August 1998 Producer Price Index

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The Producer Price Index for Finished Goods declined 0.4 percent in August, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This drop followed a 0.2-percent advance in July and 0.1-percent decrease in June. The index for finished goods other than foods and energy fell 0.1 percent, following two consecutive increases. Prices received by producers of intermediate goods fell 0.3 percent in August, after showing no change in July. The crude goods index declined 2.7 percent, following a 1.8-percent drop in the previous month. (See table A.)

Among finished goods in August, the indexes for finished energy goods and finished consumer foods decreased, after increasing one month ago. Prices for finished consumer goods excluding foods and energy were unchanged, following an increase in July. The index for capital equipment fell 0.3 percent, after a small rise in the previous month.

Change in Except finished Inter- goods foods from 12 mediateCrude and months Month Total Foods Energy energy ago goods goods (unadj.) 1997 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

For the first eight months of 1998, the Producer Price Index for Finished Goods declined at a 1.4-percent seasonally adjusted annual rate (SAAR). This compares with a 1.2-percent decrease during all of 1997. Over the past eight months, the index for finished goods other than foods and energy rose at a 1.2-percent SAAR, after showing no change in 1997. Prices for intermediate materials, supplies, and components fell at a 3.1- percent SAAR from December 1997 to August 1998, following a 0.8-percent decrease last year. The index for crude materials declined at a 19.5- percent SAAR during the first eight months of 1998. This contrasts with an 11.3-percent drop during 1997.

Before seasonal adjustment, the Producer Price Index for Finished Goods moved down 0.2 percent in August to 130.6 (1982=100). From August 1997 to August 1998, the finished goods index decreased 0.8 percent. Over the past 12 months, prices for finished energy goods declined 10.3 percent. By contrast, prices for finished goods other than foods and energy increased 1.0 percent, and the index for finished consumer foods rose 0.1 percent. Prices received by domestic producers of intermediate goods fell 2.1 percent during the 12 months ended in August, and the index for crude materials decreased 12.0 percent during the same period.

Finished goods

The index for finished energy goods declined 2.3 percent in August, following a 0.3-percent advance in July. Prices for gasoline fell 8.5 percent, after a 1.3-percent drop a month ago. The index for home heating oil also fell more than in the previous month. Prices for residential electric power decreased, following an increase in the prior month. The index for finished lubricants rose less than in July. On the other hand, prices for residential natural gas increased 1.0 percent, after a 0.4- percent increase in July.

The index for finished consumer foods declined 0.4 percent in August, following a 0.4-percent advance in July. Prices for fresh and dry vegetables fell 20.6 percent, after a 21.3-percent rise in the prior month. The indexes for processed young chickens and for processed fruits and vegetables increased less than in the previous month. Prices for beef and veal and for shortening and cooking oils fell more than a month ago. The index for soft drinks was unchanged, after advancing in the prior month. By contrast, prices for pork increased 0.9 percent, following a 10.9- percent decline in July. The index for eggs for fresh use rose, after falling last month. Prices for dairy products rose more than in the previous month.

The index for finished consumer goods other than foods and energy was unchanged in August, following a 0.3-percent advance in July. Prices for passenger cars fell 1.7 percent, after a 0.8-percent rise in the prior month. The indexes for prescription drugs, sanitary papers and health products, men's and boys' apparel, and household appliances decreased, after increasing a month ago. By contrast, prices for tobacco products advanced 2.8 percent, after showing no change in July. The index for girls', children's, and infants' apparel rose, after falling in the previous month.

The index for capital equipment declined 0.3 percent in August, following a 0.1-percent advance in July. Prices for light motor trucks fell 0.1 percent, after a 0.7-percent rise in the prior month. The indexes for communication and related equipment, heavy motor trucks, and for office and store machines and equipment also turned down, after increasing a month ago. Prices for electronic computers and civilian aircraft decreased more than in the previous month. By contrast, the index for commercial furniture advanced 0.1 percent, following a 0.1-percent decline in July. Prices for tools, dies, jigs, fixtures, and industrial molds also turned up after falling in the prior month. The indexes for x-ray and electromedical equipment fell less than one month earlier.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components dropped 0.3 percent in August, after showing no change in July. Prices for intermediate energy goods and intermediate foods and feeds declined, after rising last month. Conversely, the index for durable manufacturing materials rose, after falling a month earlier. Prices for nondurable manufacturing materials decreased at the same rate as in the previous month, and prices for construction materials increased at the same rate as in July. The index for intermediate goods excluding foods and energy fell 0.1 percent in August, after showing no change in the prior month. (See table B.)

The index for intermediate energy materials dropped 1.5 percent in August, after increasing 0.4 percent in July. Prices for gasoline decreased 8.5 percent, following a 1.3-percent decline a month ago. The indexes for residual fuel and diesel fuel also fell more than in the previous month. Prices for commercial electric power turned down after advancing in the prior month. The index for jet fuels decreased, after showing no change in July. By contrast, prices for natural gas to electric utilities rose 0.8 percent, following a 0.3-percent gain in July. The index for liquefied petroleum gas fell less than in the previous month.

