October 1999 Producer Price Index

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The Producer Price Index for Finished Goods decreased 0.1 percent in October, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This decline followed a 1.1-percent advance in September and a 0.5-percent gain in August. The index for finished goods other than foods and energy rose 0.3 percent in October, after advancing 0.8 percent in the prior month. Prices received by producers of intermediate goods rose 0.3 percent, the same as in September. The crude goods index turned down 1.6 percent, after posting a 5.1-percent increase in the previous month. (See table A.)

Change in finished Except goods foods from 12 Inter- and months mediate Crude Month Total Foods Energy energy ago goods goods (unadj.) 1998 Oct. 0.3 0.4 0.8 0.1 -0.7 -0.2 2.5 Nov. -.2 -.4 -1.3 .1 -.6 -.2 -.1 Dec. .5 0 -1.8 1.0 0 -.7 -3.6

The October downturn in prices for finished goods was led by the indexes for finished energy goods and finished consumer foods, which both fell after increasing in September. The index for finished consumer goods other than foods and energy rose less than in the prior month. Capital equipment prices increased 0.3 percent, after registering a 0.2-percent gain in September.

For the first 10 months of 1999, the Producer Price Index for Finished Goods increased at a 2.9-percent seasonally adjusted annual rate (SAAR), after showing no change for the 1998 calendar year. Prices for finished goods other than foods and energy rose at a 0.9-percent SAAR for the first 10 months of 1999, after posting a 2.5-percent gain in the previous calendar year. The index for intermediate goods increased at a 4.0-percent SAAR from December 1998 to October 1999, following a 3.3-percent decline during the 1998 calendar year. Prices for crude goods advanced at a 19.4- percent SAAR during the first 10 months of 1999, after a 16.7-percent decrease during all of 1998.

Before seasonal adjustment, the Producer Price Index for Finished Goods edged up 0.1 percent in October to stand at 135.0 (1982=100). From October 1998 to October 1999, the finished goods index advanced 2.7 percent. Over the past 12 months, prices for finished energy goods advanced 12.1 percent, the index for finished goods other than foods and energy moved up 1.9 percent, and prices for finished consumer foods rose 0.1 percent. Prices received by producers of intermediate goods increased 2.4 percent for the 12 months ended in October 1999, and the index for crude materials rose 11.6 percent during the same period.

Finished goods

Prices for finished energy goods fell 1.0 percent in October, following three consecutive monthly increases. The gasoline index declined 3.8 percent, after posting a 2.2-percent gain a month ago. Prices for residential electric power and home heating oil also turned down, after rising in the prior month. The indexes for liquefied petroleum gas and residential natural gas rose less than last month. By contrast, finished lubricant prices fell 1.8 percent, following a 3.9-percent decline in September.

The index for finished consumer foods decreased 0.7 percent in October, after registering a 1.0-percent gain in September. The pork index dropped 5.9 percent, following a 9.7-percent advance in the previous month. Prices for fresh and dry vegetables, dairy products, finfish and shellfish, and processed young chickens also turned down, after rising in the prior month. The index for fresh fruits and melons rose less than a month ago. Conversely, soft drink prices increased 0.4 percent in October, after showing no change in September. The index for roasted coffee fell less than last month, and prices for bakery products rose more for the same period.

The index for finished consumer goods other than foods and energy increased 0.3 percent in October, after rising 1.1 percent in September. Prices for tobacco products showed no change, following an 8.4-percent increase last month. The indexes for passenger cars and alcoholic beverages rose less than in the previous month. In accordance with usual practice, most new model year passenger cars and light trucks were introduced into the PPI in October. (See "Report on Quality Changes for 2000 Model Vehicles.") The household appliance index fell more than in September. Prices for tires, tubes, and tread and for men's and boys' apparel turned down, after both increased the month before. On the other hand, the prescription drug index moved up 1.2 percent in October, following a 0.1-percent gain in September. Prices for book publishing and household furniture rose more than in the prior month. The index for cosmetics and other toilet preparations turned up, after falling a month ago.

Capital equipment prices rose 0.3 percent in October, following a 0.2- percent increase in September. Rising prices for light motor trucks, civilian aircraft, industrial material handling equipment, heavy motor trucks, and construction machinery and equipment outweighed falling prices for electronic computers, communication and related equipment, railroad equipment, and oil field and gas field machinery and equipment.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components registered a 0.3-percent gain in October, seasonally adjusted, following a similar increase in September. Advancing prices for nondurable manufacturing materials, durable manufacturing materials, intermediate foods and feeds, and intermediate energy goods outweighed falling prices for materials and components for construction. Excluding foods and energy, the October index for intermediate materials rose 0.4 percent, after increasing 0.1 percent in September. (See table B.)

Prices for nondurable manufacturing materials rose 1.1 percent, after posting a 0.4-percent gain in September. This is the largest one-month advance in nondurable manufacturing material prices since a 1.9-percent rise in April 1995. The primary basic organic chemicals index advanced 8.8 percent, following a 3.0-percent increase in the prior month. Prices for paperboard and basic inorganic chemicals turned up, after falling a month ago. The indexes for plastic resins and materials, paper, and nitrogenates rose more than last month. Synthetic fiber prices increased, after showing no change a month earlier. By contrast, the woodpulp index registered a 0.6-percent decline in October, following a 4.5-percent rise in September. Prices for medicinal and botanical chemicals and for gray fabrics also turned down, after rising in the previous month. The phosphates index fell more than a month ago.

