May 1999 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 increased 0.2 percent in May, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This rise followed a 0.5-percent advance in April and a 0.2-percent increase in March. The index for finished goods other than foods and energy edged up 0.1 percent, the same as a month earlier. Prices received by producers of intermediate goods advanced 0.2 percent, after increasing 0.6 percent in the previous month. The crude goods index rose 5.5 percent, following a 1.3-percent rise in April. (See table A.)

The slower rate of increase in the index for finished goods can be traced primarily to prices for finished energy goods, which showed no change in May after increasing 5.1 percent in April. By contrast, prices for finished consumer foods turned up, following a decline in the prior month. As in April, the index for finished consumer goods other than foods and energy showed no change in May. Capital equipment prices moved up 0.2 percent, after showing no change a month ago.

Before seasonal adjustment, the Producer Price Index for Finished Goods increased 0.5 percent in May to stand at 132.4 (1982=100). From May 1998 through May 1999, the Finished Goods Price Index advanced 1.4 percent. During this same period, prices for finished goods other than foods and energy increased 1.7 percent, the index for finished energy goods rose 1.3 percent, and prices for finished consumer foods increased 0.6 percent. Prices received by producers of intermediate goods declined 1.1 percent for the 12 months ended in May, and the index for crude goods fell 4.4 percent during the same period.

Finished goods

Prices for finished energy goods showed no change in May, after advancing 5.1 percent in April. The gasoline index fell 2.7 percent, following a record 29.1-percent rise in the previous month. Price increases for home heating oil slowed from 14.3 percent in April to 2.5 percent in May. The index for residential electric power fell more than in April. Conversely, liquefied petroleum gas prices rose 19.6 percent, after showing no change in the prior month. Prices for residential natural gas turned up, after falling a month earlier.

The finished consumer foods index increased 0.5 percent in May, after declining 0.9 percent in the prior month. Prices for dairy products rose 1.3 percent, following a 7.1-percent decline a month ago. The indexes for pork, processed young chickens, unprocessed finfish, Irish potatoes for consumer use, and eggs for fresh use also turned up, after decreasing a month earlier. On the other hand, prices for fresh vegetables, except potatoes, fell 22.9 percent, following a 23.0-percent gain in April. Beef and veal prices also fell, after increasing last month. The indexes for soft drinks and for shortening and cooking oils rose less than in the prior month.

The index for finished consumer goods other than foods and energy showed no change for the second consecutive month. Price advances for passenger cars, light motor trucks, apparel, periodical circulation, and for photographic equipment and supplies were offset by declining prices for prescription drugs, plastic products, textile housefurnishings, and for sanitary papers and health products.

The capital equipment index increased 0.2 percent in May, after showing no change in the previous month. Prices for light motor trucks rose more than a month ago. The heavy motor truck index advanced 0.7 percent, after showing no change in April. Prices for civilian aircraft, commercial furniture, and for telephone and telegraph equipment turned up in May, following a decrease in the prior month. Electronic computer prices fell less than last month. By contrast, the index for construction machinery and equipment rose 0.1 percent, after a 0.5-percent increase in April. Prices for agricultural irrigation systems and for optical instruments and lenses turned down, after increasing a month earlier.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components advanced 0.2 percent in May, seasonally adjusted, after registering a 0.6-percent gain in April. This deceleration was mainly due to a slowing rate of increase in prices for energy goods, which rose less than in the previous month. By contrast, the indexes for intermediate foods and feeds and durable manufacturing materials advanced, following declines a month earlier. Prices for nondurable manufacturing materials and for materials and components for construction rose at the same rate in May as in April. Excluding foods and energy, the index for intermediate materials increased 0.2 percent for the second consecutive month. (See table B.)

The intermediate energy goods index advanced 0.4 percent in May, after posting a 4.5-percent gain in April. In May, rising prices for liquefied petroleum gas, residual fuels, industrial natural gas, commercial natural gas, and natural gas to electric utilities outweighed falling prices for gasoline, jet fuels, diesel fuel, finished lubricants, and industrial electric power.

The index for intermediate foods and feeds increased 0.5 percent in May, following a 1.8-percent drop in April. Prices for fluid milk products rose 2.5 percent, after registering a 14.6-percent decline in the prior month. The indexes for pork, processed young chickens, flour, processed eggs, and granulated sugar also advanced, following declines a month earlier. Conversely, beef and veal prices fell 0.2 percent, after increasing 2.3 percent in April. Prices for prepared animal feeds and crude vegetable oils also fell, after rising a month ago. The index for liquid beverage bases used for soft drinks showed no change, following an increase last month.

Prices for durable manufacturing materials advanced 0.8 percent in May, after registering a 0.2-percent decline in April. The index for primary nonferrous metals, except precious, rose 6.3 percent, following a 0.3-percent gain a month earlier. Prices for softwood plywood, softwood lumber, aluminum mill shapes, nonferrous wire and cable, and cement increased, after decreasing in the prior month. The index for hot rolled bars, plates, and structural shapes fell less than in the previous month. Prices for copper and brass mill shapes rose more than a month ago. On the other hand, the index for hot rolled sheet and strip declined 1.7 percent, following a 0.4-percent gain in April. Thermoplastic resin prices rose less than a month earlier. The wood chips index fell, after rising last month.

