August 2005 Producer Price Index

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The Producer Price Index for Finished Goods rose 0.6 percent in August, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This increase followed a 1.0-percent gain in July and no change in June. At the earlier stages of processing, prices received by manufacturers of intermediate goods advanced 0.7 percent, after moving up 1.0 percent in the preceding month. The crude goods index climbed 2.3 percent in August, following a 6.7-percent rise in July. (See table A.)

Hurricane Katrina Hurricane Katrina struck Florida and the Gulf Coast after the Producer Price Index's August pricing date, and therefore did not affect the PPI in August. The PPI pricing date for September 2005 is Tuesday, September 13.

Among finished goods, prices for goods other than foods and energy showed no change in August, after increasing 0.4 percent in the prior month. The finished energy goods index rose 3.7 percent, compared with a 4.4-percent gain in July. Finished consumer foods prices declined 0.3 percent in August, the same rate of decrease as in the preceding month.

Before seasonal adjustment, the Producer Price Index for Finished Goods advanced 0.5 percent in August to 156.1 (1982=100). From August 2004 to August 2005, prices for finished goods rose 5.1 percent. Over the same period, the index for finished energy goods increased 19.2 percent, prices for finished goods other than foods and energy went up 2.4 percent, and the finished consumer foods index rose 1.2 percent. For the 12 months ended August 2005, intermediate goods prices moved up 6.1 percent, and the crude goods index increased 11.3 percent.

Finished goods

The index for finished consumer goods other than foods and energy edged down 0.1 percent in August, after rising 0.4 percent in the previous month. Accounting for about half of this downturn, prices for passenger cars declined 1.3 percent, following a 1.5-percent gain in July. The indexes for alcoholic beverages, tires, and periodical circulation also fell, after advancing in the preceding month. The rates of increase in prices for pharmaceutical preparations and light motor trucks slowed from July to August. By contrast, the cosmetics and other toilet preparations index inched up 0.1 percent in August, compared with a 0.4-percent decrease a month earlier. Prices for home electronic equipment and for women's, girls', and infants' apparel also turned up, while the sanitary paper products index rose more than it had in July. (See table 2.)

Prices for capital equipment decreased 0.1 percent in August, following a 0.5-percent rise in the preceding month. The civilian aircraft index showed no change, after increasing 1.0 percent in July. Prices for passenger cars, commercial furniture, and communication and related equipment turned down, following gains in the prior month. The indexes for light motor trucks and heavy motor trucks advanced less than they had in July. Alternatively, railroad equipment prices moved up 0.9 percent in August, after dropping 0.6 percent in the previous month. The indexes for agricultural machinery and equipment and for metal cutting machine tools also turned up, following declines a month earlier. Electronic computer prices fell less in August than in the prior month, while the index for pumps, compressors, and equipment went up, after showing no change in July.

Subsequent to a 4.4-percent increase in July, prices for finished energy goods rose 3.7 percent in August. The residential natural gas index moved up 2.5 percent, compared with a 3.7-percent gain in the previous month. The rates of increase in the indexes for gasoline and residential electric power also slowed from July to August, and home heating oil prices fell, after climbing in the prior month. By contrast, the liquefied petroleum gas index jumped 10.7 percent in August, following a 5.6-percent rise in the preceding month. Prices for diesel fuel and kerosene also advanced more than they had in July, while the finished lubricants index turned up in August.

Prices for finished consumer foods decreased 0.3 percent for the second consecutive month. In August, declining prices for beef and veal, eggs for fresh use, dairy products, fresh fruits and melons, and roasted coffee outweighed rising prices for pork, processed young chickens, fresh and dry vegetables, soft drinks, and finfish and shellfish.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components advanced 0.7 percent in August, following a 1.0-percent gain in July. Most of this slower rate of increase can be attributed to prices for intermediate energy goods, which rose less in August than they had a month earlier. The index for intermediate foods and feeds turned down, after moving up in July. By contrast, prices for materials and components for construction were unchanged in August, after falling in the previous month. The materials for nondurable manufacturing index increased slightly more than it had in July, while materials for durable manufacturing prices fell slightly less than in the preceding month. In August, the index for intermediate goods excluding foods and energy decreased 0.1 percent, its fourth consecutive monthly decline. (See table B.)

Prices for intermediate energy goods climbed 3.3 percent in August, following a 5.2-percent advance in July. The gasoline index rose 9.5 percent in August, compared with a 10.9-percent gain a month earlier. Prices for residual fuel and commercial natural gas also went up at slower rates than they had in July. The indexes for jet fuels, commercial electric power, and home heating oil turned down in August, after moving up in the prior month. Alternatively, diesel fuel prices increased 3.1 percent, following a 0.2-percent advance in July. The indexes for liquefied petroleum gas and natural gas to electric utilities also rose more in August than in the previous month. (See table 2.)

The index for intermediate foods and feeds declined 0.4 percent in August, after increasing 0.9 percent in July. Prices for prepared animal feeds fell 1.6 percent, subsequent to a 2.7-percent jump in the prior month. The dairy products index also turned down in August. Prices for beef and veal and for flour decreased at faster rates than in July, while the index for processed young chickens rose less than it had in the previous month. By contrast, pork prices advanced 4.8 percent in August, compared with a 0.6-percent drop a month earlier. The indexes for shortening and cooking oils, sausages and deli meats, and refined sugar and byproducts also moved up, following declines in July.

