December 2005 Producer Price Index

Historical release narrative reproduced from the official public-domain source. Statistical tables, standard technical appendices, administrative material and attendance rosters are omitted; formatting is adapted for reading. Figures retain the release's historical context and may have been revised. Consult the linked source for the complete document.

The Producer Price Index for Finished Goods rose 0.9 percent in December, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This increase followed a 0.7-percent decline in November and a 0.7-percent gain in October. Prices for finished goods other than foods and energy advanced 0.1 percent in December, the same rate as in November. At the earlier stages of processing, the intermediate goods index rose 0.2 percent in December, following a 1.2- percent decrease in the prior month, while prices for crude goods moved down 2.3 percent, after falling 1.2 percent in November. (See table A.)

2004 Dec. -0.3 0.2 -2.4 0.2 4.2 0.1 -3.1

The December upturn in finished goods prices was led by the index for energy goods, which climbed 3.1 percent after dropping 4.0 percent in the preceding month. Larger price increases for finished consumer foods and an upturn in the index for capital equipment also contributed to this turnaround. By contrast, prices for finished consumer goods other than foods and energy moved up at a 0.1-percent rate in December, compared with a 0.2-percent increase in November.

Before seasonal adjustment, the Producer Price Index for Finished Goods advanced 0.3 percent in December to 158.8 (1982 = 100). From December 2004 to December 2005, finished goods prices rose 5.4 percent, following a 4.2-percent increase in 2004. The index for finished energy goods climbed 23.9 percent in 2005, after moving up 13.4 percent in the preceding calendar year. Conversely, prices for finished goods other than foods and energy rose 1.7 percent in 2005, following a 2.3-percent gain in 2004. The finished consumer foods index also went up at a slower rate in 2005 than it had in the previous year--1.4 and 3.1 percent, respectively. At the earlier stages of processing, prices received by manufacturers of intermediate goods advanced 8.4 percent in 2005, compared with a 9.2- percent increase in 2004, while the crude goods index jumped 22.1 percent, after rising 17.4 percent a year earlier. (See summary table below.)

Crude materials for further processing 19.5 17.4 22.1 6.6 -9.7 103.2 12.2 Foodstuffs and feedstuffs 24.1 -2.6 1.4 15.0 -23.2 .3 18.5 Crude energy materials 14.4 35.9 44.8 15.3 4.9 237.4 7.7 Crude nonfood materials less energy 21.6 20.5 4.8 -20.7 -17.2 54.9 17.2 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 jumped 3.1 percent in December, following a 4.0-percent decline in November. Most of this upturn can be attributed to gasoline prices, which advanced 12.3 percent in December after falling 10.7 percent a month earlier. The indexes for liquefied petroleum gas, home heating oil, diesel fuel, and kerosene also increased, following decreases in November. By contrast, prices for residential electric power moved up 0.5 percent in December, compared with a 2.3- percent gain in the previous month. The index for residential natural gas declined 2.7 percent, after falling 0.5 percent in November. (See table 2.)

The index for finished consumer foods rose 0.9 percent in December, following a 0.5-percent advance in November. Prices for fresh and dry vegetables jumped 21.7 percent, after increasing 7.2 percent in the preceding month. The indexes for beef and veal and for pork also climbed at faster rates in December than a month earlier, while prices for processed young chickens fell less than they had in November. The indexes for finfish and shellfish and for processed turkeys turned up in December, while the dairy products index rose, following no change in the prior month. By contrast, soft drink prices declined 0.4 percent in December, after advancing 0.8 percent in November. The index for shortening and cooking oils also turned down, following an increase in the previous month. Prices for eggs for fresh use, fresh fruits and melons, and processed fruits and vegetables moved up at slower rates in December than they had in November.

2004 Dec. 0.4 -1.4 0.4 9.2 2.2 -7.5 -1.4 17.4

The capital equipment index advanced 0.1 percent in December, after inching down 0.1 percent in November. Prices for communication and related equipment increased 0.6 percent, compared with a 0.3-percent decrease in the previous month. The indexes for metal cutting machine tools and for mining machinery and equipment also turned up in December, after falling a month earlier. Passenger car prices declined less in December than they had in the prior month, while the indexes for civilian aircraft and for integrating and measuring instruments rose more than in November. Conversely, prices for light motor trucks moved down 1.0 percent in December, following a 0.8-percent decrease in the previous month. The index for electronic computers also fell at a quicker rate than it had in November. Prices for agricultural machinery and equipment, as well as for tools, dies, jigs, fixtures, and industrial molds, turned down in December. The capital equipment index advanced 1.3 percent in 2005, after climbing 2.4 percent in 2004.