Prices for nondurable manufacturing materials increased 0.2 percent in May, the same rate of increase as in April. Index advances for primary basic organic chemicals, thermoplastic resins, paint materials, woodpulp, paperboard (excluding corrugated), and writing and printing papers outweighed index declines for basic inorganic chemicals, nitrogenates, finished circular knit fabrics, and synthetic rubber.

The index for materials and components for construction advanced 0.1 percent in May, following a 0.1-percent gain in April. Rising prices for softwood plywood, softwood lumber, millwork, particleboard and fiberboard, and nonferrous wire and cable slightly outweighed falling prices for steel mill products, fabricated structural metal products, prepared asphalt and tar roofing and siding products, and ready mixed concrete.

Crude goods

The Producer Price Index for Crude Materials for Further Processing advanced 5.5 percent in May, seasonally adjusted, following a 1.3-percent increase in April. The May increase represents the largest monthly increase since a 6.1-percent rise in December 1996. Prices for crude foodstuffs and feedstuffs and basic industrial materials turned up, after falling in the previous month. The index for crude energy materials rose more than in April. (See table B.)

Prices for crude foodstuffs and feedstuffs increased 2.2 percent in May, following a 2.5-percent drop in April. The index for milk eligible for fluid use turned up 0.1 percent, after registering a 12.2-percent decline a month ago. Prices for slaughter broilers and fryers, slaughter cows and bulls, and unprocessed finfish also rallied, following last month's declines. The indexes for slaughter hogs and alfalfa hay rose more than in the previous month. By contrast, prices for fresh vegetables, except potatoes, dropped 22.9 percent in May, following a 23.0-percent rate of increase in April. The indexes for oilseeds and citrus fruits also turned down, after rising in the prior month. The index for slaughter steers and heifers fell more than a month ago.

The index for crude energy materials advanced 11.9 percent in May, after rising 8.5 percent in April. The May increase is the largest one- month rise since a 19.3-percent increase in December 1996. Prices for natural gas gained 17.2 percent, after increasing 1.7 percent in the prior month. The index for coal also rose faster than a month ago. Conversely, crude petroleum prices increased 11.3 percent, following a 27.3-percent advance in April.

Prices for basic industrial materials turned up 2.3 percent in May, following a 1.1-percent decline in April. The carbon steel scrap index increased 8.4 percent, after rising 0.3 percent in the previous month. The index for aluminum base scrap also rose faster than in April. Prices for copper ores and raw cotton turned up, after falling in the prior month. Following a decrease in April, the index for gold ore showed no change. On the other hand, corrugated wastepaper prices fell 2.6 percent in May, following a 4.6-percent rise in April. The phosphates index also turned down, after rising in the month of April. The index for pulpwood decreased faster than 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 advanced 9.3 percent in May, following a 5.3-percent increase in April. (Net output price indexes are not seasonally adjusted.) Price increases for the crude petroleum, natural gas, and natural gas liquids industry accelerated from 9.2 percent in April to 15.2 percent in May. The index for copper ores turned up, after falling in the prior month. By contrast, prices for the drilling oil and gas wells industry turned down 0.6 percent, after rising 0.4 percent in the previous month. The index for the mining of non-metallic minerals, except fuels, industry group showed no change, following a 0.3-percent rise in April. In May, the Producer Price Index for the net output of total domestic mining industries stood at 74.3 (December 1984=100), 0.1 percent above its year-ago level.

Manufacturing. The Producer Price Index for the net output of total domestic manufacturing industries rose 0.2 percent in May, after increasing 1.0 percent in April. Most of this deceleration was due to the index for the petroleum refining industry group, which rose 2.5 percent after jumping 23.6 percent in the prior month. Among other manufacturing industries in May, prices for the chemicals and allied products, rubber and miscellaneous plastic products, and the fabricated metal products industry groups fell, after rising in the previous month. However, prices advanced 1.0 percent, following a 1.0-percent decline for the food and kindred products industry group. Prices for the measuring and controlling instruments, primary metal industries, and the furniture and fixtures industry groups also turned up, after falling in April. In May, the Producer Price Index for the net output of the total domestic manufacturing industries stood at 127.7 (December 1984=100), 1.0 percent higher than its year-ago level.

Other. Among other industries in May, prices for real estate agents and managers turned down 0.3-percent, after gaining 1.3 percent a month earlier. The indexes for passenger car rental, scheduled air transportation, hotels and motels, air courier services, and engineering services also fell, after rising in the prior month. By contrast, prices advanced 3.6 percent for radio broadcasting, following a 1.5-percent rise a month ago. The indexes for life insurance carriers, truck rental and leasing, and skilled and intermediate care facilities rose, after falling in April. Prices for operators and lessors of nonresidential buildings and offices and clinics of doctors of medicine increased, 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.

