March 2006 Producer Price Index

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The Producer Price Index for Finished Goods rose 0.5 percent in March, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This increase followed a 1.4-percent decline in February and a 0.3-percent advance in January. At the earlier stages of processing, prices received by manufacturers of intermediate goods decreased 0.1 percent in March, after moving down 0.3 percent in February, and the crude goods index fell 2.7 percent, following a 9.2-percent drop in the prior month. (See table A.)

The March upturn in finished goods prices was led by the index for finished energy goods, which climbed 1.8 percent following a 4.7-percent decline in February. Prices for finished consumer foods also turned up-increasing 0.5 percent after falling 2.7 percent in the preceding month. By contrast, the index for finished goods less foods and energy rose 0.1 percent in March, following a 0.3-percent advance in February.

During the first quarter of 2006, the finished goods index decreased at a 2.5-percent seasonally adjusted annual rate (SAAR), after moving up at a 4.1-percent SAAR during the fourth quarter of 2005. For the 3 months ended March 2006, prices for finished energy goods fell at an 11.6-percent SAAR, after increasing at a 15.1-percent SAAR for the 3 months ended December 2005. The index for finished consumer foods went down at a 7.6- percent SAAR during the first quarter of 2006, after rising at a 5.0- percent SAAR during the fourth quarter of 2005. By contrast, prices for finished goods other than foods and energy, which were unchanged for the 3 months ended in December, advanced at a 3.1-percent SAAR for the 3 months ended in March. At earlier stages of process, the intermediate goods index moved up a 3.0-percent SAAR during the first quarter of 2006, after increasing at a 7.0-percent SAAR during the fourth quarter of 2005, and prices for crude goods dropped at a 40.3-percent SAAR for the 3 months ended in March, after climbing a 5.9-percent SAAR for the 3 months ended in December. (See summary table below.)

Crude materials for further processing 19.5 17.4 22.1 -8.4 108.9 5.9 -40.3 Foodstuffs and feedstuffs 24.1 -2.6 1.4 -20.9 -.3 13.9 -28.2 Crude energy materials 14.4 35.9 44.8 4.9 259.0 1.2 -57.9 Crude nonfood materials less energy 21.6 20.5 4.8 -16.1 52.5 9.8 16.9 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 Producer Price Index for Finished Goods rose 0.8 percent in March to 159.0 (1982 = 100). From March 2005 to March 2006, prices for finished goods increased 3.5 percent. Over the same period, the index for finished energy goods advanced 15.6 percent, prices for finished goods other than foods and energy moved up 1.7 percent, and the index for finished consumer foods declined 1.4 percent. At the earlier stages of processing, prices received by manufacturers of intermediate goods rose 7.0 percent, and the crude goods index increased 4.9 percent.

Finished goods

The index for finished energy goods increased 1.8 percent in March, following a 4.7-percent drop a month earlier. Most of this upturn may be traced to gasoline prices, which jumped 9.1 percent, after falling 11.0 percent in February. The indexes for residential natural gas, liquefied petroleum gas, and diesel fuel declined at slower rates in March than they had in the previous month. Kerosene prices moved up, following decreases in the prior month. By contrast, the index for residential electric power, which was unchanged in February, fell 0.7 percent in March. Prices for home heating oil declined more than they had in the preceding month. (See table 2.)

The index for finished consumer foods advanced 0.5 percent in March, following a 2.7-percent decrease in the prior month. Prices for fresh and dry vegetables rose 3.7 percent, after dropping 27.1 percent in February. Also turning up in March were the indexes for eggs for fresh use, pork, finfish and shellfish, fresh fruits and melons, and confectionery end products. Prices for beef and veal and for processed young chickens fell less than they had in February. Conversely, the dairy products index moved down 3.1 percent in March, compared with a 1.8-percent decline a month earlier. Soft drink prices decreased, after rising in February.

The index for finished goods less foods and energy increased 0.1 percent in March, following a 0.3-percent advance in the preceding month. Prices for light motor trucks inched up 0.1 percent, after rising 0.5 percent in February. The indexes for pharmaceutical preparations, periodical circulation, construction machinery and equipment, and civilian aircraft also moved up at slower rates in March than they had a month earlier. Prices for cigarettes, metal cutting machine tools, and floor coverings turned down, after increasing in February. Alternatively, the passenger car index climbed 0.4 percent in March, following a 0.8-percent decline in the previous month. Commercial furniture prices also rose, after falling in February, while the index for sanitary papers and health products advanced more in March than it had in the prior month.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components edged down 0.1 percent in March, following a 0.3-percent decline in the prior month. Prices for intermediate energy goods and the index for intermediate foods and feeds fell at slower rates than they had in February. The index for materials and components for construction advanced more than in the prior month. By contrast, prices for materials for nondurable manufacturing turned down in March, and the index for materials for durable manufacturing rose less than it had in the preceding month. Prices for intermediate materials less foods and energy edged up 0.1 percent, after advancing 0.5 percent in February. (See table B.)

