January 2002 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 edged up 0.1 percent in January, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This increase follows a 0.6-percent drop in December and a 0.5-percent decline in November. At the earlier stages of processing, prices received by intermediate goods manufacturers fell 0.1 percent, following a 0.8-percent decline in the prior month. The crude goods index increased 3.7 percent, after decreasing 9.6 percent in December. (See table A.) (Effective with this month's data release, the PPI's weights have been updated to 1997 shipment values. See note on page 7.)

2002 Jan. .1 .8 .1 -.1 -2.6 -.1 3.7

January's upturn for finished goods was led by the energy goods index -- which rose 0.1 percent, compared with a 3.9-percent decline in December. Rising prices for finished consumer foods -- which increased 0.8 percent, following no change in the previous month -- also contributed to the acceleration in finished goods. On the other hand, the index for finished goods other than foods and energy inched down 0.1 percent, after showing no change in December.

Before seasonal adjustment, the Producer Price Index for Finished Goods increased 0.2 percent in January, to stand at 137.5 (1982=100). From January 2001 to January 2002, prices for finished goods declined 2.6 percent. During the same period, the index for finished energy goods fell 20.1 percent. By contrast, prices for finished consumer foods rose 1.8 percent for the 12 months ended in January 2002, and the index for finished goods other than foods and energy moved up 0.3 percent over the same period. At the earlier stages of processing, prices for intermediate goods decreased 4.6 percent during the past 12 months, and the index for crude goods dropped 40.4 percent.

Finished Goods

Prices for finished energy goods turned up 0.1 percent in January, following a 3.9-percent decline in December. The gasoline index advanced 3.4 percent, after registering an 8.3-percent decrease in the previous month. Prices for residential natural gas, liquefied petroleum gas, and home heating oil also rose, after falling in December. By contrast, the residential electric power index turned down 1.4 percent in January, following a 0.1-percent gain in the prior month. January prices for finished lubricants and similar oils decreased at a faster rate than in December.

2002 Jan. -.1 -.6 0 -4.6 4.0 5.6 -.5 -40.4

Prices for finished consumer foods rose 0.8 percent in January, after showing no change in December. The dairy products index turned up 1.6 percent, after declining 1.5 percent in the prior month. Prices for eggs for fresh use, processed young chickens, and for finfish and shellfish also increased, after falling in December. The index for fresh and dry vegetables rose more than it did a month ago. Prices for pork decreased at a slower rate than they did in December. Partially counteracting these price movements, the fresh fruits and melons index dropped 7.2 percent in January, following a 13.4-percent gain in the previous month. The indexes for beef and veal, soft drinks, and roasted coffee also turned down, after increasing in December. Prices for processed fruits and vegetables and for shortening and cooking oils rose at a slower rate in January than they did in the prior month.

The index for finished consumer goods other than foods and energy declined 0.1 percent in January, after showing no change in December. Falling prices for cigarettes, light motor trucks, sanitary papers and health products, tires, alcoholic beverages, men's and boys' apparel, and textile housefurnishings more than offset increasing prices for passenger cars, pharmaceutical preparations, book publishing, periodical circulation, floor coverings, household furniture, and for sporting and athletic goods.

After showing no change in December, the index for capital equipment edged down 0.1 percent in January. Decreasing prices for light motor trucks, civilian aircraft, and railroad equipment outweighed rising prices for passenger cars, electronic computers, and for pumps and compressors.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components inched down 0.1 percent in January, seasonally adjusted, after falling 0.8 percent in December. In January, prices for intermediate energy goods and for intermediate foods and feeds decreased less than a month earlier. The indexes for construction materials and durable manufacturing materials turned up, following declines in the previous month. By contrast, prices for nondurable manufacturing materials fell at a faster rate in January than they did in December. Excluding foods and energy, the intermediate goods index was unchanged in January, after a slight decline in December. (See table B.)

The index for intermediate energy goods decreased 0.6 percent in January, following a 4.0-percent drop in December. January's falling prices for residual fuels, commercial electric power, industrial electric power, and natural gas to electric utilities outweighed price increases for jet fuels, diesel fuel, gasoline, and liquefied petroleum gas.

The index for materials and components for construction rose 0.2 percent in January, after declining 0.2 percent in December. Softwood lumber prices advanced 6.9 percent, following a 2.2-percent drop a month earlier. The indexes for plywood, hardwood lumber, and wiring devices also turned up, after decreasing in the prior month. Prices for gypsum products fell less in January than they did in December. On the other hand, the index for fabricated structural metal products declined 0.3 percent, following a 0.1-percent gain in December. In January, prices for nonferrous wire and cable, fabricated ferrous wire products, and heating equipment also turned down, after rising in the previous month.

The rate of decline in prices for intermediate foods and feeds slowed to 0.1 percent in January from a 1.0-percent rate of decline in December. January's price decreases for prepared animal feeds; beef and veal; pork; natural, processed, and imitation cheese; and for dry, condensed, and evaporated milk products were offset by rising prices for flour, refined sugar, confectionery materials, and crude vegetable oils.

