August 2007 Producer Price Index

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The Producer Price Index for Finished Goods fell 1.4 percent in August, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This decrease followed a 0.6-percent increase in July and a 0.2-percent decline in June. At the earlier stages of processing, prices received by manufacturers of intermediate goods moved down 1.2 percent in August compared with a 0.6-percent advance in July, and the crude goods index dropped 3.0 percent after climbing 1.2 percent in the prior month. (See table A.)

Accounting for most of the downturn in finished goods prices, the index for energy goods fell 6.6 percent in August following a 2.5-percent rise in the prior month. Prices for consumer foods declined 0.2 percent after inching down 0.1 percent in July. By contrast, slightly counteracting the downturn in finished goods prices, the index for finished goods other than foods and energy moved up 0.2 percent in August compared with a 0.1-percent increase a month earlier.

Before seasonal adjustment, the Producer Price Index for Finished Goods decreased 1.4 percent in August to 165.8 (1982 = 100). From August 2006 to August 2007, finished goods prices advanced 2.2 percent. Over the same period, the index for finished goods other than foods and energy climbed 2.2 percent, prices for finished consumer foods rose 4.7 percent, and the index for finished energy goods was unchanged. At the earlier stages of processing, prices received by intermediate goods producers increased 2.4 percent, and the crude goods index moved up 6.9 percent, for the 12 months ended August 2007.

Finished goods

The index for finished energy goods fell 6.6 percent in August, seasonally adjusted, after rising 2.5 percent in July. Gasoline prices dropped 13.8 percent in August following a 3.2-percent advance a month earlier. Similarly, the indexes for residential natural gas, residential electric power, and diesel fuel also turned down after increasing in July. Prices for home heating oil declined more in August than they had in the previous month, while the index for liquefied petroleum gas moved up less than it had in July. By contrast, slightly counteracting the downturn in prices for finished energy goods, the index for finished lubricants rose 1.3 percent compared with a 1.8-percent decrease in the preceding month. (See table 2.)

The index for finished consumer foods fell 0.2 percent in August after edging down 0.1 percent in July. In August, price declines for fresh and dry vegetables, eggs for fresh use, pork, processed young chickens, fresh fruits and melons, and for finfish and shellfish outweighed price increases for beef and veal, soft drinks, and confectionery end products.

The index for finished goods other than foods and energy climbed 0.2 percent after inching up 0.1 percent in July. In August, higher prices for pharmaceutical preparations, civilian aircraft, passenger cars, alcoholic beverages, and newspaper circulation more than offset lower prices for light motor trucks, electronic computers, heavy motor trucks, and floor coverings.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components declined 1.2 percent in August following a 0.6-percent increase in July. Prices for intermediate energy goods, materials for nondurable manufacturing, and materials and components for construction turned down after rising in July. The index for materials for durable manufacturing fell more in August, while prices for intermediate foods and feeds advanced less than they had in July. (See table B.)

Prices for intermediate energy goods fell 3.7 percent in August after moving up 2.0 percent in July. The diesel fuel index dropped 7.2 percent compared with a 6.8-percent increase a month earlier. Prices for gasoline and jet fuels also turned down after rising in July. The indexes for commercial natural gas, home heating oil, and natural gas to electric utilities decreased more than they had in the previous month. By contrast, partially offsetting the downturn in intermediate energy goods prices, the index for industrial electric power advanced 1.6 percent in August following no change in the prior month. Prices for commercial electric power rose after falling in July. (See table 2.)

The materials for nondurable manufacturing index declined 1.1 percent in August after increasing by the same rate in July. Prices for primary basic organic chemicals dropped 7.0 percent following a 2.8-percent rise in the preceding month. The index for inedible fats and oils also turned down in August. Ethanol prices decreased more than they had in July, and the index for plastic resins and materials was unchanged in August after increasing a month earlier. By contrast, prices for intermediate basic organic chemicals rose 0.6 percent following a 5.6-percent decline in July. The indexes for finished fabrics and synthetic fibers also turned up in August. Prices for phosphates increased at faster rates than they had in July.

The index for materials for durable manufacturing decreased 1.5 percent in August after falling 0.5 percent in July. The cold rolled steel sheet and strip index dropped 17.4 percent in August following no change a month earlier. Prices for copper cathode and refined copper; copper and brass mill shapes; hot rolled steel bars, plates, and structural shapes; softwood lumber; and building paper and board turned down after rising in July. By contrast, prices for hot rolled steel sheet and strip advanced 11.6 percent in August after declining 12.9 percent in the previous month. The index for secondary aluminum also turned up following a decline in July, and prices for semifinished steel mill products fell less in August than they had a month earlier.

The index for materials and components for construction decreased 0.1 percent in August following a 0.2-percent gain in July. The index for nonferrous wire and cable fell 1.6 percent after increasing 4.3 percent a month earlier. Prices for softwood lumber, cast iron pressure and soil pipe fittings, treated wood, building paper and board, and plywood also turned down subsequent to rising in the preceding month. Conversely, the index for asphalt felts and coatings advanced 2.3 percent following a 2.5-percent decline in July. Prices for fabricated structural metal products, concrete products, and wiring devices also turned up in August.

