January 2001 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 advanced 1.1 percent in January, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. January's rise followed a 0.2-percent increase in December 2000 and a 0.1-percent gain in November 2000. At the earlier stages of process, prices received by producers of intermediate goods increased 0.7 percent, following a 0.4-percent rise in the prior month, and the crude goods index advanced 13.9 percent, after posting an 8.5-percent increase a month earlier. (See table A.)

2001 Jan. 1.1 .8 3.8 .7 4.8 .7 13.9

Among finished goods in January, prices for finished energy goods rose 3.8 percent, following a 0.8-percent gain in December. The index for finished consumer foods turned up 0.8 percent, after falling 0.4 percent a month ago. Prices for finished goods other than foods and energy rose 0.7 percent, after edging up 0.1 percent in December. Price increases for cigarettes and passenger cars accounted for a large part of this acceleration. Excluding cigarettes and passenger cars, the index for finished goods other than foods and energy would have risen 0.3 percent.

Before seasonal adjustment, the Producer Price Index for Finished Goods advanced 1.1 percent to stand at 141.2 (1982=100). From January 2000 to January 2001, prices for finished goods increased 4.8 percent. Over the same period, the finished energy goods index rose 21.6 percent, prices for finished goods other than foods and energy gained 2.0 percent, and the finished consumer foods index advanced 2.5 percent. Prices received by domestic producers of intermediate goods moved up 4.4 percent for the 12 months ended January 2001, and the index for crude goods registered a 46.5- percent gain for the same period.

2001 Jan. 1.7 3.1 .2 4.4 2.2 25.0 .5 46.5

Finished goods

The index for finished energy goods advanced 3.8 percent in January, after posting a 0.8-percent rise in December. Liquefied petroleum gas prices jumped 15.3 percent, after inching up 0.1 percent in the prior month. The gasoline index turned up, following a decline a month earlier. Prices for residential natural gas and residential electric power rose more than in the previous month. Conversely, the index for home heating oil declined 3.6 percent in January, after falling 0.3 percent a month ago. Diesel fuel prices turned down, after rising last month.

The index for finished consumer foods rose 0.8 percent in January, after falling 0.4 percent in December. Much of this acceleration can be traced to the index for fresh and dry vegetables, which advanced 16.2 percent, following a 26.0-percent decline a month ago. Prices for soft drinks increased, after showing no change last month. The index for fresh fruits and melons rose more than a month earlier. Prices for bakery products, processed fruits and vegetables, and confectionery end products turned up, after decreasing in the previous month. By contrast, pork prices fell 2.6 percent in January, following a 0.4-percent gain in December. The index for eggs for fresh use also turned down, after increasing in the prior month. Prices for dairy products and for finfish and shellfish rose less than a month ago, and the index for processed young chickens fell more than in December.

Prices for finished consumer goods other than foods and energy advanced 0.8 percent in January, following a 0.2-percent gain in December. The cigarette index increased 6.3 percent, after showing no change last month. Passenger car prices advanced more than a month earlier. The index for sanitary papers and health products turned up, following a decline in the previous month. Prices for pet food and for cosmetics and other toilet preparations increased, after showing no change in the prior month. By contrast, the index for alcoholic beverages edged down 0.1 percent, following a 1.1-percent rise in December. Prices for floor coverings also turned down, after advancing a month ago. In January, price increases slowed for light motor trucks and book publishing.

The capital equipment index increased 0.3 percent in January, following a 0.1-percent gain in December. Passenger car prices rose 1.2 percent, after advancing 0.2 percent in the previous month. The indexes for x-ray and electromedical equipment, heavy motor trucks, and for tools, dies, jigs, fixtures, and industrial molds turned up, following declines in December. Prices for commercial furniture and civilian aircraft increased more than in the prior month. Conversely, the electronic computer index fell 5.4 percent in January, following a 2.0-percent decrease in December. Light motor truck prices rose less than a month ago. The indexes for communication and related equipment and for construction machinery and equipment declined, after showing no change in December.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components advanced 0.7 percent, seasonally adjusted, after registering a 0.4-percent gain in December. In January, prices for intermediate energy goods increased more than a month earlier, and the index for nondurable manufacturing materials turned up, following a decline in the previous month. By contrast, prices for durable manufacturing materials and materials and components for construction moved down, after rising in the prior month. The index for intermediate foods and feeds advanced 1.7- percent for the second consecutive month. Excluding foods and energy, prices for intermediate materials increased 0.2 percent, after showing no change a month ago. (See table B.)

