December 2003 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 rose 0.3 percent in December, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This increase followed a 0.3-percent decline in November and a 0.8-percent advance in October. At the earlier stages of processing, prices received by producers of intermediate goods turned up 0.5 percent, after falling 0.2 percent in the previous month. The crude goods index rose 2.0 percent in December, following a 0.2-percent increase in November. (See table A.)

Among finished goods, prices for finished energy goods advanced 1.8 percent in December, after decreasing 1.2 percent a month earlier. The index for finished consumer foods rose 0.2 percent, compared with a 0.3- percent decline in the prior month. On the other hand, the index for finished goods other than foods and energy inched down 0.1 percent in December, the same as in November.

Before seasonal adjustment, the Producer Price Index for Finished Goods was unchanged from its level of 144.5 (1982=100) in November. From December 2002 to December 2003, finished goods prices increased 4.0 percent, after climbing 1.2 percent during 2002. Finished consumer food prices turned up 7.7 percent in 2003, as opposed to slipping 0.6 percent in the prior year. A 1.0-percent increase in the index for finished goods other than foods and energy in 2003 followed a 0.5-percent dip in 2002. By contrast, the index for finished energy goods advanced 11.5 percent in 2003, following a 12.3-percent rise in the previous calendar year. At the earlier stages of processing, the intermediate goods index advanced 3.9 percent from December 2002 to December 2003, after registering a 3.2- percent gain during 2002. Prices received by producers of crude materials for further processing increased 18.5 percent in 2003, following a 24.7- percent jump in the prior calendar year. (See summary below.)

Finished goods

Prices for finished energy goods turned up 1.8 percent in December, after decreasing 1.2 percent in November. The gasoline index rose 5.1 percent, following a 4.8-percent decline in the preceding month. Prices for liquefied petroleum gas and residential electric power climbed more rapidly in December than they did a month earlier. The indexes for home heating oil and diesel fuel moved up, subsequent to declines in November. Residential natural gas prices decreased at a slower rate in December than they did in November.

The index for finished consumer foods edged up 0.2 percent in December, after falling 0.3 percent in the prior month. Most of this reversal can be attributed to fresh and dry vegetable prices, which jumped 20.7 percent, following a 5.2-percent decrease in November. The indexes for finfish and shellfish and for eggs for fresh use also turned up, after declining in the preceding month, while the indexes for fresh fruits and melons, shortening and cooking oils, and processed turkeys rose at a faster pace than they did in November. Alternatively, prices for dairy products slipped 0.8 percent in December, following a 0.5-percent hike in November. The indexes for beef and veal and for pork fell more rapidly in December than they did in the previous month, while prices for processed young chickens rose less than they did in the prior month. The soft drinks index turned down slightly, after posting an increase in November.

Prices for finished consumer goods other than foods and energy inched down 0.1 percent in December, following no change in the prior month. In December, price declines for light motor trucks, men's and boys' apparel, floor coverings, mobile homes, periodical circulation, and for sanitary papers and health products prevailed over rising prices for book publishing, passenger cars, pharmaceutical preparations, women's apparel, alcoholic beverages, and household furniture. During the 2003 calendar year, the index for finished consumer goods other than foods and energy advanced 1.0 percent, following a 0.5-percent decrease in 2002.

2002 Dec. 1.0 -0.5 -0.1 3.2 1.3 3.3 0.2 24.7

Capital equipment prices decreased 0.1 percent in December, the same rate of decline that was registered in November. Falling prices for light motor trucks, electronic computers, x-ray and electromedical equipment, welding machines and equipment, metal cutting machine tools, and printing trades machinery slightly outweighed price increases for civilian aircraft, heavy motor trucks, construction machinery and equipment, and for integrating and measuring instruments. For the 12 months ended December 2003, capital equipment prices advanced 0.9 percent, after posting a 0.6- percent drop during the previous calendar year.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components advanced 0.5 percent in December, following a 0.2-percent decline in the previous month. Prices for intermediate energy goods turned up, after falling in the prior month. The index for materials for nondurable manufacturing increased at a faster rate than it did in November. By contrast, prices for intermediate foods and feeds decreased in December, following gains a month earlier. The materials and components for construction index showed no change, after moving up in the preceding month. Prices for materials for durable manufacturing rose less than they did in November. Excluding prices for foods and energy, the intermediate goods index inched up 0.1 percent in December, compared with a 0.2-percent increase in the previous month. (See table B.)

