August 2008 Producer Price Index

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The Producer Price Index for Finished Goods declined 0.9 percent in August, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This decrease followed advances of 1.2 percent in July and 1.8 percent in June. At the earlier stages of processing, prices received by manufacturers of intermediate goods fell 1.0 percent in August after rising 2.7 percent in the prior month, and the crude goods index dropped 11.9 percent following a 4.2-percent increase in July. (See table A.)

Leading the downturn in prices for finished goods, the index for energy goods fell 4.6 percent in August after climbing 3.1 percent in July. Prices for goods other than foods and energy advanced 0.2 percent following a 0.7-percent rise in the previous month. The index for consumer foods increased 0.3 percent in August, the same rate as in July.

Before seasonal adjustment, the Producer Price Index for Finished Goods decreased 1.6 percent in August to 182.1 (1982 = 100). From August 2007 to August 2008, prices for finished goods advanced 9.6 percent. Over the same period, the index for finished energy goods increased 27.4 percent, prices for finished goods other than foods and energy rose 3.6 percent, and the index for finished consumer foods climbed 9.1 percent. At the earlier stages of processing, prices received by producers of intermediate goods jumped 16.7 percent and the crude goods index surged 38.1 percent for the 12 months ended in August.

Finished goods

The index for finished energy goods declined 4.6 percent in August following a 3.1- percent advance in July. Prices for liquefied petroleum gas dropped 19.5 percent in August after rising 10.8 percent a month earlier. The indexes for residential natural gas, home heating oil, diesel fuel, and kerosene also turned down following increases in July. Gasoline prices fell more in August than they had in the prior month, while the index for residential electric power rose less than it had in July. Conversely, slightly counteracting the overall downturn in finished energy goods, prices for finished lubricants advanced 8.6 percent in August after moving up 5.4 percent in the preceding month. (See table 2.)

The index for finished goods other than foods and energy moved up 0.2 percent in August following a 0.7-percent jump in July. Prices for pharmaceutical preparations advanced 0.4 percent in August after rising 0.7 percent in the prior month. The indexes for light motor trucks, passenger cars, heavy motor trucks, and for medical, surgical, and personal aid devices fell after advancing in July. Prices for turbines and turbine generator sets were unchanged in August following a surge in the previous month. By contrast, the civilian aircraft index climbed 0.7 percent after rising 0.3 percent in July. Prices for pet food and for industrial trucks and tractors also moved up more than they had a month earlier.

The index for finished consumer foods increased 0.3 percent in August, the same as in July. In August, higher prices for meats, canned vegetables and vegetable juices, eggs for fresh use, Irish potatoes for consumer use, spices, and confectionery end products outweighed lower prices for fresh vegetables (excluding potatoes), packaged fluid milk and related products, fresh fruits and melons, and for shortening and cooking oils.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components declined 1.0 percent in August following a 2.7-percent increase in July. Prices for intermediate energy goods and for intermediate foods and feeds turned down after rising in July. The indexes for materials for both durable and nondurable manufacturing and for materials and components for construction advanced less than they had in the previous month. Excluding foods and energy, the intermediate materials index rose 1.7 percent after increasing 2.0 percent in July. (See table B.)

Prices for intermediate energy goods fell 8.2 percent in August after moving up 4.3 percent in July. The jet fuels index dropped 24.9 percent compared with a 6.5-percent increase a month earlier. Prices also turned down in August for diesel fuel, utility natural gas, residual fuels, liquefied petroleum gas, and heating oil. The index for gasoline fell more than in July. By contrast, slightly offsetting the downturn in intermediate energy goods prices, the index for finished lubricants advanced 8.6 percent in August following a 5.4-percent gain in the prior month. (See table 2.)

Prices for intermediate foods and feeds edged down 0.2 percent in August after rising 4.0 percent in July. The index for formula feeds decreased 1.7 percent following an 8.3-percent advance in the previous month. Prices for shortening and cooking oils and for fluid milk products also turned down after rising in July. The indexes for corn, cottonseed, and soybean cake and meal and for beef and veal increased less than in July. By contrast, flour prices advanced 1.5 percent in August after dropping 7.8 percent in the prior month. The indexes for pork and for refined sugar and byproducts rose more in August than a month earlier. Prices for natural cheese (except cottage cheese) fell less than in July.

The index for materials for durable manufacturing moved up 0.4 percent in August after climbing 1.5 percent in July. Prices for thermoplastic resins and materials increased 2.9 percent following an 8.7-percent advance in the prior month. The indexes for primary nonferrous metals, copper and brass mill shapes, secondary precious metals, and specialty glass turned down after rising in July. By contrast, prices for semifinished steel mill products advanced 5.2 percent in August after moving up 2.2 percent in the previous month. The index for prepared paint also increased more than it had in July. Prices for cold rolled steel sheet and strip fell less in August than a month earlier. The indexes for softwood lumber and refined lead turned up after declining in July.

The materials for nondurable manufacturing index advanced 5.2 percent in August following a 5.4-percent rise in July. In August, higher prices for industrial chemicals, agricultural chemicals and chemical products, plastic resins and materials, non-corrugated paperboard, woodpulp, rubber and rubber products, and writing and printing papers outweighed lower prices for inedible fats and oils and for shortening and cooking oils.

