October 2006 Producer Price Index

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The Producer Price Index for Finished Goods fell 1.6 percent in October, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This decrease followed a 1.3-percent decline in September and a 0.1-percent advance in August. At the earlier stages of processing, prices received by manufacturers of intermediate goods moved down 1.1 percent in October after falling 1.4 percent in September, and the crude goods index dropped 10.5 percent following a 3.4- percent decrease in the previous month. (See table A.)

Among finished goods in October, prices for goods other than foods and energy declined 0.9 percent after rising 0.6 percent in September. The index for finished consumer foods also turned down-falling 0.8 percent in October following a 0.7-percent increase in the prior month. Conversely, prices for energy goods decreased 5.0 percent after dropping 8.4 percent in September.

Before seasonal adjustment, the Producer Price Index for Finished Goods moved down 1.2 percent in October to 158.4 (1982 = 100). From October 2005 to October 2006, finished goods prices declined 1.6 percent. Over the same period, the index for finished energy goods fell 10.4 percent, prices for finished consumer foods climbed 1.5 percent, and the index for finished goods other than foods and energy increased 0.6 percent. At the earlier stages of processing, prices received by intermediate goods producers rose 0.4 percent, while the crude goods index decreased 22.0 percent for the 12 months ended in October.

Finished goods

The index for finished goods other than foods and energy declined 0.9 percent in October after rising 0.6 percent in September. Prices for light motor trucks fell 9.7 percent following a 3.5-percent gain in the preceding month. From October 2005 to October 2006, the index for light motor trucks dropped 12.4 percent. Passenger car prices moved down 2.3 percent in October compared with a 2.8-percent advance a month earlier. For the 12 months ended October 2006, the passenger cars index decreased 3.2 percent. In accordance with usual practice, most new-model-year passenger cars and light motor trucks were introduced into the PPI in October. (See Report on Quality Changes for 2007 Model Vehicles, USDL 06-1973.) Prices for communication and related equipment, soaps and synthetic detergents, alcoholic beverages, x-ray and electromedical equipment, and printing trades machinery declined in October after increasing in September. The mobile homes index was unchanged following an advance in the prior month, and prices for cosmetics and other toilet preparations rose less than in September. Alternatively, the index for pharmaceutical preparations climbed 0.5 percent after falling 0.2 percent in the previous month. Prices for household appliances, tires, and household furniture also turned up in October. The indexes for sporting and athletic goods and for commercial furniture increased more than they had in September. (See table 2.)

Prices for finished consumer foods decreased 0.8 percent in October following a 0.7-percent increase in the prior month. The pork index fell 10.2 percent after rising 8.1 percent in September. Prices for fresh and dry vegetables, beef and veal, and soft drinks also declined in October following advances a month earlier. The indexes for dairy products, finfish and shellfish, and processed fruits and vegetables increased less than they had in September, while prices for processed young chickens decreased more in October than in the previous month. Conversely, the index for confectionery end products fell 0.2 percent after moving down 2.6 percent in September. Prices for fresh fruits and melons and for processed turkeys turned up, while the indexes for bakery products and roasted coffee climbed in October after remaining unchanged in the preceding month.

The index for finished energy goods declined 5.0 percent in October following an 8.4-percent drop in September. Gasoline prices decreased 7.9 percent after dropping 22.2 percent a month earlier. The indexes for liquefied petroleum gas and diesel fuel also fell less than they had in September. Prices for home heating oil and kerosene turned up in October. By contrast, the index for residential natural gas declined 9.3 percent following a 1.8-percent advance in September. Prices for residential electric power fell more in October than they had in the previous month.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components fell 1.1 percent in October following a 1.4-percent decline in September. Prices for intermediate energy goods decreased less than they had in the prior month. The index for nondurable manufacturing materials turned up after falling in September. By contrast, prices for materials for durable manufacturing and for materials and components for construction turned down following advances a month earlier. The index for intermediate foods and feeds increased less than it had in the previous month. Excluding foods and energy, prices for intermediate goods were unchanged in October after edging up 0.1 percent in September. (See table B.)

The index for intermediate energy goods decreased 5.5 percent in October following a 7.5-percent decline in September. Prices for diesel fuel fell 8.9 percent after dropping 22.3 percent a month earlier. The indexes for gasoline and jet fuel also declined at slower rates than in the previous month. Prices for home heating oil and commercial electric power turned up in October. By contrast, the index for industrial natural gas decreased 12.3 percent after advancing 0.7 percent in September. Prices for commercial natural gas and natural gas to electric utilities also turned down in October. (See table 2.)

Prices for materials for nondurable manufacturing edged up 0.2 percent in October subsequent to a 1.5-percent decrease in September. The index for finished fabrics increased 0.6 percent compared with a 0.2-percent decline in the previous month. Prices for primary basic organic chemicals decreased less in October than a month earlier, while the index for plastic resins and materials moved up after no change in September. Conversely, the index for nitrogenates moved down 1.8 percent in October after increasing 4.5 percent in September. The index for intermediate basic organic chemicals declined more than it had in the prior month. Paper prices were unchanged in October following increases in the previous month. The index for stemmed and redried tobacco fell after no change in September, and prices for paint materials rose less than in the prior month.

