March 2007 Producer Price Index

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The Producer Price Index for Finished Goods increased 1.0 percent in March, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This advance followed a 1.3-percent rise in February and a 0.6-percent decrease in January. The index for finished goods excluding foods and energy was unchanged in March after moving up 0.4 percent in February. At the earlier stages of processing, prices received by producers of intermediate goods increased 1.0 percent in March following a 1.1-percent advance a month earlier, and the crude goods index rose 3.2 percent after climbing 8.9 percent in February. (See table A.)

Among finished goods, the index for consumer goods less foods and energy edged up 0.1 percent in March following a 0.5-percent increase in the preceding month, while capital equipment prices moved down 0.1 percent after advancing 0.3 percent in February. The consumer foods index rose less in March than it had a month earlier-1.4 and 1.9 percent, respectively. By contrast, slightly counteracting the deceleration in finished goods prices, the index for energy goods increased 3.6 percent in March compared with a rise of 3.5 percent in February.

During the first quarter of 2007, the finished goods index climbed at a 6.9-percent seasonally adjusted annual rate (SAAR), after moving up at a 3.5-percent SAAR during the fourth quarter of 2006. This faster rate of increase can be traced primarily to prices for finished consumer foods, which advanced at an 18.7-percent SAAR for the 3 months ended March 2007 after rising at a 3.6-percent SAAR for the 3 months ended December 2006. The index for finished energy goods increased at a 9.4-percent SAAR during the first quarter of 2007 after moving up at a 6.6-percent SAAR during the fourth quarter of 2006. Prices for finished goods less foods and energy advanced at a 2.3-percent SAAR for the 3 months ended in March, the same as for the 3 months ended in December. At the earlier stages of processing, the intermediate goods index increased at a 5.9-percent SAAR during the first quarter of 2007 after inching up at a 0.7-percent SAAR during the fourth quarter of 2006, and prices for crude goods jumped at a 23.5-percent SAAR for the 3 months ended in March after climbing at a 29.0-percent SAAR for the 3 months ended in December. (See summary table below.)

Crude materials for further processing 17.4 21.1 -2.4 6.4 5.9 29.0 23.5 Foodstuffs and feedstuffs -2.6 1.6 2.9 2.5 18.8 22.9 59.3 Crude energy materials 35.9 42.2 -11.4 -11.3 2.6 54.0 -11.6 Crude nonfood materials less energy 20.5 5.2 16.7 66.6 -2.3 -7.0 59.8 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 1.4 percent in March to 164.2 (1982 = 100). From March 2006 to March 2007, finished goods prices advanced 3.2 percent. Over the same period, the index for finished consumer foods increased 7.8 percent, prices for finished goods less foods and energy moved up 1.7 percent, and the index for finished energy goods rose 2.8 percent. For the 12 months ended in March, prices received by manufacturers of intermediate goods advanced 3.5 percent, and the crude goods index jumped 15.6 percent.

Finished goods

The capital equipment index inched down 0.1 percent in March after rising 0.3 percent in February. Most of this downturn can be attributed to prices for light motor trucks, which fell 1.2 percent in March following a 1.7-percent increase a month earlier. The indexes for commercial furniture and for ships also decreased after advancing in the preceding month. Prices for pumps, compressors, and related equipment rose less in March than in the prior month, while the index for electronic computers declined more than it had in February. Prices for communication and related equipment were unchanged following increases in the previous month. By contrast, partially offsetting the downturn in capital equipment prices, the index for x-ray and electromedical equipment moved up 0.3 percent in March after falling 2.6 percent in February. Prices for passenger cars, railroad equipment, and for integrating and measuring instruments also turned up in March. (See table 2.) The capital equipment index advanced at a 1.9-percent SAAR during the first quarter of 2007 after climbing at a 2.7-percent SAAR during the fourth quarter of 2006.

The index for finished consumer goods less foods and energy edged up 0.1 percent in March following a 0.5-percent rise in February. Cigarette prices were unchanged in March after climbing 4.6 percent a month earlier. The indexes for light motor trucks; toys, games, and children's vehicles; household furniture; soaps and synthetic detergents; lawn and garden equipment (excluding garden tractors); and sanitary papers and health products turned down following gains in February. By contrast, the passenger cars index moved up 0.2 percent in March after falling 1.2 percent in the prior month. Prices for newspaper circulation and home electronic equipment also increased following declines in February, while the pharmaceutical preparations index advanced at a slightly quicker rate in March than it had in the preceding month. During the first quarter of 2007, prices for finished consumer goods less foods and energy rose at a 3.1-percent SAAR after moving up at a 1.7-percent SAAR during the fourth quarter of 2006.

The index for finished consumer foods rose 1.4 percent in March following a 1.9-percent advance in the prior month. Prices for processed young chickens moved up 1.1 percent compared with a 3.8-percent jump in February. The indexes for fresh fruits and melons, pork, eggs for fresh use, and confectionery end products turned down in March after increasing a month earlier. Prices for bakery products and pasta products rose less than they had in February. By contrast, the index for fresh and dry vegetables surged 13.5 percent in March following an 8.3-percent advance in the preceding month. Prices for dairy products also increased more than they had in February. The indexes for soft drinks and processed turkeys climbed after falling in the prior month.

