February 2009 Producer Price Index

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The Producer Price Index for Finished Goods advanced 0.1 percent in February, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This rise followed a 0.8-percent increase in January and a 1.9-percent decline in December. At the earlier stages of processing, prices received by manufacturers of intermediate goods decreased 0.9 percent in February after falling 0.7 percent in the previous month, and the index for crude materials declined 4.5 percent following a 2.9-percent decrease in January. (See table A.)

The slower rate of increase in finished goods prices was led by the index for energy goods, which rose 1.3 percent in February after climbing 3.7 percent in the preceding month. Capital equipment prices also moved up less, rising 0.1 percent after increasing 0.5 percent in January. The index for consumer foods fell 1.6 percent in February following a 0.4-percent decrease a month earlier. Conversely, partially offsetting the slower rate of increase in finished goods prices, the index for consumer goods other than foods and energy advanced 0.4 percent after rising 0.3 percent in the prior month. Following a 0.4-percent increase in January, the index for finished goods less foods and energy climbed 0.2 percent in February.

Before seasonal adjustment, the Producer Price Index for Finished Goods declined 0.1 percent in February to 170.1 (1982 = 100). From February 2008 to February 2009, the index for finished goods fell 1.3 percent. Over the same period, prices for finished energy goods decreased 18.4 percent. By contrast, the index for finished goods less foods and energy rose 4.0 percent and prices for finished consumer foods advanced 0.7 percent. At the earlier stages of processing, the intermediate goods index declined 5.2 percent and crude goods prices dropped 34.7 percent for the 12 months ended in February.

Finished goods

The increase in the index for finished energy goods slowed to 1.3 percent in February from 3.7 percent in January. More than half of this deceleration can be traced to gasoline prices, which moved up 8.7 percent in February following a 15.0-percent jump in the previous month. The indexes for liquefied petroleum gas, home heating oil, and kerosene turned down after advancing in January. Prices for residential natural gas and diesel fuel decreased more than they had in the prior month. Conversely, the index for residential electric power increased 0.8 percent in February after rising 0.3 percent a month earlier. Prices for asphalt and for lubricating and similar oils fell less than they had in January. (See table 2.)

The index for finished consumer foods decreased 1.6 percent in February following a 0.4- percent decline in the previous month. Prices for fresh and dry vegetables fell 4.1 percent after rising 6.6 percent in January. The indexes for eggs for fresh use, soft drinks, processed young chickens, and frozen specialties also turned down in February. Prices for fluid milk products decreased more than they had in the preceding month. Conversely, the index for beef and veal declined 0.3 percent in February following a 10.5-percent drop a month earlier. Prices for natural, processed, and imitation cheese and for pork also moved down less than they had in January.

The capital equipment index inched up 0.1 percent in February after rising 0.5 percent in the prior month. Civilian aircraft prices advanced 0.5 percent after climbing 1.0 percent in January. The indexes for communication and related equipment, commercial furniture, office and store machines and equipment, and for signs and advertising displays turned down in February following increases a month earlier. Prices for electronic computers fell more than they had in January, while the index for civilian ships was unchanged after rising in the prior month. By contrast, the index for light motor trucks advanced 1.3 percent in February following a 0.5-percent increase in the previous month. Prices for turbines and turbine generator sets also rose more than they had in January, while the index for power and distribution transformers turned up in February.

The index for finished consumer goods other than foods and energy moved up 0.4 percent in February after advancing 0.3 percent in January. In February, higher prices for cigarettes, light motor trucks, alcoholic beverages, household appliances, pet food, and apparel outweighed lower prices for consumer plastic products; toys, sporting goods, and small arms; and motor homes built on purchased chassis.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components fell 0.9 percent in February following a 0.7-percent decline in January. Prices for intermediate energy goods and materials for nondurable manufacturing turned down in February after rising a month earlier. By contrast, partially offsetting the faster rate of decrease in intermediate goods prices, the indexes for materials for durable manufacturing, intermediate foods and feeds, and materials and components for construction declined less than they had in January. Prices for intermediate materials less foods and energy moved down 0.6 percent in February compared with a 1.1- percent drop in the preceding month. (See table B.)