Prices for durable manufacturing materials registered a 0.6-percent advance in October, following a 0.4-percent decline in September. The hot rolled sheet and strip index rose 1.9 percent, after falling 0.5 percent in the prior month. Prices for semifinished steel mill products, cold rolled sheet and strip, aluminum mill shapes, and silver also turned up, after dropping a month earlier. The indexes for primary aluminum, gold, and prepared paint increased, after showing no change a month ago. Platinum prices rose more than in the previous month. Conversely, the flat glass index fell 0.5 percent in October, after showing no change in September. Prices for hot rolled bars, plates, and structural shapes declined more than a month earlier. The indexes for copper cathode and refined copper and for copper and brass mill shapes turned down, after rising in the prior month.

Prices for intermediate foods and feeds increased 0.5 percent in October, after posting a 1.3-percent advance in September. The pork index decreased 5.9 percent, following a 9.7-percent gain a month ago. Prices for natural, processed, and imitation cheese; dry, condensed, and evaporated milk products; and crude vegetable oils also turned down, after rising in the previous month. The indexes for beef and veal and for dry mix preparations increased less than a month earlier. On the other hand, prepared animal feed prices advanced 1.4 percent in October, after posting a 0.4-percent gain in September. The indexes for fluid milk products and confectionery materials also rose more than last month.

The index for intermediate energy goods registered a 0.2-percent increase in October, following a 1.8-percent rise in September. The residual fuels index fell 6.4 percent, after gaining 20.5 percent a month earlier. Prices for gasoline, jet fuels, commercial natural gas, industrial natural gas, and natural gas to electric utilities also turned down, after rising in the prior month. The liquefied petroleum gas index rose less than a month ago, while diesel fuel prices fell more than in September. By contrast, the commercial electric power index advanced 3.6 percent in October, following a 0.1-percent gain in the previous month. Prices for industrial electric power rose, after showing no change a month ago.

The index for materials and components for construction declined 0.3 percent in October, after posting a 0.5-percent drop a month earlier. In October, falling prices for plywood, softwood lumber, and millwork outweighed rising prices for fabricated structural metal products, nonferrous wire and cable, gypsum products, plastic construction products, and wiring devices.

Crude Goods

The Producer Price Index for Crude Materials for Further Processing turned down 1.6 percent in October, seasonally adjusted, following a 5.1- percent rise in September. Prices for crude energy materials and crude foodstuffs and feedstuffs also fell, after rising in the prior month. By contrast, the basic industrial materials index rose more than in the previous month. (See table B.)

The index for crude energy materials fell 4.8 percent in October, following a 10.4-percent gain in September. October's downturn was led by the natural gas index, which declined 6.4 percent after rising 13.3 percent in the prior month. Crude petroleum prices also decreased, following an advance a month ago. By contrast, the index for coal turned up 5.5 percent, after a 3.8-percent decline a month earlier.

The index for crude foodstuffs and feedstuffs declined 0.1 percent, following a 1.3-percent increase in September. Fluid milk prices turned down 5.6 percent, after a 4.5-percent rise in the prior month. The indexes for slaughter broilers and fryers, soybeans, fresh and dry vegetables, wheat, and slaughter turkeys also turned down, following an increase in the previous month. The index for Irish potatoes for processing rose less than a month ago. On the other hand, slaughter cattle prices rose 5.8 percent, following a 0.2-percent rise in September. The indexes for Louisiana rough rice and slaughter hogs rose, after falling a month earlier.

The basic industrial materials index rose 2.4 percent, following a 2.2- percent rise in September. Gold ore prices advanced 20.8 percent, after a 0.5-percent increase in the prior month. The indexes for raw cotton and softwood logs turned up, after falling in the previous month. Pulpwood log prices increased more than a month ago. The hardwood logs index showed no change, after a decline in September. By contrast, leaf tobacco prices rose 3.9 percent, following a 9.1-percent gain a month earlier. The indexes for iron and steel scrap and wastepaper rose less than in the prior month. Copper base scrap prices fell, following an increase 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 2.8 percent in October, after registering a 9.1- percent advance in September. (Net output price indexes are not seasonally adjusted.) Prices received by the crude petroleum, natural gas, and natural gas liquids industry turned down 5.3 percent, following a 14.0- percent increase a month ago. The industry indexes for oil and gas well drilling and for dimension stone quarrying rose less than in September. By contrast, the bituminous coal and lignite mining index turned up 3.6 percent, after a 2.5-percent decrease in the prior month. The index for the potash, soda and borate minerals industry also rose, following a decline in September. Prices received by gold ore producers increased more than a month ago. In October, the Producer Price Index for the net output of total domestic mining industries stood at 88.4 (December 1984=100), 30.2 percent above its year-ago level.

Manufacturing. The Producer Price Index for the net output of total domestic manufacturing industries increased 0.3 percent in October, after posting a 0.5-percent rise in September. Price increases for the transportation equipment, chemicals and allied products, printing and publishing, paper and allied products, and apparel industries outweighed price declines for the petroleum refining, food and kindred products, lumber and wood products (except furniture), and the electrical and electronic machinery industries. The October Producer Price Index for the net output of total domestic manufacturing industries stood at 130.1 (December 1984=100), 2.9 percent above its year-ago level.

Other. Among other industries in October, prices increases were registered for hotels and motels, prepackaged software, passenger car rental, general medical and surgical hospitals, and offices and clinics of doctors of medicine. On the other hand, the industry indexes for telephone communications (except radiotelephone), travel agencies, operators and lessors of nonresidential buildings, and trucking (except local) declined in September.

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