Subsequent to a 0.2-percent decline in December, the durable manufacturing materials index inched up 0.1 percent in January. Prices for hot rolled sheet and strip increased 0.6 percent, after falling 1.6 percent in the previous month. The indexes for hardwood lumber, plywood, and aluminum mill shapes also turned up, following declines a month earlier. Prepared paint prices rose more quickly in January than they did in December. By contrast, the index for building paper and board decreased 0.8 percent, after advancing 2.6 percent in the prior month. Prices for cold rolled sheet and strip and for hot rolled bars, plates, and structural shapes fell at a faster rate in January than they did in December. The cement index turned down, after rising a month ago.

Prices for nondurable manufacturing materials declined 1.2 percent in January, after moving down 0.9 percent in December. The index for medicinal and botanical chemicals posted a 6.1-percent drop, following a 0.2-percent decrease in the prior month. Prices for plastic resins and materials and for intermediate basic organic chemicals also fell more in January than they did in December. The index for paperboard turned down in January, while paper prices declined, after showing no change in December. By contrast, the index for primary basic organic chemicals decreased 0.6 percent in January, following an 8.0-percent drop in December. Prices for fertilizer materials, paint materials, and leather turned up, after moving down in the previous month. The woodpulp index rose more rapidly in January than it did in December.

Crude Goods

The index for Crude Materials for Further Processing turned up 3.7 percent in January, compared with a 9.6-percent decrease in December. Both the crude energy materials and foodstuffs and feedstuffs indexes rose this month, following December declines. Slightly counteracting these rising prices, the index for basic industrial materials fell more in January than in the prior month. (See table B.)

The index for crude energy materials rose 5.6 percent in January, subsequent to a 20.5-percent drop in December. Natural gas prices exhibited a similar pattern -- turning up 4.9 percent in January, after falling 24.7 percent in the prior month. The indexes for crude petroleum and coal posted increases in January of 8.1 and 3.2 percent, respectively, following declines in December of 21.6 and 5.5 percent.

Prices for crude foodstuffs and feedstuffs increased 4.0 percent in January, following a 1.9-percent decline in December. Leading the acceleration, the index for slaughter hogs rose 26.4 percent, after falling 11.1 percent in December. The indexes for slaughter broilers and fryers and slaughter turkeys also increased in January, following a decrease in the prior month. Slaughter cattle prices rose faster in January than in the previous month. On the other hand, corn prices fell 4.5 percent in January, after posting a 1.9-percent gain in the previous month. The indexes for raw cane sugar and for fresh fruits and melons also fell this month, following an increase in December.

The index for crude nonfood materials less energy dropped 0.5 percent in January, after declining 0.3 percent in the prior month. A downturn in January pulpwood prices -- which fell 10.7 percent, following a 2.1-percent rise in December -- was the leading cause of the faster rate of decline for basic industrial materials. Construction sand, gravel, and crushed stone prices also turned down in January, compared with an increase in December. The indexes for raw cotton and aluminum base scrap increased at a slower rate in January than they did in December, while the index for softwood logs, bolts, and timber fell faster in January than they did in the previous month. By contrast, the index for iron and steel scrap increased 0.7 percent in January, after posting a 4.6-percent decline in the prior month. The indexes for nonferrous metal ores and phosphates also rose in January, following a decline in December. Prices for hides and skins fell at a slower rate in January than they did in the previous month.

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

Mining. The Producer Price Index for the Net Output of Total Domestic Mining Industries advanced 4.6 percent in January, after posting a 16.3- percent drop in December. (Net output price indexes are not seasonally adjusted.) A 7.0-percent rise in prices received by the crude petroleum, natural gas, and natural gas liquids industry -- which followed a 22.9- percent decline in December -- accounted for most of the upturn in mining industry prices. The industry indexes for coal mining; gold ores; potash, soda, and borate minerals; crushed and broken limestone; and oil and gas field exploration services also turned up in January. On the other hand, prices received by the oil and gas well drilling industry decreased at a 3.0-percent rate, compared with a 0.6-percent dip a month earlier. The index for the iron ores industry fell 1.4 percent, after showing no change in the previous month. In January, the Producer Price Index for the Net Output of Total Mining Industries stood at 81.6 (December 1984 = 100), 56.1 percent below its year-ago level.

Manufacturing. After registering a 1.1-percent decline in December, the Producer Price Index for the Net Output of Total Manufacturing Industries edged up 0.2 percent in January. Much of this upturn can be traced to prices received by the industry group for petroleum refining and related products, which increased 3.5 percent in January, following a 13.6-percent drop a month earlier. The indexes for the printing and publishing industry and the lumber and wood products (except furniture) industry also turned up in January. Prices received by the industry groups for chemicals and allied products, transportation equipment, and food and kindred products fell less than they did in the previous month. The industry group index for electrical and electronic machinery and equipment jumped 0.6 percent in January, after showing no change in December. Conversely, prices received by the tobacco manufactures industry decreased 1.7 percent, following no change in the prior month. The industry group index for paper and allied products moved down, following a December gain. In January, the Producer Price Index for the Net Output of Total Manufacturing Industries stood at 131.7 (December 1984 = 100), 2.3 percent lower than a year ago.

