January 2011 Producer Price Index

Historical release narrative reproduced from the official public-domain source. Statistical tables, standard technical appendices, administrative material and attendance rosters are omitted; formatting is adapted for reading. Figures retain the release's historical context and may have been revised. Consult the linked source for the complete document.

The Producer Price Index for finished goods rose 0.8 percent in January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This advance followed increases of 0.9 percent in December and 0.7 percent in November and marks the seventh straight rise in finished goods prices. At the earlier stages of processing, prices received by manufacturers of intermediate goods moved up 1.1 percent, and the crude goods index rose 3.3 percent. On an unadjusted basis, prices for finished goods advanced 3.6 percent for the 12 months ended January 2011. (See table A.)

Stage-of-Processing Analysis

Finished goods

In January, leading the broad-based increase in the index for finished goods were higher prices for finished energy goods, which rose 1.8 percent. The indexes for both finished goods less foods and energy and for finished consumer foods also contributed to this increase, moving up 0.5 percent and 0.3 percent, respectively.

Finished energy: The index for finished energy goods climbed 1.8 percent in January, the fourth consecutive monthly increase. Most of the January rise is attributable to a 6.9-percent advance in gasoline prices. Increases in the indexes for diesel fuel and home heating oil also contributed to higher finished energy goods prices. (See table 2.)

Finished core: Prices for finished goods other than foods and energy moved up 0.5 percent in January, the third straight increase. Nearly forty percent of the January advance can be traced to the index for pharmaceutical preparations, which moved up 1.4 percent. Higher prices for plastic products also contributed to the rise in the finished core index.

Finished foods: The index for finished consumer foods moved up 0.3 percent in January, the fifth consecutive monthly increase. A 13.7-percent advance in prices for fresh and dry vegetables was the main factor in the January rise in the finished consumer foods index.

Intermediate goods

The Producer Price Index for intermediate materials, supplies, and components rose 1.1 percent in January, the sixth straight monthly increase. Accounting for nearly two-thirds of the broad- based January advance, prices for intermediate goods other than foods and energy climbed 1.0 percent. The indexes for intermediate energy goods and for intermediate foods and feeds also contributed to this rise, moving up 1.8 percent and 0.4 percent, respectively. For the 12 months ended January 2011, prices for intermediate goods increased 6.0 percent, the smallest advance since rising 5.4 percent in September 2010. (See table B.)

Intermediate core: The index for intermediate goods less foods and energy climbed 1.0 percent in January, the largest increase since a 1.1-percent jump in April 2010. Roughly one-fourth of January's over-the-month advance can be traced to prices for industrial chemicals, which moved up 3.0 percent. Higher prices for steel mill products and for plastic resins and materials also were major factors in the January rise in the intermediate core index. (See table 2.)

Intermediate energy: Prices for intermediate energy goods increased 1.8 percent in January, the sixth straight monthly advance. A major factor in the January rise was the diesel fuel index, which jumped 7.2 percent. Higher prices for gasoline also contributed significantly to the increase in the intermediate energy goods index.

Intermediate foods: In January, the index for intermediate foods and feeds moved up 0.4 percent for the second consecutive month. A 2.7-percent rise in beef and veal prices accounted for about forty percent of the January increase in the intermediate foods index.

Crude goods

The Producer Price Index for crude materials for further processing increased 3.3 percent in January. For the 3-month period ended in January, crude material prices climbed 11.5 percent after moving up 8.8 percent from July to October. In January, about half of the broad-based monthly advance is attributable to a 4.3-percent rise in prices for crude foodstuffs and feedstuffs. Also contributing to this increase, the index for crude nonfood materials less energy moved up 4.0 percent and prices for crude energy materials rose 1.9 percent. (See table B.)

