August 2006 Producer Price Index

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The Producer Price Index for Finished Goods rose 0.1 percent in August, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This advance followed increases of 0.1 percent in July and 0.5 percent in June. The index for finished goods other than foods and energy decreased 0.4 percent in August after declining 0.3 percent in the prior month. At the earlier stages of processing, prices received by producers of intermediate goods moved up 0.4 percent in August following a 0.5-percent gain in the previous month, while the crude goods index rose 2.2 percent after advancing 3.1 percent in July. (See table A.)

Among finished goods in August, prices for consumer foods climbed 1.4 percent and the index for energy goods moved up 0.3 percent. These increases slightly outweighed falling prices for consumer goods other than foods and energy and for capital equipment, which fell 0.5 percent and 0.3 percent, respectively.

Before seasonal adjustment, the Producer Price Index for Finished Goods rose 0.1 percent in August to 162.1 (1982 = 100). From August 2005 to August 2006, prices for finished goods advanced 3.7 percent. Over the same period, the index for finished energy goods jumped 13.2 percent, prices for finished consumer foods moved up 2.8 percent, and the index for finished goods other than foods and energy increased 0.9 percent. At the earlier stages of processing, prices for intermediate goods climbed 8.8 percent, and the crude goods index rose 5.3 percent for the 12 months ended August 2006.

Finished goods

The index for finished consumer foods advanced 1.4 percent in August after moving down 0.3 percent in July. Prices for fresh and dry vegetables surged 20.7 percent following a rise of 6.5 percent in the previous month. The index for processed young chickens also increased more in August than it had a month earlier. Prices for fresh fruits and melons, eggs for fresh use, dairy products, soft drinks, and processed turkeys turned up after falling in July. By contrast, the beef and veal index decreased 1.5 percent in August following a 0.2-percent decline in the prior month. The index for portion controlled meat products moved down after advancing in July, and pork prices rose less in August than they had in the preceding month. (See table 2.)

The index for finished energy goods increased 0.3 percent in August following a 1.3-percent gain in July. Prices for liquefied petroleum gas rose 0.9 percent after climbing 11.5 percent in the prior month. The index for residential electric power also moved up less in August than it had in July. Gasoline prices turned down following advances in the preceding month. Alternatively, the index for residential natural gas increased 1.6 percent in August after rising 0.9 percent a month earlier. Prices for home heating oil and diesel fuel turned up following declines in July.

The index for finished consumer goods other than foods and energy decreased 0.5 percent in August after moving down 0.3 percent in July. Passenger car prices fell 2.6 percent in August following a 0.8-percent decline a month earlier. The indexes for pharmaceutical preparations and light motor trucks also decreased more than they had in July. Prices for alcoholic beverages, tires, and periodical circulation turned down in August after rising in the preceding month. Conversely, the index for men's and boys' apparel advanced 1.2 percent following a 0.6-percent decline in July. Prices for newspaper circulation and household appliances also increased in August after falling in the previous month.

The capital equipment index decreased 0.3 percent in August after moving down 0.2 percent in July. Leading the August decline, prices for light motor trucks dropped 3.4 percent. The indexes for passenger cars, electronic computers, and communication and related equipment also fell in August. By contrast, prices for civilian aircraft, industrial material handling equipment, transformers and power regulators, truck trailers, and heavy motor trucks increased in August.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components advanced 0.4 percent in August following a 0.5-percent gain in July. In August, rising prices for energy goods, materials and components for construction, and materials for both durable and nondurable manufacturing outweighed falling prices for foods and feeds. The index for intermediate goods excluding foods and energy moved up 0.4 percent in August following a 0.7- percent increase a month earlier. (See table B.)

Prices for intermediate energy goods rose 0.7 percent in August after edging down 0.1 percent in July. The jet fuels index climbed 6.7 percent compared with a 5.3-percent decline a month earlier. Prices for diesel fuel and residual fuel also moved up after decreasing in July. The index for industrial natural gas increased more than it had in the previous month. Alternatively, gasoline prices fell 2.2 percent subsequent to a 0.7- percent advance in July. The index for commercial electric power also turned down in August. Prices for liquefied petroleum gas and natural gas to electric utilities advanced less than they had in the previous month. (See table 2.)

The index for materials and components for construction increased 0.4 percent in August following a 0.7-percent gain in July. Prices for concrete products inched up 0.1 percent after advancing 1.4 percent a month earlier. The indexes for steel mill products, paving mixtures and blocks, plumbing fixtures and brass fittings, and plastic construction products also rose less than they had in the prior month. Prices for softwood lumber fell more than they had in July. The indexes for plywood and millwork turned down in August. Conversely, prices for nonferrous wire and cable moved up 3.3 percent following a 1.0-percent decline in July. The asphalt felts and coatings index advanced in August after remaining unchanged in the previous month.

The materials for durable manufacturing index rose 0.4 percent in August after moving up 2.3 percent in July. The rate of increase for the cold rolled steel sheet and strip index slowed from 8.6 percent in July to 0.8 percent in August. Prices for hot rolled steel sheet and strip also advanced less than in the prior month. The indexes for primary nonferrous metals; hot rolled steel bars, plates and structural shapes; and copper and brass mill shapes turned down in August after rising a month earlier. The index for softwood lumber fell more than in July. By contrast, prices for aluminum mill shapes edged up 0.1 percent in August after declining 2.3 percent in the previous month. Prices for semifinished steel mill products increased more than they had a month earlier.

