September 2006 Producer Price Index

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The Producer Price Index for Finished Goods fell 1.3 percent in September, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This decline followed increases of 0.1 percent in both August and July. At the earlier stages of processing, prices received by manufacturers of intermediate goods moved down 1.4 percent in September after increasing 0.4 percent in the preceding month, and the crude goods index dropped 3.4 percent following a 2.2-percent gain in August. (See table A.)

Among finished goods in September, prices for energy goods declined 8.4 percent compared with a 0.3-percent increase in August. The finished consumer foods index rose 0.7 percent after advancing 1.4 percent in the prior month. By contrast, prices for finished goods other than foods and energy climbed 0.6 percent in September following a 0.4-percent decline in August.

During the third quarter of 2006, prices for finished goods decreased at a seasonally adjusted annual rate (SAAR) of 4.4 percent after moving up at a 6.4-percent SAAR during the second quarter of 2006. Excluding prices for foods and energy, the finished goods index edged down at a 0.3-percent SAAR for the 3 months ended September 2006 subsequent to rising at a 2.3- percent SAAR for the 3 months ended June 2006. Among prices for raw and partially processed goods, the intermediate goods index fell at a 1.9- percent SAAR in the third quarter of 2006 after climbing at a 10.3-percent SAAR from March to June 2006. The crude goods index moved up at an 8.0- percent SAAR for the 3 months ended September 2006 following a 6.4-percent rate of increase during the previous quarter. (See summary table below.)

Before seasonal adjustment, the Producer Price Index for Finished Goods decreased 1.1 percent in September to 160.3 (1982 = 100). From September 2005 to September 2006, prices for finished goods rose 0.9 percent. Over the same period, the index for finished goods other than foods and energy went up 1.2 percent, prices for finished consumer foods climbed 2.2 percent, and the finished energy goods index declined 1.8 percent. For the 12 months ended September 2006, intermediate goods prices advanced 4.7 percent, and the crude goods index decreased 7.8 percent.

Crude materials for further processing 19.5 17.4 21.1 -11.0 -38.6 6.4 8.0 Foodstuffs and feedstuffs 24.1 -2.6 1.6 -4.4 -29.1 4.6 18.0 Crude energy materials 14.4 35.9 42.2 -24.7 -55.7 -10.3 7.2 Crude nonfood materials less energy 21.6 20.5 5.2 22.6 17.9 59.4 -1.9 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.

Finished goods

The index for finished energy goods declined 8.4 percent in September following a 0.3-percent gain in August. Over half of this downturn was due to gasoline prices, which dropped 22.2 percent in September subsequent to a 2.2-percent decrease in the previous month. The indexes for home heating oil, liquefied petroleum gas, residential electric power, and diesel fuel turned down after rising in August. By contrast, the index for residential natural gas advanced 1.8 percent in September following a 1.6-percent increase in the prior month. (See table 2.) During the third quarter of 2006, prices for finished energy goods fell at a 24.7-percent SAAR after moving up at a 22.3-percent SAAR during the second quarter of 2006.

The rate of increase in the index for finished consumer foods slowed from 1.4 percent in August to 0.7 percent in September. Prices for fresh and dry vegetables rose 3.5 percent after jumping 20.7 percent in the previous month. The index for eggs for fresh use also rose less than it had in August. The indexes for fresh fruits and melons, processed young chickens, and processed turkeys turned down in September following increases a month earlier. Prices for confectionery end products decreased after remaining unchanged in the preceding month. Alternatively, finfish and shellfish prices advanced 6.7 percent in September following a 9.1- percent decline in August. Prices for beef and veal also turned up after falling in August, and the index for pork rose at a faster rate than it had in the prior month. From June to September 2006, the index for finished consumer foods advanced at a 7.6-percent SAAR after increasing at a 3.7-percent SAAR for the 3 months ended June 2006.

Prices for finished consumer goods other than foods and energy increased 0.5 percent in September after falling at the same rate in the previous month. The light motor trucks index climbed 3.5 percent following a 3.4-percent decline in August. Prices for passenger cars, alcoholic beverages, and mobile homes also turned up in September after decreasing a month earlier. The index for pharmaceutical preparations fell less than it had in the prior month, while prices for soaps and synthetic detergents rose after remaining unchanged in August. By contrast, the index for household appliances moved down 1.4 percent subsequent to a 0.7-percent gain in the preceding month. Prices for men's and boys' apparel increased at slower rates in September compared with the previous month. The index for women's, girls', and infants' apparel was unchanged following an increase in August. During the third quarter of 2006, the index for finished consumer goods other than foods and energy decreased at a 1.0- percent SAAR after advancing at a 2.2-percent SAAR from March to June 2006.