The index for intermediate energy goods decreased 2.0 percent in February after rising 1.5 percent in January. Diesel fuel prices fell 11.1 percent in February following a 2.8-percent decline in the prior month. The indexes for utility natural gas and jet fuels also fell more than in the previous month. The index for gasoline rose less than it had in January. Prices for liquefied petroleum gas, heating oil, and residual fuel turned down in February. By contrast, electric power prices increased 0.8 percent in February after decreasing 0.9 percent a month earlier. (See table 2.)

Prices for materials for nondurable manufacturing fell 0.8 percent in February following a 0.1-percent gain in January. The index for primary basic organic chemicals decreased 9.0 percent in February after climbing 2.1 percent in the previous month. Prices for medicinal and botanical chemicals, carbon black, and finished knit fabrics also turned down after rising a month earlier. The index for inedible fats and oils declined more than it had in January. By contrast, prices for fertilizer materials increased 2.7 percent following a 25.0-percent drop in the prior month. The indexes for plastic resins and materials, basic inorganic chemicals, synthetic rubber, and paint colors also turned up in February.

The rate of decrease in prices for materials for durable manufacturing slowed to 2.6 percent in February from 3.5 percent in January. The index for semifinished steel mill products fell 8.2 percent after dropping 13.8 percent a month earlier. Prices for steel pipe and tube, aluminum mill shapes, and primary nonferrous metals also declined less in February than they had a month earlier. The indexes for basic inorganic chemicals, plastic resins and materials, and synthetic rubber turned up after falling in January. By contrast, prices for hot rolled steel sheet and strip declined 13.1 percent compared with a 6.8-percent decrease in January. The index for cold rolled steel sheet and strip also fell more in February than in the previous month.

The index for intermediate foods and feeds decreased 1.4 percent in February after falling 2.2 percent a month earlier. Prices for natural cheese (except cottage cheese) moved down 0.8 percent in February compared with an 18.6-percent decline in the preceding month. The indexes for beef and veal, pork, and processed cheese and related products also fell less than they had in January. Prices for wet-processed corn byproducts rose more than in the preceding month. Conversely, prices for fluid milk products decreased 9.7 percent in February following a 0.6- percent decline a month earlier. The indexes for corn, cottonseed, and soybean cake and meal and for shortening and cooking oils also fell more than they had in the prior month. Processed young chicken prices turned down after rising in January.

The index for materials and components for construction decreased 0.6 percent in February following a 0.7-percent decline in January. In February, falling prices for prefabricated metal buildings; fabricated structural metal; roofing asphalts, pitches, coatings, and cement; paving mixtures and blocks; sheet metal products; prefabricated structural wood members; and metal doors and frames (except storm doors) outweighed price increases for prepared asphalt and tar roofing and siding products and for basic inorganic chemicals. Crude goods

The Producer Price Index for Crude Materials for Further Processing declined 4.5 percent in February subsequent to a 2.9-percent decrease in the previous month. Prices for crude foodstuffs and feedstuffs turned down after rising in January. The index for crude energy materials fell more than in the preceding month. By contrast, partially offsetting the faster rate of decline in the crude goods index, prices for crude nonfood materials less energy increased more than they had in January. (See table B.)

The index for crude foodstuffs and feedstuffs turned down 3.9 percent following a 1.0- percent gain in January. Leading this downturn, prices for slaughter hogs dropped 13.0 percent in February after climbing 11.1 percent a month earlier. The indexes for hay, hayseeds, and oilseeds; slaughter steers and heifers; fresh vegetables (except potatoes); slaughter cows and bulls; and wheat also turned down after increasing in the prior month. Corn prices rose less than in January. By contrast, the Irish potatoes for processing index advanced 27.0 percent compared with a 23.0-percent decrease in the previous month. Prices for slaughter chickens declined less than in January, and the index for slaughter lambs turned up in February after falling a month earlier. (See table 2.)

Prices for crude energy materials moved down 8.5 percent in February subsequent to an 8.1-percent decrease in the prior month. In February, a 17.8-percent decline in the index for natural gas more than offset a 2.5-percent increase in crude petroleum prices and a 2.2-percent advance in the coal index.