Crude foods: The index for crude foodstuffs and feedstuffs increased 4.3 percent in January. From October to January, prices for crude foodstuffs and feedstuffs moved up 5.6 percent after rising 11.8 percent in the 3 months ended October 2010. Nearly half of the January monthly advance can be traced to a 7.6-percent gain in the slaughter cattle index. Higher prices for hay, hayseeds, and oilseeds and for slaughter borrow and gilts also were factors in the increase in the crude foodstuffs and feedstuffs index. (See table 2.)

Crude core: The index for crude nonfood materials less energy moved up 4.0 percent in January. For the 3 months ended in January, crude core prices climbed 11.1 percent, subsequent to a 10.6-percent rise from July to October. Over eighty percent of January's over-the-month increase was driven by a 13.6-percent jump in the index for iron and steel scrap. Rising prices for nonferrous scrap also contributed to the advance in the crude core index.

Crude energy: The index for crude energy materials rose 1.9 percent in January. For the 3- month period ended in January, prices for crude energy materials jumped 17.3 percent after advancing 4.3 percent for the 3 months ended October 2010. A 3.7-percent increase in the index for crude petroleum led the January monthly advance in crude energy prices.

Services Analysis

Trade industries: The Producer Price Index for the net output of total trade industries moved down 0.7 percent in January, the largest decline since a 1.4-percent drop in June 2010. (Trade indexes measure changes in margins received by wholesalers and retailers.) Accounting for over forty percent of the January decrease, margins received by discount department stores fell 11.1 percent. Declines in the indexes for both family and women's clothing stores also contributed to the January drop in margins received by trade industries.

Transportation and warehousing industries: The Producer Price Index for the net output of transportation and warehousing industries moved up 1.8 percent in January, the largest increase since a 2.1-percent gain in June 2008. Accounting for over two-fifths of the January advance, prices received by the air transportation industry group rose 4.2 percent. Higher prices received by couriers and the water transportation industry group also were major factors in the January increase in the transportation and warehousing industries index.

Traditional service industries: The Producer Price Index for the net output of total traditional service industries advanced 0.7 percent in January, the largest increase since a similar 0.7-percent advance in April 2010. More than half of the January rise can be traced to a 4.3-percent increase in prices received by the depository credit intermediation industry group. Advances in the indexes for insurance carriers and offices of lawyers also contributed to higher prices received by total traditional service industries.

Resampling of Industries

Effective with this release, the Producer Price Index (PPI) includes data for 50 resampled industries and one newly introduced industry classified according to the North American Industry Classification System (NAICS). The Bureau of Labor Statistics periodically updates the sample of producers providing data for the PPI to reflect current conditions more accurately when the structure, membership, technology, or product mix of an industry shifts. The first results of this systematic process were published in July 1986. Subsequent efforts have been completed at 6-month intervals.

For information on specific index additions, deletions, and recodes that are effective with this semiannual update, see the January 2011 issue of the PPI Detailed Report online at http://www.bls.gov/ppi/ppidr201101.pdf, or contact the PPI's Section of Index Analysis and Public Information at ppi-info@bls.gov or (202) 691-7705.