Capital equipment prices increased 0.6 percent in September after falling 0.3 percent in August. The index for passenger cars moved up 2.8 percent following a 2.6-percent decline in the prior month. Prices for light motor trucks, communication and related equipment, commercial furniture, and for x-ray and electromedical equipment also turned up in September after declining a month earlier. By contrast, the civilian aircraft index was unchanged following a 0.4-percent gain in August. Prices for industrial material handling equipment advanced less in September than they had in the preceding month. The index for truck trailers turned down after increasing in August. For the 3 months ended September 2006, capital equipment prices rose at a 0.5-percent SAAR after climbing at a 2.5-percent SAAR for the 3 months ended June 2006.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components decreased 1.4 percent in September following a 0.4-percent increase in August. Most of this downturn can be traced to prices for intermediate energy goods, which fell after rising in the prior month. The index for materials for nondurable manufacturing also turned down, while prices for materials and components for construction advanced less in September than they had a month earlier. Alternatively, the index for intermediate foods and feeds moved up following a decline in the prior month, and prices for materials for durable manufacturing increased more than they had in August. Excluding foods and energy, prices for intermediate goods edged up 0.1 percent in September after rising 0.4 percent in the preceding month. (See table B.)

The index for intermediate energy goods decreased 7.5 percent in September following a 0.7-percent advance in August. Diesel fuel prices dropped 22.3 percent after increasing 2.7 percent in the prior month. The indexes for jet fuel, home heating oil, liquefied petroleum gas, and residual fuel also moved down in September following advances a month earlier. Gasoline prices fell more than in August, while the indexes for industrial natural gas and natural gas to electric utilities increased less in September than they had in the previous month. Conversely, the index for commercial natural gas climbed 3.0 percent in September compared with a 1.8-percent gain in August. Prices for commercial electric power decreased less than they had in the preceding month. (See table 2.) The intermediate energy goods index declined at a 24.8-percent SAAR during the third quarter of 2006 after advancing at an 18.2-percent SAAR during the second quarter of 2006.

The index for materials for nondurable manufacturing fell 1.5 percent in September following a 0.2-percent increase in August. Leading this downturn, prices for basic organic chemicals decreased 4.0 percent after rising 2.0 percent in the prior month. The indexes for inedible fats and oils and for gray fabrics also moved down in September following advances a month earlier. Prices for plastic resins and materials and for stemmed and redried tobacco were unchanged after rising in August, while the indexes for paperboard and paper increased less than in the previous month. By contrast, prices for nitrogenates climbed 4.5 percent in September following a 6.0-percent drop in the preceding month. The index for synthetic fibers also turned up after falling in August. Prices for materials for nondurable manufacturing declined at a 4.4-percent SAAR for the 3 months ended in September after moving up at a 10.8-percent SAAR for the 3 months ended in June.

The index for materials and components for construction rose 0.2 percent in September following a 0.4-percent increase in August. Prices for fabricated structural metal products were unchanged after climbing 1.0 percent in the prior month. The nonferrous wire and cable index moved up less in September than it had a month earlier. Prices for concrete products, gypsum products, paving mixtures and blocks, hardwood lumber, and plastic construction products turned down following advances in August. Conversely, the softwood lumber index moved up 0.7 percent in September after dropping 5.6 percent in the previous month. Prices for treated wood also turned up following declines in August. The plywood index fell less in September than it had in the preceding month, while prices for steel mill products and for air conditioning and refrigeration equipment increased more than in the prior month. The index for materials and components for construction rose at a 5.2-percent SAAR in the third quarter of 2006 after advancing at a 7.8-percent SAAR in the second quarter of 2006.

The index for intermediate foods and feeds increased 0.8 percent in September compared with a 0.2-percent decrease in August. Flour prices moved up 1.7 percent after falling 5.1 percent in the prior month. The beef and veal index also turned up in September following a decline a month earlier. Prices for pork and for natural, processed, and imitation cheese rose more than they had in August, while the indexes for prepared animal feeds and for refined sugar and byproducts fell less than in the previous month. By contrast, prices for processed young chickens decreased 0.6 percent in September after advancing 4.6 percent in August. The index for dry, condensed, and evaporated milk products increased less than it had in the preceding month. Prices for intermediate foods and feeds climbed at a 3.9-percent SAAR for the 3 months ended in September after moving down at a 0.9-percent SAAR for the 3 months ended in June.

The index for materials for durable manufacturing advanced 0.5 percent in September following a 0.4-percent gain in August. In September, rising prices for cold rolled steel sheet and strip; hot rolled steel sheet and strip; hot rolled steel bars, plates, and structural shapes; softwood lumber; prepared paint; and cement outweighed falling prices for aluminum mill shapes, primary aluminum (except extrusion billet), cold finished steel bars, building paper and board, and hardwood lumber. The index for materials for durable manufacturing increased at a 13.4-percent SAAR in the third quarter of 2006 after surging at a 29.6-percent SAAR in the second quarter of 2006.

