November 2006 Producer Price Index

Historical release narrative reproduced from the official public-domain source. Statistical tables, standard technical appendices, administrative material and attendance rosters are omitted; formatting is adapted for reading. Figures retain the release's historical context and may have been revised. Consult the linked source for the complete document.

The Producer Price Index for Finished Goods advanced 2.0 percent in November, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This gain followed declines of 1.6 percent in October and 1.3 percent in September. The index for finished goods other than foods and energy rose 1.3 percent in November compared with a 0.9-percent decrease in the previous month. At the earlier stages of processing, prices for intermediate goods moved up 0.7 percent after falling 1.1 percent in the prior month, and the crude goods index increased 15.7 percent following a 10.5-percent decline in October. (See table A.)

The upturn in the finished goods index was broad-based and led by prices for energy goods, which climbed 6.1 percent in November after declining 5.0 percent in October. The index for finished consumer goods excluding foods and energy rose 1.1 percent following a 0.8-percent decline in the previous month. Prices for capital equipment turned up 1.4 percent after falling 0.9 percent in October. The index for finished consumer foods increased 0.1 percent in November compared with a 0.8-percent decrease a month earlier.

Before seasonal adjustment, the Producer Price Index for Finished Goods advanced 0.8 percent in November to 159.7 (1982 = 100). From November 2005 to November 2006, prices for finished goods rose 0.9 percent. Over the same period, prices for finished goods other than foods and energy moved up 1.8 percent, the finished consumer foods index increased 0.8 percent, and prices for finished energy goods moved down 2.1 percent. For the 12 months ended November 2006, prices for intermediate goods rose 2.4 percent, while the crude goods index declined 8.5 percent.

Finished goods

Prices for finished energy goods increased 6.1 percent in November following a 5.0-percent decline in the prior month. The gasoline index jumped 17.9 percent after falling 7.9 percent in the preceding month. Prices for residential natural gas, diesel fuel, and lubricating grease also turned up in November. The index for home heating oil rose more than in the prior month, while prices for residential electric power and liquefied petroleum gas decreased less than they had in October. By contrast, the index for lubricating and similar oils advanced 1.0 percent in November following a 1.4-percent rise in the previous month. (See table 2.)

The index for finished consumer goods excluding foods and energy climbed 1.1 percent in November following a 0.8-percent decrease in October. Accounting for the majority of this upturn, prices for light motor trucks increased 13.7 percent after moving down 9.7 percent in the previous month. The indexes for passenger cars and alcoholic beverages also turned up after October declines. By contrast, the index for pharmaceutical preparations declined 0.4 percent following a 0.5-percent advance in October. Prices for household appliances, sporting and athletic goods, and tires also moved down in November after rising in the prior month. The index for mobile homes fell after no change in October.

The capital equipment index moved up 1.4 percent in November following a 0.9-percent decrease in the preceding month. Prices for passenger cars rose 2.2 percent subsequent to a 2.3-percent decline a month earlier. The indexes for light motor trucks, communication and related equipment, and for x-ray and electromedical equipment also turned up in November. Prices for civilian aircraft advanced after no change in October. The index for heavy motor trucks advanced more than it had in the previous month. By contrast, prices for integrating and measuring devices fell 1.1 percent after edging up 0.1 percent a month earlier. The index for commercial furniture increased less than it had in October.

The finished consumer foods index inched up 0.1 percent in November subsequent to a 0.8-percent decline in the prior month. Prices for pork increased 1.2 percent after declining 10.2 percent in October. The indexes for soft drinks, processed young chickens, and beef and veal also turned up in November. Prices for dairy products and eggs for fresh use rose more than they had a month earlier. Alternatively, prices for fresh fruits and melons fell 20.3 percent in November compared with a 3.9-percent increase in the preceding month.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components advanced 0.7 percent in November following a 1.1-percent decline in October. Most of this upturn can be traced to prices for intermediate energy goods, which increased after falling in the previous month. The index for intermediate foods and feeds rose more in November than it had a month earlier. Conversely, prices for materials for nondurable manufacturing turned down following advances in the prior month. The indexes for materials for durable manufacturing and for materials and components for construction decreased more than they had in the preceding month. Prices for containers were unchanged in November after rising a month earlier. Excluding foods and energy, prices for intermediate goods fell 0.3 percent after no change in October. (See table B.)

