December 2004 Producer Price Index

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The Producer Price Index for Finished Goods fell 0.7 percent in December, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This decline followed a 0.5-percent increase in November and a 1.7-percent advance in October. At the earlier stages of processing, prices received by producers of intermediate goods turned down 0.3 percent, after rising 0.8 percent in the previous month, and the crude goods index declined 2.9 percent in December, following an 8.7-percent increase in November. (See table A.)

Among finished goods, prices for energy goods dropped 4.0 percent in December, as opposed to the 1.8-percent increase registered in November. (Excluding energy, prices for finished goods rose 0.1 percent in December.) The index for finished consumer foods inched up 0.1 percent in December, compared with a 0.4-percent gain in the prior month. Prices for finished goods other than foods and energy rose 0.1 percent in December, following a 0.2-percent increase in November.

Before seasonal adjustment, the Producer Price Index for Finished Goods declined 0.9 percent to 150.4 (1982=100). From December 2003 to December 2004, finished goods prices increased 4.1 percent, after climbing 4.0 percent during 2003. Prices for finished goods other than foods and energy gained 2.2 percent in 2004, following a 1.0-percent rise in 2003. Prices for finished energy goods advanced 13.4 percent in 2004, compared with an 11.4-percent increase in the previous year. By contrast, the finished consumer foods index moved up 2.8 percent in 2004, following a 7.7- percent advance in the prior year. At the earlier stages of processing, the intermediate goods index jumped 9.1 percent from December 2003 to December 2004, after registering a 3.9-percent gain during 2003. Prices received by producers of crude materials for further processing increased 18.0 percent in 2004, following a 19.5-percent rise in the prior year. (See summary below.)

Crude materials for further processing 24.7 19.5 18.0 32.9 25.7 -20.4 46.7 Foodstuffs and feedstuffs 4.5 24.1 -2.5 16.7 9.7 -37.5 16.2 Crude energy materials 61.5 14.4 37.3 35.5 91.6 -27.1 87.9 Crude nonfood materials less energy 12.6 21.6 20.1 63.1 -33.2 51.3 27.5 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.

Finished goods

The index for finished energy goods turned down 4.0 percent in December, after increasing 1.8 percent in November. Gasoline prices fell 11.1 percent, following a 0.7-percent decline in the preceding month. The indexes for home heating oil and diesel fuel also fell more in December than they did in November. Prices for residential natural gas and liquefied petroleum gas turned down, after rising in November, while the residential electric power index increased less than it did in the prior month.

Prices for finished consumer foods edged up 0.1 percent in December, after increasing 0.4 percent in the prior month. In December, rising prices for beef and veal, eggs for fresh use, dairy products, fresh fruits and melons, confectionery end products, and processed young chickens outweighed price declines for fresh and dry vegetables, pork, shortening and cooking oils, finfish and shellfish, and bakery products.

The index for finished consumer goods other than foods and energy inched up 0.1 percent in December, following a 0.2-percent gain in the prior month. Prices for pharmaceutical preparations, cosmetics and other toilet preparations, mobile homes, newspaper circulation, book publishing, and cigarettes advanced in December. By contrast, prices for passenger cars, periodical circulation, alcoholic beverages, light motor trucks, sporting and athletic goods, and men's and boys' apparel fell in December. During 2004, the index for finished consumer goods other than foods and energy advanced 2.0 percent, following a 1.1-percent rise in 2003.

A 0.1-percent increase in capital equipment prices in December followed a 0.2-percent gain in November. Rising prices for railroad equipment, civilian aircraft, agricultural machinery and equipment, commercial furniture, transformers and power regulators, and metal cutting machine tools more than compensated for declining prices for communication and related equipment, passenger cars, integrating and measuring instruments, light motor trucks, truck trailers, and electronic computers. For the 12 months ended December 2004, capital equipment prices advanced 2.4 percent, after posting a 0.8-percent increase during the previous year.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components decreased 0.3 percent in December, after registering a 0.8- percent advance in November. This downturn is attributable to prices for intermediate energy goods, which fell in December following an increase a month earlier. On the other hand, the indexes for materials and components for construction and intermediate foods and feeds rose, after showing no change in November, while prices for durable and nondurable manufacturing materials moved up faster than they did in the prior month. The index for intermediate goods other than foods and energy went up 0.5 percent in December, following a 0.4-percent gain in November. (See table B.)

