June 1998 Producer Price Index

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The Producer Price Index for Finished Goods decreased 0.1 percent in June, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This decrease follows increases of 0.2 percent in both May and April. The index for finished goods other than foods and energy rose 0.2 percent for the third consecutive month. Prices received by producers of intermediate goods fell 0.3 percent in June, after inching down 0.1 percent in May. The crude goods index fell 1.4 percent, following a 0.3-percent decline in the prior month. (See table A.)

Change in Except finished Inter- goods foods from 12 mediateCrude and months Month Total Foods Energy energy ago goods goods (unadj.) 1997 June -0.2 -0.8 -0.2 0.0 -0.1 -0.1 -2.7 July -0.2 -0.3 -0.5 -0.1 -0.2 -0.2 -0.5 Aug. 0.2 -0.1 0.9 0.1 -0.2 0.1 0.4 Sept. 0.4 0 1.1 0.4 0 0.2 1.3 Oct. 0 0.7 -0.5 -0.1 -0.3 -0.1 4.6 Nov. -0.2 -0.3 -0.4 -0.1 -0.7 0.2 1.6 Dec. -0.2 0 -0.6 -0.1 -1.2 -0.2 -5.6

Among finished goods, the index for finished energy goods turned down, after increasing in May. Prices for finished consumer goods other than foods and energy rose less than a month ago. By contrast, the index for finished consumer foods turned up, after declining in the previous month. Prices for capital equipment showed no change, following a decrease in May.

During the first six months of 1998, the Finished Goods Price Index fell at a seasonally adjusted annual rate of 1.5 percent, after showing no change in the last half of 1997. Prices for finished consumer foods declined at a seasonally adjusted annual rate of 0.6 percent during the first six months of 1998, after showing no change from June 1997 to December 1997. The index for finished goods less foods and energy rose at a 1.4-percent seasonally adjusted annual rate in the first half of 1998, after advancing at a 0.1-percent rate from June 1997 to December 1997. Prices for finished energy goods declined at a 15.9-percent seasonally adjusted annual rate in the first half of 1998, after showing no change in the second half of 1997. The Intermediate Goods Price Index fell at a 3.5- percent seasonally adjusted annual rate from December 1997 to June 1998, after moving down at a 0.2-percent rate for the last six months of 1997. The Crude Goods Price Index decreased at a 17.9-percent seasonally adjusted annual rate in the first half of 1998, following a 3.2-percent rate of increase in the previous six months.

Before seasonal adjustment, the Producer Price Index for Finished Goods rose 0.2 percent in June to 130.6 (1982=100). From June 1997 to June 1998, the Finished Goods Price Index decreased 0.8 percent. Over the past 12 months, prices for finished energy goods declined 8.3 percent, and the index for finished consumer foods fell 0.3 percent. By contrast, prices for finished goods other than foods and energy rose 0.8 percent from its year-ago level. Prices received by domestic producers of intermediate goods declined 1.9 percent for the 12 months ended in June, and the index for crude goods fell 8.0 percent during the same period.

Finished goods

The index for finished energy goods decreased 1.7 percent in June, after rising 0.8 percent in May. This was the eighth decline in the finished energy index over the last nine months. Prices for residential electric power moved down 0.9 percent, after showing no change in the prior month. The index for gasoline showed no change, following a 4.3-percent gain in the previous month. The indexes for residential natural gas and home heating oil fell more than in May.

In June, the index for finished consumer goods other than foods and energy increased 0.3 percent, after advancing 0.5 percent in the previous month. On a seasonally adjusted annual rate basis, this index rose 2.6 percent for the first half of 1998, compared with a 0.7-percent rate of increase in the latter half of 1997. In June, prices for prescription drugs rose 3.2 percent, after jumping 10.7 percent in May. The indexes for tobacco products and periodical circulation also rose less than in the prior month. Prices for home electronic equipment and book publishing were unchanged in June, after increasing in May. On the other hand, prices for passenger cars turned up 0.3 percent, following a 1.7-percent decline in the previous month. The indexes for alcoholic beverages and for tires and tubes also rose after decreasing in May. Prices for light motor trucks fell less than a month ago. The index for household appliances increased more than in May.

The index for capital equipment showed no change in June, after decreasing 0.2 percent in May. This index moved down at a seasonally adjusted annual rate of 0.4 percent in the first half of 1998, following a 0.7-percent rate of decline in the last half of 1997. In June, price increases for printing trades machinery, heavy motor trucks, pumps and compressors, and construction machinery offset price decreases for light motor trucks, electronic computers, communication equipment, and civilian aircraft.

