September 2009 Producer Price Index

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The Producer Price Index for Finished Goods declined 0.6 percent in September, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This decrease followed a 1.7-percent rise in August and a 0.9-percent decline in July. In September, at the earlier stages of processing, prices received by manufacturers of intermediate goods moved up 0.2 percent and the crude goods index fell 2.1 percent. On an unadjusted basis, from September 2008 to September 2009, prices for finished goods fell 4.8 percent, the tenth consecutive month of year-over-year declines. (See table A.)

Stage-of-Processing Analysis

Finished goods

In September, over ninety percent of the finished goods decrease was the result of lower energy prices, which moved down 2.4 percent. The indexes for finished goods less foods and energy and for finished consumer foods also contributed to the decline in finished goods prices, both edging down 0.1 percent.

Finished energy: The index for finished energy goods fell 2.4 percent in September compared with an 8.0-percent surge a month earlier. Almost eighty percent of the decrease can be attributed to gasoline prices, which moved down 5.4 percent. Falling prices for home heating oil and residential natural gas also contributed to the decline in the finished energy goods index. (See table 2.)

Finished core: Prices for finished goods less foods and energy edged down 0.1 percent in September following a 0.2-percent increase in August. Leading the decline, the index for light motor trucks moved down 1.4 percent. Lower prices for pet food also impacted the finished core index.

Finished foods: Prices for finished consumer foods inched down 0.1 percent in September after rising 0.4 percent in August. The index for eggs for fresh use, which declined 9.8 percent, led the decrease in finished consumer food prices.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components moved up 0.2 percent in September, its second consecutive monthly increase. This advance can be attributed to prices for intermediate materials less foods and energy, which rose 0.9 percent. By contrast, the index for intermediate energy goods fell 2.1 percent, and prices for intermediate foods and feeds declined 0.5 percent. On a 12-month basis, the intermediate goods index fell 11.7 percent in September. This was the second consecutive month of slowing year-over-year declines after a record 15.1-percent drop for the 12-months ended July 2009. (See table B.)

Intermediate core: Prices for intermediate materials less foods and energy climbed 0.9 percent in September, their fourth consecutive monthly increase. Accounting for about a quarter of the September advance, the index for primary basic organic chemicals rose 8.1 percent. Higher prices for hot rolled steel sheet and strip and for primary nonferrous metals also were factors in the intermediate core increase. (See table 2.)

Crude goods

The Producer Price Index for Crude Materials for Further Processing declined 2.1 percent in September. In the third quarter of 2009, crude material prices dropped 3.0 percent after rising 11.5 percent during the second quarter. In September, monthly decreases of 5.4 percent in the index for crude energy materials and 1.9 percent for prices of crude foodstuffs and feedstuffs outweighed a 3.6-percent increase in the index for crude nonfood materials less energy. (See table B.)

Crude energy: The index for crude energy materials declined 5.4 percent in September and 5.1 percent from June to September. By comparison, for the 3-month period ended in June, prices jumped 20.6 percent. Accounting for most of the monthly September decrease, the natural gas index fell 13.8 percent. Lower prices for both crude petroleum and coal also contributed to the decline in the crude energy materials index. (See table 2.)

Crude foods: The index for crude foodstuffs and feedstuffs fell 1.9 percent in September. This index moved down 8.6 percent in the most recent 3-month period, compared with a 4.1-percent advance in the previous 3-month period. In September, a 19.0-percent drop in soybean prices led the decline in the crude foodstuffs and feedstuffs index. Falling slaughter poultry prices also were a factor in this decrease.

Services Analysis

Total trade industries: The Producer Price Index for the Net Output of Total Trade Industries fell 0.2 percent in September, its third consecutive monthly decline. (Trade indexes measure changes in margins received by wholesalers and retailers.) The September decrease was led by a 1.2-percent drop in margins received by wholesale trade industries. The margin indexes for both discount department stores and for electronic shopping and mail-order houses also fell in September, contributing to decreasing margins received by total trade industries.

Transportation and warehousing industries: The Producer Price Index for the Net Output of Total Transportation and Warehousing Industries turned down 0.7 percent in September after increasing in each of the previous three months. About two-thirds of the decrease can be traced to a 3.2-percent drop in prices received by the industry for scheduled passenger air transportation. The industry indexes for local general freight trucking and for specialized freight trucking of new goods also declined in September.

Traditional service industries: The Producer Price Index for the Net Output of Total Traditional Service Industries fell 0.2 percent in September, its first decline since March. Leading the September decrease, prices received by the industry for non-casino hotels and motels dropped 9.4 percent. The industry indexes for commercial banking, software publishers, and cellular and other wireless carriers also fell in September.