December 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 declined 0.7 percent in December, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The December decline follows decreases of 0.6 percent in November and 1.6 percent in October. Prices received by producers of intermediate goods decreased 0.9 percent, following a 0.5- percent decline in the prior month. The crude goods index dropped 9.5 percent, after posting a 7.3-percent rise in November. (See table A.)

Over three fourths of the decrease in December's finished goods index can be traced to falling energy prices -- which declined 4.0 percent, following a 3.8-percent decrease in November. The index for finished goods other than foods and energy declined 0.1 percent in December, following a 0.2-percent gain in November. Finished consumer foods prices decreased 0.1 percent in December, following a 0.8-percent decline a month earlier.

Before seasonal adjustment, the Producer Price Index for Finished Goods decreased 0.9 percent to stand at 137.2 (1982=100). From December 2000 to December 2001, finished goods prices fell 1.8 percent -- the largest 12-month rate of decline since a 2.3-percent drop for the 12 months ended in December 1986. This index rose 3.6 percent during 2000. Prices for finished energy goods turned down 17.2 percent in 2001, following a 16.6-percent advance in the previous calendar year. For the 12 months ended in December 2001, the index for finished goods other than foods and energy rose 0.7 percent, after posting a 1.3-percent gain in 2000. Prices for finished consumer foods advanced at about the same rate in 2001 as in the prior calendar year -- 1.8 and 1.7 percent, respectively. At the earlier stages of processing, the intermediate goods index decreased 4.0 percent from December 2000 to December 2001, after registering a 4.1- percent rise during 2000. Prices received by producers of crude materials for further processing dropped 32.4 percent in 2001, following a 35.5- percent increase in the prior calendar year. (See summary below.)

Crude materials for further processing 15.3 35.5 -32.4 -22.7 -33.2 -33.3 -39.1 Foodstuffs and feedstuffs -.1 7.4 -7.4 15.6 -6.8 4.2 -34.5 Crude energy materials 36.9 85.6 -53.0 -42.4 -52.0 -61.6 -53.9 Crude nonfood materials less energy 14.0 -5.5 -9.9 -10.8 -15.0 -4.5 -9.3 NOTE: Late reports and corrections by respondents may cause some indexes to change 4 months after original publication. In addition, seasonally adjusted indexes may be revised for 5 years due to the recalculation of seasonal factors each January.

Finished goods

Prices for finished energy goods fell 4.0 percent in December, after decreasing 3.8-percent in November. The gasoline and liquefied petroleum gas indexes led December's decline -- tumbling 8.2 and 19.3 percent, respectively. Falling prices for home heating oil, residential natural gas, diesel fuel, and residential electric power also contributed to the decrease for the finished energy goods index.

The index for finished consumer goods other than foods and energy turned down 0.1 percent in December, after rising 0.3 percent in November. Passenger car prices fell 0.7 percent, following a 0.9-percent advance in the prior month. The index for cigarettes showed no change, after increasing in November. December light motor truck prices declined at a faster pace than they did a month earlier. The indexes for men's and boys' apparel, textile housefurnishings, women's apparel, and floor coverings turned down in December. Conversely, book publishing prices increased 1.1 percent in December, compared with a 1.0-percent decline in the previous month. The indexes for sanitary papers and health products, pharmaceutical preparations, and newspaper circulation also turned up, after falling in November. During the 2001 calendar year, prices for finished consumer goods other than foods and energy increased 1.3 percent, following a 1.4- percent hike in 2000.

Capital equipment prices inched down 0.1 percent in December, after rising 0.1 percent a month earlier. The index for passenger cars declined 0.7 percent, following a 0.9-percent gain in November. Prices for light motor trucks and electronic computers fell more quickly in December than they did in the prior month. The index for communication and related equipment rose less than it did in November. Prices for agricultural machinery and equipment and for construction machinery and equipment turned down from last month's increases. By contrast, the index for civilian aircraft advanced 0.2 percent in December, following a 0.2-percent decline in November. Prices for heavy motor trucks, office and store machines and equipment, and industrial material handling equipment also turned up, after falling in the previous month. The index for x-ray and electromedical equipment rose, following no change in November. For the 12 months ended December 2001, capital equipment prices decreased 0.1 percent, after increasing 1.2 percent during the previous calendar year.

