October 2004 Producer Price Index

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The Bureau of Labor Statistics of the U.S. Department of Labor reported today that the seasonally adjusted Producer Price Index for Finished Goods advanced 1.7 percent in October. This gain followed a 0.1- percent rise in September and a 0.1-percent decrease in August. At the earlier stages of processing, prices received by the manufacturers of intermediate goods went up 0.9 percent, after increasing 0.1 percent in the prior month. The index for crude materials turned up 4.3 percent in October, compared with a decline of 4.2 percent in September. (See table A.)

Among finished goods, prices for energy goods turned up 6.8 percent in October, following a 0.9-percent decline in September. The finished consumer foods index rose 1.6 percent, compared with a 0.1-percent increase in the prior month. By contrast, prices for finished goods other than foods and energy advanced 0.3 percent in October, the same rate of increase as in September.

Before seasonal adjustment, the Producer Price Index for Finished Goods increased 2.2 percent in October to 151.9 (1982=100). From October 2003 to October 2004, prices for finished goods advanced 4.4 percent. Over the same period, prices for finished energy goods went up 17.2 percent, the index for finished goods other than foods and energy climbed 1.8 percent, and the index for finished consumer foods rose 2.5 percent. Prices for intermediate goods moved up 9.0 percent during the 12-month period ended October 2004, and the crude goods index jumped 15.7 percent.

Finished goods

The index for finished energy goods advanced 6.8 percent in October, after decreasing 0.9 percent a month earlier. Prices for gasoline climbed 17.3 percent, following a 0.7-percent rise in September. The indexes for residential electric power, residential natural gas, liquefied petroleum gas, and home heating oil turned up in October, following decreases in the previous month.

Prices for finished consumer foods rose 1.6 percent in October, compared with a 0.1-percent gain in the preceding month. A 34.2-percent upsurge in October's fresh and dry vegetables index followed a 12.1-percent increase in September and led the acceleration in the finished consumer foods index. Prices for beef and veal, pork, soft drinks, dairy products, and processed fruits and vegetables rose in October, compared with decreases in the prior month. The index for processed young chickens fell less in October than it did in September. By contrast, price increases slowed from 23.1 percent in September to 11.3 percent in October for fresh fruits and melons. The indexes for bakery products and eggs for fresh use turned down, after increasing in the previous month.

Prices for finished consumer goods other than foods and energy advanced 0.2 percent in October, after rising 0.4 percent in the previous month. The index for passenger cars decreased 1.3 percent, compared with a 1.1-percent gain in September. For the 12 months ended in October 2004, passenger car prices increased 1.1 percent. In accordance with usual practice, most new model year passenger cars and light trucks were introduced into the PPI in October. (See Report on Quality Changes for 2005 Model Vehicles, USDL 04-2351.) Prices for book publishing and pharmaceutical preparations also turned down in October. The indexes for mobile homes; women's, girls', and infants' apparel; and soaps and synthetic detergents moved up at a slower pace in October than they did in the prior month. Alternatively, prices for light motor trucks posted a 2.7- percent gain, after edging up 0.2 percent in September. From October 2003 to October 2004, prices for light motor trucks increased 0.3 percent. Household furniture prices rose more in October than they did in the prior month. The index for men's and boys' apparel increased, after showing no change in the previous month.

The capital equipment index moved up 0.4 percent in October, the same rate of increase as in September. In October, rising prices for light motor trucks, construction machinery, civilian aircraft, agricultural machinery, and integrating and measuring instruments outweighed decreasing prices for passenger cars, heavy motor trucks, electronic computers, metal cutting machine tools, and textile machinery.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components advanced 0.9 percent in October, following a 0.1-percent gain in September. This acceleration was primarily due to prices for intermediate energy goods, which climbed in October after falling in the preceding month. By contrast, the indexes for materials for durable manufacturing and for materials and components for construction turned down, after rising in September. Prices for materials for nondurable manufacturing went up at a slower rate in October than they did a month earlier, while the index for intermediate foods and feeds decreased at a faster pace over the same period. Excluding foods and energy, price increases for intermediate goods slowed from a 0.7-percent rate in September to a 0.3-percent rate in October. (See table B.)

