May 2005 Producer Price Index

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The Producer Price Index for Finished Goods fell 0.6 percent in May, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This decline followed a 0.6-percent increase in April and a 0.7-percent advance in March. At the earlier stages of processing, prices received by manufacturers of intermediate goods decreased 0.7 percent in May, after rising 0.8 percent in the preceding month, while the crude goods index moved down 2.0 percent, following a 2.7- percent jump in April. (See table A.)

Over three fourths of the downturn in the finished goods index can be traced to prices for energy goods, which fell 3.5 percent in May after posting a 2.1-percent increase in April. Prices for finished consumer foods also turned down -- declining 0.3 percent following a 0.1-percent advance in the prior month. The index for finished goods other than foods and energy went up 0.1 percent in May, compared with a 0.3-percent gain in April.

Before seasonal adjustment, the Producer Price Index for Finished Goods moved down 0.2 percent in May to 154.1 (1982=100). From May 2004 to May 2005, prices for finished goods increased 3.5 percent. Over the same period, the index for finished energy goods climbed 10.2 percent, the index for finished consumer foods advanced 0.8 percent, and prices for finished goods other than foods and energy rose 2.6 percent. For the 12 months ended May 2005, prices for intermediate goods increased 6.3 percent and the crude goods index went up 6.1 percent.

Finished goods

The index for finished energy goods fell 3.5 percent in May, after rising 2.1 percent in April. Accounting for nearly half of this downturn, gasoline prices dropped 9.9 percent in May, following a 2.6-percent increase a month earlier. The indexes for residential natural gas and liquefied petroleum gas also turned down, following April gains. Prices for home heating oil, residential electric power, and diesel fuel decreased at faster rates than they did in the preceding month. (See table 2.)

Prices for finished consumer foods declined 0.3 percent in May, compared with a 0.1-percent rise in April. The index for fresh and dry vegetables dropped 15.0 percent, following a 1.1-percent increase in the preceding month. Pork prices were unchanged in May, after advancing a month earlier. The indexes for roasted coffee and confectionery end products moved up at slower rates than they did in April, while prices for processed turkeys and for shortening and cooking oils fell more in May than they did in the prior month. By contrast, the index for soft drinks rose 1.0 percent in May, compared with a 1.3-percent decrease in April. Prices for eggs for fresh use and for finfish and shellfish also turned up in May.

The index for finished consumer goods other than foods and energy inched up 0.1 percent in May, following a 0.2-percent advance in April. In May, rising prices for cigarettes, pharmaceutical preparations, periodical circulation, textile housefurnishings, household furniture, alcoholic beverages, and mobile homes slightly outweighed falling prices for light motor trucks; passenger cars; and women's, girls', and infants' apparel.

The capital equipment index edged up 0.1 percent in May, after moving up 0.2 percent in April. In May, higher prices for construction machinery and equipment; civilian aircraft; heavy motor trucks; commercial furniture; agricultural machinery and equipment; and tools, dies, jigs, fixtures, and industrial molds slightly outweighed lower prices for light motor trucks, passenger cars, and electronic computers.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components declined 0.7 percent in May, after increasing 0.8 percent in April. The majority of this downturn was due to the index for intermediate energy goods, which fell after rising in April. Prices for materials for durable manufacturing declined in May, after showing no change in the prior month. The index for materials and components for construction edged down slightly more in May than it did in the previous month. By contrast, prices for materials for nondurable manufacturing advanced in May, after declining in April. Prices for intermediate foods and feeds rose at the same pace in May as they did in the previous month. Excluding foods and energy, prices for intermediate goods turned down 0.3 percent, following a 0.2-percent advance in April. (See table B.)

The index for intermediate energy goods decreased 2.6 percent in May, compared to a 3.4-percent advance in April. Prices for industrial natural gas fell 1.5 percent, after rising 8.4 percent in April. Prices for jet fuels, gasoline, commercial natural gas, natural gas to electric utilities, and liquefied petroleum gas also turned down in May, compared with increases in the prior month. The home heating oil and diesel fuel indexes fell at faster rates in May than they did in April. Conversely, the index for commercial electric power increased 1.1 percent, following a 0.1- percent gain in the preceding month. (See table 2.)

Prices for materials for durable manufacturing fell 1.4 percent in May, after showing no change in April. The index for hot rolled steel sheet and strip declined 8.4 percent, following a 1.1-percent decline in the previous month. Prices for aluminum mill shapes, cold rolled steel sheet and strip, and unprocessed filament yarns increased less than they did in the prior month. The flat glass and original equipment automotive stamping indexes turned down, compared with increases in April. By contrast, the index for semifinished steel mill products rose 0.1 percent, after dropping 10.3 percent in April. The hot rolled steel bars, plates, and structural shapes; cold finished steel bars; copper and brass mill shapes; and hardwood lumber indexes also moved up in May, after falling in the prior month.

The materials and components for construction index decreased 0.2 percent in May, after inching down 0.1 percent in the previous month. In May, declining prices for softwood lumber, steel mill products, plywood, building paper and board, nonferrous wire and cable, and wiring devices outweighed increasing prices for paving mixtures and blocks, plastic construction products, fabricated structural metal products, gypsum products, architectural coatings, and concrete products.