Services. Among service industries in January, advancing prices were registered by the industries for engineering services, scheduled air transportation, skilled and intermediate care facilities, data processing services, advertising agencies, general medical and surgical hospitals, passenger car rental, cable and other pay television services, and legal services. Conversely, falling prices were experienced by the industries for help supply services, prepackaged software, radio broadcasting, wireless telecommunications, telephone communications (except radiotelephone), and airports, flying fields, and airport services.

Recalculation of Seasonal Adjustment Factors

Effective with this release, seasonal adjustment factors have been recalculated to reflect price-movement patterns during 2001 for stage-of- processing (SOP) and commodity-grouping indexes. This routine annual recalculation may affect previously published seasonally adjusted indexes and percent changes for January 1997 through December 2001. Revised seasonally adjusted data for this period, as well as seasonal factors for commodity indexes to be used through December 2002, were released February 13, 2002. To request this information, contact the Division of Industrial Prices and Price Indexes, Section of Index Analysis and Public Information at ppi-info@bls.gov or (202) 691-7705.

The table below provides monthly seasonally adjusted percent changes for the three major SOP categories during 2001, based on former and recalculated seasonal factors.

PPI Weights have been Updated

With the release of data for January 2002, the Bureau of Labor Statistics updated the value weights used to calculate Producer Price Indexes to more accurately reflect recent production and marketing patterns. The new weights are based on shipment values for the year 1997 published by the U.S. Census Bureau of the U.S. Department of Commerce. (From January 1996 through December 2001, PPI weights were based on 1992 census shipment values.)

All indexes are affected by this weight update, including all industry net output indexes and indexes calculated from traditional commodity groupings. In addition, weights were 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 does not affect the arithmetic reference base used by the PPI index system.

Also with the publication of this data, SIC-classified indexes reflect updated input/output (I/O) ratios based on the 1992 Input-Output Account from the Bureau of Economic Analysis (BEA) of the U.S. Department of Commerce. These I/O ratios, which represent the proportion of each industry's output consumed outside its industry, were updated from those reflected in BEA's 1987 Input-Output Account. This procedure does not affect the commodity-grouping indexes.

It is important to note that the PPI classification system and aggregation structure did not change as a result of the weight revisions discussed above. The weight update, however, does 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 importance data as of December 2001, based on the 1992 and 1997 weighting schemes, were made available on February 13, 2002. To request this information, contact the Division of Industrial Prices and Price Indexes, 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 28 resampled and 4 newly introduced 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 index additions, deletions, and recodes that are effective this month, see the January 2002 issue of the PPI Detailed Report or contact the Division of Industrial Prices and Price Indexes, Section of Index Analysis and Public Information at ppi-info@BLS.gov or (202) 691-7705.

Standard Industrial Classification (SIC) Code Industry

1221 Bituminous coal and lignite surface mining 1222 Bituminous coal underground mining 2013 Sausages and other prepared meat products, made from purchased material 2099 Food preparations, not elsewhere classified 2231 Wool weaving and finishing 2259 Knitting mills, not elsewhere classified 2269 Finishers of textiles, not elsewhere classified 2299 All other miscellaneous textile product mills 2531 Public building and related furniture 2752 Commercial printing, lithographic 2754 Commercial printing, gravure 2759 Commercial printing, not elsewhere classified 2782 Blankbooks and looseleaf binders 2816 Inorganic pigments 2899 Chemicals and chemical preparations, not elsewhere classified 3411 Metal cans 3443 Fabricated plate work (boiler shops) 3561 Pumps and pumping equipment 3564 Industrial and commercial fans and blowers and air purification equipment 3575 Computer terminals 3579 Office machines, not elsewhere classified 3585 Refrigeration and heating equipment 3663 Radio and television broadcasting and communications equipment 3743 Railroad equipment 3952 Lead pencils and art goods 5541 Gasoline service stations* 5551 Boat dealers* 5561 Recreational vehicle dealers* 7361 Employment agencies 7363 Help supply services 7374 Data processing services* 8053 Skilled and intermediate care facilities

* denotes newly introduced PPI. 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 September 2001 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 4 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 September 2001 have been recalculated 2/ Not seasonally adjusted. to incorporate late reports and corrections by respondents. 3/ Not available. All indexes are subject to revision 4 months after original publication Table 3. Producer price indexes for selected commodity groupings (1982=100 unless otherwise indicated)

1/ Data for September 2001 have been revised to reflect the availability of late reports and corrections by respondents. All data are subject to revision 4 months after original publication.

2/ Prices of some items in this grouping are lagged 1 month.

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 September 2001 have been recalculated to incorporate late reports and corrections by respondents. All indexes are subject to revision 4 months after original publication.

1/ All seasonally adjusted indexes are subject to change up to 5 years after original publication due to the recalculation of seasonal factors each January. The indexes for September 2001 have been recalculated to incorporate late reports and corrections by respondents. 2/ Includes crude petroleum. 3/ Excludes crude petroleum.