The finished energy goods index rose 3.6 percent in March after advancing 3.5 percent in February. In March, higher prices for gasoline, which jumped 8.7 percent, along with increasing prices for residential natural gas, liquefied petroleum gas, diesel fuel, and home heating oil outweighed declining prices for finished lubricants.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components rose 1.0 percent in March, slightly less than the 1.1-percent increase in the prior month. In March, price advances for intermediate energy goods, materials for both nondurable and durable manufacturing, intermediate foods and feeds, and for materials and components for construction outweighed falling prices for components for manufacturing. Prices for intermediate materials less foods and energy moved up 0.2 percent for the second consecutive month. (See table B.)

The intermediate energy goods index rose 4.1 percent in March subsequent to a 4.5-percent advance in the previous month. Prices for natural gas to electric utilities increased 5.9 percent after climbing 12.2 percent in February. The indexes for both commercial and industrial electric power turned down following gains a month earlier. Prices for asphalt, home heating oil, and both commercial and industrial natural gas rose less than they had in the prior month. By contrast, partially offsetting the deceleration in intermediate energy goods prices, the jet fuels index jumped 12.4 percent in March after inching up 0.3 percent in the preceding month. Gasoline prices also increased more than they had in February. (See table 2.) The intermediate energy goods index advanced at a 19.7-percent SAAR from December 2006 to March 2007 after rising at a 3.3- percent SAAR during the final quarter of 2006.

Subsequent to a 0.7-percent increase in February, prices for materials for nondurable manufacturing moved up 0.9 percent in March. The index for inedible fats and oils rose 2.4 percent following a 9.6-percent drop in February. Prices for plastic resins and materials, intermediate basic organic chemicals, paperboard, and paint materials also turned up in March. The fertilizer materials index advanced at a faster rate than it had in February. By contrast, the index for primary basic organic chemicals increased 0.5 percent after climbing 3.2 percent in February. Prices for finished fabrics also rose less in March, and the paper index decreased more than it had a month earlier. From December 2006 to March 2007, prices for materials for nondurable manufacturing increased at a 6.1-percent SAAR after moving down at a 4.5-percent SAAR in the prior quarter.

The index for materials for durable manufacturing advanced 1.1 percent in March following a 0.3-percent increase in February. Prices for copper and brass mill shapes rose 1.7 percent after declining 4.5 percent a month earlier. Prices for cement, building paper and board, and thermoplastic resins also turned up in March. The indexes for hot rolled steel bars, plates, and structural shapes; prepared paint; and hot rolled steel sheet and strip increased more than they had in February. Conversely, the titanium mill shapes index decreased 13.1 percent in March compared with a 0.3-percent advance in the preceding month. Prices for softwood lumber and aluminum mill shapes rose less than they had in February. The index for materials for durable manufacturing advanced at a 3.0-percent SAAR for the 3 months ended March 2007 after declining at a 2.3-percent SAAR in the preceding quarter.

Prices for intermediate foods and feeds moved up 1.7 percent in March following a 2.6-percent increase in the prior month. The prepared animal feeds index rose 1.8 percent after climbing 4.8 percent in February. Prices for processed young chickens also advanced at slower rates in March than they had a month earlier. The indexes for pork and confectionery materials turned down after rising in the previous month. By contrast, prices for fluid milk products increased 2.4 percent subsequent to a 0.5- percent gain in February. The indexes for flour and for refrigerated, perishable prepared foods turned up after falling a month earlier. Prices for refined sugar and byproducts fell less in March than in the previous month. The index for intermediate foods and feeds climbed at a 27.5- percent SAAR in the first quarter of 2007 after rising at a 22.1-percent SAAR in the final quarter of 2006.

Prices for materials and components for construction increased 0.3 percent in March after edging up 0.1 percent in the prior month. The concrete products index advanced 0.8 percent following a 0.3-percent rise in February. Prices for fabricated structural metal products also increased more than they had in the preceding month. Prices for nonferrous wire and cable and for treated wood fell less in March than in the prior month. The indexes for architectural coatings and for asphalt felts and coatings turned up after falling in February. Alternatively, prices for plastic construction products declined 0.3 percent in March following a 0.3- percent advance a month earlier. The index for heating equipment also turned down after rising in February, while prices for plumbing fixtures and brass fittings increased less in March. The index for materials and components for construction advanced at a 2.1-percent SAAR in the first quarter of 2007 after falling at a 2.1-percent SAAR in the prior quarter.

The index for components for manufacturing declined 0.5 percent in March after increasing 0.1 percent for two consecutive months. In March, falling prices for electronic components and accessories, computer storage devices, carpets and rugs, and lamp bulbs and tubes outweighed rising prices for fabricated steel plate, heat exchangers and condensers, steam and hot water equipment, and parts for turbines and turbine generators. The index for components for manufacturing fell at a 1.5-percent SAAR from December 2006 to March 2007 after rising at a 0.3-percent SAAR during the final quarter of 2006.

