November 1997 Producer Price Index

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The Producer Price Index for Finished Goods decreased 0.2 percent in November, seasonally adjusted, the Bureau of Labor Statistics of the U. S. Department of Labor reported today. This followed a rise of 0.1 percent in October. Prices for finished goods other than foods and energy fell 0.1 percent in November after showing no change in the prior month. Prices received by domestic producers of intermediate goods increased 0.2 percent in November following a 0.1-percent decrease in the previous month. The index for crude materials rose 1.6 percent after advancing 4.0 percent in October. (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 Nov. 0.2 0.0 0.9 0.0 3.0 -0.2 2.7 Dec. 0.5 -0.2 3.3 0.1 2.8 0.5 6.2

A 0.8 percent drop in energy goods prices led the November decrease in the index for finished goods. Also contributing were small declines in the indexes for finished consumer foods, finished consumer goods other than foods and energy, and capital equipment.

For the first 11 months of 1997, the Producer Price Index for Finished Goods declined at a 1.2-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 0.2-percent SAAR for the first 11 months of 1997 after rising 0.6 percent in the prior year.

Before seasonal adjustment, the Producer Price Index for Finished Goods declined 0.5 percent in November to stand at 131.8 (1982=100). From November 1996 to November 1997, the finished goods index decreased 0.6 percent. During this same period, prices for finished energy goods fell 3.4 percent, consumer foods prices declined 1.2 percent, and prices for finished goods other than foods and energy rose 0.3 percent. Prices received by domestic producers of intermediate goods moved down 0.1 percent during the 12 months ended in November 1997, and crude materials prices decreased 0.9 percent over the same period.

Finished goods

Prices for finished energy goods fell 0.8 percent in November following a 0.1 percent rise in October. The heavily weighted index for residential electric power turned down 0.7 percent after advancing 0.5 percent in October. By contrast, the index for finished lubricants rose 1.2 percent after falling 5.8 percent in the previous month. Prices for fuel oil #2 and residential natural gas rose more than in the prior month. The index for gasoline fell less than in October.

The index for finished consumer goods other than foods and energy fell 0.1 percent in November after rising 0.1 percent in Ocotober. In November, prices for passenger cars decreased 0.6 percent following a 0.7-percent advance in the previous month. The index for home electronic equipment fell more than in the prior month. Prices for gold jewelry, tires and tubes, and floor coverings fell after rising in October. By contrast, the index for women's apparel rose 0.8 percent after falling 0.9 percent in the previous month. Prices for sanitary paper products fell less than in the prior month.

The index for finished consumer foods decreased 0.1 percent in November. Declining prices for fresh fruits and melons and for fresh and dry vegetables were the key factors in this decrease. The decline in finished consumer food prices in November followed a 0.4 percent advance a month ago. The turnaround was led by the index for fresh and dry vegetables, which fell 11.0 percent after rising 16.8 percent in the previous month. Prices for finfish and shellfish and for fresh fruits and melons also turned down after rising in October. The indexes for beef and veal and for roasted coffee fell more than in the prior month. By contrast, the index for eggs for fresh use advanced 30.6 percent after declining 10.0 percent a month ago. Prices for pork also rose after falling in the previous month. The index for butter rose more than in October.

The index for capital equipment declined 0.1 percent in November after decreasing the same amount in October. Price declines for light motor trucks, electronic computers, and civilian aircraft slightly outweighed price increases for communication and related equipment, heavy motor trucks, and commercial furniture.

Intermediate goods

The index for intermediate goods rose 0.2 percent following a 0.1- percent decline in October. The index for intermediate food and feeds increased after declining a month ago. Prices for construction materials also increased after falling in October. The index for nondurable manufacturing materials rose after showing no change in the prior month. In addition, the index for materials for durable manufacturing fell less than in the previous month. Prices for intermediate energy goods rose the same amount in November as in October. The index for intermediate materials other than foods and energy increased 0.1 percent for the second consecutive month. (See table B.)