Prices for intermediate energy goods increased 2.2 percent in December, after falling 2.9 percent in the prior month. The index for commercial electric power moved up 1.4 percent, compared with a 4.0-percent drop in November. Prices for natural gas to electric utilities, gasoline, diesel fuel, and commercial natural gas also turned up, following declines in the preceding month. The index for industrial natural gas fell less than it did in the previous month. Prices for jet fuels and liquefied petroleum gas advanced at a quicker rate than they did in November. On the other hand, the industrial electric power index moved down 1.1 percent in December, after edging down 0.1 percent a month earlier. From December 2002 to December 2003 prices for intermediate energy goods rose 10.9 percent, following a 12.0-percent gain in 2002.

The index for materials for nondurable manufacturing increased 0.5 percent in December, after rising 0.2 percent in the preceding month. Prices for primary basic organic chemicals went up 5.8 percent, compared with a 0.3-percent decrease in November. The indexes for intermediate basic organic chemicals, sulfuric acid, and synthetic rubber also turned up, following declines in the prior month. Prices for fertilizer materials and plastic resins and materials advanced at a faster rate in December than they did in the previous month. Alternatively, the medicinal and botanical chemicals index fell 1.6 percent in December, after moving up 2.5 percent a month earlier. Prices for inedible fats and oils, paper, finished fabrics, and woodpulp also turned down, following gains in November. Nondurable manufacturing materials prices increased 5.1 percent in 2003, following a 4.2-percent gain in 2002.

The index for intermediate foods and feeds moved down 0.7 percent in December, after posting a 2.7-percent gain in the prior month. Leading this downturn, prices for prepared animal feeds decreased 0.4 percent, after jumping 7.0 percent a month earlier. The indexes for crude vegetable oils and for natural, processed, and imitation cheese also fell, following increases in November. Flour prices rose at a slower pace in December than they did in the previous month. The indexes for beef and veal and fluid milk products declined at a quicker pace in December than they did in the preceding month. By contrast, prices for shortening and cooking oils advanced 4.6 percent in December, compared with a 0.9-percent gain a month earlier. The indexes for refined sugar and byproducts, liquid beverage bases (used for soft drinks), and butter turned up, after falling in November. During the 2003 calendar year, prices for intermediate foods and feeds jumped 12.7 percent, following a 4.2-percent increase in the previous calendar year.

Subsequent to a 0.5-percent increase in November, the index for materials and components for construction showed no change in December. Plywood prices fell 7.1 percent, following a 1.0-percent increase a month earlier. The indexes for wiring devices, asphalt felts and coatings, treated wood, and hardwood lumber also decreased in December. Offsetting these falling prices, the indexes for fabricated structural metal products, concrete products, nonferrous wire and cable, steel mill products, and plastic construction products moved up in December. From December 2002 to December 2003, prices for materials and components for construction advanced 3.0 percent, after edging up 0.8 percent in 2002.

The materials for durable manufacturing index climbed 0.5 percent in December, compared with a 0.8-percent gain in the preceding month. In December, rising prices for steel mill products, primary nonferrous metals, copper and brass mill shapes, and aluminum mill shapes outweighed falling prices for building paper and board, plywood, soft fiber cordage and twine (except cotton), hardwood lumber, and flat glass. For the 12 months ended in December 2003, the index for materials for durable manufacturing advanced 3.9 percent, following a 3.1-percent increase in the preceding year.

