June 2006 Producer Price Index

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The Producer Price Index for Finished Goods increased 0.5 percent in June, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This rise followed advances of 0.2 percent in May and 0.9 percent in April. At the earlier stages of processing, prices received by producers of intermediate goods climbed 0.7 percent in June after increasing 1.1 percent in the prior month, and the crude goods index fell 1.7 percent following a 2.0-percent gain in May. (See table A.)

Among prices for finished goods, the index for consumer foods moved up 1.4 percent in June after decreasing 0.5 percent in May. Prices for energy goods rose 0.7 percent following a 0.4-advance in the previous month. By contrast, the index for finished goods other than foods and energy increased 0.2 percent in June compared with a 0.3-percent rise in May.

During the first 6 months of 2006, the finished goods index rose at a 2.1-percent seasonally adjusted annual rate (SAAR) after moving up at a 7.5- percent SAAR during the latter half of 2005. Leading this slower rate of advance, prices for finished energy goods climbed at a 4.1-percent SAAR from December 2005 to June 2006 after advancing at a 36.3-percent SAAR for the 6 months ended December 2005. The index for finished consumer foods declined at a 2.3-percent SAAR during the first half of 2006 after increasing at a 3.6-percent SAAR during the second half of 2005. By contrast, prices for finished goods other than foods and energy advanced at a 3.1-percent SAAR for the 6 months ended in June after rising at a 0.6- percent SAAR during the prior 6 month period. At the earlier stages of processing, the intermediate goods index increased at a 6.6-percent SAAR from December 2005 to June 2006 after moving up at a 12.1-percent SAAR during the latter half of 2005, and prices for crude goods fell at a 19.1- percent SAAR for the 6 months ended in June after surging at a 46.1-percent SAAR for the 6 months ended December 2005. (See summary table below.)

Crude materials for further processing 19.5 17.4 21.1 -19.1 2.2 -38.2 5.7 Foodstuffs and feedstuffs 24.1 -2.6 1.6 -13.9 14.7 -28.6 3.9 Crude energy materials 14.4 35.9 42.2 -36.9 -5.9 -54.8 -12.1 Crude nonfood materials less energy 21.6 20.5 5.2 37.1 11.5 15.2 63.1 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 0.3 percent in June to 161.7 (1982 = 100). From June 2005 to June 2006, prices for finished goods increased 4.9 percent. Over the same period, the index for finished energy goods climbed 19.1 percent, prices for finished goods other than foods and energy advanced 1.9 percent, and the index for finished consumer foods rose 0.6 percent. For the 12 months ended June 2006, prices received by intermediate goods producers moved up 9.3 percent, and the crude goods index increased 8.6 percent.

Finished goods

The index for finished consumer foods rose 1.4 percent in June following a 0.5-percent decrease in May. Prices for processed young chickens jumped 12.1 percent after edging down 0.2 percent in the preceding month. Also turning up in June were the indexes for eggs for fresh use, fresh fruits and melons, and dairy products. Prices for fresh and dry vegetables declined less in June than they had a month earlier, while the indexes for pork and confectionery end products increased more than in May. Conversely, beef and veal prices moved up 0.4 percent in June following a 2.3-percent gain in the prior month. The indexes for soft drinks and bakery products also advanced less than they had in the previous month. (See table 2.)

Prices for finished energy goods rose 0.7 percent in June after moving up 0.4 percent in May. Leading this acceleration, the gasoline index climbed 6.3 percent following a 2.2-percent increase in the preceding month. Prices for home heating oil and diesel fuel also rose more in June than they had a month earlier. The index for lubricating and similar oils, which was unchanged in May, advanced in June. By contrast, prices for residential electric power fell 2.8 percent in June after inching up 0.1 percent in the prior month. The index for residential natural gas declined at a faster rate than it had in May, while prices for liquefied petroleum gas and kerosene rose less than in the previous month.

The index for finished goods other than foods and energy increased 0.2 percent in June following a 0.3-percent advance in May. In June, rising prices for passenger cars, light motor trucks, civilian aircraft, pharmaceutical preparations, alcoholic beverages, and mobile homes outweighed falling prices for platinum and karat gold jewelry; home electronic equipment; electronic computers; and women's, girls', and infants' apparel.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components rose 0.7 percent in June following a 1.1-percent advance in the prior month. Prices for materials for durable manufacturing, intermediate energy goods, materials and components for construction, and materials for nondurable manufacturing also increased less than they had in May. By contrast, the index for intermediate foods and feeds turned up after falling in the previous month. Prices for intermediate goods other than foods and energy moved up 0.8 percent in June compared with a 1.1-percent jump in May. (See table B.)