The index for finished consumer goods other than foods and energy edged up 0.1 percent in December, following a 0.2-percent gain in November. In December, rising prices for pharmaceutical preparations, newspaper circulation, tires, book publishing, and mobile homes slightly outweighed falling prices for light motor trucks, sanitary papers and health products, passenger cars, and sporting and athletic goods. The index for finished consumer goods other than foods and energy increased 1.9 percent in 2005, after advancing 2.2 percent in 2004.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components increased 0.2 percent in December, following a 1.2-percent drop in November. Prices for intermediate foods and feeds turned up, after falling in the previous month. The indexes for intermediate energy goods and nondurable manufacturing materials fell less in December than in the preceding month. By contrast, the index for construction materials advanced at a slower rate in December than it had in the prior month, while prices for durable manufacturing materials increased at the same rate as in November. The increase in the index for intermediate goods less foods and energy slowed to 0.3 percent, after rising 0.5 percent a month earlier. (See table B.)

After decreasing 0.1 percent in November, prices for intermediate foods and feeds edged up 0.1 percent in December. The index for prepared animal feeds increased 0.4 percent in December, compared with a 1.3-percent decline a month earlier. Prices for beef and veal; natural, processed, and imitation cheese; and pork moved up at faster rates than they had in November. The index for processed young chickens declined less in December than in the preceding month. By contrast, prices for shortening and cooking oils moved down 4.9 percent in December, following a 0.2-percent gain in the prior month. The indexes for flour, fluid milk products, and snack chips also turned down, after climbing in November. Prices for refined sugar and byproducts advanced less in December than they had a month earlier. (See table 2.) From December 2004 to December 2005, the index for intermediate foods and feeds rose 2.1 percent, following a 2.3- percent decline in 2004.

Prices for intermediate energy goods declined 0.2 percent in December, compared with a 6.6-percent decrease in November. The jet fuels index fell 2.5 percent, after dropping 26.5 percent in the preceding month. Prices for gasoline, diesel fuel, home heating oil, and liquefied petroleum gas turned up, following declines in November. Alternatively, industrial electric power prices edged up 0.1 percent, after advancing 4.4 percent in November. The indexes for natural gas to electric utilities and industrial natural gas decreased more in December than they had a month earlier, while prices for commercial electric power increased less than in November. From December 2004 to December 2005, prices for intermediate energy goods advanced 26.5 percent, following a 15.8-percent gain in 2004.

The index for materials for nondurable manufacturing inched down 0.1 percent in December, after falling 0.9 percent in November. Prices for primary basic organic chemicals declined 1.9 percent, following a 10.3- percent drop in the preceding month. The index for ethanol also decreased less in December than it had a month earlier. Prices for medicinal and botanical chemicals and for woodpulp moved up, after declining in November. Conversely, the index for plastic resins and materials fell 1.2 percent in December, following a 2.4-percent increase in the prior month. Prices for paperboard and gray fabrics also turned down, after rising in November. The index for nitrogenates rose less in December than it had in the preceding month. The index for materials for nondurable manufacturing climbed 7.5 percent in 2005, following a 13.7-percent gain in 2004.

The index for materials and components for construction moved up 0.6 percent in December, after rising 1.0 percent in November. Prices for plastic construction products increased 1.4 percent, compared with an 8.0- percent gain in the prior month. The indexes for concrete products and architectural paint coatings turned down, after rising in November. Prices for wiring devices, steel mill products, and asphalt felts and coatings increased less in December than they had in the prior month. By contrast, the plywood index edged down 0.2 percent, following a 15.0-percent drop in November. Prices for building paper and board, softwood lumber, and air conditioning and refrigeration equipment turned up in December, after declining a month earlier. During 2005, prices for materials and components for construction climbed 6.1 percent, following a 10.1-percent increase in the previous year.

Prices for materials for durable manufacturing advanced 1.6 percent in December, the same rate of increase as in November. The indexes for primary nonferrous metals; aluminum mill shapes; hot rolled steel bars, plates, and structural shapes; hot rolled steel sheet and strip; and copper and brass mill shapes moved up in December. These increases more than offset falling prices for cold rolled steel sheet and strip, semifinished steel mill products, plywood, and unprocessed filament yarns. In 2005, the index for materials for durable manufacturing climbed 6.1 percent, following an 18.3-percent jump in 2004.

Crude goods

The Producer Price Index for Crude Materials for Further Processing declined 2.3 percent in December, following a 1.2-percent fall in November. In December, prices for crude nonfood materials less energy were unchanged, after rising in the previous month, while prices for crude energy materials declined more than they had in November. By contrast, the crude foodstuffs and feedstuffs index increased more than it had a month earlier. (See table B.)

The index for basic industrial materials showed no change in December, after increasing 5.4 percent in November. Prices for iron and steel scrap decreased 4.4 percent, following an 18.8-percent advance in the preceding month. The indexes for copper base scrap; both hardwood and softwood logs, bolts, and timber; hides and skins; and phosphates also turned down in December. Prices for construction sand, gravel, and crushed stone increased at slower rates, compared to the previous month. By contrast, the gold ores index gained 11.9 percent, subsequent to a 1.1-percent decrease in November. The wastepaper index also turned up in December. The index for raw cotton declined less than it had in the prior month, while the rates of increase in prices for aluminum base scrap quickened from November to December. (See table 2.) In 2005, the basic industrial materials index advanced 4.8 percent, after rising 20.5 percent in 2004.

