March 1998 Producer Price Index

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The Producer Price Index for Finished Goods declined 0.3 percent in March, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This decline followed decreases of 0.1 percent in February and 0.7 percent in January. The index for finished goods other than foods and energy showed no change in March, after advancing 0.1 percent a month ago. Prices received by producers of intermediate goods declined 0.5 percent, following a 0.2-percent drop in the prior month. The crude goods index fell 1.6 percent, after a 2.5- percent decrease in February. (See Table A.)

Among finished goods in March, the index for finished consumer foods declined 0.4 percent, following a 0.4-percent increase in the previous month. Prices for finished energy goods fell for the sixth consecutive month. In March, the finished energy drop was led by a large decline in gasoline prices. The decline in gasoline accounted for over half of the finished goods index decrease. Prices for capital equipment showed no change in March, after falling a month ago. The index for finished consumer goods other than foods and energy increased 0.1 percent for the second consecutive month.

During the first quarter of 1998, the Finished Goods Price Index moved downward at a seasonally adjusted annual rate of 4.2 percent, following a 1.2-percent rate of decline during the fourth quarter of 1997. The index for finished energy goods fell at a 25.9-percent annual rate from December 1997 to March 1998, after falling at a 6.1-percent annual rate over the last three months of 1997, and accounted for more than three fourths of the faster rate of decline in the finished goods index in the first quarter of 1998. The index for finished consumer foods turned down at an annual rate of 1.5 percent from December to March, after increasing at a 0.9-percent rate during the fourth quarter of 1997. Prices for consumer nondurables less foods fell more than in the prior quarter. The index for finished goods other than foods and energy showed no change in the first quarter of 1998, after decreasing 0.6 percent in the prior quarter. Prices for capital equipment fell less during the first three months of 1998 than in the final quarter of 1997.

Before seasonal adjustment, the Producer Price Index for Finished Goods fell 0.3 percent in March to stand at 129.7 (1982=100). From March 1997 to March 1998, the Finished Goods Price Index decreased 1.8 percent. Over the past 12 months, prices for finished consumer foods declined 1.4 percent, the index for finished energy goods fell 10.4 percent, and prices for finished goods other than foods and energy decreased 0.1 percent. Prices received by domestic producers of intermediate goods declined 1.8 percent for the 12 months ended in March, and the index for crude goods fell 7.8 percent during the same period.

Finished goods

Prices for finished consumer foods turned down 0.4 percent in March, following a 0.4-percent increase a month ago. The index for dairy products fell 1.2 percent, after rising 3.1 percent in the previous month. Prices for fresh fruits and melons, beef and veal, and for finfish and shellfish also turned down, after increasing in February. The index for processed young chickens rose less than in the prior month. By contrast, prices for eggs for fresh use advanced 13.4 percent, following a 13.9-percent decline a month ago. The index for processed turkeys also turned up, after falling a month earlier. Prices for soft drinks and for fresh and dry vegetables rose more than a month ago.

The index for finished energy goods declined 1.9 percent in March, following a 1.8-percent decrease in February. Falling prices for gasoline, residential electric power, and home heating oil more than offset price increases for residential natural gas and finished lubricants.

Prices for capital equipment showed no change, after declining 0.1 percent in February. In March, rising prices for light motor trucks, civilian aircraft, truck trailers, and for construction machinery and equipment offset falling prices for electronic computers and commercial furniture.

Prices for finished consumer goods other than foods and energy advanced 0.1 percent in March, following a similar increase a month ago. Price increases for prescription drugs, light motor trucks, passenger cars, periodical circulation, and for sanitary papers and health products outweighed price declines for book publishing, household appliances, men's and boys' apparel, and over-the-counter drugs.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components decreased 0.5 percent in March, seasonally adjusted, after declining 0.2 percent in February. During the first quarter of 1998, this index fell at a 5.3-percent seasonally adjusted annual rate, after declining at a 0.6-percent rate during the prior quarter. In March, prices for intermediate energy goods and intermediate foods and feeds decreased more than in the previous month. The index for materials for durable manufacturing fell, after rising last month. Prices for materials and components for construction showed no change, after a slight increase in the prior month. The index for materials for nondurable manufacturing decreased at the same rate as a month ago. Excluding foods and energy, the index for intermediate materials decreased 0.1 percent, the same as in February. (See table B.)