The index for materials for durable manufacturing climbed 1.1 percent in June after rising 4.4 percent in May. Hot rolled steel sheet and strip prices increased 5.6 percent in June after gaining 7.9 percent a month earlier. The index for aluminum mill shapes also advanced less than it had in May. Prices for primary nonferrous metals, copper and brass mill shapes, softwood lumber, and for building paper and board turned down after rising in the previous month. By contrast, the index for cold rolled steel sheet and strip increased 8.4 percent in June compared with a 1.2-percent gain in the preceding month. Prices for hot rolled steel bars, plates, and structural shapes also advanced more than they had in May. The index for thermoplastic resins turned up after declining in the prior month. (See table 2.) From December 2005 to June 2006, the index for materials for durable manufacturing jumped at a 22.0-percent SAAR after moving up at an 11.2-percent SAAR in the previous 6-month period.

The intermediate energy goods index advanced 0.4 percent in June after increasing 1.0 percent in the preceding month. The increase in the index for residual fuel slowed to 7.3 percent from 10.3 percent in May. Prices for both industrial and commercial natural gas fell more than in the preceding month. The index for natural gas to electric utilities turned down in June after increasing a month earlier. By contrast, prices for industrial electric power turned up 0.9 percent after falling 0.8 percent in May. The index for commercial electric power also rose after declining in the previous month. Prices for gasoline, jet fuel, and home heating oil advanced more than in the prior month. The index for intermediate energy goods moved up at a 4.4-percent SAAR during the first half of 2006 after climbing at a 36.0-percent SAAR in the second half of 2005.

Subsequent to a 1.2-percent gain in May, prices for materials and components for construction increased 0.3 percent in June. The index for paving mixtures and blocks rose 2.6 percent after advancing 7.1 percent in the previous month. Prices for nonferrous wire and cable, softwood lumber, gypsum products, and for building paper and board turned down in June following increases in the prior month. The treated wood index fell after showing no change in May. Alternatively, prices for fabricated structural metal products went up 1.1 percent in June, after rising 0.6 percent in the preceding month. The index for steel mill products also advanced more in June, and prices for wiring devices turned up from declines in May. The index for air conditioning and refrigeration equipment moved up after showing no change in the previous month. During the first half of 2006, the index for materials and components for construction advanced at a 7.7- percent SAAR after increasing at the same rate in the second half of 2005.

Prices for materials for nondurable manufacturing moved up 1.0 percent in June after increasing 1.4 percent a month earlier. The increase in the index for paperboard slowed to 1.0 percent from 5.3 percent in May. The indexes for inedible fats and oils, phosphates, aluminum compounds, and finished fabrics turned down in June after moving up in the prior month. By contrast, prices for plastic resins and materials advanced 1.3 percent following a 1.2-percent drop in the preceding month. The index for intermediate basic organic chemicals also turned up in June. Prices for primary basic organic chemicals and paper rose more in June than they had in May. From December 2005 to June 2006, prices for materials for nondurable manufacturing climbed at an 8.2-percent SAAR after rising at a 14.8-percent SAAR from June to December 2005.

The intermediate foods and feeds index moved up 1.0 percent in June following a 0.2-percent decline in the prior month. Prices for shortening and cooking oils advanced 0.8 percent after falling 1.7 percent in May. The indexes for processed young chickens; natural, processed, and imitation cheese; and confectionery materials also turned up in June. Prices for prepared animal feeds were unchanged in June after decreasing a month earlier. The pork index rose more than in the previous month. Conversely, the index for beef and veal increased 0.4 percent in June after advancing 2.3 percent a month earlier. Prices for flour also rose less than they had in May. The index for soft drink beverage bases was unchanged after moving up a month earlier. Prices for intermediate foods and feeds declined at a 1.5-percent SAAR in the first half of 2006 after increasing at a 0.6- percent SAAR in the prior 6-month period.

Crude goods

The Producer Price Index for Crude Materials for Further Processing declined 1.7 percent in June following a 2.0-percent increase in May. Prices for crude energy materials fell after rising in the previous month. The index for basic industrial materials increased less than it had in May. By contrast, prices for crude foodstuffs and feedstuffs turned up following declines in the prior month. (See table B.)

