September 2007 Producer Price Index

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The Producer Price Index for Finished Goods increased 1.1 percent in September, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This advance followed a 1.4-percent decrease in August and a 0.6-percent rise in July. The index for finished goods excluding foods and energy moved up 0.1 percent in September after increasing 0.2 percent in August. At the earlier stages of processing, prices received by producers of intermediate goods turned up 0.4 percent after declining 1.2 percent a month earlier, and the crude goods index rose 0.1 percent following a 3.0-percent drop in August. (See table A.)

Among finished goods, the index for finished energy goods turned up 4.1 percent in September after decreasing 6.6 percent in the preceding month. Prices for finished consumer foods moved up 1.5 percent after declining 0.2 percent in August. The index for finished consumer goods less foods and energy advanced 0.2 percent for the fourth consecutive month. Slightly counteracting the upturn in finished goods prices, the index for capital equipment fell 0.1 percent following a 0.1-percent increase in August.

During the third quarter of 2007, the finished goods index rose at a 1.4-percent seasonally adjusted annual rate (SAAR), after climbing at a 6.0-percent SAAR during the second quarter. Much of this slower rate of increase can be traced to prices for finished energy goods, which moved down at a 1.5-percent SAAR for the 3 months ended in September after increasing at a 27.5-percent SAAR for the 3 months ended in June. The index for finished goods less foods and energy advanced at a 1.5-percent SAAR during the third quarter of 2007 after rising at a 2.5-percent SAAR during the second quarter. By contrast, prices for finished consumer foods increased at a 4.7-percent SAAR for the 3 months ended in September after declining at a 2.1-percent SAAR for the 3 months ended in June. At the earlier stages of processing, the intermediate goods index moved down at a 0.7-percent SAAR during the third quarter of 2007 after increasing at a 10.7-percent SAAR during the second quarter, and prices for crude goods moved down at a 6.6-percent SAAR for the 3 months ended in September after jumping at a 12.4-percent SAAR for the 3 months ended in June. (See summary table.)

Before seasonal adjustment, the Producer Price Index for Finished Goods climbed 1.0 percent in September to 167.4 (1982 = 100). From September 2006 to September 2007, finished goods prices rose 4.4 percent. Over the same period, the index for finished energy goods increased 10.6 percent, prices for finished consumer foods moved up 5.7 percent, and the index for finished goods less foods and energy advanced 2.0 percent. For the 12 months ended in September, prices received by manufacturers of intermediate goods rose 4.2 percent, and the crude goods index advanced 11.4 percent.

Finished goods

The finished energy goods index turned up 4.1 percent after dropping 6.6 percent in August. About half of this upturn can be attributed to the gasoline index, which moved up 8.4 percent in September after falling 13.8 percent a month earlier. Prices for residential natural gas, home heating oil, diesel fuel, and kerosene also turned up after decreasing in the preceding month. The index for liquefied petroleum gas advanced more in September than in the prior month, and prices for residential electric power were unchanged following August decreases. Partially offsetting the upturn in finished energy goods prices, the index for lubricating and similar oils fell 0.9 percent after advancing 1.4 percent in August. (See table 2.)

The index for finished consumer foods turned up 1.5 percent in September following a 0.2-percent decrease in August. The index for fresh and dry vegetables jumped 15.2 percent in September after falling 6.0 percent in the previous month. Prices for eggs for fresh use, fresh fruits and melons, dairy products, and processed young chickens also turned up in September. The index for bakery products rose more than in August. By contrast, the index for soft drinks turned down 0.7 percent in September after climbing 0.7 percent a month earlier. Prices for confectionery end products also declined following August increases.

The index for finished consumer goods less foods and energy climbed 0.2 percent for the fourth consecutive month. Rising prices for cigarettes, pharmaceutical preparations, alcoholic beverages, household furniture, newspaper circulation, and book publishing outweighed price decreases for passenger cars and light motor trucks. During the third quarter of 2007, the index for finished consumer goods less foods and energy moved up at a 2.4-percent SAAR after advancing at a 2.6-percent SAAR during the second quarter.

The index for capital equipment turned down 0.1 percent after rising 0.1 percent in August. The index for passenger cars dropped 1.8 percent following a 0.5-percent rise in the previous month. Prices for transformers and power regulators also turned down in September, and the index for civilian aircraft advanced less than in August. Conversely, the decrease in the index for light motor trucks slowed to 0.5 percent in September after declining 0.9 percent in the previous month. Prices for heavy motor trucks and electronic computers also moved down less than a month earlier. The index for commercial furniture turned up in September, and prices for integrating and measuring instruments advanced more than in August. The capital equipment index inched up at a 0.3-percent SAAR from June to September after increasing at a 2.2-percent SAAR from March to June.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components increased 0.4 percent in September after falling 1.2 percent in August. Prices for intermediate energy goods and for materials for nondurable manufacturing rose in September following declines a month earlier. The index for intermediate foods and feeds advanced more than it had in August, while prices for materials for durable manufacturing decreased less in September than in the previous month. By contrast, slightly counteracting the upturn in prices for intermediate goods, the index for materials and components for construction moved down more than it had in August. Excluding foods and energy, prices for intermediate goods inched up 0.1 percent in September after dropping 0.5 percent in the prior month. (See table B.)