Prices for intermediate energy goods declined 2.4 percent in March, following a 1.2-percent decline in February. This index declined at a seasonally adjusted annual rate of 23.0 percent during the first quarter of 1998, following a 3.6-percent rate of decline for the previous three months. In March, the index for residual fuel fell 17.3 percent, after a 12.6-percent advance in the prior month. Prices for commercial electric power, diesel fuel, jet fuels, gasoline, and liquefied petroleum gas all decreased more than in the previous month. Conversely, the index for utility natural gas advanced 0.5 percent, following a 2.3-percent decline last month. Prices for coke oven products also turned up, after falling in February.

Prices for intermediate foods and feeds declined 1.6 percent in March, following a 0.1-percent decline in February. During the first quarter of 1998, this index fell at an 18.1-percent seasonally adjusted annual rate, after falling at a 6.8-percent rate during the prior quarter. In March, the index for fluid milk products decreased 1.8 percent, after a 5.6- percent increase a month ago. Prices for refined sugar and for beef and veal also fell, after rising in the previous month. The index for pork declined more than last month. The index for confectionery materials rose less than in the prior month. By contrast, the index for prepared animal feeds declined 2.7 percent, following a 3.5-percent decline last month. Prices for flour and for condensed and evaporated milk products rose more than in the previous month.

The index for durable manufacturing materials declined 0.5 percent in March, following a 0.1-percent advance in February. From December 1997 to March 1998, this index declined at a seasonally adjusted annual rate of 4.5 percent, following a 4.7-percent rate of decline for the previous quarter. In March, prices for building paper and board decreased 3.4 percent, after increasing 3.4 percent a month ago. The indexes for precious metals, plywood, and for hot-rolled bars, plates, and structural shapes also fell, after rising in the previous month. Prices for hot-rolled sheet and strip fell more than last month. On the other hand, the index for copper cathode and refined copper rose 2.7 percent, following a 0.8-percent increase a month earlier. Prices for prepared paint also rose more than in February. The indexes for flat glass and for cold rolled sheet and strip fell less than a month ago.

The index for materials and components for construction showed no change in March, following a 0.1-percent advance in February. During the first quarter of 1998, this index fell at a 0.3-percent seasonally adjusted annual rate, after falling at a 0.5-percent rate during the final quarter of 1997. In March, falling prices for plywood, switchgear, softwood lumber, wiring devices, and millwork offset rising prices for nonferrous wire and cable, fabricated structural metal products, metal valves, cement, and plastic construction products.

The index for nondurable manufacturing materials declined 0.5 percent in March, following a similar 0.5-percent decline in February. This index declined at a seasonally adjusted annual rate of 4.5 percent during the first quarter of 1998, following a 0.6-percent rate of increase for the previous quarter. In March, falling prices for primary basic organic chemicals, plastic resins and materials, nitrogenates, synthetic rubber, gray fabrics, and basic inorganic chemicals outweighed rising prices for paperboard, finished fabrics, paper, and for inedible fats and oils.

Crude goods

The Producer Price Index for Crude Materials for Further Processing declined 1.6 percent in March, seasonally adjusted, following a 2.5-percent drop in February. This index fell at a seasonally adjusted annual rate of 29.6 percent in the first quarter of 1998, following no change in the final quarter of 1997. In March, prices for crude energy materials fell less than in the prior month. The index for crude foodstuffs and feedstuffs rose, after falling in February. Prices for basic industrial materials fell, after rising in the previous month. (See table B.)

The index for crude energy materials decreased 4.3 percent in March after falling 6.5 percent in February. During the first quarter of 1998, this index fell at a seasonally adjusted annual rate of 52.6 percent, following a 1.0-percent rate of increase in the fourth quarter of 1997. In March, price declines for crude petroleum outweighed price increases for coal and natural gas.

Prices for crude foodstuffs and feedstuffs turned up 0.7 percent in March, after decreasing 0.7 percent in the prior month. From December 1997 to March 1998, this index fell at a seasonally adjusted annual rate of 12.7 percent, following a 3.3-percent rate of increase in the final quarter of 1997. In March, the index for slaughter cattle advanced 3.7 percent, after falling 4.8 percent in the previous month. Prices for slaughter turkeys also turned up, after declining in February. The indexes for slaughter broilers and fryers, wheat, and for fresh vegetables, except potatoes, rose more than a month ago. By contrast, prices for soybeans fell 3.1 percent, following a 3.3-percent gain in February. The indexes for fluid milk and for fresh fruits and melons also fell, after rising in the prior month. Prices for slaughter hogs decreased more than in the previous month.

