June 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 Bureau of Labor Statistics of the U.S. Department of Labor reported today that the Producer Price Index for Finished Goods decreased 0.3 percent in June. This decline followed a 0.8-percent rise in May and a 0.7-percent increase in April. Prices for finished goods other than foods and energy went up 0.2 percent in June, as opposed to a 0.3-percent increase in the prior month. At the earlier stages of processing, prices received by manufacturers of intermediate goods rose 0.5 percent, compared with a 1.1-percent jump in the preceding month. The index for crude materials advanced 1.6 percent in June, after posting a 2.8-percent rate of increase a month earlier. (See table A.)

Among finished goods, the index for finished energy goods turned down 1.6 percent in June, following a 1.6-percent increase in May. Prices for finished consumer foods fell 0.6 percent, after gaining 1.5 percent in the prior month. The rate of increase in the index for finished consumer goods other than foods and energy slowed to 0.1 percent in June from a 0.4- percent rate in May, and the index for capital equipment moved up at nearly the same pace in June as it did in the previous month.

During the first 6 months of 2004, the finished goods index moved up at a seasonally adjusted annual rate of 5.0 percent, compared with a 3.0- percent rate of advance during the latter half of 2003. Within the finished goods category, following a 4.2-percent rate of increase during the second half of 2003, the index for finished energy goods rose at a seasonally adjusted annual rate of 14.9 percent in the first half of 2004. Prices for finished goods other than foods and energy moved up at a 2.5- percent seasonally adjusted annual rate during the first half of 2004, after rising at a 1.2-percent rate in the latter half of 2003. On the other hand, prices for finished consumer foods went up at a 5.3-percent seasonally adjusted annual rate from December 2003 to June 2004, after increasing at a 7.4-percent rate from June 2003 to December 2003. Among crude and partially processed goods, the index for intermediate materials, supplies, and components climbed at a seasonally adjusted annual rate of 11.4 percent from December 2003 to June 2004, compared with a 2.7-percent rate of increase in the previous 6-month period. After rising at a 10.4- percent rate in the second half of 2003, prices for crude materials rose at a 27.9-percent seasonally adjusted annual rate during the first half of 2004. (See summary below.)

Crude materials for further processing -32.5 24.7 19.5 27.9 27.9 22.1 34.1 Foodstuffs and feedstuffs -7.6 4.5 24.1 13.1 36.8 13.5 12.7 Crude energy materials -52.9 61.5 14.4 57.6 10.8 15.8 114.4 Crude nonfood materials less energy -9.9 12.6 21.6 4.7 50.0 53.3 -28.5 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.

Before seasonal adjustment, the Producer Price Index for Finished Goods declined 0.3 percent in June to 148.7 (1982 = 100). From June 2003 to June 2004, the finished goods index moved up 4.0 percent. During the same period, prices for finished energy goods increased 9.4 percent, the index for finished consumer foods rose 6.4 percent, and prices for finished goods other than foods and energy gained 1.8 percent. The index for intermediate goods rose 6.9 percent, while prices received by crude goods producers jumped 18.9 percent during the 12 months ended June 2004.

Finished goods

A 1.6-percent decrease in the index for finished energy goods followed 6 consecutive monthly increases. Gasoline prices moved in similar fashion, falling 5.2 percent in June after 6 months of rising prices, and led the reversal in the finished energy goods index. Residential electric power prices declined in June, after showing no change in the prior month, and the liquefied petroleum gas index remained unchanged, after rising in May. By contrast, residential natural gas prices moved up 3.1 percent in June, compared with a 0.1-percent increase in the previous month. The home heating oil index advanced, following a decrease in May.

Subsequent to a 1.5-percent increase in May, finished consumer food prices turned down 0.6 percent in June. The dairy products index fell 3.3 percent in June, following a 6.0-percent gain in May. Dairy product prices were 17.7 percent higher in June than they were in December 2003. The indexes for fresh fruits and melons and processed young chickens also turned down, after rising in the prior month. Prices for fresh and dry vegetables and eggs for fresh use decreased more in June than they did in May, and the indexes for beef and veal and pork rose less than they did in May. By contrast, soft drink prices rebounded 2.5 percent, following a 1.3- percent decrease in the previous month. The index for processed fruits and vegetables moved up at a faster pace in June than it did in May.

Prices for finished consumer goods other than foods and energy inched up 0.1 percent in June, following a 0.4-percent advance in May. The rate of increase in the pet food index slowed from 3.4 percent in May to 0.6 percent in June. The index for sanitary papers and health products also rose less in June than it did in the prior month. Prices for alcoholic beverages; men's and boys' apparel; and women's, girls', and infants' apparel fell in June, after increasing in the prior month. By contrast, prices for cigarettes turned up 0.3 percent, compared with a 0.7-percent decline in May. The index for tires rose, after showing no change in the previous month. During the first 6 months of 2004, prices for finished consumer goods other than foods and energy advanced at a seasonally adjusted annual rate of 2.4 percent, following a 1.4-percent rate of increase during the second half of 2003.