Prices for intermediate energy goods fell 3.8 percent in December, compared with a 2.3-percent advance in November. The jet fuels index dropped 23.0 percent, after rising 4.4 percent in the preceding month. Prices for industrial natural gas, commercial natural gas, natural gas to electric utilities, liquefied petroleum gas, and residual fuels also turned down, following increases in November. The indexes for gasoline and diesel fuel fell more in December than they did in the prior month, while prices for commercial electric power and industrial electric power increased less in December than they did in November. From December 2003 to December 2004, prices for intermediate energy goods rose 14.7 percent, following a 10.9-percent gain in 2003.

The index for materials and components for construction moved up 0.4 percent in December, after showing no change in November. Prices for softwood lumber increased 0.7 percent, following an 8.0-percent drop in the prior month. The indexes for plywood, building paper and board, wiring devices, switchgear, fabricated ferrous wire products, heating equipment, and gypsum products also turned up, after falling in November. Prices for nonferrous wire and cable and cement rose more in December than they did in the prior month. By contrast, the index for fabricated structural metal products edged up 0.2 percent, following a 0.6-percent gain in November. Prices increases also slowed from November to December for concrete products, asphalt felts and coatings, and steel mill products. The index for plastic construction products fell, after rising in the preceding month. During 2004, prices for materials and components for construction jumped 10.0 percent, following a 3.0-percent increase in the previous year.

Prices for materials for durable manufacturing advanced 1.0 percent in December, following a 0.5-percent increase in November. The index for building paper and board rose 7.3 percent, after falling 8.3 percent in the prior month. Prices for plywood, primary nonferrous metals, cold rolled steel sheet and strip, and copper and brass mill shapes also turned up in December. The indexes for aluminum mill shapes; hot rolled steel bars, plates, and structural shapes; and cold finished bars went up more than they did in November. Alternatively, prices for titanium mill shapes declined 0.8 percent, following a 20.3-percent upsurge in November. The index for hardwood lumber decreased at a faster rate than it did in the previous month, and prices for prepared paint and semifinished steel mill products rose less in December than they did in the prior month. In 2004, the index for materials for durable manufacturing climbed 18.0 percent, following a 4.0-percent increase in 2003.

After showing no change in November, prices for intermediate foods and feeds advanced 0.8 percent in December. The index for beef and veal increased 3.9 percent in December, compared with a 1.6-percent decline a month earlier. Prices for prepared animal feeds; fluid milk products; and dry, condensed, and evaporated milk products also moved up, after falling in November. By contrast, flour prices moved down 1.9 percent in December, following a 3.3-percent gain in the prior month. The indexes for pork and confectionery materials also turned down, after climbing in November. Prices for natural, processed, and imitation cheese increased less in December than they did in November, while prices for shortening and cooking oils decreased more in December than they did in November. From December 2003 to December 2004, prices for intermediate foods and feeds fell 1.9 percent, following a 12.9-percent gain in 2003.

The index for materials for nondurable manufacturing increased 1.1 percent in December, following a 1.0-percent advance in November. In December, rising prices for plastic resins and materials, paper, processed or refined potassium salts, synthetic rubber, and paint materials outweighed falling prices for primary basic organic chemicals, finished fabrics, and inedible fats and oils. The index for materials for nondurable manufacturing climbed 13.7 percent in 2004, following a 4.9- percent gain in 2003.

Crude goods

The Producer Price Index for Crude Materials for Further Processing fell 2.9 percent in December, following an 8.7-percent rise in November. December prices for both crude energy materials and crude goods other than foods and energy fell, after climbing in November. By contrast, the crude foodstuffs and feedstuffs index rose more in December than it did in November. (See table B.)

The crude energy materials index moved down 7.3 percent in December, after increasing 17.0 percent in November. The natural gas index fell 6.0 percent, following a 43.7-percent jump in November. Crude petroleum prices declined more in December than they did in November. By contrast, a 0.8- percent advance in coal prices in December followed no change in the prior month. In 2004, the index for crude energy materials increased 37.3 percent, compared with a 14.4-percent rise in 2003.