The index for intermediate energy goods jumped 3.1 percent in January, following a 1.5-percent gain in December. Posting its largest increase since a 4.3-percent rise in February 1980, prices for commercial electric power moved up 3.9 percent, after advancing 0.5 percent in the previous month. Record increases for the commercial natural gas index (21.1 percent) and the natural gas to electric utilities index (64.4 percent) were recorded in January, following smaller gains in December. The indexes for liquefied petroleum gas and industrial electric power also rose more than a month ago. Gasoline prices turned up, after falling in the prior month. On the other hand, the jet fuel index dropped 12.9 percent in January, following a 3.0-percent rise in December. Diesel fuel prices also declined, after advancing a month ago. The industrial natural gas index increased less than last month.

Prices for nondurable manufacturing materials rose 1.1 percent in January, after edging down 0.1 percent in December. The plastic resins and materials index advanced 2.3 percent, following a 2.8-percent drop in the previous month. Prices for basic organic chemicals (other than primary and intermediate basic organics), paper, and processed yarns and threads also turned up, after falling a month earlier. The indexes for nitrogenates and inedible fats and oils increased more than in the prior month. By contrast, prices for primary basic organic chemicals rose 1.3 percent, following a 3.2-percent gain in December. The indexes for finished fabrics and phosphates turned down, after advancing a month ago. Synthetic fiber prices declined, after showing no change a month earlier.

The durable manufacturing materials index decreased 0.7 percent in January, following a 0.2-percent gain in December. Prices for steel mill products dropped 1.7 percent (the largest decline since a 4.6-percent decline in January 1986), after showing no change in the previous month. The indexes for aluminum mill shapes, copper cathode and refined copper, and copper and brass mill shapes fell, following increases a month earlier. Prices for softwood plywood decreased more than in the prior month. On the other hand, the hardwood lumber index turned up 0.4 percent, after declining 0.6 percent in December. Prepared paint prices also rose, following a decrease a month ago. The index for primary aluminum (except extrusion billet) advanced more than in the previous month.

Prices for materials and components for construction turned down 0.3 percent in January, after edging up 0.1 percent in December. The softwood lumber index fell 2.9 percent, following a 0.1-percent gain a month earlier. Prices for fabricated structural metal products, asphalt felts and coatings, steel wire, and switchgear also decreased, after increasing in the prior month. The indexes for softwood plywood and gypsum products declined more than a month ago. By contrast, millwork prices advanced 0.3 percent, following no change in December. The heating equipment index rose more than in the previous month, while prices for fabricated ferrous wire products turned up, after falling a month earlier.

For the second consecutive month, the intermediate foods and feeds index increased 1.7 percent. In January, rising prices were observed for prepared animal feeds, fluid milk products, beef and veal, frozen ground meat patties, confectionery materials, refined sugar, and flour. Partly offsetting these advances were falling prices for pork; crude vegetable oils; natural, processed, and imitation cheese; and butter.

Crude Goods

Registering the largest one-month increase in crude goods prices since a 22.1-percent advance registered in August 1973, the Producer Price Index for Crude Materials for Further Processing increased 13.9 percent in January, seasonally adjusted, following an 8.5-percent gain in December. The indexes for crude energy materials and basic industrial materials rose more in January than in the previous month. By contrast, prices for crude foodstuffs and feedstuffs advanced at a slower rate than in December. (See table B.)

The index for crude energy materials advanced 25.0 percent in January, following a 14.8-percent increase in December. Natural gas prices jumped 46.0 percent (the largest increase on record), after rising 35.3 percent in the previous month. The crude petroleum index fell 10.6 percent, following an 11.1-percent decrease a month ago. On the other hand, coal prices declined 3.0 percent, after a 3.0-percent gain in the prior month.