The capital equipment index moved up 0.2 percent in June, following a 0.3-percent advance in May. In June, rising prices for civilian aircraft, motor vehicles, commercial furniture, and integrating and measuring instruments outweighed falling prices for communication and related equipment, x-ray and electromedical equipment, transformers and power regulators, and electronic computers. From December 2003 to June 2004, the capital equipment index rose at a 2.4-percent seasonally adjusted annual rate, after a 1.0-percent seasonally adjusted annual rate of increase from June 2003 to December 2003.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components advanced 0.5 percent in June, after posting a 1.1-percent gain in May. Rising prices for intermediate energy goods, materials for both durable and nondurable manufacturing, and materials and components for construction outweighed price declines for intermediate foods and feeds. The index for intermediate goods other than foods and energy increased 0.5 percent in June, compared with a 0.9-percent rise in May. (See table B.)

Prices for intermediate energy goods moved up 0.7 percent in June, after advancing 1.8 percent in both May and April. The indexes for industrial natural gas, natural gas to electric utilities, commercial natural gas, residual fuels, and home heating oil posted gains in June. These increases were partially offset by falling prices for jet fuels, gasoline, commercial electric power, and diesel fuel. The index for intermediate energy goods advanced at a 17.5-percent seasonally adjusted annual rate during the first half of 2004, after rising at a 3.5-percent rate during the second half of 2003.

Price increases slowed from May to June for materials for durable manufacturing, climbing 2.0 percent and 1.1 percent, respectively. In June, the index for aluminum mill shapes rose 1.3 percent, compared with a 3.7-percent advance in the previous month. Prices turned down for hot rolled steel bars, plates, and structural shapes; plywood; and building paper and board. The indexes for semifinished steel mill products and hot rolled steel sheet and strip rose less rapidly in June than they did a month earlier. Alternatively, prices received by manufacturers of cold rolled steel sheet and strip advanced 4.2 percent, following a 0.2-percent dip in May. The indexes for primary nonferrous metals, copper and brass mill shapes, and flat glass declined at a slower rate in June than they did in the prior month. From December 2003 to June 2004, prices for materials for durable manufacturing advanced at a 26.5-percent seasonally adjusted annual rate, after registering a 7.6-percent rate of increase during the June 2003 to December 2003 period.

The index for materials for nondurable manufacturing rose 0.7 percent in June, after moving up 1.0 percent in May. Price increases for primary basic organic chemicals, paperboard, plastic resins and materials, nitrogenates, and gray fabrics more than offset falling prices for inedible fats and oils, phosphates, intermediate basic organic chemicals, leather, synthetic fibers, and paint materials. The index for materials for nondurable manufacturing advanced at an 11.2-percent seasonally adjusted annual rate from December 2003 to June 2004, after posting a 1.2-percent rate of increase from June 2003 to December 2003.

Subsequent to a 1.5-percent gain in May, the materials and components for construction index rose 0.7 percent in June. Price increases slowed from May to June for fabricated structural metal products, advancing 2.5 percent and 1.4 percent, respectively. The indexes for softwood lumber and plywood turned down, after moving up in the previous month. June prices for wiring devices and plastic construction products showed no change, following increases a month earlier. On the other hand, the index for nonferrous wire and cable turned up 0.3 percent, after falling 1.7 percent in May. Prices received by producers of concrete products, steel mill products, and gypsum products rose more quickly than they did in the prior month. The index for prefabricated wood buildings and components increased in June, following no change in May. Prices for materials and components for construction moved up at a 14.7-percent seasonally adjusted annual rate during the first half of 2004, after advancing at a 4.4-percent rate during the latter half of 2003.

Following a 3.0-percent increase in May, the index for intermediate foods and feeds declined 2.2 percent in June. Prices for prepared animal feeds fell 5.7 percent, after rising 2.3 percent in May. The indexes for dairy products and processed young chickens also turned down in June. Prices for beef and veal and pork moved up at a slower rate in June than they did in May. By contrast, the flour index turned up 5.5 percent in June, following a 2.2-percent drop in the previous month. The refined sugar and byproducts index also increased, after falling in the prior month. Subsequent to declines in May, prices remained unchanged for liquid beverage bases (used for soft drinks), malt and malt byproducts, and dry mix preparations. The intermediate foods and feeds index rose at a 16.2- percent seasonally adjusted annual rate during the December 2003 to June 2004 period, following a 15.1-percent rate of increase during the prior 6- month period.

Crude goods

The Producer Price Index for Crude Materials for Further Processing advanced 1.6 percent in June, following a 2.8-percent rise in May. This slower rate of increase can be traced to prices for crude foodstuffs and feedstuffs, which moved down in June after climbing a month earlier. On the other hand, the index for crude energy materials advanced at a faster rate than it did in the previous month, while prices for basic industrial materials fell less in June than in May. (See table B.)