Prices for basic industrial materials decreased 1.7 percent in December, after rising 2.5 percent in November. The iron and steel scrap index declined 10.8 percent, more than reversing an 8.0-percent gain in November. Prices for raw cotton and softwood logs, bolts, and timber also fell in December, after registering increases in the previous month. Price increases for pulpwood and phosphates slowed from November to December. By contrast, the iron ore index advanced 9.7 percent in December, after remaining unchanged in November. The indexes for both copper base scrap and aluminum base scrap rose more in December than they did in the prior month. Wastepaper prices increased in December, after declining in the preceding month. In 2004, the index for basic industrial materials moved up 20.1 percent, compared with a 21.6-percent gain in 2003.

The crude foodstuffs and feedstuffs index gained 2.9 percent in December, following a 1.8-percent advance in November. A 2.7-percent rise in prices for slaughter cattle in December followed a 2.8-percent decrease in the previous month. The corn, slaughter broilers and fryers, and fresh fruits and melons indexes also moved up, after falling in November. Prices for soybeans rose more in December than they did in the preceding month. By contrast, the slaughter hogs index fell 0.8 percent, following a 16.4- percent increase in the prior month. Prices for fresh vegetables (except potatoes) and wheat decreased in December, after moving up a month earlier. In 2004, the crude foodstuffs and feedstuffs index moved down 2.5 percent, compared with a 24.1-percent increase 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 declined 5.8 percent in December, following a 13.6-percent increase in the prior month. (Net output price indexes are not seasonally adjusted.) Leading this downturn, prices received by the natural gas liquid extraction industry fell 12.7 percent, after posting a 34.1-percent gain in November. The industry indexes for crude petroleum and natural gas extraction, oil and gas operations support activities, and support activities for coal mining also turned down in December, while prices received by the industry for gold ore mining rose less than they did in the preceding month. By contrast, the rate of increase in the industry index for oil and gas well drilling climbed from 1.2 percent in November to 3.5 percent in December. Prices received by the industries for iron ore mining and bituminous coal underground mining rose, after showing no change a month earlier, while the industry indexes for potash, soda, and borate mineral mining and for bituminous coal and lignite surface mining went up, compared with decreases in November. In December, the Producer Price Index for the Net Output of Total Mining Industries was 170.0 (December 1984=100). Prices received by the mining sector advanced 31.8 percent in 2004, after increasing 13.4 percent in 2003.

Manufacturing. The Producer Price Index for the Net Output of Total Manufacturing Industries fell 0.9 percent in December, following a 0.3- percent decrease in the previous month. Contributing most significantly to this faster rate of decline, the industry group index for petroleum and coal products manufacturing dropped 13.0 percent in December, after moving down 3.5 percent in the preceding month. Prices received by manufacturers of furniture and related products and primary metals advanced less than they did in November. The industry group indexes for textile mills and printing and related support activities turned down, while prices received by the textile product mills industry group showed no change in December, following gains in the prior month. Alternatively, the industry group index for food manufacturers moved up 0.8 percent in December, after remaining unchanged in the previous month. Prices received by the industry group for electrical equipment and appliances also rose, following no change in November. The industry group indexes for plastic and rubber products manufacturing and chemical manufacturing increased more in December than they did a month earlier, while prices received by producers of transportation equipment edged up, following declines in November. In December, the Producer Price Index for the Net Output of Total Manufacturing Industries was 144.7 (December 1984=100). For the 12 months ended December 2004, prices received by the manufacturing sector increased 5.1 percent, compared with a 2.8-percent advance in 2003.

Services. Among services industries in December, prices received by the industry for investment banking and securities dealing edged down 0.2 percent, after rising 1.9 percent in the preceding month. The industry indexes for direct life insurance carriers, long distance general freight trucking (truckload), hotels (except casino hotels) and motels, temporary help services, lessors of nonresidential buildings (except miniwarehouse), and television broadcasting also turned down, following increases in November. Prices received by the general medical and surgical hospitals industry rose at a slower rate than they did in the previous month. By contrast, the industry group index for scheduled passenger air transportation moved up 1.3 percent in December, compared with a 1.2- percent decline in the prior month. Prices received by the industries for employee leasing services, local general freight trucking, and residential property managers also turned up, while the industry indexes for portfolio management and scheduled freight air transportation increased more than they did in November.