Crude goods

The Producer Price Index for Crude Materials for Further Processing increased 3.2 percent in March following an 8.9-percent rise in February. The indexes for crude energy materials and for crude foodstuffs and feedstuffs advanced less in March than they had a month earlier. By contrast, partially offsetting the deceleration in crude material prices, the index for basic industrial materials increased more than it had in the prior month. (See table B.)

Prices for crude energy materials advanced 1.7 percent in March after climbing 13.7 percent in the previous month. The natural gas index rose 3.8 percent subsequent to a 21.1-percent surge a month earlier. Prices for crude petroleum turned down 1.3 percent following a 6.4-percent gain in February. The index for coal edged down 0.1 percent compared with a 1.8 percent increase in the preceding month. (See table 2.) During the first quarter of 2007, prices for crude energy materials decreased at an 11.6- percent SAAR after rising at a 54.0-percent SAAR in the prior quarter.

The index for crude foodstuffs and feedstuffs advanced 2.4 percent following a 7.4-percent rise a month earlier. Price increases for slaughter broilers and fryers slowed from 8.7 percent in February to 7.1 percent in March. Wheat prices also rose less than they had in the prior month. The indexes for corn, slaughter hogs, soybeans, and for fresh fruits and melons turned down in March. By contrast, the index for slaughter cattle advanced 5.8 percent following a 3.4-percent rise a month earlier. Prices for fluid milk and for fresh vegetables (except potatoes) also increased more than they had in February. The index for crude foodstuffs and feedstuffs rose at a 59.3-percent SAAR in the first quarter of 2007 after increasing at a 22.9-percent SAAR in the last quarter of 2006.

Prices for crude nonfood materials less energy rose 7.7 percent in March subsequent to a 2.7-percent increase in February. The iron and steel scrap index advanced 18.8 percent following a 9.1-percent rise in the previous month. Prices for copper base scrap turned up in March, while the index for aluminum base scrap fell less than it had a month earlier. Alternatively, prices for gold ores declined 1.9 percent after climbing 9.2 percent in the prior month. The indexes for construction sand, gravel, and crushed stone and for wastepaper advanced less than they had in February. Prices for raw cotton fell more than in the previous month, and the hides and skins index showed no change after rising a month earlier. The index for basic industrial materials increased at a 59.8-percent SAAR during the first quarter of 2007 after decreasing at a 7.0-percent SAAR for the last quarter of 2006.

Net output price indexes

Mining, Utilities, and Manufacturing Industries. The Producer Price Index for the Net Output of Total Mining, Utilities, and Manufacturing Industries rose 1.2 percent in March following a 1.3-percent increase in February. (Net output price indexes are not seasonally adjusted.) Higher prices received by the industry groups for petroleum and coal products manufacturing; food; chemicals; oil and gas extraction; and natural gas distribution outweighed lower prices received by the industry groups for electric power generation, distribution, and transmission; computer and electronic products; and transportation equipment.

Trade Industries. The Producer Price Index for the Net Output of Total Trade Industries advanced 1.0 percent after declining 0.3 percent in February. (Trade indexes measure changes in margins received by wholesalers and retailers.) Margins received by gasoline stations jumped 18.3 percent in March following a 24.8-percent drop in the previous month. The margin indexes for merchant wholesalers of durable goods, shoe stores, grocery stores, and automobile dealers also rose after falling in the prior month. Conversely, partially offsetting the upturn in the trade industries index, margins received by merchant wholesalers of nondurable goods decreased 0.8 percent following a 4.1-percent increase a month earlier. The margin indexes for department stores, electronic shopping and mail order houses, and clothing stores also turned down after rising in February.

Transportation and Warehousing Industries. The Producer Price Index for the Net Output of Transportation and Warehousing Industries edged down 0.2 percent in March following a 0.5-percent decline in the previous month. Prices received by the scheduled air transportation industry fell 1.0 percent after decreasing 2.9 percent a month earlier. The index for the general freight trucking industry group turned up following a decline in the preceding month. By contrast, prices received by the couriers industry decreased 0.9 percent after rising 0.3 percent a month earlier. The industry indexes for line-haul railroads, coastal and Great Lakes freight transportation, inland water freight transportation, and nonscheduled air transportation also turned down after rising in February. Prices received by the used household and office goods moving industry were unchanged following increases in the prior month.

Traditional Service Industries. The Producer Price Index for the Net Output of Total Traditional Service Industries decreased 1.4 percent in March after edging up 0.3 percent in February. Most of this downturn can be traced to prices received by the commercial banking industry, which fell 12.9 percent following a 0.6-percent rise a month earlier. The industry indexes for offices of physicians (excluding mental health) and management consulting services also turned down after increasing in the previous month. Prices received by the investment banking and securities dealing industry rose less in March, while the industry index for cellular and other wireless carriers fell more than in February. By contrast, the index for offices of lawyers increased 1.5 percent in March after inching up 0.1 percent in February. The indexes for accommodation and wired telecommunications carriers turned up following declines in the preceding month.