The rate of increase in prices for intermediate foods and feeds slowed from 0.8 percent in July to 0.3 percent in August. The index for fluid milk products rose 2.3 percent following a 6.5-percent advance in the previous month. Prices for shortening and cooking oils also moved up less than in July. Prepared animal feeds prices were unchanged in August after increasing a month earlier. The indexes for dry milk products; natural, processed, and imitation cheese; and processed young chickens turned down following advances in July. Prices for refined sugar and byproducts fell more than in the previous month. By contrast, beef and veal prices climbed 2.3 percent in August after dropping 8.4 percent in the prior month. The index for snack chips also turned up in August, and pork prices fell less than in July.

Crude goods

The Producer Price Index for Crude Materials for Further Processing fell 3.0 percent in August compared with a 1.2-percent advance in July. Prices for crude energy materials declined after rising in the previous month. The index for crude foodstuffs and feedstuffs also turned down in August. By contrast, slightly counteracting the downturn in crude goods prices, the index for basic industrial materials increased following no change a month earlier. (See table B.)

The index for crude energy materials fell 5.6 percent in August compared with a 1.1-percent gain in the preceding month. Natural gas prices dropped 12.4 percent after declining 6.4 percent in the prior month. The crude petroleum index rose 1.3 percent following an 11.8-percent rise in July. Prices for coal advanced 1.2 percent subsequent to a 1.7-percent increase a month earlier. (See table 2.)

The crude foodstuffs and feedstuffs index decreased 1.5 percent in August following a 2.1-percent advance in the previous month. Fluid milk prices declined 1.0 percent after rising 9.7 percent in July. Similarly, the indexes for soybeans, slaughter broilers and fryers, slaughter cattle, and fresh and dry vegetables also turned down in August. Prices for slaughter hogs were unchanged after rising in the preceding month, and the index for slaughter turkeys increased less than it had a month earlier. By contrast, corn prices declined 5.5 percent subsequent to a 12.8-percent decrease in July. The fresh fruits and melons index also fell less than it had in the prior month, and wheat prices advanced more than they had a month earlier.

The index for crude nonfood materials less energy rose 1.3 percent in August following no change in July. Prices for iron and steel scrap moved up 1.3 percent compared with a 4.7-percent decrease in the previous month. The indexes for hides and skins and for gold ores also turned up in August. Prices for construction sand, gravel, and crushed stone rose more than they had a month earlier. By contrast, the wastepaper index edged up 0.2 percent after advancing 11.1 percent in July. Prices for copper base scrap and raw cotton turned down in August. The softwood logs, bolts, and timber index declined following no change in the prior month.

Net output price indexes

Mining, Utilities, and Manufacturing Industries. The Producer Price Index for the Net Output of Total Mining, Utilities, and Manufacturing Industries turned down 1.0 percent in August after climbing 0.8 percent in July. (Net output price indexes are not seasonally adjusted.) Most of this downturn can be attributed to prices received by petroleum and coal products manufacturers, which declined 8.6 percent after jumping 5.0 percent a month earlier. The industry indexes for oil and gas extraction and for wood product manufacturing also turned down after increasing in July. Prices received by natural gas distributors fell more in August, and the index for electric power distribution moved up less than in July. By contrast, partially offsetting the downturn in overall mining, utility, and manufacturing prices, the index for the transportation manufacturing industry group was unchanged after decreasing 0.3 percent in July. Prices received by electric power generators advanced more in August than in the previous month, and the index for the beverage and tobacco industry group turned up after falling in July.

Trade Industries. The increase in the Producer Price Index for the Net Output of Total Trade Industries accelerated to 1.0 percent from 0.7 percent in July. (Trade indexes measure changes in margins received by wholesalers and retailers.) Margins received by merchant wholesalers of nondurable goods rose 4.5 percent after moving up 0.7 percent a month earlier. The margin index for wholesalers of durable goods also rose more than in July. Margins received by electronic shopping and mail order houses and by department stores turned up after dropping in the prior month. The margin index for gasoline stations was unchanged after decreasing in July. By contrast, the margin index for grocery stores turned down 1.0 percent after advancing 2.1 percent in the preceding month. Margins for miscellaneous general merchandise stores and for electronics and appliances stores also fell following July increases.

Transportation and Warehousing Industries. The rise in the Producer Price Index for the Net Output of Total Transportation and Warehousing Industries slowed to 0.4 percent in August after climbing 1.3 percent in July. The industry index for couriers advanced 0.2 percent following a 0.5-percent rise in the previous month. Prices received by the industries for scheduled passenger air transportation and for long distance, general freight trucking (less than truckload) turned down after increasing in July. The industry index for pipeline transportation of refined petroleum products was unchanged in August after advancing in the prior month. Conversely, the industry index for line-haul railroads jumped 1.7 percent after no change in July. Prices received by the water transportation industry group and the industry for freight transportation arrangement moved up more in August than in the previous month. The industry index for local, general-freight trucking turned up after falling in July.

Traditional Service Industries. The Producer Price Index for the Net Output of Total Traditional Service Industries turned up 0.4 percent in August after decreasing 0.2 percent in July. The index for the depository credit intermediation industry group rose 4.0 percent following a 4.5-percent drop in the prior month. Prices received by offices of lawyers and non-internet broadcasters also turned up in August. The index for the investment banking and securities dealing industry moved up following no change in July. By contrast, the index for general medical and surgical hospitals turned down 0.3 percent in August after increasing 0.4 percent in the previous month. Prices received by the telecommunications industry group, as well as, by the industries for non-casino hotels and motels, offices of real estate agents and brokers, and securities brokerages also fell following July advances.