The materials for nondurable manufacturing index edged up 0.2 percent in August, the same rate as in July. In August, rising prices for primary and intermediate basic organic chemicals, plastic resins and materials, inedible fats and oils, stemmed and redried tobacco, and paper outweighed falling prices for fertilizer materials and ethanol.

The index for intermediate foods and feeds declined 0.2 percent in August after increasing 0.4 percent in July. Flour prices fell 5.1 percent subsequent to a 2.8-percent rise in the prior month. The indexes for prepared animal feeds and for refined sugar and byproducts also turned down in August after rising a month earlier. Prices for beef and veal decreased at faster rates in August, while the index for fluid milk products rose less than it had in July. By contrast, prices for natural, processed, and imitation cheese advanced 2.4 percent compared with a 2.0-percent decline a month earlier. The index for dry, condensed, and evaporated milk products also turned up in August, and prices for processed young chickens increased more than they had in July.

Crude goods

The Producer Price Index for Crude Materials for Further Processing advanced 2.2 percent in August following a 3.1-percent rise in the previous month. Prices for crude foodstuffs and feedstuffs increased less than in the prior month, and the index for basic industrial materials turned down after rising in July. By contrast, prices for crude energy materials rose more in August than they had a month earlier. (See table B.)

The index for crude foodstuffs and feedstuffs increased 0.1 percent following a 1.8-percent gain in the preceding month. Price increases for slaughter broilers and fryers slowed from 6.4 percent in July to 3.2 percent in August. The indexes for corn, wheat, and soybeans turned down after rising a month earlier. By contrast, the index for slaughter cattle advanced 3.7 percent following a 1.0-percent rise in the prior month. The index for fresh vegetables (except potatoes) also increased at a faster rate in August than it had a month earlier. Prices for fresh fruits and melons and for slaughter hogs turned up after declining in July. (See table 2.)

Prices for crude nonfood materials less energy fell 2.8 percent after a 1.3-percent increase in July. Leading this downturn, the iron and steel scrap index dropped 14.7 percent in August following a 2.0-percent decrease in the previous month. Aluminum base scrap prices also fell more than in July. The index for wastepaper rose less than in the preceding month. Prices for softwood logs, bolts, and timber turned down after rising in the previous month. Conversely, the miscellaneous roundwood products index rose 4.0 percent in August after declining 0.1 percent a month ago. The index for raw cotton also climbed following a decrease in July. Prices for copper base scrap were unchanged following a decline in the prior month, and the index for construction sand, gravel, and crushed stone rose more than a month earlier.

The crude energy materials index advanced 5.9 percent in August after rising 4.8 percent a month earlier. This acceleration can be attributed to natural gas prices, which jumped 15.7 percent after a 1.2-percent increase in the preceding month. Conversely, the crude petroleum index turned down 1.9 percent following a 9.4-percent rise in July. The index for coal fell 1.4 percent after increasing 0.6 percent in the previous month.

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

Mining. The Producer Price Index for the Net Output of Total Mining Industries rose 4.7 percent in August after advancing 5.0 percent in the preceding month. (Net output price indexes are not seasonally adjusted.) Contributing to this slower rate of increase, prices received by the oil and gas well drilling industry moved up 1.5 percent following a 2.3-percent gain in July. The industry index for bituminous coal and lignite surface mining turned down subsequent to rising in the prior month. Prices paid to the industry for oil and gas operations support activities were unchanged in August after increasing a month earlier. The industry indexes for gold ore mining, crushed and broken granite mining and quarrying, and construction sand and gravel mining advanced less than they had in July. Conversely, prices received by the natural gas liquid extraction industry climbed 8.1 percent in August compared with a 7.1-percent gain in the preceding month. The industry index for bituminous coal underground mining also advanced more than it had in July. In August, the Producer Price Index for Total Mining Industries was 222.9 (December 1984 = 100), 9.5 percent above its year-ago level.

Manufacturing. The Producer Price Index for the Net Output of Total Manufacturing Industries rose 0.1 percent in August after increasing at the same rate in July. In August, higher prices received by the manufacturers of petroleum and coal products, electrical equipment and appliances, plastic and rubber products, fabricated metal products, and machinery outweighed falling prices paid to the industry groups for transportation equipment, wood product manufacturing, and computer and electronic products. In August, the Producer Price Index for Total Manufacturing Industries was 159.8 (December 1984 = 100), 5.3 percent above its year-ago level.

Services. Among services industries, prices received by commercial bankers increased 2.0 percent in August following a 3.6-percent decline in July. The industry index for cellular and other wireless services also turned up after falling in the previous month, and prices received by the portfolio management industry were unchanged in August subsequent to decreasing a month earlier. Alternatively, the industry index for investment banking and securities dealing declined 1.1 percent after moving up 1.8 percent in July. Prices also turned down in August for hotels and motels (excluding casino hotels), passenger car rental, and scheduled freight air transportation. The index for general medical and surgical hospitals rose less in August compared with the prior month, and prices received by internet service providers fell more than they had in July.