Prices for finished consumer foods edged down 0.1 percent in December, after registering a 0.8-percent decline in November. Falling prices for dairy products, eggs for fresh use, pork, finfish and shellfish, and processed young chickens slightly outweighed price increases for fresh fruits and melons, fresh and dry vegetables, beef and veal, processed fruits and vegetables, and confectionery end products.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components moved down 0.9 percent in December, seasonally adjusted, following a 0.5-percent drop in November. Prices for intermediate energy goods fell more in December than they did in the previous month. The index for materials and components for construction declined this month, after showing no movement in November. On the other hand, prices for materials for durable manufacturing, intermediate foods and feeds, and materials for nondurable manufacturing all decreased less in December than they did in the preceding month. For the second straight month, the index for intermediate materials other than foods and energy fell at a 0.2-percent rate. (See table B.)

The index for intermediate energy materials decreased 4.5 percent in December, after registering a 1.6-percent decline in November. This faster rate of decline was led by diesel fuel prices, which fell 19.5 percent in December and 1.8-percent in the previous month. Prices for liquefied petroleum gas, jet fuels, and commercial natural gas also decreased more rapidly than they did in November. The indexes for commercial electric power, industrial electric power, and industrial natural gas fell in December, after increasing a month earlier. Residual fuel prices fell, after showing no change in November. On the other hand, the index for gasoline declined 8.2 percent in December, after dropping 10.3 percent in November. Prices for natural gas to electric utilities also decreased at a slower pace. From December 2000 to December 2001, the intermediate energy goods index fell 17.2 percent, following a 19.0-percent gain in 2000.

Prices for materials and components for construction declined 0.2 percent in December, after posting no change in the preceding month. The gypsum products index fell 3.3 percent, following a 9.1-percent increase in November. Prices for softwood lumber and plywood decreased faster in December than they did in the prior month. The index for asphalt felts and coatings increased at a slower rate than it did in November, while prices for plumbing fixtures and brass fittings fell, after rising a month earlier. By contrast, the index for plastic construction products turned up 0.2 percent in December, compared with a 0.7-percent decrease in the previous month. The indexes for fabricated ferrous wire products and for nonferrous wire and cable also increased, after decreasing in the preceding month. Millwork prices declined less rapidly in December than they did in November. Prices for fabricated structural metal products rose in December, after registering no change a month earlier. The index for materials and components for construction showed no change for the 12 months ended in December 2001, following a 0.1-percent increase in the prior year.

The index for materials for durable manufacturing fell 0.2 percent, after registering a 0.6-percent drop in November. In December, price declines for steel mill products, plywood, flat glass, and hardwood lumber outweighed price gains for primary aluminum, building paper and board, and prepared paint. The index for durable manufacturing materials declined 3.9 percent for the 12 months ended December 2001, following a 0.2-percent increase during 2000.

Subsequent to a 1.5-percent drop in November, the index for intermediate foods and feeds fell 1.0 percent in December. Prices for natural, processed, and imitation cheese decreased 0.6 percent, after declining 8.2 percent in the prior month. The index for beef and veal advanced 1.7 percent, following a 6.3-percent decline in November. Prices for refined sugar and for dry milk products also increased in December, after falling a month earlier. The butter index decreased at a slower pace in December than it did in the preceding month. Conversely, fluid milk prices fell 7.0 percent, after edging down 0.1 percent a month earlier. The indexes for pork and flour turned down in December. Confectionery materials prices advanced less than they did in the previous month, while the index for crude vegetable oils showed no change, after increasing in November. Prices for intermediate foods and feeds rose 0.5 percent during calendar-year 2001, after posting a 3.6-percent advance in the previous calendar year.