The index for materials for nondurable manufacturing edged up 0.1 percent in May, compared with a 0.1-percent dip in April. The index for plastic resins and materials rose 0.4 percent, after declining 0.5 percent in April. Prices for finished fabrics and for processed yarns and threads also turned up in May. The inedible fats and oils, basic inorganic chemicals, and phosphates indexes grew more in May than they did in the preceding month. By contrast, the index for intermediate basic organic chemicals fell 10.2 percent in May, following a 0.1-percent gain in the prior month. Prices for gray fabrics also turned down in May. The paper, synthetic fibers, nitrogenates, synthetic rubber, and medicinal and botanical chemicals indexes gained less in May than they did in April.

Prices for intermediate foods and feeds advanced 0.4 percent in May, after posting a 0.4-percent rise in April. In May, increasing prices for beef and veal, prepared animal feeds, fluid milk products, and flour outweighed decreasing prices for natural, processed, and imitation cheese; shortening and cooking oils; refined sugar and byproducts; processed young chickens; confectionery materials; liquid milk products; and butter.

Crude goods

The Producer Price Index for Crude Materials for Further Processing turned down 2.0 percent in May, after rising 2.7 percent in the preceding month. Prices for crude energy materials and basic industrial materials declined, following increases in April. By contrast, the index for crude foodstuffs and feedstuffs decreased less in May than it did in the prior month. (See table B.)

Prices for crude energy materials fell 1.9 percent in May, compared with a 7.2-percent gain in the previous month. Leading this downturn, the index for natural gas decreased 3.6 percent, after jumping 18.1 percent in the prior month. The rate of increase in coal prices slowed from 2.8 percent in April to 0.3 percent in May. Alternatively, the crude petroleum index turned up 0.5 percent, following a 6.3-percent decline in April. (See table 2.)

Prices for crude nonfood materials other than energy moved down 3.6 percent in May, after posting a 0.8-percent gain in the preceding month. This downturn was mostly due to the index for iron and steel scrap, which dropped 12.3 percent following an 8.0-percent increase in April. Prices for copper ores; copper base scrap; aluminum base scrap; and softwood logs, bolts, and timber also turned down in May, after rising in the prior month. By contrast, the index for wastepaper showed no change, following a 3.8- percent decline in April. Raw cotton prices turned up in May, while the indexes for gold ores and for hides and skins fell less than they did in April.

The rate of decrease in prices for crude foodstuffs and feedstuffs slowed from 2.3 percent in April to 1.0 percent in May. The index for corn inched down 0.1 percent, following a 7.5-percent decline in the preceding month. Prices for slaughter broilers and fryers also fell less than they did in April. The indexes for wheat, soybeans, unprocessed finfish, and slaughter turkeys turned up in May. Alternatively, the slaughter cattle index turned down 1.2 percent in May, following a 0.8-percent gain in the prior month. Prices for fresh vegetables, except potatoes, also decreased, after increasing a month earlier. The index for fluid milk fell more in May that it did in the preceding month, and alfalfa hay prices rose less than they did in April.

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

Mining. The Producer Price Index for the Net Output of Total Mining Industries fell 2.1 percent in May, following a 5.5-percent gain in April. (Net output price indexes are not seasonally adjusted.) Much of this downturn can be attributed to prices received by the crude petroleum and natural gas extraction industry, which decreased 2.7 percent after posting a 6.6-percent rise in the previous month. The industry indexes for natural gas liquid extraction and for copper ore and nickel ore mining also turned down in May, following increases a month earlier. Prices received by the oil and gas well drilling industry were unchanged, after rising in April. Alternatively, the phosphate rock mining industry index turned up 2.6 percent in May, after edging down 0.1 percent in the preceding month. Prices paid to the industries for gold ores and for potash, soda, and borate minerals fell less rapidly in May than they did in April, while the industry indexes for crushed and broken granite mining and quarrying, construction sand and gravel, and nonmetallic minerals support activity (except fuels) rose more during the same period. In May, the Producer Price Index for Total Mining Industries was 179.1 (December 1984=100), 19.8 percent above its year-ago level.

Manufacturing. The Producer Price Index for the Net Output of Total Manufacturing Industries slipped 0.3 percent, following a 0.5-percent gain in April. This reversal was primarily due to prices received by the petroleum and coal products manufacturing industry group, which fell 3.2 percent after advancing 3.7 percent in the prior month. The industry group indexes for chemicals, transportation equipment, and electrical equipment and appliances also turned down, compared with increases in April. Prices received by manufacturers of fabricated metal products advanced less in May than they did a month earlier, while the industry group index for computers and electronic products fell more in May than it did in April. Conversely, prices for the machinery industry group rose 0.4 percent, after inching up 0.1 percent in the previous month. The industry group index for beverage and tobacco manufacturing turned up in May, after falling in the prior month. Prices for printing and related support activities fell less than they did in April, while the industry group index for textile mills increased more during the same period. In May, the Producer Price Index for Total Manufacturing Industries was 149.3 (December 1984=100), 4.2 percent above its year-ago level.

Services. Among services industries in May, prices received by commercial bankers declined 3.0 percent, after rising 9.3 percent in April. The industry indexes for savings institutions, lessors of nonresidential buildings (except miniwarehouses), cellular and other wireless carriers, and solid waste collection also turned down, following gains in April. Prices for direct life insurance carriers showed no change in May, after increasing in the preceding month. The scheduled passenger air transportation index fell more quickly than it did in April. By contrast, prices for portfolio management advanced 0.4 percent in May, compared with a 1.6-percent decline a month earlier. The indexes for offices of certified public accountants, casino hotels, passenger car rental, and employee leasing services also turned up, after falling in April. Prices received by line-haul railroads rose more in May than they did in the previous month.