The index for intermediate foods and feeds increased 1.6 percent in November. A 0.9-percent rise in prices for prepared animal feeds led this advance. Higher prices for fluid milk products and crude vegetable oils also contributed to November's increase. The 1.6-percent increase in prices for intermediate foods and feeds followed a 2.8-percent decline in October. This upturn can be mostly attributed to the index for prepared animal feeds, which rose after decreasing 6.4 percent in the prior month. Prices for confectionery materials and pork also increased after falling in the previous month.

The index for intermediate energy goods rose 0.5 percent in November following a similar rise in the previous month. Price increases for industrial electric power, utility natural gas, residual fuel, and commercial natural gas outweighed price declines for gasoline, commercial electric power, and jet fuels.

The index for materials for nondurable manufacturing increased 0.2 percent in November after showing no change in October. This advance can be traced to rising prices for paperboard, which increased 3.2 percent after rising 0.3 percent in the prior month. The indexes for basic inorganic chemicals and paper also rose more than a month ago. Conversely, prices for plastic resins and materials declined 1.8 percent after increasing 0.5 percent in the previous month. The indexes for medicinal and botanical chemicals and for processed yarns and threads also turned down after rising in October.

The index for materials and components for construction moved up 0.2 percent in November, led by a 1.8-percent increase in prices for softwood lumber. Price increases for fabricated structural metal products and plywood also contributed to the advance in the construction materials index. November's rise in construction materials prices followed a 0.2- percent decrease in October. This upturn can be primarily attributed to the index for softwood lumber, which rose after falling 4.0 percent in the previous month. Additionally, prices for plastic construction products and plywood turned up following a decline a month ago. On the other hand, the index for gypsum products turned down 0.6 percent after increasing 2.4 percent in the prior month.

The index for materials for durable manufacturing decreased 0.2 percent in November. Falling prices for copper cathode and refined copper, for copper and brass mill shapes, and for cold rolled sheet and strip led this decline. November's decrease in durable manufacturing materials prices followed a larger drop of 0.4 percent in October. One reason for the slowing rate of decline in this index was the upturn in prices for building paper and building board mill products, which gained 6.4 percent after falling 1.1 percent in the previous month. Prices for plywood and aluminum also rose in November after declining a month ago.

Crude goods

The Producer Price Index for Crude Materials for Further Processing increased 1.6 percent in November, seasonally adjusted. This rise can be traced to increasing prices for crude energy materials. By contrast, the indexes for basic industrial materials and for crude foodstuffs and feedstuffs declined in November.

The November increase in the index for crude materials for further processing followed a larger 4.0-percent rise in October. Key to this slowdown was a lower rate of increase in prices for crude energy materials. In addition, prices for basic industrial materials fell after rising in the previous month. The index for crude foodstuffs and feedstuffs also declined in November after showing no change in October. (See table B.)

The index for crude energy materials increased 5.0 percent following a 10.7-percent jump in October. Prices for natural gas rose 11.0 percent following a 17.5-percent advance in the prior month. On the other hand, the index for coal fell 0.7 percent in November following a 0.6- percent decline in the previous month. Prices for crude petroleum fell after rising a month ago.

The index for basic industrial materials decreased 0.7 percent in November following a 0.3-percent increase in October. Prices for copper ores fell 13.8 percent after advancing 2.7 percent one month ago. The indexes for gold ores and leaf tobacco also turned down after rising in the prior month. By contrast, prices for softwood logs, bolts, and timber gained 0.1 percent after falling in October. The index for wastepaper fell less than a month ago. Prices for iron and steel scrap and for raw cotton rose more than in the previous month.

The index for crude foodstuffs and feedstuffs fell 0.3 percent in November after showing no change in October. Prices for slaughter cattle declined 3.4 percent following a 0.3-percent increase in the prior month. The indexes for corn, fresh and dry vegetables, and fresh fruits and melons also turned down after rising in October. Conversely, prices for slaughter hogs increased 7.4 percent following a 5.5-percent decrease in the previous month. The index for slaughter turkeys also turned up after falling in the prior month. Prices for alfalfa hay decreased less than in October.