The index for materials for durable manufacturing inched down 0.1 percent in October compared with a 0.5-percent advance in September. Prices for hot rolled steel sheet and strip fell 2.2 percent subsequent to a 1.1-percent rise a month earlier. The indexes for cold rolled steel sheet and strip and for hot rolled steel bars, plates, and structural shapes increased at slower rates than in September. By contrast, the index for primary aluminum (except extrusion billet) rose 5.6 percent after declining 2.1 percent in September. Prices for cold finished steel bars were unchanged after declining in the prior month. The index for hardwood lumber edged up following a decrease in September, and prices for titanium mill shapes increased more than in the preceding month.

Prices for materials and components for construction declined 0.2 percent in October subsequent to a 0.2-percent advance in September. The softwood lumber index decreased 6.8 percent in October compared with a 0.7- percent increase a month earlier. Prices for treated wood and for air conditioning and refrigeration equipment also moved down following September gains. The indexes for steel mill products and for asphalt felts and coatings rose less than they had in the preceding month. The index for millwork declined in October after no change a month earlier. By contrast, prices for concrete products advanced 0.2 percent after falling 0.4 percent in September. The index for fabricated structural metal products moved up after remaining unchanged in the prior month.

Prices for intermediate foods and feeds rose 0.4 percent in October following a 0.8-percent advance in September. In October, rising prices for prepared animal feeds; flour; fluid milk products; and dry, condensed, and evaporated milk products more than offset declining prices for pork; beef and veal; processed young chickens; natural, processed, and imitation cheese; shortening and cooking oils; and refined sugar and byproducts.

Crude goods

The Producer Price Index for Crude Materials for Further Processing fell 10.5 percent in October after decreasing 3.4 percent in September. Prices for crude energy materials fell more than they had in the previous month. The basic industrial materials index turned down in October after increasing a month earlier. Conversely, prices for crude foodstuffs and feedstuffs rose more than they had in September. (See table B.)

The crude energy materials index dropped 23.5 percent in October following an 8.4-percent decline in the previous month. Prices for natural gas plummeted 39.6 percent after falling 5.5 percent in September. The index for coal edged up 0.1 percent after advancing 0.2 percent in the preceding month. By contrast, price declines for crude petroleum slowed from 13.3 percent in September to 9.4 percent in October. (See table 2.)

Prices for crude nonfood materials less energy decreased 1.3 percent after advancing 1.0 percent a month earlier. The iron and steel scrap index turned down 2.7 percent following a 5.0-percent increase in September. Aluminum base scrap prices also fell in October after rising in the previous month. The indexes for wastepaper and for construction sand, gravel, and crushed stone increased less than they had in September. Prices for copper base scrap and gold ores decreased more than they had in the preceding month. Conversely, the decline in the raw cotton index slowed to 0.6 percent from 2.0 percent a month earlier. Prices for hides and skins turned up after decreasing in September.

The crude foodstuffs and feedstuffs index increased 3.1 percent following a 2.3-percent rise in September. Corn prices jumped 32.7 percent after a 1.0-percent advance in the preceding month. The indexes for wheat and slaughter turkeys also rose more in October than they had in September. Prices for soybeans turned up following declines in the previous month. By contrast, slaughter cattle prices fell 1.1 percent after a 3.0-percent increase in the preceding month. The indexes for slaughter hogs and for fresh and dry vegetables also turned down following advances a month earlier. Prices for slaughter broilers and fryers fell more in October than they had 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 fell 16.4 percent in October after declining 7.4 percent in the preceding month. (Net output price indexes are not seasonally adjusted.) Prices received by the oil and gas extraction industry group moved down 24.7 percent following a 9.8-percent decrease in September. The industry index for gold ore mining also fell more than in the prior month. Prices paid to the industries for crushed and broken limestone mining and quarrying and for bituminous coal and lignite surface mining turned down after increasing a month earlier. The industry index for oil and gas operations support activities rose less than in September. Conversely, declines in prices received for oil and gas well drilling slowed to 2.3 percent in October from 4.9 percent in the previous month. The industry index for bituminous coal underground mining turned up after decreasing in September, and prices received by the industry for crushed and broken granite mining and quarrying rose more than a month earlier. In October, the Producer Price Index for Total Mining Industries was 172.6 (December 1984 = 100), 32.1 percent below its year-ago level.

Manufacturing. The decline in the Producer Price Index for the Net Output of Total Manufacturing Industries slowed to 0.6 percent in October from 1.9 percent a month earlier. Prices received by the petroleum and coal products manufacturing industry group fell 5.7 percent after decreasing 16.2 percent in September. The industry group index for plastics and rubber products turned up after falling in the prior month, and prices received by the machinery manufacturing industry group rose more than in September. Alternatively, the increase in the industry group index for transportation equipment slowed to 0.3 percent in October from 0.9 percent a month earlier. Prices received by the industry groups for food manufacturing, wood product manufacturing, computer and electronic product manufacturing, and for beverage and tobacco product manufacturing turned down after rising in September. In October, the Producer Price Index for Total Manufacturing Industries was 155.8 (December 1984 = 100), 0.5 percent below its year- ago level.

Services. Among services in October, higher prices were received by the industries for general medical and surgical hospitals, scheduled passenger air transportation, engineering services, offices of physicians, portfolio management, and for investment banking and securities dealing. Alternatively, lower prices were received by the industries for commercial banking; non-casino hotels and motels; lessors of nonresidential buildings (except miniwarehouses); and long distance, less than truckload, general freight trucking.