January 1998 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 declined 0.7 percent in January, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This decline was led by a sharp drop for finished energy prices and followed decreases of 0.2 percent in both December and November. The index for finished goods other than foods and energy declined 0.1 percent for the third consecutive month. Prices received by producers of intermediate goods fell 0.6 percent in January, after decreasing 0.3 percent in the prior month. The crude goods index declined 4.5 percent, following a decrease of 5.2 percent in December. (See table A.)

Among finished goods in January, the index for energy goods fell 3.7 percent, following a decrease of 0.8 percent in the previous month. Prices for finished consumer foods fell more than in December. The index for finished consumer goods other than foods and energy decreased, after showing no change a month ago. Prices for capital equipment fell less than in the prior month.

1998 Jan. -0.7 -0.4 -3.7 -0.1 -1.8 -0.6 -4.5 NOTE: Some percent changes shown here and elsewhere in this release may differ from those previously reported because seasonal adjustment factors have been recalculated to reflect developments during 1997. In addition, indexes for September 1997 have been recalculated to incorporate late reports and corrections by respondents. All indexes are subject to revision four months after original publication.

Before seasonal adjustment, the Producer Price Index for Finished Goods fell 0.7 percent in January to 130.2 (1982=100). From January 1997 to January 1998, the Finished Goods Price Index moved down 1.8 percent, the largest 12-month decline since December 1986, when the index dropped 2.3 percent, also largely reflecting falling energy prices. Over the past 12 months, prices for finished consumer foods fell 1.0 percent, the index for finished energy goods decreased 10.5 percent, and prices for finished goods other than food and energy fell 0.1 percent. Prices received by domestic producers of intermediate goods decreased 1.7 percent for the 12 months ended in January, and the index for crude goods fell 18.7 percent during this period.

Finished Goods

Prices for finished energy goods declined 3.7 percent in January, following a decrease of 0.8 percent in the prior month. Prices for gasoline fell 7.9 percent, after advancing 0.9 percent in December. The indexes for residential electric power, residential natural gas, and home heating oil decreased more in January than in the previous month. Price declines slowed, however, for finished lubricants.

Prices for finished consumer foods declined 0.4 percent in January, after falling 0.1 percent in the previous month. The index for fresh fruits and melons fell 18.5 percent, after advancing 22.2 percent in December. Prices for dairy products and soft drinks also turned down, after increasing in the prior month. The indexes for pork, finfish and shellfish, and milled rice decreased more than a month ago. By contrast, prices for fresh and dry vegetables rose 12.9 percent, following a 2.5 percent decline in December. The indexes for beef and veal, processed young chickens, and for shortening and cooking oils rose, after falling in the previous month. Prices for eggs for fresh use fell less than in December.

1998 Jan. -3.2 -2.9 -0.1 -1.7 -3.3 -7.3 -2.2 -18.7 NOTE: Some percent changes shown here and elsewhere in this release may differ from those previously reported because seasonal adjustment factors have been recalculated to reflect developments during 1997. In addition, indexes for September 1997 have been recalculated to incorporate late reports and corrections by respondents. All indexes are subject to revision four months after original publication.

The index for finished consumer goods other than foods and energy edged down 0.1 percent in January, after showing no change in December. Price decreases for passenger cars, light trucks, men's and boys' apparel, periodicals, and tobacco products outweighed increases for prescription drugs, alcoholic beverages, household furniture, and cosmetics.

The index for capital equipment edged down 0.1 in January, after moving down 0.2 percent in December. Price decreases for light motor trucks, electronic computers and civilian aircraft more than offset increases for truck trailers, heavy trucks, and for communication and related equipment.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components fell 0.6 percent in January, seasonally adjusted, after falling 0.3 percent a month earlier. Prices for intermediate energy goods, foods and feeds, and durable manufacturing materials also fell more than in December. The index for construction materials declined, after showing no change a month ago. Conversely, nondurable manufacturing materials fell less than in the previous month. Excluding food and energy, the intermediate materials index decreased 0.1 percent for the second consecutive month. (See table B.)

Prices for intermediate energy goods decreased 2.9 percent in January, following a 1.6-percent drop in December. The index for gasoline fell 7.9 percent, after rising 0.9 percent a month ago. Prices for industrial and commercial electric power also turned down, after rising in the prior month. The index for liquefied petroleum gas decreased more than in December. By contrast, prices for industrial natural gas declined 3.6 percent, less than the 6.1-percent drop last month. The indexes for diesel fuel and residual fuel also fell less than in the previous month.

