July 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 rose 0.1 percent in July, 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 June and a 0.8-percent jump in May. Prices for finished goods other than foods and energy increased 0.1 percent in July, following a 0.2-percent rise in the previous month. At the earlier stages of processing, prices received by manufacturers of intermediate goods advanced 0.8 percent, compared with a 0.5-percent gain in June, while the crude goods index edged down 0.2 percent, after climbing 1.6 percent in the prior month. (See table A.)

The July upturn in the finished goods index was led by the index for finished energy goods, which rose 2.3 percent in July following a 1.6- percent drop in June. By contrast, the index for finished consumer foods declined 1.6 percent in July, compared with a 0.6-percent decrease in June. Among finished goods other than foods and energy, the capital equipment index inched up 0.1 percent, following a 0.2-percent increase in the previous month, and prices for finished consumer goods advanced 0.1 percent for the second consecutive month.

Before seasonal adjustment, the Producer Price Index for Finished Goods showed no change in July to remain at 148.7 (1982 = 100). From July 2003 to July 2004, the finished goods index moved up 4.0 percent. Over the same period, prices for finished energy goods advanced 11.3 percent, the index for finished consumer foods rose 5.0 percent, and prices for finished goods other than foods and energy increased 1.7 percent. The index for intermediate goods climbed 7.6 percent, and prices received by crude goods producers jumped 22.2 percent for the 12-month period ended in July 2004.

Finished goods

The finished energy goods index increased 2.3 percent in July, compared with a 1.6-percent decline in June. Leading this upturn, gasoline prices advanced 5.4 percent, following a 5.2-percent decrease in the previous month. The indexes for residential electric power and diesel fuel also turned up, after posting declines in June. Prices for liquefied petroleum gas rose, after showing no change in the prior month. The index for home heating oil climbed at a faster pace in July than it did a month earlier. On the other hand, residential natural gas prices increased 1.2 percent, following a 3.1-percent gain in the previous month.

The finished consumer foods index declined 1.6 percent in July -- the largest decrease since a 3.1-percent drop in April 2002. In June 2004, this index fell 0.6 percent. Beef and veal prices declined 8.3 percent in July, after rising 2.0 percent in the previous month. The index for soft drinks also turned down in July. Prices for dairy products, roasted coffee, and processed turkeys fell more rapidly in July than they did in June, while price increases for pork and processed fruits and vegetables slowed during the same period. On the other hand, the index for fresh and dry vegetables declined 2.8 percent, after plummeting 24.0 percent in June. The indexes for fresh fruits and melons and for processed young chickens also fell less in July than they did in the prior month. July prices for finfish and shellfish and for confectionery end products turned up, following decreases a month earlier.

The index for capital equipment inched up 0.1 percent, subsequent to a 0.2-percent gain in June. Rising prices were registered in July for civilian aircraft, construction machinery and equipment, welding machines and equipment, railroad equipment, semiconductor manufacturing equipment, and industrial material handling equipment. These increases slightly outweighed declining prices for communication and related equipment, commercial furniture, passenger cars, integrating and measuring instruments, x-ray and electromedical equipment, and electronic computers.

Prices for finished consumer goods other than foods and energy inched up 0.1 percent in July, after rising at the same rate in June. In July, rising prices for sanitary paper products, cosmetics and other toilet preparations, book publishing, periodical circulation, men's and boys' apparel, and cigarettes slightly outweighed falling prices for passenger cars; home electronic equipment; women's, girls', and infants' apparel; tires; household furniture; and toys, games, and children's vehicles.

Intermediate goods

Registering its eighth consecutive gain, the Producer Price Index for Intermediate Materials, Supplies, and Components advanced 0.8 percent in July, following a 0.5-percent increase in June. Prices for intermediate energy goods and materials for nondurable manufacturing moved up at a faster rate in July than they did a month earlier, while the index for intermediate foods and feeds fell at a slower pace than it did in June. Conversely, prices for materials and components for construction and for materials for durable manufacturing rose less in July than they did in June. Excluding foods and energy, prices for intermediate goods went up 0.5 percent, the same rate of increase observed in the previous month. (See table B.)