The index for crude foodstuffs and feedstuffs declined 3.6 percent in June, compared with a 3.2-percent gain in May. Fluid milk prices decreased 10.1 percent, after jumping 12.1 percent in the preceding month. The indexes for soybeans, slaughter hogs, fresh fruits and melons, and wheat also fell in June, following increases in May. Prices for fresh and dry vegetables and corn declined at a quicker pace, while the indexes for alfalfa hay and slaughter cattle advanced less in June than they did a month earlier. By contrast, prices for slaughter broilers and fryers rose 4.1 percent, after moving down at a 0.5-percent rate in May. The index for crude foodstuffs and feedstuffs increased at a seasonally adjusted annual rate of 13.1 percent from December 2003 to June 2004, compared with a 36.9- percent rate of advance during the previous 6-month period.

The index for crude energy materials climbed 7.7 percent in June, following a 5.8-percent gain in May. This acceleration is attributable to natural gas prices, which jumped 17.0 percent in June after rising 6.4 percent a month earlier. By contrast, the crude petroleum index turned down 5.5 percent, compared with a 6.7-percent increase in May. Coal prices inched up 0.1 percent in June, following a 0.4-percent rise in the prior month. The index for crude energy materials moved up at a seasonally adjusted annual rate of 57.6 percent from December 2003 to June 2004, after falling at a 17.6-percent annual rate during the latter half of 2003.

Prices for crude nonfood materials less energy declined at a slower rate in June than they did in May -- falling 0.5 and 3.8 percent, respectively. The index for iron and steel scrap turned up 0.6 percent in June, compared with a 15.7-percent drop in the prior month. Prices for gold ores; softwood logs, bolts, and timber; and hardwood logs, bolts, and timber also turned up in June, after declining in May. The indexes for aluminum base scrap and pulpwood fell less than they did in the previous month. Prices for metal ores (other than copper and gold ores) rose more in June than they did a month earlier. On the other hand, the raw cotton index decreased 13.6 percent, following a 15.0-percent gain in May. Prices for construction sand, gravel, and crushed stone rose less, while the indexes for phosphates and copper base scrap declined more in June than they did in May. The index for iron ores showed no change, after rising in May. During the first half of 2004, the index for crude nonfood materials less energy went up at a 4.7-percent seasonally adjusted annual rate. This index rose at a 39.3-percent annual rate during the second half of 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 6.1 percent in June, following a 4.7-percent gain in the previous month. (Net output price indexes are not seasonally adjusted.) Prices received by the natural gas liquid extraction industry jumped 16.6 percent in June, after advancing 6.1 percent in the prior month. The industry indexes for oil and gas well drilling; oil and gas operations support activities; and potash, soda, and borate mineral mining also increased at a faster pace in June than they did a month earlier. Prices received by the gold ore mining industry turned up, following a decline in May. By contrast, the rate of increase in the industry index for crude petroleum and natural gas extraction slowed from 7.1 percent in May to 4.2 percent in June. Prices received by the industries for bituminous coal and lignite surface mining and support activities for coal mining turned down, following gains in the preceding month. The industry index for iron ore mining showed no change, after rising in May. During the first half of 2004, the Producer Price Index for the Net Output of Total Mining Industries advanced at an annual rate of 42.1 percent, compared with an 11.5-percent rate of decline in the second half of 2003. In June 2004, this index was 153.8 (December 1984=100), 12.2 percent above its year-ago level.

Manufacturing. The Producer Price Index for the Net Output of Total Manufacturing Industries fell 0.3 percent in June, compared with a 1.1- percent increase in the prior month. Prices received by the petroleum and coal products manufacturing industry group dropped 5.5 percent, after posting a 7.6-percent gain in May. The industry group index for food manufacturing also turned down in June. Prices received by the industry groups for electrical equipment, appliances, and components and primary metal manufacturing rose less than they did in the previous month, while the industry group index for computers and electronic products fell more in June than it did in May. On the other hand, prices received by manufacturers of chemicals went up 0.9 percent in June, following a 0.5- percent increase a month earlier. The industry group indexes for furniture and related products manufacturing and textile mills also advanced at a quicker pace than they did in the preceding month. Prices received by the industry groups for beverage and tobacco manufacturing and printing and related support activities inched up, following declines in May. From December 2003 to June 2004, the Producer Price Index for the Net Output of Total Manufacturing Industries rose at an annual rate of 7.8 percent, following a 2.1-percent rate of increase from June 2003 to December 2003. In June 2004, this index was 143.0 (December 1984=100), 4.9 percent above its year-ago level.

Services. Among services industries in June, rising prices were received by the industries for direct life insurance carriers, investment banking and securities dealing, long distance general freight trucking (less than truckload), direct property and casualty insurance carriers, temporary help services, television broadcasting, and general medical and surgical hospitals. Alternatively, the industry indexes for nonresidential property managers, casino hotels, lessors of nonresidential buildings (except miniwarehouse), data processing and related services, and used household goods moving fell in June.