The increase in the index for crude nonfood materials less energy accelerated to 1.5 percent in February from 0.1 percent in the previous month. Nonferrous scrap prices led this faster rate of advance, increasing 4.2 percent following a 10.1-percent decline in January. The indexes for phosphates; corrugated wastepaper; and construction sand, gravel, and crushed stone also turned up after decreasing a month earlier. Prices for hides and skins fell less than in the prior month. By contrast, the index for carbon steel scrap decreased 3.8 percent after jumping 23.8 percent in January. Prices for wheat also turned down after rising in the previous month. The indexes for corn and soybeans rose less in February than in the preceding 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 declined 0.4 percent in February after edging up 0.1 percent in January. (Net output price indexes are not seasonally adjusted.) Leading this downturn, the industry index for petroleum refineries moved down 1.6 percent following an 8.1-percent rise a month earlier. Prices received by soft drink manufacturers also turned down in February. The industry indexes for natural gas distribution, fluid milk manufacturing, and oil and gas well drilling fell more than they had in the prior month. By contrast, partially offsetting the downturn in the index for total mining, utilities, and manufacturing industries, prices received by manufacturers of phosphatic fertilizer increased 16.9 percent compared with a 26.8-percent decline a month earlier. Similarly, the index for the electric power generation, transmission, and distribution industry group also turned up in February. Prices received by the livestock slaughtering and cheese manufacturing industries decreased less than they had in the previous month. In February, the index for total mining, utilities, and manufacturing industries was 104.8 (December 2006 = 100), 3.0 percent below its year-ago level.

Trade Industries. The Producer Price Index for the Net Output of Total Trade Industries moved up 0.9 percent after decreasing 0.3 percent in January. (Trade indexes measure changes in margins received by wholesalers and retailers.) Leading the February upturn, margins received by merchant wholesalers of nondurable goods climbed 6.3 percent subsequent to a 2.3-percent decline in the preceding month. The margin indexes for gasoline stations with convenience stores, department stores, and pharmacies and drug stores also turned up in February. Conversely, the margin index for merchant wholesalers of durable goods fell 0.9 percent following a 0.8-percent gain in January. Margins received by supermarkets, new car dealers, electronic shopping and mail-order houses, and family clothing stores also turned down after rising a month earlier. In February, the index for total trade industries was 111.8 (December 2006 = 100), 6.4 percent above its year-ago level.

Transportation and Warehousing Industries. The decline in the Producer Price Index for the Net Output of Total Transportation and Warehousing Industries slowed to 0.5 percent in February from 0.8 percent in the previous month. Prices received by line-haul railroads fell 1.9 percent subsequent to a 4.3-percent decrease in January. The industry index for long distance general freight trucking (truckload) also declined less than it had a month earlier. Prices received by couriers and local specialized freight truckers of new goods turned up in February. The U.S. Postal Service index advanced following no change in the prior month. By contrast, prices received by the air transportation industry group fell 4.3 percent after edging down 0.1 percent in January. The industry indexes for long distance general freight trucking (less than truckload) and inland water freight transportation declined after rising a month earlier. In February, the index for total transportation and warehousing industries was 108.1 (December 2006 = 100), 0.2 percent below its year-ago level.

Traditional Service Industries. The Producer Price Index for the Net Output of Total Traditional Service Industries moved down 0.3 percent in February after increasing 0.4 percent in the previous month. The index for the depository credit intermediation industry group decreased 3.1 percent after no change in January. Prices received by investment bankers and security dealers, lessors of nonresidential buildings, and periodical publishers fell in February after advancing in the prior month. The industry index for direct health and medical insurance carriers was unchanged subsequent to a January rise. By contrast, the industry index for offices of real estate agents and brokers moved up 2.9 percent in February after falling 4.5 percent a month earlier. Prices received by portfolio managers and the temporary help services industry also turned up in February. The offices of physicians (except mental health) industry index increased more than it had in the previous month. In February, the index for total traditional service industries was 102.0 (December 2006 = 100), 0.5 percent below its year-ago level.