March 2005 Producer Price Index

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The Producer Price Index for Finished Goods advanced 0.7 percent in March, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This increase followed a 0.4-percent rise in February and a 0.3-percent gain in January. As they did in February, prices for finished goods other than foods and energy edged up 0.1 percent in March. At the earlier stages of processing, the intermediate goods index rose 1.0 percent, after climbing 0.7 percent in the prior month, and prices for crude goods turned up 4.3 percent in March, after declining 1.6 percent a month earlier. (See table A.)

The faster rate of increase for the finished goods index was primarily due to energy prices, which advanced 3.3 percent in March after rising 1.4 percent in February, though an upturn in capital equipment prices also contributed to the acceleration in finished goods prices. By contrast, price increases for consumer foods slowed to 0.3 percent in March from 0.8 percent in February. The index for consumer goods other than foods and energy also advanced less than it did in the previous month -- posting a 0.1-percent increase following a 0.2-percent rise in February.

During the first quarter of 2005, prices for finished goods advanced at a seasonally adjusted annual rate (SAAR) of 5.7 percent, after rising at a 7.2-percent SAAR during the final 3 months of 2004. Excluding prices for foods and energy, the finished goods index increased at a 3.7-percent SAAR for the 3 months ended March 2005, after rising at a 2.6-percent SAAR in the last quarter of 2004. Among prices for raw and partially processed goods, the SAAR for intermediate goods accelerated from 6.8 percent to 8.7 percent from the final quarter of 2004 to the first quarter of 2005. The crude goods index moved up at a 2.4-percent SAAR during the first quarter of 2005, after advancing at a 41.9-percent SAAR in the last 3 months of 2004. (See summary below.)

Crude materials for further processing 24.7 19.5 18.0 26.0 -17.7 41.9 2.4 Foodstuffs and feedstuffs 4.5 24.1 -2.5 9.1 -34.2 8.1 13.9 Crude energy materials 61.5 14.4 37.3 91.6 -26.6 86.5 3.7 Crude nonfood materials less energy 12.6 21.6 20.1 -30.4 58.2 25.2 -17.0 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 finished goods index rose 0.9 percent in March to 153.5 (1982=100). From March 2004 to March 2005, prices for finished goods increased 4.9 percent. Among finished goods, the index for energy goods advanced 15.3 percent, prices for consumer foods climbed 3.6 percent, and the index for goods other than foods and energy moved up 2.6 percent. At the earlier stages of processing, intermediate goods prices advanced 8.7 percent, and the crude goods index rose 10.8 percent for the 12 months ended March 2005.

Finished goods

Prices for finished energy goods advanced 3.3 percent in March, compared with a 1.4-percent increase in February. The index for residential natural gas turned up 2.3 percent, after slipping 0.4 percent in the prior month. The residential electric power index also turned up in March, following a decline in February. Prices for home heating oil, liquefied petroleum gas, diesel fuel, kerosene, and gasoline rose more in March than they did in February. (See table 2.) The index for finished energy goods advanced at a 15.9-percent SAAR in the first quarter of 2005, compared with a 25.4-percent SAAR of increase in the last 3 months of 2004.

Capital equipment prices rose 0.3 percent in March, after falling 0.2 percent in the prior month. The index for civilian aircraft climbed 0.9 percent, following a 0.1-percent gain in February. Prices for light motor trucks, passenger cars, and communication and related equipment fell less in March than they did a month earlier. The index for tools, dies, jigs, fixtures, and industrial molds turned up, after falling in the previous month. Alternatively, prices received by producers of office and store machines and equipment edged up 0.1 percent in March, following a 4.0- percent rise in February. The rate of increase in prices for pumps, compressors, and equipment also slowed from February to March. The indexes for electronic computers, commercial furniture, and welding machines and equipment turned down, following increases in the preceding month. During the first 3 months of 2005, the capital equipment index rose at a 2.8- percent SAAR, after increasing at a 3.1-percent SAAR in the fourth quarter of 2004.