The index for crude nonfood materials less energy turned down 1.9 percent in March, following a 0.1 percent increase in February. This index fell at a seasonally adjusted annual rate of 15.0 percent in the first quarter of 1998, following a 7.9-percent rate of decline in the fourth quarter of 1997. In March, prices for leaf tobacco fell 9.5 percent, after rising 4.0 percent in the previous month. The indexes for gold ores, raw cotton, wastepaper, and copper ores also turned down, after advancing a month ago. On the other hand, prices for softwood logs, bolts, and timber turned up 0.6 percent, following a 1.2-percent drop in the prior month. The index for aluminum base scrap fell less than in February.

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 3.4 percent in March following a 4.4-percent decline in February. (Net output price indexes are not seasonally adjusted.) From December 1997 to March 1998, this index fell at an annual rate of 42.8 percent, following a 13.6-percent annual rate of increase in the last quarter of 1997. In March, the index for the oil and gas extraction industry group fell 4.8 percent, following a 5.7-percent drop in the previous month. Prices for the coal mining industry group turned up 0.7 percent following a 2.6-percent decrease in the prior month. By contrast, prices for the metal mining industry group declined 1.6 percent, after rising 3.7 percent a month ago. Prices for the non-metallic mineral mining industry group increased less than in February. In March, the Producer Price Index for the net output of total domestic mining industries stood at 72.0 (December 1984=100), 8.6 percent below its year-ago level.

Manufacturing. The Producer Price Index for the net output of total domestic manufacturing industries declined 0.4 percent in March, following a 0.1-percent decline in February. This index moved down at a 4.0-percent annual rate in the first quarter of 1998, after falling at a 1.2 percent annual rate in the previous quarter. In March, prices for the petroleum refining and the chemicals and allied products industry groups fell more than in the previous month. Prices for the food and kindred products, lumber and wood products, printing and publishing, and measuring instruments industry groups turned down, after increasing in the prior month. The indexes for the apparel, furniture and fixtures, and fabricated metal products industry groups increased less than in February. Conversely, prices for the paper products industry group turned up, after falling a month earlier. In March, the Producer Price Index for the net output of the total domestic manufacturing sector stood at 125.7 (December 1984=100), 1.6 percent below its year-ago level.

Other. Among other industries in March, prices for passenger car rental fell, after increasing in the previous month. Indexes for freight transportation along the Great Lakes, Mississippi river transportation, marine cargo handling, freight transportation arrangement, recovered paper collection, truck rental and leasing, and architectural services also turned down, after rising a month earlier. Prices for local trucking without storage, electric power utilities, and ferrous metal scrap collection fell more than in February. The indexes for courier services (except by air), air passenger transportation, travel agencies, telephone communications, real estate agents and managers, advertising agencies, and for skilled and intermediate care facilities rose less than in the prior month. The index for other specialty hospitals was unchanged, after advancing in February.

By contrast, the index for home health care services increased 0.5 percent in March, after falling 1.3 percent in February. Prices for general warehousing and storage, deep sea domestic transportation of freight, air cargo transportation, air courier services, and airports and airport services also turned up after falling in the previous month. The indexes for nonscheduled air transportation, radio broadcasting, cable and other pay television services, operators of nonresidential buildings, hotels and motels, help supply services, offices and clinics of doctors of medicine, and legal services rose more than a month ago. Prices for natural gas utilities showed no change after falling in February.

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 November 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 November 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. Table 3. Producer Price Indexes for selected commodity groupings (1982=100 unless otherwise indicated)

1/ Data for November 1997 have been revised to reflect the availability of late reports and corrections by respondents. All data are subject to revision four months after original publication.

2/ Prices of some items in this grouping are lagged 1 month. Table 4. Producer Price Indexes for the net output of major industry groups, not seasonally adjusted

1/ Indexes in this table are derived from the net-output-weighted industry price indexes shown in table 5. 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 shown in table 6. 2/ The indexes for November 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 five years after original publication due to the recalculation of seasonal factors each January. The indexes for November 1997 have been recalculated to incorporate late reports and corrections by respondents. 2/ Includes crude petroleum. 3/ Excludes crude petroleum.