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 3.6 percent in November following an 8.2-percent advance in October. (Net output price indexes are not seasonally adjusted.) The index for the metal mining industry group decreased 7.0 percent after a 1.2-percent increase in the previous month. Prices for the oil and gas extraction industry group rose 5.3 percent following an 11.1- percent rise one month ago. The index for the coal mining industry group declined 0.4 percent after a 0.2-percent decline in the prior month. By contrast, prices for the nonmetallic minerals mining industry group increased 0.4 percent following a 0.2-percent advance last month. In November, the Producer Price Index for the net output of total domestic mining industries stood at 91.9 (December 1984=100), 1.7 percent above its year-ago level.

Manufacturing. The Producer Price Index for the net output of total domestic manufacturing industries declined 0.2 percent in November following a 0.3-percent advance in October. In November, prices for the transportation equipment, chemicals and allied products, miscellaneous manufacturing, and machinery (except electrical) industry groups declined after advancing in the previous month. The indexes for the textile mill products and rubber and plastic products industry groups decreased after showing no change one month ago. Prices for the primary metals industry group fell more than in the prior month. The indexes for the printing and publishing, nonmetallic mineral products, and fabricated metal products (except machinery and transportation equipment) industry groups rose less than last month. Conversely, prices for lumber and wood products, apparel, and measuring and controlling instruments increased after decreasing in the previous month. The indexes for the leather and leather products, furniture and fixtures, and electrical and electronic machinery and equipment industry groups also rose after falling in October. Prices for the tobacco manufactures industry group advanced after showing no change one month ago. The index for the paper and allied products industry group increased more than in the prior month. Prices for the petroleum refining and food and kindred product industry groups fell less than last month. In November, the Producer Price Index for the net output of the total domestic manufacturing sector stood at 127.5 (December 1984=100), 0.4 percent below its year-ago level.

Other. Among other industries in November, prices for water transportation of freight (other than deep sea), psychiatric hospitals, passenger car rental (without drivers), scheduled air passenger transportation, and home health care services declined after advancing in the previous month. The indexes for truck rental and leasing (without drivers), real estate agents and managers, trucking (except local), and operators and lessors of nonresidential buildings also fell after rising. Prices for waste materials (other than metal and paper) and telephone communications (other than radiotelephone) decreased more than one month ago. The indexes for freight transportation arrangement and engineering services showed no change after advancing in the prior month. Prices for metal scrap, cable and other pay television services, and for skilled and intermediate care facilities increased less than last month. By contrast, the indexes for travel agencies, marine cargo handing, and scheduled air cargo transportation advanced following declines in the previous month. Prices for accounting services, advertising agencies, and for general medical and surgical hospitals also rose after falling. The indexes for deep sea domestic transportation of freight and for general warehousing and storage increased after showing no change in October. Prices for natural gas utilities, nonscheduled air transportation, and radio broadcasting rose more than in the prior month. The indexes for recovered paper, deep sea foreign transportation of freight, and electric power utilities declined less than last 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.

PPI Commodity Weight Allocations to Stage-of-Processing Indexes to be Updated

Effective with the release of January 1998 data on February 18, 1998, the Bureau of Labor Statistics will update the weight allocations used to calculate the stage-of-processing (SOP) indexes, found in table 1 of the press release and of the PPI Detailed Report, to more accurately reflect recent marketing patterns. While PPI weights will continue to be based on shipment values from the 1992 economic census, the proportion of these weights allocated to the various SOP categories within and, in some cases, across the Finished, Intermediate, and Crude goods stages will change. The new allocations will be based primarily on data contained in the Input/Output Accounts published by the Bureau of Economic Analysis.

It is important to note that the allocation update will not change the PPI classification system, reference base, or aggregation structure. It may, however, result in significant shifts in the relative importance of component series in the stage-of-processing indexes. The allocation update will not affect the industry SOP indexes found in tables 10 and 11 of the PPI Detailed Report.

Relative importances as of December 1997, based on both the former and revised weight allocations, will be available on February 13, 1998, two working days before release of the January 1998 PPI, on the BLS ftp site at ftp://stats.bls.gov. Choose the "pub" directory, the "special.requests" directory, and the "ppi" directory. The revised SOP relative importances will be in the file, "sopnew.txt". The information may also be requested from the Division of Industrial Prices and Price Indexes, Section of Index Analysis, at 202-606-7705. For further information on this change, please contact Angelo Maggi on (202) 606-7729, or Scott Sager on (202) 606-7700, ext. 211.