The index for intermediate energy goods jumped 4.3 percent in October, following a 1.9-percent decline in September. Jet fuel prices increased 17.2 percent, after moving down at a 12.5-percent rate in the prior month. The indexes for diesel fuel, commercial natural gas, home heating oil, and liquefied petroleum gases also turned up in October, following decreases in the previous month. Gasoline prices climbed 17.3 percent, compared with a 0.7-percent gain in September, while prices for industrial natural gas fell at a slower pace than they did in the preceding month. On the other hand, the index for industrial electric power dropped 2.4 percent, after inching down at a 0.1-percent rate in September. Prices for natural gas to electric utilities also declined at a quicker pace in October, while the index for commercial electric power turned down, following a September rise.

The index for materials for durable manufacturing moved down at a 0.3- percent rate in October, compared with a 1.5-percent gain in September. Much of this downturn can be traced to prices for aluminum mill shapes, which fell 6.6 percent following a 6.4-percent rise in the prior month. The indexes for cold rolled steel sheet and strip, building paper and board, plywood, and hardwood lumber also decreased in October, after increasing a month earlier. Cement prices advanced at a slower rate than they did in September. By contrast, the index for primary nonferrous metals surged 7.6 percent, following a 0.7-percent decline in the previous month. Prices for copper and brass mill shapes also turned up in October, while the index for semifinished steel mill products rose at a faster pace than it did in September.

Price increases for materials for nondurable manufacturing slowed to a 0.9-percent rate in October, after advancing 1.7 percent in September. The index for primary basic organic chemicals rose 0.2 percent, compared with a 4.1-percent increase in the preceding month. Prices for plastic resins and materials, paper, synthetic rubber, and phosphates also moved up less than they did in September. The index for inedible fats and oils fell more in October than it did in the prior month, while paperboard prices turned down, after climbing in September. Conversely, the index for intermediate basic organic chemicals increased 6.3 percent, following a 1.2-percent decline in the previous month. Prices for gray fabrics, paint materials, and finished fabrics also turned up in October. The nitrogenates index increased more than it did in September.

Prices for materials and components for construction inched down at a 0.1-percent rate, after increasing 0.7 percent in September. The softwood lumber index dropped 9.4 percent in October, compared with a 0.1-percent decrease a month earlier. Prices for plywood, building paper and board, asphalt felts and coatings, wiring devices, and gypsum products moved down, following September gains. The indexes for concrete products and plastic construction products advanced at a slower pace than they did in the preceding month. By contrast, prices for nonferrous wire and cable climbed 2.7 percent, after falling 0.8 percent in September. The indexes for fabricated structural metal products, architectural coatings, and steel mill products rose more in October than they did in the previous month.

Prices for intermediate foods and feeds fell 1.9 percent in October, slightly more than the 1.7-percent decrease registered in September. The index for prepared animal feeds dropped 5.7 percent, following a 3.0- percent decline in the preceding month. Prices for natural, processed, and imitation cheese and shortening and cooking oils also decreased at a faster rate in October than they did a month earlier. The indexes for flour, butter, and liquid milk products turned down, after rising in September. Conversely, beef and veal prices increased 3.2 percent in October, compared with a 1.0-percent decline in the prior month. The indexes for pork and packaged fluid milk also moved up, after falling in September. Prices for processed young chickens went down less in October than they did in the previous month.

Crude goods

The Producer Price Index for Crude Materials for Further Processing advanced 4.3 percent in October, after falling 4.2 percent in September. Prices for crude energy materials and crude nonfood materials less energy turned up, after decreasing in the prior month. The index for crude foodstuffs and feedstuffs fell less rapidly in October than it did a month earlier. (See table B.)

Subsequent to a 6.6-percent drop in September, prices for crude energy materials moved up 7.9 percent in October. The natural gas index increased 2.7 percent, following a 12.4-percent decline in September. Crude petroleum prices jumped 18.4 percent, after slipping 0.3 percent in the prior month. By contrast, a 1.9-percent decline in the coal index was preceded by a 2.9-percent gain in September.