The intermediate energy goods index decreased 0.9 percent in March, subsequent to a 3.1-percent decline in the prior month. Prices for liquefied petroleum gas edged down 0.1 percent, after falling 14.3 percent in February. The indexes for commercial and industrial natural gas, commercial electric power, and diesel fuel also decreased less than they had a month earlier. Gasoline prices turned up in March. Alternatively, the jet fuels index inched up 0.2 percent in March, following a 3.0-percent increase in the preceding month. The indexes for industrial electric power and home heating oil fell more than they had a month earlier, and prices for residual fuel turned down in March. (See table 2.) The intermediate energy goods index declined at an 8.4-percent SAAR from December 2005 to March 2006, after rising at a 4.7-percent SAAR during the final quarter of 2005.

The intermediate foods and feeds index moved down 0.3 percent in March, following a 1.2-percent decrease in the prior month. Prices for beef and veal declined 1.2 percent, after falling 4.2 percent in February. The indexes for processed young chickens and natural, processed, and imitation cheese also decreased less than they had a month earlier. Prices for pork, prepared animal feeds, and shortening and cooking oils turned up in March. Conversely, prices for flour fell 1.1 percent in March, subsequent to a 3.5-percent gain in February. The index for fluid milk products declined more than it had in the preceding month, while prices for refined sugar and byproducts rose less than in February. The index for intermediate foods and feeds decreased at a 2.4-percent SAAR in the first quarter of 2006, after rising at a 1.8-percent SAAR in the final quarter of 2005.

Prices for materials and components for construction gained 0.4 percent in March, after increasing 0.3 percent in the prior month. In March, rising prices for concrete products, fabricated structural metal products, paving mixtures and blocks, architectural coatings, wiring devices, and for air conditioning and refrigeration equipment outweighed falling prices for both hardwood and softwood lumber. The index for materials and components for construction advanced at a 7.4-percent SAAR in the first quarter of 2006, after moving up at a 12.3-percent SAAR in the prior quarter.

Prices for materials for nondurable manufacturing declined 0.6 percent in March, after increasing 1.6 percent a month earlier. The index for basic organic chemicals went down 2.4 percent, following a 1.0-percent rise in February. Prices for plastic resins and materials, gray fabrics, synthetic rubber, and medicinal and botanical chemicals also decreased in March, after moving up in the prior month. The paperboard index rose less than it had in February. Alternatively, the index for inedible fats and oils increased 3.8 percent, after falling 2.8 percent in February. Prices for phosphates and rock salt also turned up in March. The indexes for paper and leather advanced more than they had a month earlier. From December 2005 to March 2006, prices for materials for nondurable manufacturing increased at a 12.1-percent SAAR, after rising at a 4.6- percent SAAR in the prior quarter.

The rate of increase in the index for materials for durable manufacturing slowed from 1.6 percent in February to 0.3 percent in March. Prices for aluminum mill shapes rose 0.9 percent, after advancing 2.4 percent a month earlier. The indexes for copper and brass mill shapes, cold rolled steel sheet and strip, and cement also rose less than they had in February. Prices for titanium mill shapes, primary aluminum, softwood lumber, and thermoplastic resins turned down in March. By contrast, the hot rolled steel sheet and strip index edged up 0.1 percent in March, compared with a 1.4-percent decrease in the preceding month. The index for prepared paint increased more than it had in February. The index for materials for durable manufacturing advanced at a 12.4-percent SAAR for the 3 months ended March 2006, after moving up at a 22.0-percent SAAR in the preceding quarter.

Crude goods

The Producer Price Index for Crude Materials for Further Processing declined 2.7 percent in March, after falling 9.2 percent in the previous month. Prices for crude energy materials and for crude foodstuffs and feedstuffs decreased less than they had in February. By contrast, the basic industrial materials index increased at a slower rate in March than it had in the preceding month. (See table B.)

Prices for crude energy materials moved down 4.5 percent in March, after dropping 16.2 percent in the preceding month. Accounting for the majority of this slower rate of decline, the natural gas index went down 11.5 percent, compared with a 24.0-percent decrease in February. Prices for crude petroleum rose 5.2 percent, after declining at the same rate in the previous month, while the coal index increased 0.8 percent in March, after moving up 0.3 percent a month earlier. (See table 2.) During the first quarter of 2006, prices for crude energy materials fell at a 57.9- percent SAAR, after inching up at a 1.2-percent SAAR in the prior quarter.