The index for crude energy materials fell 6.8 percent in June after increasing 2.5 percent in the preceding month. Leading this downturn, prices for natural gas dropped 10.8 percent following a 2.3-percent gain in May. The index for crude petroleum decreased 3.7 percent after rising 3.8 percent in the prior month. Alternatively, coal prices were unchanged following a 2.2-percent decline in May. (See table 2.) During the first half of 2006, the crude energy materials index decreased at a 36.9-percent SAAR after rising at an 83.8-percent SAAR in the previous 6-month period.

Prices for crude nonfood materials less energy increased 1.7 percent in June after a 6.2-percent rise in the prior month. The iron and steel scrap index advanced 6.2 percent following a 6.8-percent gain in May. Prices for gold ores, both copper and aluminum base scrap, and wastepaper fell after increasing in the previous month. By contrast, the raw cotton index declined 0.6 percent in June following a 13.0-percent decrease in the preceding month. Prices for miscellaneous metal ores turned up, while the index for hides and skins rose more than it had in May. From December 2005 to June 2006, the index for basic industrial materials increased at a 37.1- percent SAAR after rising at a 30.4-percent SAAR in the second half of 2005.

The index for crude foodstuffs and feedstuffs advanced 4.8 percent compared with a 2.3-percent decline in May. Slaughter cattle prices increased 2.5 percent in June after falling 5.2 percent in the preceding month. Prices for fluid milk, Irish potatoes for processing, fresh fruits and melons, and alfalfa hay also turned up. The indexes for slaughter hogs and for slaughter broilers and fryers rose more in June than they had a month earlier. Alternatively, prices for soybeans fell 1.4 percent following a 5.9-percent gain in May. The index for corn also decreased after rising in the previous month. The index for crude foodstuffs and feedstuffs declined at a 13.9-percent SAAR in the first half of 2006 after increasing at a 6.9-percent SAAR in the prior 6-month period.

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

Mining. The Producer Price Index for the Net Output of Total Mining Industries declined 4.4 percent in June after rising 3.1 percent in May. (Net output price indexes are not seasonally adjusted.) The majority of this downturn can be attributed to prices received by the oil and gas extraction industry group, which declined 6.5 percent following a 3.2- percent gain in May. Prices received for gold ore mining and for oil and gas well drilling also turned down in June. The index for the bituminous coal underground mining industry fell more than in the previous month. The index for potash, soda, and borate mineral mining was unchanged in June following an increase in the prior month, and prices received by the construction sand and gravel mining industry rose less than in May. By contrast, the index for oil and gas operations support activities increased 1.8 percent following a 0.3-percent decrease in May. Prices received for bituminous coal and lignite surface mining also turned up in June. During the first half of 2006, the Producer Price Index for the Net Output of Total Mining Industries declined at a 25.3-percent annual rate compared with a 73.5-percent rate of increase in the second half of 2005. In June 2006, this index was 202.7 (December 1984 = 100), 13.8 percent above its year-ago level.

Manufacturing. The Producer Price Index for the Net Output of Total Manufacturing Industries increased 0.6 percent in June following a 0.9- percent gain a month earlier. The industry group index for petroleum and coal products advanced 3.0 percent after increasing 4.3 percent in May. Prices received by manufacturers of electrical equipment, appliances, and components and by producers of primary metals also rose less than they had in the prior month. The industry group indexes for wood products, plastic and rubber products, computers and electronic products, and medical equipment and supplies turned down in June. Alternatively, prices received by food manufacturers moved up 1.2 percent subsequent to a 0.6-percent increase in May. The industry group index for transportation equipment was unchanged after falling in the previous month, while the beverage and tobacco industry group index increased after remaining unchanged in May. From December 2005 to June 2006, the Producer Price Index for the Net Output of Total Manufacturing Industries rose at an annual rate of 9.0 percent following a 4.3-percent rate of increase from June to December 2005. In June 2006, this index was 159.5 (December 1984 = 100), 6.6 percent higher than its year-ago level.

Services. Among services industries in June, prices received by commercial bankers advanced 5.8 percent after decreasing 2.2 percent in May. The industry indexes for scheduled passenger air transportation, cellular and other wireless carriers, portfolio management, passenger car rental, lessors of nonresidential buildings (excluding miniwarehouses), and for investment banking and securities dealing also turned up in June. Conversely, prices paid for engineering services edged down 0.1 percent following a 1.3-percent rise in the previous month. The industry index for long distance general freight trucking (less than truckload) also turned down in June.