May 2004 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 0.8 percent in May, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This increase followed a 0.7-percent rise in April and a 0.5-percent gain in March. At the earlier stages of processing, prices received by manufacturers of intermediate goods climbed 1.1 percent in May, after posting a 1.4-percent rise in the previous month. The crude goods index went up 2.8 percent, following a 3.0-percent jump in April. (See table A.)

Among finished goods in May, the index for finished consumer foods moved up 1.5 percent, compared with a 1.4-percent gain in the prior month. Prices for finished energy goods rose at a 1.6-percent rate for the second consecutive month. The index for finished goods other than foods and energy moved up at a slightly quicker pace in May than it did in April -- rising 0.3 and 0.2 percent, respectively.

Before seasonal adjustment, the finished goods index increased 1.2 percent to 149.1 (1982=100). From May 2003 to May 2004, prices for finished goods rose 5.0 percent. This is the largest 12-month increase in the finished goods index since a 5.7-percent advance for the 12 months ended December 1990. For the 12 months ended May 2004, the indexes for finished energy goods, finished consumer foods, and finished goods other than foods and energy advanced 15.0, 7.4, and 1.7 percent, respectively. At the earlier stages of processing, prices for intermediate goods increased 7.1 percent for the 12 months ended May 2004, and the crude goods index surged 21.9 percent during the same period.

Finished goods

The May index for finished consumer foods climbed 1.5 percent, after registering a 1.4-percent gain in April. Prices for dairy products, beef and veal, fresh fruits and melons, pork, processed young chickens, processed turkeys, and bakery products rose in May. By contrast, the indexes for soft drinks, fresh and dry vegetables, finfish and shellfish, and eggs for fresh use declined in May.

A 5.7-percent jump in gasoline prices led the 1.6-percent advance in the index for finished energy goods in May. Rising prices for liquefied petroleum gas, asphalt, residential natural gas, and finished lubricants also were registered in May. These increases were partially offset by falling prices for home heating oil and diesel fuel.

The index for finished consumer goods other than foods and energy moved up 0.4 percent, compared with a 0.3-percent gain in April. In May, rising prices for passenger cars, light motor trucks, pet food, sanitary papers and health products, pharmaceutical preparations, and household furniture more than offset declining prices for cigarettes, platinum and karat gold jewelry, and lawn and garden equipment (except tractors).

The capital equipment index increased 0.3 percent in May, after showing no change in April. Prices for light motor trucks went up 1.1 percent, compared with a 1.0-percent decrease in the previous month. The indexes for passenger cars, communication and related equipment, commercial furniture, and pumps and compressors also turned up in May. Prices for welding machines and related equipment advanced at a quicker rate in May than they did in April. Conversely, the index for heavy motor trucks fell 2.0 percent in May, following a 0.3-percent decline in April. Prices for construction machinery and equipment turned down, while the index for truck trailers increased at a slower pace than it did in April.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components rose 1.1 percent in May, after advancing 1.4 percent in the previous month. Prices for intermediate foods and feeds, components for manufacturing, durable and nondurable manufacturing materials, and materials and components for construction increased less in May than they did in April. The index for intermediate energy goods advanced 1.8 percent for the second consecutive month. Prices for intermediate goods other than foods and energy moved up 0.9 percent, after posting a 1.1-percent gain in April. (See table B.)

The rate of increase for the intermediate foods and feeds index slowed from 5.0 percent in April to 3.0 percent in May. The index for prepared animal feeds rose 2.3 percent, following a 6.8-percent hike in the previous month. Prices also advanced more slowly in May than in April for natural, processed, and imitation cheese; shortening and cooking oils; beef and veal; and confectionery materials. The index for liquid beverage bases (used for soft drinks) turned down, after rising in the prior month. Alternatively, prices for fluid milk products jumped 15.6 percent in May, following a 4.5-percent gain in April. The indexes for processed young chickens and pork also rose more in May than they did a month earlier.

Prices for components for manufacturing increased 0.3 percent, after rising 0.6 percent in April. The index for complex electronic component assemblies turned down 4.4 percent in May, compared with a 7.9-percent increase in the prior month. Prices for gray and ductile iron castings also turned down in May, after rising in April. Price increases slowed from April to May for the indexes for sheet metal products, aircraft engines and engine parts, truck and bus bodies (sold separately), and industrial controls. On the other hand, the motor vehicle parts index turned up 0.9 percent in May, following a slight decline in the previous month. Prices for digital MOS integrated circuits and transistors also rose, after falling in April. The index for computer storage devices showed no change in May, compared with a decline in the prior month.

The index for materials for durable manufacturing rose 2.0 percent in May, after advancing 2.4 percent in the prior month. Prices for hot rolled steel bars, plates, and structural shapes increased 2.5 percent, following a 9.6-percent surge in April. The indexes for cold rolled steel sheet and strip, copper cathode and refined copper, primary aluminum (except extrusion billet), and copper and brass mill shapes turned down in May, after rising a month earlier. By contrast, prices for aluminum mill shapes rose 3.7 percent, following a 1.2-percent gain in the previous month. The indexes for semifinished steel mill products and cold finished steel bars also advanced at a faster pace in May than they did in April. Hardwood lumber prices turned up, after falling a month ago.