The intermediate energy goods index increased 4.2 percent in November after declining 5.5 percent a month earlier. Industrial natural gas prices rose 4.5 percent following a 12.3-percent drop in the previous month. The indexes for gasoline, diesel fuel, commercial natural gas, natural gas to electric utilities, and residual fuel also turned up after declining in October. Prices for jet fuel fell less in November compared with a month earlier, and home heating oil prices increased more than they had in the prior month. By contrast, the index for commercial electric power edged up 0.2 percent following a 1.2-percent advance in October. (See table 2.)

Prices for intermediate foods and feeds rose 3.4 percent subsequent to a 0.4-percent gain in the preceding month. The prepared animal feeds index increased 7.4 percent after rising 2.2 percent in October. The indexes for pork; natural, processed, and imitation cheese; shortening and cooking oils; beef and veal; and processed young chickens turned up in November following declines in the previous month. By contrast, flour prices edged down 0.1 percent after rising 5.7 percent in October. The index for confectionery materials also turned down following an increase in the prior month, and prices for fluid milk products rose less than they had a month earlier.

The index for materials for nondurable manufacturing moved down 0.4 percent following a 0.2-percent advance in October. Prices for plastic resins and materials fell 2.4 percent in November after rising 0.2 percent in the preceding month. The indexes for basic inorganic chemicals and for processed yarns and threads also turned down following increases in the prior month. Prices for both primary and intermediate basic organic chemicals, as well as nitrogenates, fell more than they had a month earlier. The index for paperboard declined after no change in October. Conversely, prices for inedible fats and oils jumped 17.7 percent in November after declining 3.2 percent in the preceding month. Ethanol prices also turned up following decreases in the previous month, and the paper index moved up after no change in October.

Prices for materials for durable manufacturing fell 0.5 percent in November after moving down 0.1 percent in the previous month. Hot rolled steel sheet and strip prices dropped 14.8 percent following a 2.2-percent decrease a month earlier. The indexes for cold rolled steel sheet and strip; thermoplastic resins; hot rolled steel bars, plates, and structural shapes; and prepared paint turned down after advancing in October. The primary aluminum (except extrusion billet) index rose less than it had in the previous month. Alternatively, prices for aluminum mill shapes increased 2.5 percent following a 0.9-percent decrease in the preceding month. The index for secondary aluminum also turned up after falling in October, and prices for softwood lumber declined less in November compared with a month earlier.

The index for materials and components for construction fell 0.5 percent in November following a 0.2-percent decline in the previous month. Prices for steel mill products decreased 4.4 percent after advancing 0.5 percent in the prior month. The indexes for asphalt felts and coatings and for nonferrous wire and cable also turned down following increases in October. Prices for plastic construction products declined more than they had in the preceding month. By contrast, softwood lumber prices fell 1.6 percent after decreasing 6.8 percent a month earlier. The indexes for treated wood and for plywood turned up in November following declines in October. Millwork prices were unchanged after falling in the previous month.

Prices for containers were unchanged subsequent to a 0.3-percent advance in the preceding month. The index for paper, plastic, and foil bags turned down 0.5 percent after rising 1.1 percent a month earlier. Prices for paper boxes and containers were unchanged following increases in October. Conversely, the glass containers index rose 0.8 percent after declining 0.1 percent in the previous month.

Crude goods

The Producer Price Index for Crude Materials for Further Processing climbed 15.7 percent in November following a 10.5-percent decrease in October. Nearly all of this upturn can be traced to prices for crude energy materials, which advanced in November after dropping a month earlier. The index for basic industrial materials also turned up following a decline in October. Alternatively, prices for crude foodstuffs and feedstuffs rose less in November than they had in the prior month. (See table B.)

The index for crude energy materials increased 35.8 percent in November after falling 23.5 percent in the previous month. Accounting for most of this upturn, natural gas prices surged 92.8 percent following a 39.6-percent drop in October. The crude petroleum index decreased less in November than it had in the preceding month-1.2 percent and 9.4 percent, respectively. By contrast, coal prices declined 0.2 percent after inching up 0.1 percent in October. (See table 2.)

The index for crude nonfood materials less energy advanced 0.5 percent in November following a 1.3-percent decline in the prior month. Gold ore prices moved up 12.0 percent after falling 6.6 percent in October. The indexes for both aluminum and copper base scrap and for raw cotton also turned up in November. Prices for miscellaneous roundwood products and wastepaper rose more than they had in October. Conversely, the iron and steel scrap index decreased 5.6 percent in November after declining 2.7 percent a month earlier. Prices for softwood logs, bolts, and timber also fell more than they had in October. The indexes for pulpwood and industrial sand moved down in November after increasing in the previous month.