The index for intermediate energy goods climbed 1.1 percent in September following a 3.7-percent decline in the preceding month. Diesel fuel prices increased 3.1 percent after falling 7.2 percent in August. The indexes for gasoline, commercial natural gas, home heating oil, and asphalt also turned up in September. Prices for liquefied petroleum gas and residual fuel moved up more than they had in August. Conversely, the jet fuel index dropped 6.4 percent in September following a 2.3-percent decrease a month earlier. Prices for natural gas to electric utilities also fell more than they had in August, while the index for industrial electric power rose less in September than in the prior month. (See table 2.) Prices for intermediate energy goods declined at a 2.9-percent SAAR during the third quarter of 2007 after surging at a 23.4-percent SAAR during the second quarter.

The index for materials for nondurable manufacturing advanced 0.5 percent in September following a 1.1-percent decline in the prior month. Leading this reversal, prices for primary basic organic chemicals moved up 4.9 percent after falling 7.0 percent in August. Similarly, the indexes for inedible fats and oils and for potassium and sodium compounds (excluding bleaches and alkalies) also turned up in September. Paperboard prices rose following no change in August. By contrast, prices for nitrogenates decreased 4.4 percent after rising 3.5 percent in August. The finished fabrics index also turned down after increasing in the prior month. Prices for plastic resins and materials fell in September following no change a month earlier, while the index for paint materials rose less than in August. The index for materials for nondurable manufacturing advanced at a 1.7-percent SAAR for the 3 months ended in September after climbing at a 23.1-percent SAAR for the 3 months ended in June.

The index for intermediate foods and feeds increased 1.4 percent in September following a 0.3-percent rise in the preceding month. Flour prices jumped 13.2 percent after advancing 3.7 percent in August. The indexes for natural, processed, and imitation cheese; processed young chickens; and refined sugar and byproducts turned up in September. Prices for prepared animal feeds increased following no change in August, while the indexes for dry milk products and pork fell less in September than they had a month earlier. Conversely, prices for fluid milk products edged up 0.2 percent following a 2.3-percent gain in August. The beef and veal index also moved up less in September than in the previous month. Prices for intermediate foods and feeds climbed at a 10.5-percent SAAR during the third quarter of 2007 after rising at an 11.7-percent SAAR during the second quarter.

The index for materials for durable manufacturing declined 1.3 percent in September compared with a 1.5-percent decrease in August. In September, falling prices for primary nonferrous metals; hot rolled steel sheet and strip; copper and brass mill shapes; aluminum mill shapes; hot rolled steel bars, plates, and structural shapes; and semifinished steel mill products outweighed rising prices for cold rolled steel sheet and strip, cement, and prepared paint. The index for materials for durable manufacturing dropped at a 12.5-percent SAAR for the 3 months ended in September after surging at a 20.8-percent SAAR for the 3 months ended in June.

The index for materials and components for construction fell 0.2 percent in September after inching down 0.1 percent in the previous month. In September, lower prices for nonferrous wire and cable, asphalt felts and coatings, steel mill products, softwood lumber, plastic construction products, and gypsum products more than offset higher prices for switchgear and switchboard equipment, concrete products, and for air conditioning and refrigeration equipment. The index for materials and components for construction edged down at a 0.2-percent SAAR during the third quarter of 2007 after rising at a 4.5-percent SAAR during the second quarter.

Crude goods

The Producer Price Index for Crude Materials for Further Processing edged up 0.1 percent in September following a 3.0-percent decrease in the prior month. Prices for crude foodstuffs and feedstuffs moved up after declining in the previous month. The index for crude energy materials decreased less than a month earlier, and prices for basic industrial materials rose more than they had in August. (See table B.)

Prices for crude foodstuffs and feedstuffs increased 2.4 percent in September compared with a 1.5-percent decline in the preceding month. The soybean index moved up 13.1 percent after decreasing 8.6 percent in August. Prices for slaughter broilers and fryers, slaughter cattle, fresh and dry vegetables, and for fresh fruits and melons also turned up in September. Wheat prices increased more than they had in the preceding month, and the corn index fell less than it had a month earlier. By contrast, partially offsetting the upturn in crude foodstuffs and feedstuffs prices, the index for slaughter hogs declined 4.4 percent subsequent to no change in August. The fluid milk index decreased at a faster rate compared with August, and prices for alfalfa hay turned down in September. (See table 2.) The crude foodstuffs and feedstuffs index increased at a 12.2-percent SAAR during the third quarter of 2007 after rising at an 11.7-percent SAAR in the prior quarter.