Crude goods

The Producer Price Index for Crude Materials for Further Processing rose at a 2.0-percent rate in December, after posting a 0.2-percent gain in November. This acceleration was due to an upturn in prices for crude energy materials. By contrast, the index for crude foodstuffs and feedstuffs fell at a quicker rate in December than it did in the prior month, and price increases for basic industrial materials slowed from November to December. (See table B.)

The index for crude energy materials climbed 4.3 percent in December, compared with a 1.5-percent decrease in November. Leading this upturn, natural gas prices advanced 6.1 percent, after moving down 1.3 percent in the previous month. The index for crude petroleum rose 2.6 percent in December, following a 2.3-percent drop a month earlier. Coal prices increased 0.4 percent, subsequent to a 0.6-percent dip in November. From December 2002 to December 2003, the index for crude energy materials moved up 12.3 percent, after surging 61.5 percent during the preceding calendar year.

Prices for crude foodstuffs and feedstuffs fell 0.7 percent in December, after inching down at a 0.1-percent rate in November. The index for fluid milk declined 8.2 percent, following a 5.4-percent gain in the prior month. Prices for slaughter hogs, unprocessed shellfish, and raw cane sugar also turned down in December. The indexes for wheat, corn, and soybeans increased at a slower rate than they did in November. Conversely, the rate of decrease in prices for slaughter cattle slowed from 6.6 percent in November to 3.5 percent in December. The indexes for slaughter broilers and fryers, fresh and dry vegetables, and unprocessed finfish advanced, after falling in the preceding month. In 2003, prices for crude foodstuffs and feedstuffs climbed 24.0 percent, compared with a 4.5-percent rise in 2002.

Registering its sixth consecutive increase, the index for crude nonfood materials less energy moved up at a 3.4-percent rate in December. This rise followed a 4.3-percent gain in November. Prices for iron and steel scrap jumped 10.3 percent, after surging 13.8 percent in the previous month. The indexes for aluminum base scrap, copper base scrap, copper ores, pulpwood, and for construction sand, gravel, and crushed stone also rose at a slower rate in December. Prices for raw cotton, leaf tobacco, and wastepaper turned down, following increases in November. On the other hand, the gold ores index advanced 7.0 percent in December, outpacing a 0.9- percent rise in November. Price increases for hardwood logs and for phosphates also accelerated in December. The indexes for hides and skins and for softwood logs turned up, after falling in November. After climbing at a 12.6-percent rate in 2002, prices for basic industrial materials advanced 20.8 percent in 2003.

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

Mining. The Producer Price Index for the Net Output of Total Mining Industries rose 4.2 percent in December, following a 0.9-percent fall in November. (Net output price indexes are not seasonally adjusted.) The industry index for natural gas liquids and natural gas residue advanced 9.9 percent, after slipping 0.2 percent in the preceding month. Prices for gold ores increased more quickly in December than they did in November. The industry indexes for crude petroleum and natural gas, bituminous coal and lignite surface mining, and bituminous coal underground mining turned up, after falling in the prior month. On the other hand, the industry index for oil and gas field services other than drilling and exploration decreased 0.4 percent in December, following a 0.4-percent increase in November. Prices for the potash, soda, and borate minerals industry turned down in December, as did the industry indexes for industrial sand and for oil and gas well drilling. Prices for copper ores advanced more slowly in December than they did in November. The December Producer Price Index for the Net Output of Total Mining Industries was 127.2 (December 1984=100). From December 2002 to December 2003, prices received by the mining sector increased 11.8 percent, after rising 46.6 percent in 2002.