Prices for intermediate energy goods advanced 2.3 percent in July, compared with a 0.7-percent rise in June. Leading this acceleration, the index for jet fuels surged 16.0 percent, following a 9.8-percent decline in the preceding month. Prices for gasoline and diesel fuel also turned up in July. The index for liquefied petroleum gas increased, after showing no change in the prior month, while prices for commercial electric power fell less than they did in June. On the other hand, the index for industrial natural gas moved up at a 2.7-percent rate in July, following a 6.7-percent gain a month earlier. Prices for natural gas to electric utilities and commercial natural gas also rose less than they did in June. The indexes for residual fuel and industrial electric power turned down in July.

Prices for materials for nondurable manufacturing climbed 1.0 percent in July, after posting a 0.7-percent advance in June. The index for inedible fats and oils turned up 4.4 percent, following a 17.9-percent drop in the preceding month. Prices for intermediate basic organic chemicals and synthetic fibers also rose in July, after falling a month earlier. The indexes for paperboard, primary basic organic chemicals, and alkalies and chlorine increased at a quicker pace in July than they did in the previous month. On the other hand, prices for basic organic chemicals (other than primary and intermediate) declined 0.7 percent in July, after rising 0.9 percent in June. The indexes for paper and for medicinal and botanical chemicals also moved down, following advances in the prior month. Price increases slowed from June to July for plastic resins and materials and gray fabrics.

The index for intermediate foods and feeds decreased 1.4 percent in July, following a 2.2-percent drop in June. In July, falling prices for beef and veal, dairy products, shortening and cooking oils, flour, and processed young chickens outweighed rising prices for prepared animal feeds, sausage and deli meats, pork, confectionery materials, and refined sugar and byproducts.

The index for materials and components for construction moved up 0.2 percent in July, compared with a 0.7-percent gain in June. Prices for steel mill products increased 1.9 percent, after surging 6.2 percent in the preceding month. The indexes for millwork, concrete products, and fabricated structural metal products also advanced at a slower rate. Prices for building paper and board fell more in July than they did in June, while the index for prefabricated wood buildings and components turned down, after rising in June. Conversely, prices for asphalt felts and coatings climbed 1.4 percent in July, following a 1.9-percent decrease in the previous month. The index for mineral wool for structural insulation advanced at a quicker rate, compared with June, while prices for softwood lumber went down less in July than they did a month earlier. The index for plastic construction products rose, after showing no change in the prior month.

Prices for materials for durable manufacturing increased 1.0 percent in July, nearly matching the 1.1-percent gain observed for June. In July, rising prices for steel mill products, primary nonferrous metals, aluminum mill shapes, prepared paint, unprocessed filament yarns, and for copper and brass mill shapes outweighed falling prices for building paper and board and for plywood.

Crude goods

The Producer Price Index for Crude Materials for Further Processing turned down 0.2 percent in July, after posting a 1.6-percent gain in the preceding month. The rate of increase in prices for crude energy materials slowed from June to July. The crude foodstuffs and feedstuffs index fell at a faster pace in July than it did in the prior month. By contrast, prices for basic industrial materials rose in July, after declining a month earlier. (See table B.)

Price increases for crude energy materials decelerated from 7.7 percent in June to 0.2 percent in July. The natural gas index moved down 2.0 percent in July, following a 17.0-percent jump in the prior month. Coal prices dropped 0.9 percent, compared with a 0.1-percent gain in the preceding month. On the other hand, the index for crude petroleum turned up 5.3 percent in July, after falling 5.5 percent in June.