The index for materials and components for construction increased 1.5 percent in August following a 1.7-percent rise in July. Prices for paving mixtures and blocks advanced 9.6 percent following a 14.5-percent jump in the prior month. Prices for cast iron pressure and soil pipe and fittings, plastic construction products, and nonferrous wire and cable also increased less in August. The indexes for custom roll form metal products and wiring devices turned down after rising in the preceding month. Conversely, softwood lumber prices advanced 1.1 percent in August following a 3.4-percent decline a month earlier. The indexes for architectural coatings; roofing asphalt, pitches, coatings, and cement; and gypsum products rose more than they had in July.

Crude goods

The Producer Price Index for Crude Materials for Further Processing fell 11.9 percent in August compared with a 4.2-percent advance in the previous month. This downturn was broad based, with prices for crude energy materials, foodstuffs and feedstuffs, and nonfood materials less energy all decreasing after rising in July. (See table B.)

Prices for crude energy materials dropped 19.4 percent following a 6.9-percent gain in July. A major contributor to this downturn was the natural gas index which dropped 23.9 percent in August compared with a 7.8-percent increase in the preceding month. Similarly, prices for crude petroleum fell 17.6 percent after moving up 6.7 percent in July. By contrast, partially offsetting the downturn in prices for crude energy materials, the coal index rose 2.7 percent subsequent to a 2.1-percent advance a month earlier. (See table 2.)

The crude foodstuffs and feedstuffs index moved down 5.2 percent in August after edging up 0.1 percent in the prior month. Prices for soybeans declined 21.8 percent compared with a 7.0-percent rise in July. The index for slaughter poultry also turned down in August. Prices for corn and fluid milk declined more than they had a month earlier. The index for slaughter steers and heifers increased less than it had in July. By contrast, the index for slaughter hogs climbed 20.1 percent following a 2.1-percent decrease a month earlier. Prices for wheat and ungraded chicken eggs also turned up in August. The fresh fruits and melons index declined less than it had in July.

The index for crude nonfood materials less energy fell 1.9 percent following a 3.4- percent advance in July. Leading this downturn, prices for iron and steel scrap fell 3.7 percent compared with a 5.2-percent increase in the previous month. Similarly, the indexes for nonferrous scrap; gold ores; soybeans; plant and animal fibers; and softwood logs, bolts, and timber also turned down in August. Conversely, prices for construction sand, gravel, and crushed stone advanced 1.3 percent after edging down 0.2 percent in July. The phosphates index increased more than it had a month earlier.

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 1.4 percent after climbing 2.2 percent in July. (Net output price indexes are not seasonally adjusted.) The index for the petroleum refineries industry declined 11.4 percent in August after increasing 5.5 percent a month earlier. Prices received by natural gas distributors; oil and gas extractors; automotive, light truck, and utility vehicle manufacturers; as well as by complete swine feed producers also turned down after advancing in the prior month. The industry index for electric power distribution was unchanged in August after moving higher in the previous month, and prices received by livestock slaughterhouses rose less than in July. Conversely, partially offsetting the downturn in the index for total mining, utilities, and manufacturing industries, the increase in prices received by the electric power generation industry accelerated to 8.1 percent in August from 5.0 percent in the preceding month. In August, the index for total mining, utilities, and manufacturing industries was 117.2 (December 2006 = 100), 12.5 percent above its year-ago level.

Trade Industries. The advance in the Producer Price Index for the Net Output of Total Trade Industries accelerated to 2.1 percent in August from 1.1 percent in July. (Trade indexes measure changes in margins received by wholesalers and retailers.) The margin index for merchant wholesalers of nondurable goods jumped 7.9 percent in August after moving up 0.2 percent in the prior month. Margins received by merchant wholesalers of durable goods also climbed more than in July. The margin indexes for fuel dealers and women's clothing stores turned up in August after falling a month earlier. By contrast, the margin index for gasoline stations with convenience stores rose 5.0 percent following a 24.2-percent jump in July. Margins received by pharmacies and drug stores, grocery stores (excluding convenience stores), and non-discount department stores turned down in August after moving higher in the previous month. In August, the index for total trade industries was 112.4 (December 2006 = 100), 7.7 percent above its year- ago level.

Transportation and Warehousing Industries. The increase in the Producer Price Index for the Net Output of Total Transportation and Warehousing Industries slowed to 0.2 percent in August from 0.8 percent in July. The index for the couriers industry climbed 1.0 percent in August after rising 2.4 percent in the prior month. Prices received by the industries for scheduled passenger air transportation, long-distance specialized freight trucking of new goods, nonscheduled air passenger chartering, freight transportation arrangement, as well as, the general freight trucking industry group, turned down after advancing in July. Conversely, the industry index for scheduled freight air transportation turned up 11.9 percent in August after falling 5.6 percent a month earlier. Prices received by deep sea freight transporters increased more than in July. In August, the index for total transportation and warehousing industries was 116.1 (December 2006 = 100), 10.2 percent above its year-ago level.

Traditional Service Industries. The Producer Price Index for the Net Output for Total Traditional Service Industries turned up 0.7 percent in August after edging down 0.2 percent in July. The index for the commercial banking industry climbed 5.2 percent in August after declining 5.5 percent a month earlier. Prices received by the industries for casino hotels; cellular and other wireless carriers; and by the securities, commodity contracts, and like activities industry sector also turned up following July decreases. Conversely, the industry index for non- casino hotels and motels turned down 1.3 percent in August after advancing 4.1 percent in the preceding month. Prices received by the industries for passenger car rental, offices of real estate agents and brokers, and general medical and surgical hospitals also fell after rising in July. In August, the index for total traditional service industries was 102.5 (December 2006 = 100), 0.6 percent above its year-ago level.