The index for intermediate foods and feeds decreased 3.2 percent in January, following a 0.9-percent decline in December. Prices for prepared animal feeds dropped 4.7 percent, after a slight 0.2-percent decline in the prior month. The indexes for pork, fluid milk products, and flour also fell more than a month ago. By contrast, the index for confectionery materials turned up 2.7 percent, after dropping 4.6 percent in December. Prices for beef and veal also rose, after falling in the prior month.

The index for durable manufacturing materials declined 0.7 percent in January, after falling 0.6 percent in the prior month. Price declines for building paper and board, copper and brass mill shapes, aluminum mill shapes, copper cathode, and cold rolled sheet and strip outweighed price increases for hot rolled sheet and strip, hardwood lumber, and hot rolled bars, plates, and structural shapes.

Prices for construction materials fell 0.2 percent in January, after showing no change in December. The index for softwood lumber dropped 2.5 percent, after a slight 0.1-percent decline a month ago. Prices for plastic construction products, wiring devices, and millwork fell, after rising in the previous month. The index for fabricated structural metal products showed no change, after increasing 0.1 percent in December. By contrast, prices for fabricated ferrous wire products rose 0.2 percent, after falling 0.2 percent in the prior month. The indexes for plywood and nonferrous wire and cable fell less than a month ago.

The index for nondurable manufacturing materials edged down 0.1 percent in January, following a 0.3-percent decrease last month. Price decreases for fertilizer materials, industrial chemicals, inedible fats and oils, and leather outweighed price increases for paper, paperboard, plastic resins and materials, and gray fabrics.

Crude goods

The Producer Price Index for Crude Materials for Further Processing declined 4.5 percent in January, seasonally adjusted, following a 5.2- percent drop in December. Prices for crude energy materials, foodstuffs and feedstuffs, and basic industrial materials all fell in January. (See table B.)

The index for crude energy materials decreased 7.3 percent, after a 12.6-percent fall in December. Prices for crude petroleum declined 12.8 percent, following a 9.9-percent decrease in the prior month. The index for natural gas dropped 6.9 percent, following a drop of 18.7 percent in December. Prices for coal showed no change in January.

Prices for crude foodstuffs and feedstuffs declined 3.3 percent in January, after showing no change in the prior month. The index for slaughter cattle fell 2.8 percent, following a 1.3-percent gain in December. Prices for corn and for fresh fruits and melons also turned down after rising a month ago. The indexes for slaughter hogs and wheat fell more than in the previous month. By contrast, prices for slaughter broilers and fryers turned up 6.2 percent, after declining 0.2 percent last month. The index for fresh and dry vegetables also rose, after falling in December. Prices for unprocessed shellfish and soybeans fell less than a month ago.

The index for crude nonfood materials less energy declined 2.2 percent, following a 1.4-percent decline in the prior month. Prices for leaf tobacco turned down 1.6 percent, after gaining 8.8 percent last month. The indexes for cattle hides, aluminum base scrap, and copper base scrap fell more than in the prior month. Prices for pulpwood logs showed no change, following an increase in December. On the other hand, the indexes for nonferrous metal ores and raw cotton declined less than a month ago. Prices for hardwood logs, bolts, and timber rose more than in the previous month.

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

Mining. The Producer Price Index for the net output of total domestic mining industries fell 5.9 percent in January, following a 9.9-percent decline in December. (Net output price indexes are not seasonally adjusted.) The index for the oil and gas extraction industry group decreased 7.7 percent, after a 12.6-percent decline one month ago. Prices for the metal mining industry group fell 1.3 percent, following a 6.0- percent drop in the previous month. The index for the non-metallic mineral mining industry group rose 0.5 percent, after a 0.2-percent decrease last month. By contrast, prices for the coal mining industry group declined 0.1 percent, following a 1.3-percent advance in the prior month. In January, the Producer Price Index for the net output of total domestic mining industries stood at 77.9 (December 1984=100), 30.0 percent below its year- ago level.

Manufacturing. The Producer Price Index for the net output of total domestic manufacturing industries declined 0.6 percent in January, following a 0.4-percent decrease in December. Prices for the petroleum refining and the food and kindred products industry groups fell more than in the previous month. The indexes for the lumber and wood products and tobacco manufactures declined, after increasing one month ago. Prices for the paper and allied products industry group rose less than in the prior month. By contrast, the indexes for the printing and publishing and the apparel industry groups rose more than last month. Prices for the furniture and fixtures, fabricated metal products, and miscellaneous manufacturing industry groups increased, after showing no change in the previous month. The indexes for the chemicals and allied products, non- metallic mineral products, and the leather and leather products industry groups rose, after falling a month earlier. The indexes for the primary metals, transportation equipment, and electrical machinery industry groups declined less than last month. In January, the Producer Price Index for the net output of the total domestic manufacturing sector stood at 126.3 (December 1984=100), 1.4 percent below its year-ago level.