The crude energy materials index fell 5.4 percent in December, following a 4.2-percent decline in November. The index for natural gas fell 11.4 percent in December, after decreasing 1.3 percent in the prior month. By contrast, prices for crude petroleum gained 7.9 percent, following an 11.4-percent decline in November, while the index for coal showed no change, after edging down 0.1 percent in the previous month. In 2005, the crude energy materials index surged 44.8 percent, subsequent to a 35.9-percent climb in 2004.

The crude foodstuffs and feedstuffs index advanced 2.8 percent in December, after rising 1.3 percent in November. In December, prices for slaughter cattle gained 4.1 percent, following a 1.5-percent increase in the preceding month. Similarly, prices for fresh and dry vegetables and for slaughter turkeys rose at faster rates than they had in November. The slaughter hogs, unprocessed finfish, and alfalfa hay indexes turned up in December. Alternatively, prices for slaughter broilers and fryers fell 6.2 percent in December, following a 2.9-percent decrease in the prior month. The index for fluid milk declined, after showing no change in November. Prices for soybeans and corn rose at slower rates, compared with the previous month. In 2005, the crude foodstuffs and feedstuffs index increased 1.4 percent, subsequent to a 2.6-percent decrease in 2004.

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

Mining. The Producer Price Index for the Net Output of Total Mining Industries fell 2.9 percent in December, following a 3.4-percent decline in the previous month. (Net output price indexes are not seasonally adjusted.) Prices received by the natural gas liquid extraction industry decreased 0.6 percent, after moving down 2.5 percent in November. The industry indexes for gold ore mining, oil and gas operations support activities, and bituminous coal and lignite surface mining turned up, following declines in the preceding month. Prices received by the industry for oil and gas well drilling rose more than they had in November. Conversely, the industry index for crude petroleum and natural gas extraction decreased 7.2 percent in December, after falling 6.1 percent in the prior month. Prices received by the industries for support activities for coal mining; potash, soda, and borate mineral mining; and kaolin and ball clay mining turned down, compared with increases in November. The industry index for crushed and broken limestone mining and quarrying advanced less than it had in the previous month. In December, the Producer Price Index for the Net Output of Total Mining Industries was 238.1 (December 1984 = 100). Prices received by the mining sector advanced 40.7 percent in 2005, after increasing 31.2 percent a year ago.

Manufacturing. The Producer Price Index for the Net Output of Total Manufacturing Industries edged up 0.1 percent in December, after decreasing 2.4 percent in the previous month. Prices received by manufacturers of wood products increased 0.8 percent, compared with a 2.7-percent decline in the prior month. The industry group index for food manufacturing also turned up in December, while prices received by the industry groups for petroleum and coal products, transportation equipment, and computer and electronic products fell less than they had in November. Prices received by manufacturers of machinery rose, following no change in the preceding month. By contrast, prices received by the plastics and rubber products industry group inched down 0.1 percent in December, after advancing 3.3 percent in the prior month. The industry group index for beverages and tobacco also turned down, following increases in the preceding month. Prices received by the industry groups for chemicals, paper, and nonmetallic mineral products advanced at slower rates than they had in November. In December, the Producer Price Index for the Net Output of Total Manufacturing Industries was 152.8 (December 1984 = 100). For the 12 months ended December 2005, prices received by the manufacturing sector increased 5.4 percent, compared with a 5.3-percent rise in 2004.

Services. Among services industries, the industry index for commercial banking increased 0.5 percent in December, following a 4.4-percent gain in the previous month. Prices received by the industry for couriers also rose less than they had in November. The industry indexes for scheduled passenger air transportation, hotels and motels (excluding casinos), and offices of certified public accountants turned down, after moving up a month earlier. Alternatively, prices received by the industry for lessors of nonresidential buildings (excluding miniwarehouses) went up 1.7 percent, following a 4.0-percent decline in November. The industry indexes for investment banking and securities dealing, savings institutions, and casino hotels fell less in December than they had a month earlier. Prices received by the passenger car rental industry rose more than they had in November.

Recalculated Seasonal Adjustment Factors and Relative Importance Figures to be Available on February 15, 2006

Each year with the release of PPI data for January, seasonal adjustment factors are recalculated to reflect price movements from the just-completed calendar year. This routine annual calculation may result in revisions to seasonally adjusted indexes for the previous 5 years. The following information will be available on February 15, 2006 (2 workdays prior to the release of PPI data for January 2006 on February 17):

Direct seasonal factors for commodity indexes for the year 2006,

Recalculated seasonal factors for the last 5 years (2001-2005) for the commodity indexes,

Recalculated seasonal factors for the last 5 years (2001-2005) for the stage-of-processing indexes.

In addition to recalculated seasonal factors, December 2005 relative importance figures also will be available on February 15, 2006.

To obtain this information, visit the PPI website at http://www.bls.gov/ppi/ or call the Division of Industrial Prices and Price Indexes, Section of Index Analysis and Public Information at (202) 691- 7705.