The index for materials for nondurable manufacturing declined 0.9 percent in December, following a 1.0-percent drop in November. In December, price declines for primary basic organic chemicals, plastic resins and materials, fertilizer materials, and basic inorganic chemicals outweighed price increases for paperboard, inedible fats and oils, gray fabrics, and woodpulp. During 2001, prices for materials for nondurable manufacturing fell 5.4 percent, after increasing 4.1 percent in 2000.

Crude goods

The Producer Price Index for Crude Materials for Further Processing turned down 9.5 percent, following a 7.3-percent increase in November. Prices for crude energy materials also fell in December, after rising in the previous month. On the other hand, the crude foodstuffs and feedstuffs index decreased less than it did in November. Prices for basic industrial materials edged up, after declining in the prior month. (See table B.)

The index for crude energy materials declined 20.5 percent in December, following a 28.3-percent gain in November. Prices for natural gas dropped 24.7 percent, after jumping 80.0 percent in the prior month. The crude petroleum index fell 21.6 percent, following a 7.4-percent decrease in November. Coal prices turned down 5.5 percent, after increasing 4.7 percent in the previous month. The crude energy materials index declined 53.0 percent during 2001, following an 85.6-percent advance in 2000.

Prices for crude foodstuffs and feedstuffs decreased 1.9 percent in December, after falling 5.9 percent in November. The fluid milk index declined 2.9 percent, after dropping 11.8 percent in the prior month. December prices for slaughter hogs also fell less than they did a month earlier. Prices for slaughter cattle, corn, and for fresh and dry vegetables turned up, after decreasing in November. The index for fresh fruits and melons rose more than it did in the previous month. By contrast, the wheat index moved down 0.3 percent, after posting a 3.9- percent gain in November. Slaughter turkey prices also turned down in December. The indexes for unprocessed finfish, alfalfa hay, and soybeans decreased at a faster rate then they did in November. Prices for unprocessed shellfish advanced less than they did in the prior month. During 2001, the crude foodstuffs and feedstuffs index declined 7.4 percent, after rising at the same rate in 2000.

The index for crude nonfood materials less energy edged up 0.1 percent in December, after posting a 0.8-percent decline in November. In December, rising prices for raw cotton; aluminum base scrap; pulpwood; construction sand, gravel, and crushed stone; and softwood logs, bolts, and timber outweighed falling prices for iron and steel scrap, hides and skins, phosphates, gold ores, and leaf tobacco. The basic industrial materials index decreased 9.9 percent during the 2001 calendar year, compared with a 5.5-percent decline in 2000.

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

Mining. The Producer Price Index for the Net Output of Total Domestic Mining Industries dropped 16.3 percent in December, after posting an 18.3- percent jump in November. (Net output price indexes are not seasonally adjusted.) A 22.9-percent December decrease in prices received by the crude petroleum, natural gas, and natural gas liquids industry, which followed a 29.0-percent increase in November, accounted for most of the downturn in mining-industry prices. The industry indexes for bituminous coal and lignite, oil and gas field exploration services, and crushed and broken limestone also turned down in December. Prices received by the construction sand and gravel industry rose less than they did in the prior month. On the other hand, the industry index for oil and gas well drilling exhibited a slower rate of decline, falling 0.6 percent in December, after dropping 5.4 percent in November. Prices received by the gold ores; potash, soda, and borate minerals; and coal mining services industries also decreased less than they did in November. In December, the Producer Price Index for the Net Output of Total Mining Industries stood at 78.0 (December 1984=100). From December 2000 to December 2001, this index declined 46.8 percent, following a 69.0-percent advance in 2000.