Prices for finished consumer foods moved up 0.1 percent in June, following a 0.3-percent decline a month earlier. The index for eggs for fresh use advanced 20.3 percent, after decreasing 0.5 percent in the prior month. Prices for processed young chickens, soft drinks, and processed turkeys also turned up after falling in May. The index for fresh and dry vegetables fell less than in the previous month. Prices for pork rose more than a month ago. By contrast, prices for beef and veal decreased 2.6 percent in June, following a 3.4 percent advance in May. Prices for finfish and shellfish, fresh fruits and melons, and processed fruits and vegetables also turned down, after rising in the prior month.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components declined 0.3 percent in June, following a 0.1-percent decline in May. Prices for intermediate energy goods and for materials for durable manufacturing fell more than in the previous month. The indexes for intermediate foods and feeds and for materials and components for construction decreased, after showing no change a month ago. By contrast, prices for materials for nondurable manufacturing fell less than in the prior month. Excluding foods and energy, the index for intermediate materials declined 0.1 percent, the same as in May. (See table B.)

The index for intermediate energy materials declined 1.7 percent in June, following a 0.6-percent decline in May. This index decreased at a 15.4-percent seasonally adjusted annual rate during the first half of 1998, after falling at a 1.4-percent rate during the second half of 1997. In June, prices for jet fuels decreased 9.3 percent, following a 0.2-percent decrease in the previous month. The indexes for No. 2 diesel fuel, commercial natural gas, liquefied petroleum gas, and industrial natural gas fell, after rising a month ago. Prices for gasoline showed no change, after increasing last month. By contrast, the index for residual fuel advanced 4.4 percent, following a 15.1-percent decline in the prior month. Prices for industrial electric power also rose, after falling a month earlier. The index for natural gas to electric utilities rose more than in May.

The index for durable manufacturing materials declined 0.8 percent in June, following a 0.6-percent decline in May. From December 1997 through June of 1998, this index fell at a 5.0-percent seasonally adjusted annual rate, after falling at a 3.4-percent rate during the latter half of 1997. In June, prices for aluminum mill shapes decreased 2.2 percent, after showing no change in the previous month. The indexes for building paper and board and for miscellaneous metal products fell, following increases a month earlier. Prices for copper cathode and refined copper, copper and brass mill shapes, and plywood fell more than in the prior month. By contrast, the index for hot rolled sheet and strip advanced 0.5 percent, following a 0.8-percent decline a month ago. Prices for hardwood lumber also rose, after falling in May. The index for cold rolled sheet and strip fell less than in the previous month.

The index for intermediate foods and feeds declined 0.4 percent in June, after showing no change in May. Prices for this category decreased at a 11.9-percent seasonally adjusted annual rate during the first six months of 1998, after falling at a 4.8-percent rate during the last six months of 1997. In June, the index for beef and veal declined 2.6 percent, following a 3.4-percent advance in the previous month. Prices for crude vegetable oils and for fluid milk products also fell, after rising a month ago. The indexes for flour and for dry, condensed, and evaporated milk products fell more than in May. By contrast, prices for prepared animal feeds declined 0.2 percent, following a 2.4-percent decline in the prior month. The indexes for natural, processed, and imitation cheese and for refined sugar rose, after falling a month earlier. Prices for pork rose more than in May.

The index for materials and components for construction declined 0.1 percent in June, after showing no change in May. This index advanced at a 0.3-percent seasonally adjusted annual rate during the first half of 1998, after declining at a 0.5-percent rate during the second half of 1997. In June, falling prices for softwood lumber, plastic construction materials, plywood, plumbing fixtures and brass fittings, asphalt felts and coatings, and steel wire slightly outweighed rising prices for fabricated structural metal products, wiring devices, switchgear and switchboard equipment, nonferrous wire and cable, and cement.

The index for materials for nondurable manufacturing declined 0.1 percent in June, following a 0.2-percent decline in May. This index declined at a 3.2-percent seasonally adjusted annual rate during the first six months of 1998, after advancing at a 1.2-percent rate during the last six months of 1997. In June, falling prices for plastic resins and materials, basic organic chemicals, paper, gray fabrics, processed yarns and threads, and alkalies and chlorine slightly outweighed rising prices for fertilizer materials, medicinal and botanical chemicals, inedible fats and oils, paperboard, and leather.

Crude Goods

The Producer Price Index for Crude Materials for Further Processing decreased 1.4 percent in June, seasonally adjusted, following a 0.3-percent decline in May. Prices for crude energy materials and basic industrial materials fell, after rising in the previous month. On the other hand, the index for crude foodstuffs and feedstuffs rose, after falling in the prior month. (See table B.)