Other. Among other industries in January, the indexes for offices and clinics of doctors of medicine, cable and other pay television services, general medical and surgical hospitals, and legal services rose more than a month ago. Prices for freight transportation on the Great Lakes-St. Lawrence Seaway, crude petroleum pipelines, courier services (except by air), help supply services, and architectural services advanced, after showing no change in December. The indexes for skilled and intermediate care facilities, tugging and towing services, engineering services, and general warehousing and storage also increased, after showing no change in the prior month. Prices for operators and lessors of nonresidential buildings, trucking (except local), and advertising agencies advanced, after declining in the previous month. The index for hotels and motels showed no change in January after falling last month. The indexes for travel agencies, freight transportation arrangement, and nonscheduled air transportation declined less than in the prior month.

By contrast, prices for deep-sea domestic transportation of freight, scrap and waste materials collection, Mississippi River transportation, and telephone communications (except radiotelephone) declined more than in the previous month. The index for refined petroleum pipelines fell, after showing no change in December. Prices for radio broadcasting, airports and airport services, home health care services, deep-sea foreign transportation of freight, passenger car rental (without drivers), and scheduled air passenger transportation declined, after advancing a month earlier. The indexes for electric power utilities, psychiatric hospitals, employment agencies, and refrigerated warehousing and storage also fell, after rising last month. The index for building cleaning and maintenance services was unchanged, after increasing in 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.

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

Effective with this release, the Bureau of Labor Statistics updated 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 changed. The new allocations are 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 does not affect the PPI classification system, reference base, or aggregation structure. It did, however, result in some significant shifts in the relative importance of component series in the stage-of-processing indexes. The allocation update does 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, are available on the BLS ftp site at ftp://ftp.bls.gov. Choose the "pub" directory, the "special.requests" directory, and the "ppi" directory. The revised SOP relative importances are 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.

Resampling of Industries

Effective with this release, another set of new and resampled industries is introduced. Two (2) mining industries and twenty-seven (27) manufacturing industries were resampled this month. In addition, a service industry, prepackaged computer software, was introduced into the PPI sample for the first time. Indexes for these industries appear in table 5 of the PPI Detailed Report.

Under the resampling procedure, the sample for an industry is updated to reflect current conditions more accurately when the structure, membership, technology, or product mix of an industry has shifted significantly. The Bureau of Labor Statistics published the first results of this systematic process in July 1986. Subsequent efforts have been completed at 6-month intervals.

Standard Industrial Classification (SIC) Code Industry

1011 Iron ores 1455 Kaolin and ball clay

2015 Poultry slaughtering and processing 2048 Prepared animal feeds, not elsewhere classified 2064 Candy and other confectionery products and chewing gum 2085 Distilled spirits, except brandy 2253 Knit outerwear 2329 Men's and boys' clothing, not elsewhere classified 2361 Girls', children's, and infants' dresses 2369 Girls', children's, and infants' outerwear, not elsewhere classified 2392 House furnishings, not elsewhere classified 2396 Automotive trimmings, apparel findings, and related products 2434 Wood kitchen cabinets 2675 Die-cut paper and board 2677 Envelopes 2812 Alkalies and chlorine 2816 Inorganic pigments 2893 Printing ink

3111 Leather tanning and finishing 3296 Mineral wool 3446 Architectural and ornamental metalwork 3448 Prefabricated metal buildings 3548 Gas and electric welding and soldering 3549 Metalworking machinery, not elsewhere classified 3561 Pumps and pumping equipment 3594 Fluid power pumps and motors 3716 Motor homes built on purchased chassis 3792 Travel trailers and campers

7372* Prepackaged computer software

For information on specific additions, deletions, and recodes of indexes that are effective this month, see tables 12 through 18 in the January 1998 issue of the Producer Price Index Detailed Report.

*See " New Producer Price Index for Prepackaged Software - SIC 7372" in the January 1998 issue of the Producer Price Index Detailed Report.

Recalculation of seasonal adjustment factors

Effective with this release, seasonal adjustment factors have been recalculated to reflect 1997 price movement patterns for stage-of- processing (SOP) and commodity groupings. This routine annual recalculation may affect seasonally adjusted indexes and percent changes from January 1993 to the present. Revised seasonally adjusted data for this period, as well as seasonal factors for commodity indexes to be used through December 1998, are available on request from BLS. The table below shows 1997 monthly seasonally adjusted percent changes for the three major SOP categories calculated with the old seasonal factors, compared with the percent changes for recalculated indexes. The latter incorporate new seasonal factors that reflect 1997 price movement patterns.