Price increases for finished consumer foods slowed from 0.8 percent in February to 0.3 percent in March. Fresh and dry vegetable prices advanced 10.1 percent in March, subsequent to an 18.7-percent jump in February. The indexes for beef and veal, finfish and shellfish, and bakery products also rose less in March than they did a month earlier. Prices for eggs for fresh use turned down, after increasing in February. By contrast, the dairy products index declined 0.3 percent in March, following a 2.5-percent drop in the prior month. Prices for shortening and cooking oils and for roasted coffee turned up in February. The indexes for soft drinks and for processed fruits and vegetables rose more in March than they did in February. The index for finished consumer foods increased at a 3.7-percent SAAR in the first quarter of 2005, after advancing at a 7.0-percent SAAR in the last 3 months of 2004.

The index for finished consumer goods other than foods and energy inched up 0.1 percent in March, after rising 0.2 percent in the previous month. Rising prices for sanitary paper products, pharmaceutical preparations, men's and boys' apparel, mobile homes, floor coverings, and household appliances outweighed price declines for book publishing; passenger cars; women's, girls', and infants' apparel; light motor trucks; and periodical circulation. Prices for finished consumer goods excluding foods and energy advanced at a 4.5-percent SAAR in the first quarter of 2005, after increasing at a 2.5-percent SAAR in the last quarter of 2004.

Intermediate goods

The index for Intermediate Materials, Supplies, and Components advanced 1.0 percent in March, after posting a 0.7-percent gain in the previous month. Prices for intermediate energy goods and materials for nondurable manufacturing rose more than they did in February, while the intermediate foods and feeds index turned up in March. By contrast, the durable manufacturing materials index declined, following an increase in the prior month, and prices for materials and components for construction advanced less in March than they did in the preceding month. The index for intermediate goods other than foods and energy increased 0.3 percent, compared with a 0.5-percent rise in February. (See table B.)

Prices for intermediate energy goods climbed 3.7 percent in March, after rising 1.5 percent in the prior month. In March, price increases were reported for diesel fuel, jet fuels, gasoline, natural gas to electric utilities, home heating oil, commercial electric power, liquefied petroleum gas, and industrial natural gas. (See table 2.) The intermediate energy goods index advanced at a 16.5-percent SAAR from December 2004 to March 2005, after rising at a 20.3-percent SAAR during the final quarter of 2004.

The index for materials for nondurable manufacturing increased 1.6 percent in March, following a 0.2-percent rise in the preceding month. Leading this acceleration, prices for basic organic chemicals went up 5.2 percent, after advancing 1.2 percent in February. The index for paper also increased at a faster rate than it did in the prior month. Prices for inedible fats and oils and for paperboard turned up in March, while the nitrogenates index fell less than it did in February. By contrast, basic inorganic chemicals prices rose 0.2 percent in March, following a 1.2- percent gain in the previous month. The indexes for phosphates, paint materials, and gray fabrics turned down, after increasing in February. From December 2004 to March 2005, prices for nondurable manufacturing materials advanced at a 9.8-percent SAAR, after rising at an 11.5-percent SAAR in the prior quarter.

The intermediate foods and feeds index moved up 0.8 percent in March, following a 0.6-percent decline in the previous month. Prices for prepared animal feeds rose 2.1 percent, compared with a 1.3-percent decrease in the preceding month. The indexes for fluid milk products; shortening and cooking oils; and dry, condensed, and evaporated milk products also turned up in March, after falling in the prior month. Alternatively, prices for refined sugar and byproducts decreased 4.0 percent in March, following a 0.2-percent decline in the previous month. The indexes for natural, processed, and imitation cheese and for pork also fell more than they did in February. Beef and veal prices increased less in March than they did in the preceding month, and the index for confectionery materials turned down. Intermediate foods and feeds prices rose at a 4.6-percent SAAR for the first quarter of 2005, after declining at a 6.1-percent SAAR in the final quarter of 2004.