Subsequent to a 1.7-percent gain in April, the index for materials and components for construction moved up 1.5 percent in May. Prices for fabricated structural metal products increased 2.5 percent in May, following a 3.1-percent rise in the prior month. Prices also increased more slowly for millwork, wiring devices, steel mill products, and fabricated ferrous wire products. The index for nonferrous wire and cable turned down, after advancing in April. Conversely, prices for mineral wool for structural insulation turned up 3.4 percent in May, following a 0.8- percent decline in the prior month. The indexes for asphalt felts and coatings and hardwood lumber also turned up, after decreasing a month earlier. Heating equipment prices advanced, following no change in April. The index for air conditioning and refrigeration equipment rose more in May than it did in the previous month.

Prices for materials for nondurable manufacturing increased at nearly the same rate in May as they did in April -- rising 1.0 and 1.1 percent, respectively. In May, rising prices for plastic resins and materials, paperboard, primary basic organic chemicals, paper, and woodpulp outweighed falling prices for fertilizer materials, alkalies and chlorine, and paint materials.

The intermediate energy goods index rose 1.8 percent in May, which is the same rate of increase as in April. In May, the impact of rising prices for jet fuels, gasoline, industrial natural gas, commercial natural gas, and liquefied petroleum gas surpassed the effect of declining prices for industrial electric power, diesel fuel, residual fuel, home heating oil, and kerosene.

Crude goods

The Producer Price Index for Crude Materials for Further Processing gained 2.8 percent in May, after rising 3.0 percent in April. Prices for crude foodstuffs and feedstuffs increased less in May than they did in April, as did prices for crude energy materials. By contrast, the basic industrial materials index fell less in May than in the preceding month. (See table B.)

The crude foodstuffs and feedstuffs index advanced 3.2 percent, following a 3.7 percent rise in April. Fluid milk prices gained 12.1 percent in May, after soaring 23.2 percent in the prior month. The indexes for corn and slaughter broilers and fryers turned down, while the wheat index rose more slowly in May than it did in April. On the other hand, prices for slaughter hogs climbed 12.5 percent in May, after slipping 0.6 percent in April. The index for fresh fruits and melons also turned up. Prices for slaughter cattle and soybeans advanced at quicker pace than they did in April.

Subsequent to an April increase of 6.3 percent, the index for crude energy materials rose 5.8 percent in May. Natural gas prices moved up 6.4 percent in May, following a 7.9-percent rate of increase in the preceding month. Increases in the coal index also slowed from April to May. Alternatively, crude petroleum prices rose at a quicker rate -- posting a May gain of 6.7 percent after climbing 5.2 percent in April.

Prices for basic industrial materials fell 3.8 percent, following a 3.9-percent decline in the previous month. The decrease in May was led by a 15.7-percent drop in prices for iron and steel scrap. The indexes for aluminum base scrap, gold ores, copper base scrap, pulpwood, and copper ores also declined in May. On the other hand, price increases were registered for raw cotton; construction sand, gravel, and crushed stone; iron ore; wastepaper; and hides and skins.

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

Mining. The Producer Price Index for the Net Output of Total Mining Industries increased 4.7 percent in May, following a 3.4-percent gain in the prior month. (Net output price indexes are not seasonally adjusted.) Prices received by the natural gas liquid extraction industry rose 6.1 percent, after moving up 2.4 percent in the previous month. The industry indexes for crude petroleum and natural gas extraction and for bituminous coal and lignite surface mining also advanced at a faster pace than they did in April. Prices received by the oil and gas operations support activities industry turned up, following a decline in the previous month. The industry index for iron ore mining went up, after showing no change in the preceding month. By contrast, prices received by the gold ore mining industry dropped 8.5 percent in May, compared with a 3.4-percent rise a month earlier. The industry indexes for bituminous coal underground mining and copper and nickel ore mining also turned down, following gains in April. Prices received by the oil and gas well drilling industry advanced less than they did in the preceding month. In May, the Producer Price Index for the Net Output of Total Mining Industries was 145.0 (December 1984=100), 14.8 percent above its year-ago level.

Manufacturing. The Producer Price Index for the Net Output of Total Manufacturing Industries advanced 1.1 percent in May -- the same rate of increase as in April. In May, rising prices received by manufacturers of food, petroleum and coal products, furniture and related products, primary metal, electrical equipment and appliances, plastic and rubber products, and chemicals outweighed falling prices received by manufacturers of beverages and tobacco, computers and electronic products, printing and related support activities, and surgical appliances and supplies. In May, the Producer Price Index for the Net Output of Total Manufacturing Industries was 143.4 (December 1984=100), 5.6 percent above its year-ago level.

Services. Among services industries in May, rising prices were received by the industries for general medical and surgical hospitals, securities brokerage, direct property and casualty insurance, casino hotels, television broadcasting, and used household and office goods moving. On the other hand, the industry indexes for employee leasing services, passenger car rental, cellular and other wireless carriers, architectural services, wired telecommunication carriers, and periodical publishers fell.

The Producer Price Index data for May 2004 in this release were originally scheduled for release on June 11, 2004.