Crude goods

The Producer Price Index for Crude Materials for Further Processing fell 3.4 percent in September following a 2.2-percent increase in August. Prices for crude energy materials turned down after rising in the previous month. Conversely, the basic industrial materials index increased after declining in August. The index for crude foodstuffs and feedstuffs rose more than in the prior month. (See table B.)

Prices for crude energy materials dropped 8.4 percent in September following a 5.9-percent rise in the preceding month. Leading this downturn, natural gas prices fell 5.5 percent after climbing 15.7 percent in the previous month. The crude petroleum index dropped 13.3 percent following a 1.9-percent decrease in August. Alternatively, prices for coal advanced 0.2 percent after declining 1.4 percent in the prior month. (See table 2.) During the third quarter of 2006, the crude energy materials index increased at a 7.2-percent SAAR after falling at a 10.3-percent SAAR in the second quarter of 2006.

The index for crude nonfood materials less energy advanced 1.0 percent after decreasing 2.8 percent in August. Iron and steel scrap prices rose 5.0 percent following a 14.7-percent drop in the previous month. Prices for aluminum base scrap also turned up in September following declines in the preceding month. Conversely, prices for nonferrous metal ores fell 5.3 percent after increasing 4.8 percent in August. The raw cotton index also turned down following an advance in the previous month. Prices for construction sand, gravel, and crushed stone and for wastepaper rose less in September than in August. The index for copper base scrap fell after remaining unchanged in the previous month, and the index for pulpwood was unchanged after increasing a month earlier. For the 3 months ended September 2006, the basic industrial materials index decreased at a 1.9- percent SAAR after rising at a 59.4-percent SAAR in the 3 months ended June 2006.

The index for crude foodstuffs and feedstuffs increased 2.3 percent in September following a 0.1-percent gain in the previous month. Corn prices turned up 1.0 percent after dropping 13.9 percent in August. The fluid milk, wheat, and unprocessed finfish indexes also rose after declining in the prior month. Prices for slaughter hogs increased more in September than in the preceding month. By contrast, the slaughter broilers and fryers index declined 2.5 percent after increasing 3.2 percent in August. Prices for fresh fruits and melons also turned down following increases in the prior month. The indexes for fresh and dry vegetables and for slaughter cattle advanced less in September than in the previous month. The crude foodstuffs and feedstuffs index increased at an 18.0-percent SAAR during the third quarter of 2006 after rising at a 4.6-percent SAAR in the prior quarter.

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

Mining. The Producer Price Index for the Net Output of Total Mining Industries turned down 7.4 percent in September after rising 4.7 percent in August. (Net output price indexes are not seasonally adjusted.) The index for the oil and gas extraction industry group declined 9.8 percent following a 6.2-percent gain in August. Prices received for copper ore and nickel ore mining, oil and gas well drilling, gold ore mining, and bituminous coal underground mining also turned down after increasing a month earlier. The industry index for phosphate rock mining fell more than in the previous month. By contrast, the index for bituminous coal and lignite surface mining increased 0.1 percent following a 1.5-percent decrease in August. Prices received for oil and gas operation support activities rose in September after remaining unchanged in the previous month. For the 3 months ended September 2006, the Producer Price Index for the Net Output of Total Mining Industries advanced at a 7.7-percent annualized rate, compared to a 1.4-percent annualized rate of increase in the second quarter of 2006. In September, the Producer Price Index for Total Mining Industries was 206.5 (December 1984 = 100), 11.4 percent below its year-ago level.

Manufacturing. The Producer Price Index for the Net Output of Total Manufacturing Industries turned down 1.9 percent in September after rising 0.1 percent a month earlier. The industry group index for petroleum and coal products declined 16.2 percent after increasing 0.7 percent in August. Prices received by the plastics and rubber products and by the medical equipment and supplies industry groups also turned down after rising in the previous month. The industry group index for electrical equipment and appliances rose less than in August. Alternatively, the industry group index for transportation equipment increased 0.9 percent in September after falling 1.2 percent a month earlier. Prices received by the wood products and by the computer and electronic products industry groups also rose after August declines. The food industry group index rose more than in the prior month. For the third quarter of 2006, the Producer Price Index for the Net Output of Total Manufacturing Industries fell at an annualized rate of 6.6 percent, compared with a 12.1-percent annualized rate of increase in the prior quarter. In September, the Producer Price Index for Total Manufacturing Industries was 156.8 (December 1984 = 100), 1.7 percent above its year-ago level.

Services. Among services industries, prices received for scheduled passenger air transportation turned down 10.8 percent in September after rising 1.0 percent in August. The industry indexes for general medical and surgical hospitals and for cellular and other wireless carriers also decreased in September after increasing in the previous month. By contrast, prices paid to commercial bankers rose 3.1 percent after advancing 2.0 percent in the prior month. The industry indexes for investment advice, casino hotels, passenger car rental, and newspaper publishing turned up after declining in August. Prices paid to Internet service providers decreased less than a month earlier.