Prices for crude energy materials fell 2.0 percent in September subsequent to a 5.6- percent decrease in the preceding month. Natural gas prices dropped 11.1 percent following a 12.4-percent decline in the previous month. The crude petroleum index increased 7.1 percent after a 1.3-percent gain in August. By contrast, prices for coal inched down 0.2 percent compared with a 1.2-percent increase a month earlier. During the third quarter of 2007, the crude energy materials index decreased at a 23.4-percent SAAR after rising at a 20.7-percent SAAR in the second quarter.

The index for crude nonfood materials less energy advanced 1.6 percent following a 1.3-percent increase in August. Iron and steel scrap prices rose 5.8 percent in September subsequent to a 1.3-percent advance in the previous month. The wastepaper and gold ores indexes also increased more than they had in the preceding month. Prices for raw cotton turned up in September. The indexes for copper base scrap and for softwood logs, bolts, and timber decreased less than they had in the prior month. By contrast, prices for aluminum base scrap moved down 0.9 percent compared with no change in August. The construction sand, gravel, and crushed stone index rose less in September than in August. For the 3 months ended September 2007, the basic industrial materials index advanced at a 12.4-percent SAAR after no change in the 3 months ended in June.

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 0.5 percent in September after falling 1.0 percent in August. (Net output price indexes are not seasonally adjusted.) Most of this upturn can be attributed to prices received by petroleum and coal products manufacturers, which advanced 3.8 percent after declining 8.6 percent a month earlier. The indexes for natural gas distributors, food manufacturers, and the mining support activities industry group also turned up in September. Prices received by the oil and gas extraction industry group fell less than in August. By contrast, partially offsetting the upturn in overall mining, utility, and manufacturing prices, the index for the electric power generation industry decreased 1.7 percent after rising 4.5 percent in August. Prices received by the transportation equipment industry group fell following no change in the previous month, and the industry group index for chemical manufacturing increased less than it had in August. For the 3 months ended September 2007, the total mining, utilities, and manufacturing industries index advanced at a 0.8-percent annual rate after rising at a 10.6-percent annual rate for the 3 months ended in June.

Trade Industries. The Producer Price Index for the Net Output of Total Trade Industries declined 2.2 percent in September compared with a 1.0-percent rise in August. (Trade indexes measure changes in margins received by wholesalers and retailers.) Margins received by merchant wholesalers of nondurable goods fell 4.2 percent after increasing 4.5 percent a month earlier. The margin indexes for wholesalers of durable goods, department stores, motor vehicle and parts dealers, fuel dealers, and for health and personal care stores also turned down in September. Margins received by gasoline stations fell after no change in August, and the margin index for electronic shopping and mail order houses rose less in September than in the prior month. Conversely, margins received by building materials and supply dealers fell 0.4 percent in September after declining 1.5 percent a month earlier. The margin index for furniture stores rose more than it had in August. During the third quarter of 2007, the total trade industries index decreased at a 1.9-percent annual rate after rising at a 5.6-percent annual rate in the second quarter.

Transportation and Warehousing Industries. The Producer Price Index for the Net Output of Total Transportation and Warehousing Industries moved down 0.9 percent in September subsequent to a 0.4-percent gain in August. The industry index for scheduled passenger air transportation fell 6.4 percent following a 0.4-percent decline in the previous month. Prices received by the industries for freight transportation arrangement and for local, general-freight trucking turned down in September after increasing a month earlier. Prices received by the industries for line-haul railroads, long distance general freight trucking (by the truckload), and inland water freight transportation rose less than they had in August. By contrast, the industry index for long distance general freight trucking (less than truckload) increased 0.3 percent in September after declining 0.6 percent a month earlier. Prices received by the industries for nonscheduled air transportation and pipeline transportation of crude oil rose following no change in the previous month. Prices received by household and office goods movers turned up after falling in August. During the third quarter of 2007, the transportation and warehousing industries index increased at a 2.7-percent annual rate after rising at a 6.4-percent annual rate in the second quarter.

Traditional Service Industries. The Producer Price Index for the Net Output of Total Traditional Service Industries edged down 0.2 percent in September after increasing 0.4 percent in August. The index for the depository credit intermediation industry group fell 1.7 percent following a 4.0-percent rise in the prior month. Prices received by the industries for investment banking and securities dealing and for passenger car rental also turned down in September. Prices received by non-casino hotels and motels declined more than in August. By contrast, the index for cellular and other wireless carriers rose 1.9 percent in September after decreasing 3.5 percent in the previous month. Prices received by wired telecommunication carriers, general medical and surgical hospitals, and management consultants also turned up in September. The industry index for offices of real estate agents and brokers fell less than it had in August. The index for total traditional service industries was unchanged during the third quarter of 2007 after rising at a 7.0- percent annual rate during the second quarter.