The index for materials and components for construction was unchanged in August, after falling 0.2 percent in July. Prices for asphalt felts and coatings jumped 8.5 percent, following no change in the preceding month. The indexes for building paper and board and for steel mill products declined less in August than they had a month earlier. Prices for gypsum products, nonferrous wire and cable, and paving mixtures and blocks rose more than they had in July. Alternatively, prices for concrete products advanced 0.6 percent, following a 1.9-percent increase in July. The plastic construction products index decreased at a faster rate in August compared with the prior month, while prices for millwork moved down after rising in July.

The materials for nondurable manufacturing index climbed 0.2 percent in August, following a 0.1-percent advance in the preceding month. In August, rising prices for primary basic organic chemicals, inedible fats and oils, phosphates, paint materials, and synthetic fibers outweighed falling prices for paperboard, intermediate basic organic chemicals, plastic resins and materials, and processed yarns and threads.

The materials for durable manufacturing index declined 0.8 percent in August, after moving down 0.9 percent in July. In August, deceasing prices for both hot and cold rolled steel sheet and strip; cold finished steel bars; hot rolled steel bars, plates, and structural shapes; aluminum mill shapes; building paper and board; and plywood more than offset increasing prices for primary nonferrous metals, copper and brass mill shapes, semifinished steel mill products, and prepared paint.

Crude goods

The Producer Price Index for Crude Materials for Further Processing rose 2.3 percent in August, following a 6.7-percent advance in July. Prices for crude energy materials increased less in August than in the prior month. The index for crude foodstuffs and feedstuffs turned down, after remaining unchanged in July. By contrast, prices for basic industrial materials increased more than in the previous month. (See table B.)

The index for crude energy materials gained 3.8 percent in August, after climbing 12.8 percent in July. Prices for natural gas rose 4.6 percent, following a 14.9-percent surge in the previous month. Crude petroleum prices went up 3.7 percent in August, after jumping 13.1 percent in July. The coal index moved down 0.8 percent, after edging up 0.3 percent a month earlier. (See table 2.)

The index for crude foodstuffs and feedstuffs declined 1.4 percent in August, after remaining unchanged in July. The fluid milk index decreased 3.5 percent in August, compared with a 6.2-percent increase in the prior month. Prices for corn and soybeans also turned down, following gains in July. The indexes for Irish potatoes for processing and unprocessed finfish advanced less in August than they had a month earlier. By contrast, the index for slaughter cattle fell 2.2 percent, following a 3.9- percent decline in July. Prices for wheat also declined less in August than they had a month earlier. The indexes for slaughter broilers and fryers and for fresh vegetables (except potatoes) turned up, following declines in July. Prices for slaughter hogs increased at more than they had in the previous month.

Prices for crude nonfood materials less energy advanced 4.6 percent in August, following a 3.1-percent gain in July. Most of this acceleration is attributable to the index for iron and steel scrap, which jumped 19.7 percent following a 2.7-percent advance in the prior month. The indexes for gold ores and for construction sand, gravel, and crushed stone also increased at faster rates in August, compared with July. Prices for pulpwood turned up, after falling a month earlier. Conversely, the index for copper ores decreased 3.6 percent, after climbing 20.7 percent in July. Prices for raw cotton and miscellaneous roundwood products also turned down, after rising in the previous month. The index for copper base scrap increased less in August than it had a month earlier, and prices for iron ore were unchanged, after advancing in July.

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

Mining. The Producer Price Index for the Net Output of Total Mining Industries advanced 3.6 percent in August, after rising 10.4 percent in the preceding month. (Net output price indexes are not seasonally adjusted.) This slower rate of increase is mostly due to prices received by the crude petroleum and natural gas extraction industry, which moved up 5.3 percent, following a 13.3-percent gain in July. The industry indexes for natural gas liquid extraction and for oil and gas well drilling also rose less than they had in the prior month. Prices paid to miners of copper ore and nickel ore, underground bituminous coal, and phosphate rock fell in August, after rising a month earlier. By contrast, prices received by the gold ore mining industry advanced 5.0 percent, compared with a 0.2-percent gain in July. The industry indexes for oil and gas operations support activities and for crushed and broken granite mining and quarrying turned up, after falling a month earlier. In August, the Producer Price Index for Total Mining Industries was 201.1 (December 1984=100), 26.2 percent above its year-ago level.

Manufacturing. The Producer Price Index for the Net Output of Total Manufacturing Industries rose 0.5 percent in August, after climbing 0.9 percent in the prior month. Leading this deceleration, prices received by the petroleum and coal products manufacturing industry group advanced 5.1 percent, following an 8.4-percent gain in July. The industry group indexes for transportation equipment, food manufacturing, computer and electronic products, and furniture and related product manufacturing turned down in August, after rising in the preceding month. Conversely, prices received by the chemical manufacturing industry group turned up 0.3 percent, following a 0.1-percent decline in the previous month. The industry group index for machinery rose in August, after showing no change a month earlier. Prices received by manufacturers of beverages and tobacco turned up, following declines in July. In August, the Producer Price Index for Total Manufacturing Industries was 151.6 (December 1984=100), 5.5 percent above its year-ago level.

Services. Among services industries in August, higher prices were received by investment banking and securities dealers, lessors of nonresidential buildings (except miniwarehouses), employee leasing services, direct property and casualty insurance carriers, and offices of certified public accountants. Alternatively, lower prices were paid to the industries for scheduled passenger air transportation, commercial banking, cellular and other wireless services, and hotels and motels (excluding casinos).