The index for intermediate foods and feeds declined 0.9 percent, after increasing 0.2 percent in July. Prices for prepared animal feeds declined 2.5 percent, following a 1.7-percent rise a month ago. The index for natural, processed, and imitation cheese also turned down, after increasing in the prior month. Prices for flour, beef and veal, and crude vegetable oils decreased more than in the previous month. The index for mayonnaise, salad dressing, and sandwich spreads rose less than in the prior month. By contrast, the index for fluid milk products turned up 5.0 percent in August, following a 2.2-percent decline last month. Prices for pork and for dry, condensed, and evaporated milk products rose, after falling in July.

The index for durable manufacturing materials turned up 0.1 percent, following a 0.3-percent decrease a month ago. Prices for aluminum mill shapes advanced 0.2 percent, after falling 1.3 percent in July. The indexes for aluminum, copper and brass mill shapes, and copper cathode and refined copper fell less than in the prior month. Prices for plywood increased more than in the previous month. On the other hand, the index for hot rolled sheet and strip fell 0.7 percent, after rising 0.8 percent in July. Prices for flat glass and prepared paint also declined, after advancing a month ago.

The index for materials of nondurable manufacturing declined 0.4 percent, following a similar decrease in July. Price decreases for basic organic chemicals, woodpulp, paperboard, and nitrogenates more than offset the price increases for plastic resin and materials, lubricating oil base stock, processed yarns, and threads, and leather.

The index for materials and components for construction rose 0.2 percent in August, after increasing 0.2 percent in the previous month. August price increases for plywood, softwood lumber, air conditioning and refrigeration equipment, asphalt felts and coatings, and cement outweighed price declines for nonferrous wire and cable, fabricated structural metal products, and gypsum products.

Crude Goods

The Producer Price Index for Crude Materials for Further Processing decreased 2.7 percent in August, seasonally adjusted, following a 1.8- percent decline in July. Prices for crude energy materials and basic industrial materials fell more than a month ago. By contrast, the index for crude foodstuffs and feedstuffs decreased less than in July. (See table B.)

Prices for crude energy materials fell 5.1 percent in August, following a 0.6-percent drop in the prior month. The index for crude petroleum turned down 15.5 percent, after increasing 7.4 percent in the previous month. By contrast, prices for coal turned up 0.3 percent, following a 3.3-percent decline in July. The index for natural gas fell less than a month ago.

Prices for crude foodstuffs and feedstuffs fell 1.1 percent, following a 2.8-percent decrease in July. The index for slaughter cattle declined 1.0 percent, after dropping 7.1 percent in the previous month. Prices for alfalfa hay also fell less than a month ago. The indexes for slaughter hogs and for fresh fruits and melons turned up, after falling in July. Prices for slaughter broilers and fryers rose more than in the previous month. By contrast, corn prices declined 5.1 percent, following a 0.4- percent increase last month. The indexes for soybeans, fresh vegetables (except potatoes), and raw cane sugar also turned down, after rising in July. Prices for wheat fell more than in the previous month, and the index for fluid milk rose less than a month ago.

The index for crude nonfood materials less energy fell 2.0 percent, following a 1.8-percent decline in July. Prices for iron and steel scrap declined 7.4 percent in August, after falling 3.6 percent in July. The index for raw cotton turned down 2.4 percent, after increasing 7.7 percent in the previous month. By contrast, price declines for aluminum base scrap slowed from 9.0 percent in July to 1.5 percent in August. Prices for copper ore and cattle hides turned up, after decreasing 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 fell 3.5 percent in August, following a 0.6-percent decrease in July. (Net output price indexes are not seasonally adjusted.) The index for the oil and gas extraction industry group declined 5.1 percent, after showing no change in the prior month. Prices for construction sand and gravel rose less than in the previous month. The indexes for rock salt mining industry fell, after rising a month ago. By contrast, prices for the coal mining industry group rose 0.2 percent, after declining 2.5 percent in the previous month. Prices for the lead and zinc ores and the copper ores industries also advanced, after decreasing in the prior month. In August, the Producer Price Index for the net output of total domestic mining industries stood at 68.2 (December 1984=100), 15.0 percent below its year-ago level.

Manufacturing. The Producer Price Index for the net output of total domestic manufacturing industries fell 0.2 percent, after showing no change in July. Prices decreased for the paper and allied products, chemicals and allied products, transportation, and electrical and electronic machinery equipment industry groups, after rising in the prior month. The index for the petroleum refining industry group fell more than in the previous month. By contrast, prices for the tobacco manufactures industry group rose 3.5 percent, after showing no change in July. The index for the printing and publishing industry group rose, after falling a month ago. Prices for the food and kindred products and the lumber and wood products industry groups rose more than in the previous month. In August, the Producer Price Index for the net output of the total domestic manufacturing sector stood at 126.0 (December 1984=100), which is 1.1 percent below its year-ago level.

Other. Among other industries in August, price increases for passenger car rental (without drivers), deep sea foreign transportation of freight, telephone communications, real estate agents and managers, and advertising agencies offset price decreases for operators of nonresidential buildings, property and casualty insurance, hotels and motels, and radio broadcasting.

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 April 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 April 1998 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. Table 3. Producer price indexes for selected commodity groupings (1982=100 unless otherwise indicated)

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