NAICS Code Industry

212113 Anthracite mining 212234 Copper ore and nickel ore mining 221110 Electric power generation 221121 Electric power transmission and control 221122 Electric power distribution 221210 Natural gas distribution 311111 Dog and cat food manufacturing 311311 Sugarcane mills 313222 Schiffli machine embroidery 314912 Canvas and related product mills 315110 Hosiery and sock mills (1) 315231 Women's and girls' lingerie and nightwear 316211 Rubber and plastics footwear manufacturing 321213 Engineered wood member manufacturing 322212 Folding paperboard box manufacturing 322224 Uncoated paper and multiwall bag manufacturing 323113 Commercial screen printing 323116 Manifold business forms printing 325180 Other basic inorganic chemical manufacturing (2) 325320 Pesticide and other agricultural chemical manufacturing 326211 Tire manufacturing, except retreading 331111 Iron and steel mills 331210 Iron and steel pipe and tube manufacturing from purchased steel 331221 Rolled steel shape manufacturing 331222 Steel wire drawing 331314 Secondary smelting and alloying of aluminum 332119 Metal crown, closure, and other metal stamping, except automotive (3) 332996 Fabricated pipe and pipe fitting manufacturing 333132 Oil and gas field machinery and equipment manufacturing 333312 Commercial laundry and drycleaning machinery manufacturing 333997 Scale and balance manufacturing, except laboratory 334111 Electronic computer manufacturing 334512 Automatic environmental control manufacturing 334612 Audio and video media reproduction 334613 Magnetic and optical recording media manufacturing 335932 Noncurrent-carrying wiring device manufacturing 337127 Institutional furniture manufacturing 337920 Blind and shade manufacturing 339912 Silverware and hollowware manufacturing 441210 Recreational vehicle dealers 441222 Boat dealers 444110 Home centers 444120 Paint and wallpaper stores 444130 Hardware stores 444190 Other building material dealers 483111 Deep sea freight transportation 541310 Architectural services 561380 Staffing services, except Professional Employer Organizations (4) 561720 Janitorial services 621210 Offices of dentists (5) 721110 Hotels and motels, except casino hotels

(1) Combines data formerly included under NAICS 315111 and 315119. (2) Combines data formerly included under NAICS 325181, 325182, and 325188. (3) Combines data formerly included under NAICS 332115 and 332116. (4) Combines data formerly included under NAICS 561310 and 561320. (5) For further discussion of this newly introduced PPI, see the January 2011 issue of the PPI Detailed Report online at http://www.bls.gov/ppi/ppidr201101.pdf.

Recalculation of Seasonal Adjustment Factors

Effective with this release, seasonal adjustment factors have been recalculated to reflect price-movement patterns during 2010 for stage-of- processing (SOP) and commodity-grouping indexes. This routine annual recalculation may affect previously published seasonally adjusted indexes and percent changes for January 2006 through December 2010. Revised seasonally adjusted data for this period, as well as seasonal adjustment factors for commodity indexes to be used through December 2011, were released February 14, 2011. To obtain this information, contact the Division of Industrial Prices and Price Indexes, Section of Index Analysis and Public Information at ppi- info@bls.gov or (202) 691-7705, or visit the Producer Price Index homepage at www.bls.gov/ppi.

The table below provides monthly seasonally adjusted percent changes for the three major SOP categories during 2010, based on former and recalculated seasonal factors. These percent changes include final price data through August 2010 and may differ from values shown in tables A and B of this release, which include final price data through September 2010.

Finished Goods Intermediate Goods Crude Goods Month Former Recalculated Former Recalculated Former Recalculated

PPI Introduces Experimental Aggregation System

On February 14, 2011, the Producer Price Index (PPI) of the Bureau of Labor Statistics (BLS) introduced an Experimental Aggregation system. This Experimental Aggregation system takes advantage of PPI's expansion of coverage over the last twenty years to include portions of the services and construction sectors by combining indexes for those sectors with the currently highlighted goods sector indexes. This new system is a model that greatly expands PPI coverage of the United States economy.

A webpage describing this new aggregation system has been added to the BLS Website. It includes links to methodological documentation, relative importance figure tables, and instructions for accessing historical data from the BLS Website. This webpage is located at http://www.bls.gov/ppi/experimentalaggregation.htm.

In addition, effective with the release of data for January 2011, the Experimental Aggregation indexes will be published in tables 10 through 15 of the monthly PPI Detailed Report. (See http://www.bls.gov/ppi/ppi_dr.htm.)

Since this new aggregation system is experimental, PPI is soliciting feedback from users with respect to methodology and data. To provide feedback, contact Jonathan Weinhagen by email at weinhagen.jonathan@bls.gov or by phone at (202) 691-7709. Further information also is available from the PPI Section of Index Analysis and Public Information, at ppi-info@bls.gov or (202) 691-7705.