Prices for crude energy materials dropped 3.9 percent in June, following a 0.6-percent gain in May. This index decreased at a 32.6- percent seasonally adjusted annual rate during the first half of 1998, following a 13.3-percent rate of increase in the last half of 1997. In June, prices for crude petroleum turned down 12.3 percent, after rising 0.3 percent in the previous month. The index for natural gas fell 3.5 percent, following a 0.4-percent gain in the prior month. By contrast, prices for coal advanced 4.7 percent, after rising 0.7 percent a month ago.

The index for crude nonfood materials less energy turned down 0.5 percent, following a 0.5-percent rise in May. This index decreased at a seasonally adjusted annual rate of 9.4 percent in the first six months of 1998, following a 4.0-percent rate of decline in the latter half of 1997. In June, the index for nonferrous metal ores dropped 3.7 percent, after rising 0.1 percent in the prior month. Prices for iron and steel scrap also fell, after rising in the previous month. The index for aluminum base scrap fell more than a month ago. On the other hand, prices for cattle hides turned up 18.4 percent, after falling 0.5 percent last month. The indexes for wastepaper and pulpwood logs fell less than in the previous month.

Prices for crude foodstuffs and feedstuffs rose 0.1 percent, following a 1.4-percent decrease in May. From December 1997 through June 1998, this index fell at an 8.8-percent seasonally adjusted annual rate, after declining at a 0.5-percent rate in the second half of 1997. In June, prices for fluid milk rose 3.2 percent, after falling 6.5 percent in the prior month. The indexes for slaughter broilers and fryers, Irish potatoes for processing, and for slaughter turkeys also turned up, after falling in the previous month. On the other hand, prices for alfalfa hay fell 10.6 percent, following a 2.8 percent increase a month ago. Prices for soybeans also fell, after rising last month. The index for wheat fell more than in the prior 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 turned down 3.8 percent in June, following a 0.4-percent rise in May. (Net output price indexes are not seasonally adjusted.) During the first half of 1998, this index declined at an annual rate of 27.0 percent, after advancing at an 8.4-percent annual rate for the latter half of 1997. In June, prices for the natural gas liquids industry group dropped 8.0 percent, after a 1.4-percent increase in the previous month. The indexes for the crude petroleum and natural gas, copper ores, and the lead and zinc ores industry groups also turned down, after rising in May. By contrast, prices for the bituminous coal and lignite mining industry group advanced 3.4 percent, following a 0.2-percent increase a month ago. The index for the industry group for metal mining services turned up, following a decline last month. In June, the Producer Price Index for the net output of total domestic mining industries stood at 71.1 (December 1984=100), which is 11.0 percent below its year-ago level.

Manufacturing. The Producer Price Index for the net output of total domestic manufacturing industries decreased 0.1 percent in June, following a 0.2-percent increase in May. During the first half of 1998, this index declined at an annual rate of 1.3 percent, after decreasing at a 0.3- percent annual rate for the second half of 1997. In June, prices for the petroleum refining industry group fell 3.3 percent, after rising 2.9 percent in the previous month. The indexes for the tobacco manufactures and for the chemical and allied products industry groups rose less than in the prior month. Prices for the lumber and wood products industry group fell more than a month ago. By contrast, the index for the primary metals industry group decreased 0.3 percent in June, following a 0.4-percent decline in May. Prices for the food and kindred products industry group rose more than in the previous month. The indexes for the electrical and electronic machinery and for the leather and leather products industry groups moved up in June, after showing no change last month. In June, the Producer Price Index for the net output of the total domestic manufacturing industries stood at 126.2 (December 1984=100), which is 0.8 percent below its year-ago level.

Other. Among other industries in June, prices for real estate agents and managers increased 2.9 percent, following a rise of 0.1 percent in May. The indexes for cable and other pay television services, offices and clinics of doctors of medicine, and for non-local trucking also rose more than a month ago. Prices for telephone communications, prepackaged software, and scheduled air transportation turned up, after falling in the previous month. The index for legal services increased, after showing no change last month. On the other hand, prices for operators of nonresidential buildings turned down 1.2 percent, following a 0.2-percent increase in the prior month. The indexes for passenger car rental, radio broadcasting, and for airports and airport services also fell in June, after rising in May. Prices for line haul operating railroads decreased, after showing no change 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. 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 February 1998 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 February 1998 have been recalculated to incorporate 2/ Not seasonally adjusted. late reports and corrections by respondents. All indexes 3/ Not available. 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 February 1998 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.

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 February 1998 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 February 1998 have been recalculated to incorporate late reports and corrections by respondents. 2/ Includes crude petroleum. 3/ Excludes crude petroleum.