Prices for crude foodstuffs and feedstuffs declined 4.8 percent in July, following a 3.6-percent decrease in the previous month. The slaughter cattle index turned down 3.4 percent, after inching up 0.2 percent in the prior month. Prices for slaughter broilers and fryers and for alfalfa hay also fell, following increases in June. The indexes for corn and fluid milk moved down at a quicker pace in July than they did a month earlier. Alternatively, prices for soybeans went down 0.5 percent, after plummeting 13.5 percent in the preceding month. The indexes for fresh and dry vegetables, fresh fruits and melons, and wheat also decreased less than they did in June, while prices for slaughter hogs and unprocessed finfish turned up in July.

The index for crude nonfood materials less energy advanced 8.6 percent in July, compared with a 0.5-percent decline in the preceding month. Prices for iron and steel scrap surged 32.2 percent, after rising 0.6 percent in the prior month. The indexes for gold ores and for hides and skins also climbed at a faster rate in July than they did a month earlier. Prices for copper base scrap and aluminum base scrap turned up, following June decreases. By contrast, the index for logs, bolts, timber, and pulpwood went up 1.1 percent in July, after increasing 2.5 percent in the previous month. Raw cotton prices fell more than they did in June. The index for iron ore declined, following no change in the prior month.

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

Mining. The Producer Price Index for the Net Output of Total Mining Industries rose 0.9 percent in July, following a 6.1-percent gain in the previous month. (Net output price indexes are not seasonally adjusted.) Much of this deceleration can be attributed to prices received by the natural gas liquid extraction industry, which turned down 0.3 percent in July following a 16.6-percent jump in June. The industry index for potash, soda, and borate mineral mining also turned down in July. Prices received by the industries for crude petroleum and natural gas extraction, oil and gas well drilling, and oil and gas operations support activities rose less in July than they did in June. Conversely, the index for gold ore mining increased 4.9 percent in July, after posting a 1.6-percent rise in the prior month. Prices received by the coal mining support activities industry turned up, compared with a decline in June. In July 2004, the Producer Price Index for the Net Output of Total Mining Industries was 155.2 (December 1984=100), 17.9 percent above its year-ago level.

Manufacturing. The Producer Price Index for the Net Output of Total Manufacturing Industries rose 0.3 percent in July, compared with a 0.3- percent decrease in the prior month. Prices received by the petroleum and coal products manufacturing industry group rebounded 5.6 percent, after falling 5.5 percent in June. The industry group indexes for machinery, nonmetallic mineral products, and printing and related support activities rose more in July than they did in June. Prices received by the computer and electronic products industry group decreased less in July than they did in the prior month. On the other hand, prices received by manufacturers of furniture and related products turned down 0.5 percent, after rising 1.3 percent in June. The industry group indexes for transportation equipment and for beverage and tobacco manufacturing also turned down in July. Prices received by the industry groups for chemicals and primary metals rose at a slower pace in July than they did in the prior month, and the food manufacturing industry group index fell more in July than it did in June. In July 2004, the Producer Price Index for the Net Output of Total Manufacturing Industries was 143.4 (December 1984=100), 5.1 percent above its year-ago level.

Services. Among services industries in June, prices rose at a faster pace for the general medical and surgical hospitals, direct life insurance carriers, and passenger car rental industries. The industry indexes for hotels (excluding casino hotels) and motels, nursing care facilities, and nonresidential property managers turned up in July, after falling in the previous month. Alternatively, the industry indexes for television broadcasting, portfolio management, wired telecommunications carriers, investment banking and securities dealing, and scheduled passenger air transportation decreased, compared with increases in June.

Resampling of Industries

Effective with this release, the Producer Price Index (PPI) includes data for 2 resampled industries and 1 newly introduced industry classified according to the North American Industry Classification System (NAICS). 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. 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 with this semiannual update, see the July 2004 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.

NAICS Code Industry 515111 Radio networks 524114 Direct health and medical insurance carriers* 531210 Offices of real estate agents and managers

* For further discussion of this newly introduced PPI, see "New Producer Price Index for the Direct Health and Medical Insurance Carriers Industry, NAICS 524114" in the July 2004 issue of the PPI Detailed Report, or call the Section of Index Analysis and Public Information at (202) 691-7705.