Manufacturing. After registering a 0.6-percent decline in November, the Producer Price Index for the Net Output of Total Domestic Manufacturing Industries dropped 1.1 percent in December. A larger decrease in the index for the petroleum refining and related products industry group -- 13.6 percent in December and 7.0 percent in November -- accounted for most of the faster rate of decline in total manufacturing industry prices. Prices received by the industry groups for transportation equipment and for apparel turned down, after showing no change in the previous month. The industry group index for chemicals and allied products fell more than it did in November. Prices received by the tobacco manufactures industry group showed no change in December, after posting a 1.8-percent rise in November. The industry group indexes for printing, publishing, and allied industries and for non-metallic mineral products moved down, following November gains. Prices received by the measuring and controlling instruments industry group increased less than they did in the prior month. By contrast, the industry group index for food and kindred products decreased 0.5 percent, after a 1.1-percent drop in November. Prices received by the paper and allied products industry group turned up in December. In December, the Producer Price Index for the Net Output of Total Manufacturing Industries stood at 131.4 (December 1984=100). This index declined 2.2 percent for the 12 months ended December 2001, following a 2.9-percent advance in the previous calendar year.

Services. Among service industries in December, advancing prices were registered by the industries for general medical and surgical hospitals, property and casualty insurance, legal services, travel agencies, passenger car rental, cable and other pay television services, and engineering services. Conversely, falling prices were experienced by the industries for scheduled air transportation, telephone communications (except radiotelephone), operators and lessors of nonresidential buildings, life insurance carriers, trucking (except local), hotels and motels, and deep sea foreign transportation of freight.

Recalculated Seasonal Adjustment Factors and Relative Importances to be Available on February 13, 2002

Each year with the release of PPI data for January, seasonal adjustment factors are recalculated to reflect price movements from the just-completed calendar year. This routine annual calculation may result in revisions to seasonally adjusted indexes for the previous 5 years. The following information will be available on February 13, 2002 (2 workdays prior to the release of PPI data for January 2002 on February 15):

Seasonal factors for commodity indexes for the year 2002,

Recalculated seasonal factors for the last 5 years (1997-2001) for the commodity indexes,

Recalculated seasonal factors for the last 5 years (1997-2001) for the stage-of-processing indexes.

In addition to recalculated seasonal factors, relative importances, as of December 2001, will also be available on February 13, 2002, at ftp://ftp.bls.gov which is the BLS ftp site. Choose the "pub" directory, the "special.requests" directory, and the "ppi" directory.

To request any of this information, call the Division of Industrial Prices and Price Indexes, Section of Index Analysis and Public Information at (202) 691-7705.

PPI Weights to be Updated

The Bureau of Labor Statistics will soon update the value weights used to calculate Producer Price Indexes to more accurately reflect recent production and marketing patterns. The new weights, which will be introduced in February 2002 with the release of January 2002 index data, will be based on shipment values from the year 1997. These value weights come from the Census of Manufactures, the Census of Mining, the Census of Services, and the Census of Agriculture. PPI weights have been based upon 1992 census shipment values since January 1996.

All indexes will be affected by this weight update, including all the industry net output indexes, as well as those calculated from traditional commodity groupings. In addition, weights will be updated from the 1992 to the 1997 census for all stage-of-processing indexes, net output of industry by stage of process indexes, durability of product indexes, and special commodity-grouping indexes. This weight revision will not change the arithmetic reference base, in most cases 1982=100, of the PPI index system.

Also with the publication of January data on February 15, 2002, SIC- classified indexes will reflect updated input/output (I/O) ratios based on the 1992 Input-Output Account of the U.S. Department of Commerce's Bureau of Economic Analysis (BEA). These I/O ratios, which represent the proportion of each industry's output consumed outside the industry, will be updated from those reflected in BEA's 1987 Input-Output Account. The commodity grouping indexes will not be affected.

It is important to note that the PPI classification system and aggregation structure will not change as a result of the weight revisions discussed above. The weight update, however, will result in significant shifts in the relative importance of various industries and products, and these shifts will impact future aggregate indexes in a manner commensurate with the relative gains and losses in value weights from 1992 to 1997.

Relative importances as of December 2001 on the 1992 and 1997 weighting schemes will be available on February 13, 2002. To request this information call the Division of Industrial Prices and Price Indexes, Section of Index Analysis at (202) 691-7705.