The index for crude foodstuffs and feedstuffs climbed 2.8 percent in November following a 3.1-percent gain in the preceding month. Corn prices jumped 24.9 percent after surging 32.7 percent in October. The indexes for wheat and slaughter turkeys also moved up at slower rates in November than they had a month earlier. Prices for slaughter cattle, slaughter hogs, and fresh vegetables (except potatoes) fell more than they had in October. The indexes for fresh fruits and melons and for unprocessed shellfish turned down in November. By contrast, soybean prices advanced 18.8 percent following a 5.5-percent increase in October. The fluid milk index also rose more in November than it had in the previous month. Prices for slaughter broilers and fryers turned up after declining in October.

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

Mining. The Producer Price Index for the Net Output of Total Mining Industries advanced 22.8 percent in November following a 16.4-percent drop in October. (Net output price indexes are not seasonally adjusted.) Prices received by the oil and gas extraction industry group jumped 37.8 percent after falling 24.7 percent a month earlier. The industry indexes for gold ore mining, oil and gas well drilling, crushed and broken limestone mining and quarrying, and for construction sand and gravel mining also turned up after declining in October. By contrast, price increases received by the industry for oil and gas operations support activities slowed from 0.6 percent in October to 0.1 percent in November. The industry index for crushed and broken granite mining and quarrying turned down following an increase in the prior month. The index for the bituminous coal and lignite surface mining industry fell more in November than it had a month earlier. In November, the Producer Price Index for Total Mining Industries was 211.9 (December 1984 = 100), 14.3 percent below its year-ago level.

Manufacturing. The Producer Price Index for the Net Output of Total Manufacturing Industries rose 0.4 percent in November following a 0.6- percent decline in October. Prices paid to manufacturers of transportation equipment advanced 2.7 percent after increasing 0.3 percent in the previous month. The industry group indexes for petroleum and coal products and for wood products fell less than they had in October. Prices received by food manufacturers and by beverage and tobacco manufacturers turned up in November following declines a month earlier. Conversely, the industry group index for chemical manufacturing decreased 0.4 percent after rising 0.2 percent in October. Prices paid to manufacturers of plastics and rubber products also turned down following increases in the prior month, and the industry group index for machinery manufacturing rose less than in October. In November, the Producer Price Index for Total Manufacturing Industries was 156.5 (December 1984 = 100), 2.5 percent above its year-ago level.

Services. Among services industries in November, higher prices were received by the industries for commercial banking, securities brokerage, savings institutions, and television broadcasting. By contrast, lower prices were paid to the industries for lessors of nonresidential buildings (except miniwarehouses), couriers, investment banking and securities dealing, wired telecommunications carriers, general medical and surgical hospitals, and line-haul railroads.

PPI Weights to be Updated

The Bureau of Labor Statistics will soon update the value weights used to calculate Producer Price Indexes to more accurately reflect recent production and marketing patterns. The new weights, which will be introduced in February 2007 with the release of January 2007 index data, will be based on shipment values from the year 2002. These value weights come from the Census of Manufactures, the Census of Mining, the Census of Services, and the Census of Agriculture. PPI weights have been based on 1997 census shipment values since January 2002.

All indexes will be affected by this weight update, including all the industry net output indexes, as well as those calculated for traditional commodity groupings. In addition, weights will be updated from the 1997 to the 2002 census for all stage-of-processing indexes, durability of product indexes, and special commodity-grouping indexes. This weight revision will not change the arithmetic reference base, in most cases 1982 = 100, of the PPI index system.

It is important to note that the PPI classification system and aggregation structure will not change as a result of these weight revisions. The weight update, however, will result in significant shifts in the relative importance of various industries and products, and these shifts will impact future aggregate indexes in a manner commensurate with the relative gains and losses in value weights from 1997 to 2002.

Relative importance figures as of December 2006, based on the 1997 and 2002 weighting schemes, will be available on February 14, 2007, two business days prior to the release of January 2007 PPI data. This information will be available on the PPI website at www.bls.gov/ppi or by calling the Division of Industrial Prices and Price Indexes, Section of Index Analysis and Public Information at 202-691-7705.