The index for crude nonfood material less energy increased 0.5 percent in January, after registering a 0.3-percent gain in December. Prices for iron and steel scrap advanced 8.3 percent, after rising 0.2 percent a month earlier. The indexes for aluminum base scrap and construction sand, gravel, and crushed stone turned up, after falling last month. Prices for wastepaper decreased less than in the prior month. The indexes for hardwood logs and pulpwood rose more than a month ago. By contrast, raw cotton prices declined 8.8 percent in January, after increasing 2.5 percent in December. The leaf tobacco index advanced at a slower rate than in the previous month. Prices for gold ores and phosphates turned down, after showing gains a month earlier.

The index for crude foodstuffs and feedstuffs increased 2.2 percent in January, after registering a 3.4-percent gain in December. Slaughter cattle prices moved up 2.5 percent, following a 5.5-percent rise in the previous month. The indexes for slaughter hogs, soybeans, and unprocessed shellfish turned down, after advancing a month ago. Prices for slaughter broilers and fryers increased less than a month earlier. By contrast, corn prices rose 7.0 percent, after falling 0.1 percent in December. The indexes for fresh and dry vegetables and wheat also advanced, after decreasing in the prior month. Fluid milk prices increased at a faster rate than a month earlier.

Net output price indexes for mining, manufacturing, and services industries

Mining. The Producer Price Index for the Net Output of Total Domestic Mining Industries rose 22.3 percent in January, following a 12.0-percent increase in December. (Net output price indexes are not seasonally adjusted.) Most of this acceleration can be traced to prices received by the crude petroleum, natural gas, and natural gas liquids industry, which jumped 27.9 percent, after posting a 14.9-percent gain in the prior month. In January, the index for the oil and gas field services industry group also rose at a faster pace than a month earlier. Prices received by the construction sand and gravel industry and the coal mining services industry increased, following declines in the previous month. The index for the crushed and broken limestone industry advanced, after showing no change last month. By contrast, prices received by the bituminous coal and lignite industry turned down 1.6 percent, following a 2.1-percent rise in December. The index for the gold ores industry also fell, after increasing a month ago. Prices paid to kaolin and ball clay producers rose less than a month earlier. In January, the Producer Price Index for the Net Output of Total Domestic Mining Industries stood at 170.8 (December 1984=100), 90.8 percent above its year-ago level.

Manufacturing. The Producer Price Index for the Net Output of Total Domestic Manufacturing Industries increased 0.2 percent in January, after declining 0.4 percent in December. Rising prices paid to the tobacco manufactures, chemical and allied products, food and kindred products, and printing and publishing industry groups outweighed falling prices paid to the petroleum refining, lumber and wood products, primary metals, and apparel industry groups. In January, the Producer Price Index for the Net Output of Total Domestic Manufacturing Industries stood at 134.7 (December 1984=100), 3.0 percent above its year-ago level.

Services. Among service industries in January, price increases were registered for offices of physicians, real estate agents and managers, legal services, hotels and motels, and the Unites States Postal Service. On the other hand, falling prices were observed for operators and lessors of nonresidential buildings; telephone communications, except radiotelephone; wireless telecommunications; and truck rental and leasing.

Recalculation of Seasonal Adjustment Factors

Effective with this release, seasonal adjustment factors have been recalculated to reflect 2000 price-movement patterns for stage-of- processing (SOP) and commodity groupings. This routine annual recalculation may affect seasonally adjusted indexes and percent changes from January 1996 to the present. Revised seasonally adjusted data for this period, as well as seasonal factors for commodity indexes to be used through December 2001, are available on request from BLS. The table below shows 2000 monthly seasonally adjusted percent changes for the three major SOP categories calculated with the old seasonal factors, compared with the percent changes for recalculated indexes. The latter incorporate new seasonal factors that reflect 2000 price movement patterns.