Prices for basic industrial materials climbed 5.4 percent, after decreasing 2.5 percent in September. Leading this upturn, the index for iron and steel scrap advanced 15.4 percent in October, following an 8.7- percent decline in the previous month. Prices for nonferrous metal ores, copper base scrap, aluminum base scrap, and wastepaper also turned up in October. Conversely, the raw cotton index decreased 12.3 percent, following an 11.7-percent rise in September. Prices for hides and skins also turned down, after increasing in the prior month. The indexes for leaf tobacco and phosphates advanced less quickly in October than they did in September.

The index for crude foodstuffs and feedstuffs declined 0.8 percent, following a 2.1-percent drop in September. Falling prices for corn, soybeans, slaughter cattle, wheat, and slaughter turkeys outweighed price increases for fresh and dry vegetables, slaughter broilers and fryers, slaughter hogs, fresh fruits and melons, and fluid milk.

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

Mining. The Producer Price Index for the Net Output of Total Mining Industries turned up 6.8 percent in October, following a 5.3-percent decline in the previous month. (Net output price indexes are not seasonally adjusted.) Most of this upturn can be attributed to prices received by the industries for crude petroleum and natural gas extraction and for natural gas liquid extraction. The industry index for crude petroleum and natural gas extraction jumped 11.6 percent, after decreasing 4.6 percent in the prior month, while prices received by the industry for natural gas liquid extraction advanced 4.9 percent, following a 13.9- percent drop in September. The industry indexes for coal mining support activities and potash, soda, and borate mineral mining also moved up, after falling a month earlier. Prices received by the industries for oil and gas well drilling and for gold ore mining increased at a faster rate in October than they did in the preceding month. By contrast, the industry index for bituminous coal and lignite surface mining declined 3.0 percent in October, compared with a 5.8-percent rise a month earlier. Prices received by the industries for oil and gas operations support activities and construction sand and gravel mining increased less than they did in September. In October, the Producer Price Index for the Net Output of Total Mining Industries was 158.9 (December 1984=100), 29.5 percent above its year-ago level.

Manufacturing. The Producer Price Index for the Net Output of Total Manufacturing Industries increased 1.7 percent in October, after rising 0.3 percent in the preceding month. Prices received by the industry group for petroleum and coal products manufacturing went up 11.2 percent, following a 2.1-percent gain in September. The industry group index for plastics and rubber products manufacturing also advanced at a quicker pace than it did in the prior month. Prices received by the industry groups for transportation equipment and furniture and related products manufacturing increased, after showing no change a month earlier. The industry group index for food manufacturing fell less than it did in September, while prices received by the industry group for textile mills turned up. On the other hand, the rate of increase in the industry group index for chemical manufacturing slowed from 1.4 percent in September to 0.9 percent in October. Prices received by the industry groups for nonmetallic mineral product manufacturing and primary metal manufacturing also advanced at a slower rate than they did in September, while the industry group index for printing and related support activities turned down. In October, the Producer Price Index for the Net Output of Total Manufacturing Industries was 146.5 (December 1984=100), 6.0 percent above its year-ago level.

Services. Among services industries, prices received by the industry for scheduled passenger air transportation advanced 0.8 percent in October, compared with a 3.4-percent decline in the prior month. The industry indexes for investment banking and securities dealing, software publishers, casino hotels, cable networks, and temporary help services also turned up, after falling in September. Prices received by the hotels (except casino hotels) and motels industry declined less than they did in the previous month. Alternatively, the industry index for portfolio management turned down 1.4 percent in October, after posting a 2.9-percent increase in the preceding month. Prices received by the industry for television broadcasting also declined, following gains in September. The industry group index for offices of real estate agents and brokers decreased, after showing no change in the prior month. Prices received by the deep sea freight transportation industry showed no change, after rising a month earlier, while the industry index for nonresidential property managers fell more in October than it did in September.