Manufacturing. The Producer Price Index for the Net Output of Total Manufacturing Industries posted no change in December, following a 0.4- percent decline in November. Prices received by the petroleum refining and related products industry group increased 1.4 percent, after a 4.4-percent drop in the prior month. Prices received by the industry group for fabricated metal products (except machinery and transportation equipment) and the industry group for rubber and miscellaneous plastic products also advanced in December, following November decreases. The index for the printing, publishing, and allied industries group rose, after showing no change in the prior month. Prices received by the primary metal industries group rose more quickly in December than in the preceding month, and the index for the industry group for machinery (except electrical) fell less than it did in November. Alternatively, the industry group index for food and kindred products declined 0.5 percent in December, after showing no change in November. The industry group indexes for transportation equipment and for electrical and electronic machinery, equipment, and supplies fell more in December than they did in November, while the industry group indexes for lumber and wood products (except furniture), and for paper and allied products turned down. Prices received by the industry group for stone, clay, glass, and concrete products rose less quickly in December than they did in the prior month. In December, the Producer Price Index for the Net Output of Total Manufacturing Industries was 137.7 (December 1984=100). From December 2002 to December 2003, prices received by the manufacturing sector rose 2.8 percent, after moving up 1.8 percent in 2002.

Services. Among service industries in December, prices received by the industries for operators and lessors of nonresidential buildings; engineering design, analysis, and consulting services; offices of physicians; investment advice; general medical and surgical hospitals; and insurance agencies and brokerages increased. Conversely, prices received by the industries for security brokers, dealers, and investment banking companies; telephone communications (except radiotelephone); life insurance carriers; truck rental and leasing; television broadcasting; and real estate agents and managers decreased in December.

Recalculated Seasonal Adjustment Factors and Relative Importance Figures to be Available on February 17, 2004

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 17, 2004 (2 workdays prior to the release of PPI data for January 2004 on February 19):

Seasonal factors for commodity indexes for the year 2004,

Recalculated seasonal factors for the last 5 years (1999-2003) for the commodity indexes,

Recalculated seasonal factors for the last 5 years (1999-2003) for the stage-of-processing indexes.

In addition to recalculated seasonal factors, December 2003 relative importance figures will also be available on February 17, 2004.

To obtain any of this information, visit the PPI website at http://www.bls.gov/ppi/ or call the Division of Industrial Prices and Price Indexes, Section of Index Analysis and Public Information at (202) 691- 7705.

NAICS Conversion

The net output price indexes will be converted from the 1987 Standard Industrial Classification (SIC) basis to the 2002 North American Industry Classification System (NAICS) basis with the February 2004 release of January 2004 indexes. The NAICS conversion involves major definitional changes to many of the currently published SIC-based indexes. After the conversion to NAICS, SIC-based indexes will no longer be produced or published. Historical index data based on the NAICS publication structure will be available depending on the scope of the definitional changes between SIC and NAICS. A concordance between the two structures is available at http://www.bls.gov/ppi/ppinaicstosic.htm through a World Wide Web site.

1/ Comprehensive relative importance figures are initially computed 4/ Excludes crude petroleum. after the publication of December indexes and are recalculated 5/ Percent of total finished goods. after final December indexes are available. 6/ Percent of total intermediate materials. 2/ The indexes for August 2003 have been recalculated to incorporate 7/ Formerly titled "Crude materials for late reports and corrections by respondents. All indexes further processing, excluding crude are subject to revision 4 months after original publication. foodstuffs and feedstuffs, plant and 3/ Includes crude petroleum. animal fibers, oilseeds, and leaf tobacco." 8/ Percent of total crude materials.

See footnotes at end of table.

1/ The indexes for August 2003 have been recalculated to incorporate late 2/ Not seasonally adjusted. reports and corrections by respondents. All indexes are subject to 3/ Not available. revision 4 months after original publication.

1/ Data for August 2003 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 movements of similarly titled indexes which are derived from traditional commodity groupings. 2/ The indexes for August 2003 have been recalculated to incorporate late reports and corrections by respondents. All indexes are subject to revision 4 months after original publication. 3/ Not available.

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 August 2003 have been recalculated to incorporate late reports and corrections by respondents. 2/ Includes crude petroleum. 3/ Excludes crude petroleum.