Improved Quality Adjustment for Microprocessors

Effective with this release, the Bureau of Labor Statistics implemented a new quality valuation methodology for microprocessors designed and sold for computer applications. This new quality adjustment methodology views changes in the processing power of microprocessors as changes in quality and permits the explicit estimation of their value. The new approach replaced old procedures which were generally limited to considering price differences between a new microprocessor and its predecessor as a measure of the value of the quality difference between the two.

For additional information, see the October 2000 issue of the PPI Detailed Report, or contact the Section of Index Analysis and Public Information at (ppi-info@BLS.gov) or (202) 691-7705.

Resampling of Industries

Effective with this release, the Producer Price Index (PPI) includes data for 41 resampled industries. The Bureau of Labor Statistics periodically updates the sample of producers providing data for the PPI to reflect current conditions more accurately when the structure, membership, technology, or product mix of an industry shifts significantly. The first results of this systematic process were published in July 1986. Subsequent efforts have been completed at 6-month intervals. For information on specific additions, deletions, and recodes of indexes that are effective this month, see the January 2001 issue of the PPI Detailed Report or contact the Section of Index Analysis and Public Information at (202) 691- 7705.

Also with the January data release, 17 retail trade industries and 1 financial services industry were introduced into the PPI for the first time. The introduction of these industries is part of an ongoing effort to expand PPI coverage to sectors of the economy other than mining and manufacturing. Indexes for these industries appear in table 5 of the PPI Detailed Report.

Standard Industrial Classification (SIC) Code Industry 1099 Metal ores, not elsewhere classified 1429 Crushed and broken stone, not elsewhere classified 2015 Poultry and egg processing 2032 Canned specialties 2035 Pickled fruits and vegetables, vegetable sauces and seasonings, and salad dressings 2043 Cereal breakfast foods 2068 Salted and roasted nuts and seeds 2086 Bottled and canned soft drinks and carbonated waters 2087 Flavoring extracts and flavoring syrups, not elsewhere classified 2095 Coffee 2281 Spun yarn 2282 Texturing, throwing, and winding mill products: cotton, manmade fibers, silk, and wool 2284 Thread mills 2842 Specialty cleaning, polishing, and sanitation preparations 3291 Abrasive products 3299 Nonmetallic mineral products, not elsewhere classified 3421 Cutlery 3441 Fabricated structural metal 3449 Miscellaneous structural metal work 3519 Internal combustion engines, not elsewhere classified 3545 Machine tool accessories 3548 Gas and electric welding and soldering equipment 3569 General industrial machinery, not elsewhere classified 3599 Machinery, except electrical, not elsewhere classified 3635 Household vacuum cleaners 3639 Household appliances, not elsewhere classified 3661 Telephone and telegraph apparatus 3699 Electronic and electrical equipment and supplies, not elsewhere classified 3713 Truck and bus bodies 3799 Transportation equipment, not elsewhere classified 3825 Electrical measuring and integrating instruments 3914 Silverware, plated ware, and stainless steel ware 3991 Brooms and brushes 4215 Courier services, except by air 4225 General warehousing and storage 4311 Unites States Postal Service 4522 Air transportation, nonscheduled 5912* Drug stores and proprietary stores 5921* Liquor stores

5941* Sporting goods stores 5942* Book stores 5943* Stationery stores 5944* Jewelry stores 5945* Hobby, toy, and game shops 5946* Camera and photographic supply stores 5947* Gift, novelty, and souvenir shops 5948* Luggage and leather goods stores 5949* Sewing, needlework, and piece goods stores 5961* Catalog and mail-order houses 5962* Automatic merchandising machine operators 598* Fuel dealers 5992* Florists 5995* Optical goods stores 5999* Miscellaneous retail stores, not elsewhere classified 6211* Security brokers, dealers, and investment banking companies 8062 General medical and surgical hospitals 8063 Psychiatric hospitals 8069 Specialty hospitals, except psychiatric 8082 Home health care services

* For further discussion of the new retail trade and financial services indexes, see "New Retail Trade Industries in the PPI-SIC 59" and "New Producer Price Index for Security Brokers, Dealers, and Investment Banking Companies-SIC 6211" in the January 2001 issue of the PPI Detailed Report or call the Section of Index Analysis and Public Information at (202) 691- 7705.