Prices for materials for durable manufacturing turned down 0.6 percent in March, following a 0.9-percent gain in the prior month. The cold rolled steel sheet and strip index moved down 3.0 percent, after rising 4.0 percent in February. Prices for hot rolled steel bars, plates, and structural shapes; cement; semifinished steel mill products; plywood; and titanium mill shapes also fell in March, after increasing a month earlier. The aluminum mill shapes index decreased more than it did in the previous month. Conversely, prices for primary aluminum (except extrusion billet) advanced 5.0 percent in March, compared with a 2.4-percent rise in the preceding month. The indexes for copper and brass mill shapes, unprocessed filament yarns, and flat glass also increased more in March than they did in February, while prices for cold finished steel bars and hardwood lumber fell less than they did in the prior month. The index for materials for durable manufacturing advanced at an 8.8-percent SAAR for the 3 months ended March 2005, after moving up at an 8.7-percent SAAR in the preceding quarter.

Subsequent to a 0.9-percent increase in February, prices for materials and components for construction climbed 0.2 percent in March. The index for softwood lumber rose 1.1 percent, after advancing 6.1 percent in the prior month. Prices for asphalt felts and coatings also increased less than they did in the previous month. The index for steel mill products fell more in March than it did in the preceding month. Prices for air conditioning and refrigeration equipment, plywood, and mineral wool for structural insulation turned down in March, while the index for architectural coatings showed no change, after increasing in February. By contrast, millwork prices turned up 0.3 percent in March, following a 0.2- percent decline in the preceding month. The indexes for fabricated structural metal products, plastic construction products, and switchgear and switchboard equipment increased more than they did in the prior month, and the index for hardwood lumber fell less than it did in February. Prices for materials and components for construction advanced at an 8.9- percent SAAR in the first quarter of 2005, after moving up at a 1.6-percent SAAR in the prior quarter.

Crude goods

The Producer Price Index for Crude Materials for Further Processing increased 4.3 percent in March, following a 1.6-percent decrease in February. Prices for crude foodstuffs and feedstuffs and basic industrial materials moved up in March, after falling in the preceding month, while the index for crude energy materials rose at a faster rate than it did in February. (See table B.)

Prices for crude foodstuffs and feedstuffs climbed 4.7 percent in March, compared with a 3.2-percent drop in the prior month. The slaughter cattle index advanced 3.7 percent, subsequent to a 1.9-percent decline in February. Prices for slaughter hogs, slaughter broilers and fryers, soybeans, corn, wheat, fluid milk, Irish potatoes for processing, and raw cane sugar and byproducts also turned up in March, after falling a month earlier. By contrast, the index for fresh vegetables (except potatoes) increased 9.7 percent, following a 25.3-percent gain in February. Prices for unprocessed finfish also went up less than they did in the previous month. (See table 2.) During the first quarter of 2005, the index for crude foodstuffs and feedstuffs rose at a 13.9-percent SAAR, after moving up at an 8.1-percent SAAR in the preceding quarter.

The index for crude energy materials advanced 5.5 percent in March, following a 0.2-percent increase in February. Most of this acceleration can be attributed to prices for crude petroleum, which jumped 17.8 percent after rising 3.3 percent in the preceding month. The index for natural gas fell 1.4-percent, compared with a 1.9-percent decrease in February. Alternatively, prices for coal went up 0.8 percent in March, following a 1.4-percent rise a month earlier. For the quarter ended March 2005, the index for crude energy materials increased at a 3.7-percent SAAR, after surging at an 86.5-percent SAAR in the prior quarter.

