. Prices for crude foodstuffs and feedstuffs also fell less rapidly in the third quarter (-0.4 percent) than in the second quarter (-10.1 percent) on a SAAR basis.

The index for crude energy materials increased 2.6 percent in September. This rise was mostly due to a 7.4-percent advance in prices for natural gas. The September increase in prices for crude energy materials follows a 1.7 percent rise in August. This acceleration was led by natural gas prices, which rose faster in September than in August. By contrast, prices for crude petroleum turned down after showing no change in August. Coal prices rose less than in the previous month.

Prices for crude nonfood materials less energy fell 1.0 percent in September after rising 0.8 percent in the prior month. The index for wastepaper turned down 4.9 percent following an 18.5-percent increase a month ago. Prices for iron and steel scrap and for aluminum base scrap also fell after rising in August.

The index for crude foodstuffs and feedstuffs decreased 0.3 percent in September. The 6.8-percent decline in prices for slaughter broilers and fryers was the main cause of this index's decline. The September decrease in prices for crude foodstuffs and feedstuffs follows a smaller 0.1-percent drop in August. This faster rate of decline was led by the index for Irish potatoes for processing, which turned down 15.3 percent following a 105.3 percent rise in the prior month. Prices for slaughter broilers and fryers and for fluid milk also fell after increasing a month ago. The index for wheat rose less than in the previous month. By contrast, prices for slaughter hogs declined 3.3 percent in September after falling 7.9 percent in August. The index for fresh fruits and melons turned up after declining a month earlier.

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 2.0 percent in September following a 1.1-percent increase in August. (Net output price indexes are not seasonally adjusted.) During the third quarter of 1997, this index rose at an annual rate of 12.1 percent, after increasing at a 4.6-percent rate in the second quarter. In September, prices for the oil and gas extraction industry group turned up 2.9 percent after rising 1.4 percent in the previous month. The index for the coal mining industry group increased 0.2 percent following a 1.0-percent increase a month ago. Prices for the nonmetallic minerals mining industry group declined 0.1 percent following a 6.2-percent advance in the prior month. The index for the metal mining industry group fell 3.2 percent, after showing no change one month ago. In September, the Producer Price Index for total domestic mining industries stood at 82.0 (December 1984=100), 0.9 percent above its year-ago level.

Manufacturing. The Producer Price Index for the net output of total domestic manufacturing industries showed no change in September following a 0.2-percent increase in August. From June to September, this index showed no change, after declining at a 1.6-percent annual rate in the second quarter. In September, prices for the petroleum refining and related products industry group rose 1.4 percent following a 4.2-percent increase in the prior month. The indexes for fabricated metal products, measuring and controlling instruments, and miscellaneous manufacturing industries showed no change after rising in August. Prices for the food and kindred products, and rubber and plastic products industry groups turned down after increasing in the previous month. The index for the transportation equipment industry group fell more than in the prior month. On the other hand, prices for the tobacco manufactures industry group advanced 4.4 percent after showing no change in August. The indexes for the paper and allied products and leather and leather products industry groups rose more than in the previous month. In September, the Producer Price Index for the net output of the total domestic manufacturing sector stood at 127.3 (December 1984=100), 0.2 percent below its year-ago level.

Other. Among other industries in September, the indexes for local trucking without storage, scheduled air cargo transportation, travel agencies, hotels and motels, offices and clinics of doctors of medicine, and home health care services advanced following declines one month ago. Prices for local trucking with storage rose after showing no change in the prior month. The index for farm product warehousing and storage, airports and airport services, natural gas utilities, and specialty hospitals, except psychiatric increased more than in the previous month. Prices for freight transportation on the Great Lakes-St. Lawrence Seaway, tugging and towing services, air courier services, and truck rental and leasing (without drivers) were unchanged following declines in August. The indexes for deep sea foreign transportation of freight and marine cargo handling fell less than one month earlier.

By contrast, prices for freight transportation arrangement, scrap and waste materials, and passenger car rental (without drivers) declined following advances one month ago. Prices for scheduled air passenger transportation fell more than last month. The indexes for nonscheduled air transportation, and architectural design, analysis, and consulting services showed no change following advances in August. Prices for railroads (line- haul operating) and skilled and intermediate care facilities rose less than in the prior 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 May 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. Table 2. Producer Price Indexes and percent changes for selected commodity groupings by stage of processing - Continued (1982=100 unless otherwise indicated)

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

1/ Data for May 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 May 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 May 1997 have been recalculated to incorporate late reports and corrections by respondents. 2/ Includes crude petroleum. 3/ Excludes crude petroleum.