Rebasing of Selected Producer Price Indexes

Effective with the release of data for May 1999, the Bureau of Labor Statistics has rebased 37 PPI commodity-based and 36 PPI industry-based price indexes to December 1998=100. Most of these data can normally be found in table 5 and table 6 of the PPI Detailed Report. To be considered for rebasing, an index must have dropped below 30.0, with little chance of rising to previous levels, or the index must be part of an index aggregate where the majority of the shipment value was rebased. The indexes for high- technology goods such as computers and semiconductors were most affected by this rebasing. (See the tables below.)

Rebasing is beneficial when indexes decline to such a low level that relatively sizable month-to-month price changes are not reflected in the index in a timely fashion. For example, the first-released index for April 1999 for portable computers stood at 9.1 (December 1992=100). This index level is so low that prices must change approximately 1.0 percent for the published index to indicate a change. Of course, a 1.0-percent movement in prices may accumulate over, say, two months, but the lack of precision at this low index level could place the entire price change in the second month.

The general index base for the PPI program remains 1982=100. Only the indexes listed in the attached tables are affected by this change. For further information on this change, please contact the Section of Index Analysis at (202) 606-7705.

Commodity Commodity title Final code December 1998 index before rebasing

05810111 Petroleum coke 10.0

102108 Uranium-radium-vanadium ores NA 10210802 Uranium concentrated and precipitates NA 10220141 Cadmium metal, 99.90 pct. min. 10.1

115 Electronic computers and computer equipment 30.2 1151 Electronic computers 21.8 115101 Electronic computers 21.8 11510111 Large-scale general purpose computers 60.2 11510112 Mid-range general purpose computers 41.4 11510114 Personal computers and workstations 13.3 11510115 Portable computers 10.7 11510121 Other computers 85.5 1152 Computer storage devices 38.5 115201 Computer storage devices, except parts 35.4 11520101 Computer storage devices, except parts 35.4 115202 Parts and components NA 11520201 Parts and components NA 1153 Computer terminals and parts 88.7 115301 Computer terminals 90.0 11530101 Computer terminals 90.0 115302 Computer terminal parts and subassemblies NA 11530201 Computer terminal parts and subassemblies NA 1154 Computer peripheral equipment and parts 77.6 115401 Optical scanning devices 82.1 11540101 Optical scanning devices 82.1 115402 Computer printers 62.0 11540201 Computer printers 62.0 115403 Other input/output devices, inc. monitors 70.5 11540301 Other input/output devices, inc. monitors 70.5 115404 Other peripheral equipment 87.1 11540401 Other peripheral equipment 87.1 115405 Parts for computer peripheral equipment 101.4 11540501 Parts for computer peripheral equipment 101.4

117842 Digital MOS integrated circuits 18.5 11784221 MOS, memory 13.7 11784223 Other MOS, incl. logic, MCU and MPR 54.7 11784225 MOS, microprocessors 6.1

Product Product title Final code December 1998 index before rebasing

2037197 Citrus pulp and other nonedible citrus byproducts 17.2

2911D21 Petroleum coke, made in refineries 10.0

3571 Electronic computers 26.6 3571P Primary products 21.3 35711 General purpose digital computers 27.1 357111 Large-scale (64 MB or more in minimum main memory configuration) 49.0 357112 Mid-range (<64 MB min. main memory) excl. PCs and workstations 41.4 357114 Personal computers and workstations (excluding portable computers) 13.3 357115 Portable computers (with attached display) 10.7 35712 Other computers 85.5 357121 Other computers (array, database, image processors, & other analog, hybrid, or special purpose) NA 3571M Miscellaneous receipts 51.1 3571XY9 Contract work and other miscellaneous receipts NA 3571Z89 Resales NA 3571S Secondary products 61.9 3571SS Other secondary products 75.3

3572 Computer storage devices 42.2 3572P Primary products 39.2 35721 Computer storage devices, except parts 35.4 357211 Random access storage devices 24.4 3572111 Hard disk drives (rigid magnetic media) 18.1 35721115 With media size smaller than 3.5 inches NA 35721117 With media size of 3.5 inches and over but less than 5.25 inches 14.2 35721141 With media size of 5.25 inches and over NA 35721145 Disk subsystems and disk arrays (RAID) 45.3

3674 Semiconductors and related devices 69.3 3674P Primary products 55.2 36741 Integrated circuits 41.3 36741A Digital monolithic integrated circuits 23.6 36741A1 MOS memory devices 11.2 36741A101 DRAM (dynamic random access memory) 13.1 36741A109 Other MOS memory devices 73.0 36741A2 Other digital MOS integrated circuits 45.4 36741A201 Microprocessors 5.6 36741A209 All other digital MOS integrated circuits 98.8 36741A9 Other digital integrated circuits, including bipolar and nonsilicon 81.6