The index for crude nonfood materials less energy advanced 1.0 percent in March, following a 3.0-percent decline in February. Copper ore prices climbed 4.9 percent in March, compared with a 9.9-percent drop a month earlier. The indexes for gold ores; aluminum base scrap; raw cotton; leaf tobacco; and softwood logs, bolts, and timber also turned up, after falling in February. Prices for iron and steel scrap decreased less in March than they did in the preceding month. By contrast, the wastepaper index went down 3.7 percent in March, after showing no change in February. Prices for construction sand, gravel, and crushed stone and for pulpwood rose less than they did in the prior month. During the first quarter of 2005, the index for crude nonfood materials less energy moved down at a 17.0-percent SAAR, after increasing at a 25.2-percent SAAR in the previous quarter.

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

Mining. The Producer Price Index for the Net Output of Total Mining Industries gained 4.5 percent in March, following a 1.3-percent rise in February. (Net output price indexes are not seasonally adjusted.) Much of this acceleration can be attributed to prices received by the oil and gas extraction industry group, which rose 5.9 percent in March after increasing 0.4 percent in February. The industry indexes for copper ore and nickel ore mining, gold ore mining, and support activities for metal mining turned up, after falling a month earlier. By contrast, the industry index for oil and gas operations support activities declined 1.8 percent in March, compared with an 8.8-percent climb in February. Prices received by the bituminous coal underground mining industry and the kaolin and ball clay industry also turned down in March, after rising in the previous month. The industry indexes for potash, soda, and borate mineral mining; support activities for coal mining; and oil and gas well drilling rose at slower rates than they did in February. For the 3 months ended in March 2005, the Producer Price Index for the Net Output of Total Mining Industries advanced at an 8.2-percent annualized rate, compared with a 66.8-percent annualized rate of increase in the preceding quarter. In March, the Producer Price Index for Total Mining Industries was 173.4 (December 1984=100), 26.9 percent above its year-ago level.

Manufacturing. The Producer Price Index for the Net Output of Total Manufacturing Industries advanced 1.2 percent in March, following a 0.7- percent gain in February. The greater part of this acceleration was due to prices received by the petroleum and coal products manufacturing industry group, which climbed 11.6 percent in March after gaining 6.5 percent in February. The industry group indexes for food manufacturing, chemical manufacturing, and paper manufacturing also rose more in March than in the previous month. Prices received by the transportation equipment industry group fell less in March than they did in February. By contrast, the industry group index for plastics and rubber products manufacturing gained 0.2 percent, after rising 1.2 percent in the previous month. The industry group indexes for fabricated metal products, wood products, machinery, and nonmetallic mineral products also advanced at slower rates in March than they did in the prior month. Prices received by beverage and tobacco manufacturers were unchanged in March, compared with advances in the preceding month, while prices received by the industry groups for printing and related support activities and for primary metal manufacturing industries turned down in March. For the 3 months ended in March 2005, the Producer Price Index for the Net Output of Total Manufacturing Industries advanced at an annualized rate of 12.1 percent, compared with a 1.4-percent annualized rate of increase in the prior quarter. In March, the Producer Price Index for Total Manufacturing Industries was 148.9 (December 1984=100), 6.1 percent above its year-ago level.

Services. Among services industries in March, prices received by commercial bankers decreased 6.1 percent, after declining 3.3 percent in February. The industry indexes for investment banking and securities dealing; general medical and surgical hospitals; hotels (excluding casino hotels) and motels; offices of physicians; temporary help services; and securities brokerages turned down, following increases in the preceding month. Prices received by nonresidential property managers fell more in March than they did in February. Alternatively, prices received by the scheduled passenger air transportation industry rose 3.3 percent, following a 0.9-percent gain in February. Prices received by the direct health and medical insurance carriers industry also increased at a faster rate in March. The industry indexes for wired telecommunication carriers; television broadcasting; offices of lawyers; less-than-truckload, long- distance general freight trucking; and casino hotels turned up in March, after decreasing in the prior month. The industry index for savings institutions fell less than it did in February.