The crude foodstuffs and feedstuffs index fell 2.2 percent in March, after moving down 3.0 percent in the previous month. The rate of decrease in prices for fresh vegetables (except potatoes) slowed from 33.1 percent in February to 0.8 percent in March. The indexes for slaughter hogs and slaughter cattle also fell less than they had in the previous month, while prices for unprocessed finfish, slaughter turkeys, and unprocessed shellfish turned up in March. Alternatively, the fluid milk index decreased 7.8 percent, following a 4.1-percent decline in February. Prices for slaughter broilers and fryers also fell more in March than they had in the previous month. The index for alfalfa hay turned down, and wheat prices rose less than they had a month earlier. The index for crude foodstuffs and feedstuffs fell at a 28.2-percent SAAR in the first quarter of 2006, after rising at a 13.9-percent SAAR in the last quarter of 2005.

Prices for crude nonfood materials less energy advanced 0.8 percent in March, after gaining 3.3 percent in the preceding month. Leading this deceleration, the iron and steel scrap index rose 1.5 percent, after jumping 7.1 percent in February. Prices for copper base scrap also rose less than they had in the previous month. The indexes for aluminum base scrap and gold ores turned down in March, while prices for iron ore were unchanged, after rising a month earlier. By contrast, the wastepaper index fell 0.5 percent, after decreasing 3.6 percent in the prior month. Prices for raw cotton and phosphates turned up, following declines in February. The index for basic industrial materials increased at a 16.9-percent SAAR during the first quarter of 2006, after rising at a 9.8-percent SAAR during the fourth quarter of 2005.

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

Mining. The Producer Price Index for the Net Output of Total Mining Industries fell 3.0 percent in March, following a 12.8-percent drop in February. (Net output price indexes are not seasonally adjusted.) Contributing to this slower rate of decline, prices received by the crude petroleum and natural gas extraction industry decreased 4.8 percent, after falling 15.8 percent in February. The industry index for natural gas liquid extraction also moved down at a slower rate in March than it had a month earlier. Prices received by the industry for oil and gas operations support activities turned up, following decreases in the prior month. Conversely, the industry index for gold ore mining moved down 3.4 percent in March, compared with a 3.6-percent climb in February. Prices received by the industries for oil and gas well drilling and for bituminous coal and lignite surface mining rose less in March than they had in the previous month. The industry index for bituminous coal underground mining turned down, after increasing in February, while prices received by the iron ore mining industry were unchanged in March, following gains in the preceding month. For the 3 months ended in March 2006, the Producer Price Index for the Net Output of Total Mining Industries declined at a 49.2-percent annualized rate, compared with an 8.9-percent annualized rate of increase in the final quarter of 2005. In March, the Producer Price Index for Total Mining Industries was 201.0 (December 1984 = 100), 14.2 percent above its year-ago level.

Manufacturing. The Producer Price Index for the Net Output of Total Manufacturing Industries advanced 0.9 percent in March, following a 0.4- percent decline in February. The majority of this upturn may be attributed to prices received by the petroleum and coal products manufacturing industry group, which climbed 7.9 percent in March after falling 4.3 percent in February. Prices received by the transportation equipment and the medical equipment and supplies industry groups also turned up, after moving down in February. The industry group index for food manufacturing decreased at a slower rate in March than in the previous month. The paper manufacturing industry group index increased more in March than it had a month earlier. By contrast, prices received by chemical manufacturers declined 0.6 percent, after rising 1.1 percent in the previous month. The industry group indexes for beverage and tobacco manufacturing and for plastics and rubber products manufacturing also turned down in March. Prices received by the primary metals industry group rose less than they had in February. For the first quarter of 2006, the Producer Price Index for the Net Output of Total Manufacturing Industries advanced at an annualized rate of 5.6 percent, compared with a 3.6-percent annualized rate of decline in the prior quarter. In March, the Producer Price Index for Total Manufacturing Industries was 154.9 (December 1984 = 100), 4.0 percent above its year-ago level.

Services. Among services industries in March, prices received by commercial bankers decreased 8.9 percent, after declining 0.8 percent in February. Prices received by savings institutions and software publishers also fell more in March than they had a month earlier. The industry indexes for investment banking and securities dealing, engineering services, and offices of certified public accountants turned down, following increases in the preceding month. The index for the general medical and surgical hospitals industry group was unchanged in March, after increasing a month earlier. Alternatively, prices received by the scheduled passenger air transportation industry rose 4.7 percent, after gaining 0.1 percent in February. Prices received by the industries for casino hotels and wired telecommunications carriers turned up in March, after falling a month earlier. The industry index for offices of physicians (excluding mental health) advanced more than it had in February.