Producer Price Index for Finished Goods fell 0.9% in July

The Producer Price Index for Finished Goods declined 0.9 percent in July, seasonally adjusted, the U.S. Department of Labor’s Bureau of Labor Statistics reported on August 18. This decrease followed advances of 1.8 percent in June and 0.2 percent in May. At the earlier stages of processing, prices received by manufacturers of intermediate goods moved down 0.2 percent in July after rising 1.9 percent in the prior month, and the crude goods index fell 4.5 percent following a 4.6-percent increase in June.

The downturn in finished goods prices was broad based. The index for energy goods fell 2.4 percent in July after climbing 6.6 percent a month earlier, prices for consumer foods decreased 1.5 percent following a 1.1-percent advance in the previous month, and the index for goods other than foods and energy edged down 0.1 percent compared with a 0.5-percent rise in June.

Before seasonal adjustment, the Producer Price Index for Finished Goods decreased 0.9 percent in July to 172.6 (1982 = 100). From July 2008 to July 2009, prices for finished goods fell 6.8 percent, the index for intermediate goods decreased 15.1 percent, and crude goods prices dropped 44.8 percent, all of which are record 12-month declines. Over the same period within finished goods, the index for energy goods fell 29.7 percent, prices for consumer foods moved down 4.2 percent, and the index for goods other than foods and energy rose 2.6 percent.

Finished goods

The index for finished energy goods moved down 2.4 percent in July following a 6.6-percent advance in June. Leading this downturn, gasoline prices decreased 10.2 percent after surging 18.5 percent a month earlier. The indexes for home heating oil, diesel fuel and kerosene also turned down in July. Prices for liquefied petroleum gas increased less than in the prior month. Conversely, partially offsetting the downturn in the finished energy goods index, prices for residential electric power advanced 0.7 percent subsequent to a 0.9-percent decline in June. The index for residential natural gas rose at a faster rate compared with the previous month, and prices for lubricating and similar oils turned up in July after falling in the preceding month.

The index for finished consumer foods decreased 1.5 percent in July following a 1.1-percent rise a month earlier. Prices for fresh and dry vegetables declined 11.7 percent compared with a 21.8-percent gain in June. The indexes for processed young chickens, eggs for fresh use, flour and flour base mixes and doughs, and bottled carbonated soft drinks also turned down in July. Prices for beef and veal fell more than they had in June. By contrast, prices for citrus fruits climbed 31.6 percent subsequent to a 9.2-percent decline a month earlier. The indexes for noncarbonated soft drinks and fluid milk products also turned up in July.

Prices for finished goods other than foods and energy edged down 0.1 percent in July following a 0.5-percent advance in June. The light motor trucks index declined 0.7 percent after rising 3.4 percent in the prior month. Prices for passenger cars and for communication and related equipment also turned down in July. By contrast, the pharmaceutical preparations index increased 1.2 percent compared with a 0.8-percent advance in the preceding month. Prices for civilian aircraft declined at a slower rate than in June. The indexes for plastic products; tools, dies, jigs, fixtures and individual molds; and sporting and athletic goods turned up in July.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies and Components declined 0.2 percent in July subsequent to a 1.9-percent advance in June. Prices for intermediate energy goods and intermediate foods and feeds turned down after rising in the previous month. The index for materials for nondurable manufacturing increased less than it had in June, and prices for materials and components for construction fell in July after no change in the prior month. By contrast, slightly offsetting the downturn in the index for intermediate materials, supplies and components, the index for materials for durable manufacturing increased more than it had in June. Excluding foods and energy, prices for intermediate materials moved up 0.2 percent in July following a 0.4-percent advance a month earlier.

The index for intermediate energy goods decreased 1.4 percent in July following an 8.9-percent increase in the preceding month. Diesel fuel prices dropped 8.0 percent after rising 14.6 percent in June. The indexes for gasoline, jet fuel, residual fuels, heating oil and natural gas to electric utilities also turned down after advancing in the prior month. Conversely, prices for electric power moved up 1.1 percent in July subsequent to a 0.6-percent decline a month earlier. The index for finished lubricants also turned up after falling in the preceding month. Prices for commercial natural gas rose more than in June.

Prices for materials for nondurable manufacturing advanced 1.4 percent in July compared with a 4.6-percent rise in the previous month. The index for primary basic organic chemicals moved up 3.4 percent following a 16.0-percent jump in June. Prices for inedible fats and oils, synthetic rubber, tire cord fabric, and unprocessed filament yarns turned down in July after increasing in the prior month. Conversely, prices for fertilizer materials rose 4.6 percent in July subsequent to a 20.1-percent drop a month earlier. The indexes for wood pulp and finished knit fabrics also turned up after declining in June. Prices for plastic resins and materials increased more in July than in the preceding month, while the index for non-corrugated paperboard fell less than in June.

Prices for intermediate foods and feeds fell 2.0 percent subsequent to a 1.3-percent gain in June. Leading this downturn, the prepared animal feeds index decreased 3.3 percent in July after rising 5.3 percent in the previous month. Prices for processed young chickens, flour and flour base mixes and doughs, natural cheese (except cottage cheese), and processed cheese also turned down after rising a month earlier. The indexes for beef and veal and for shortening and cooking oils fell more than they had in June. By contrast, the cooked or smoked poultry products index turned up 3.6 percent following a 1.7-percent decline a month earlier. Processed egg prices also increased in July after falling in the prior month.

The index for materials and components for construction moved down 0.3 percent in July compared with no change in June. The index for prepared asphalt and tar roofing and siding products fell 4.7 percent subsequent to a 6.1-percent increase a month earlier. Prices for ready-mixed concrete, nonferrous wire and cable, and millwork also turned down in July after rising in the previous month. The indexes for metal doors and frames (except storm doors) and for paving mixtures and blocks fell more than they had in June. By contrast, the index for treated wood rose 4.1 percent subsequent to a 2.9-percent decline in the prior month. Prices for unfinished softwood lumber (not made from purchased materials) rose more than in June, and the index for non-farm prefabricated metal building systems was unchanged in July after decreasing in the prior month.

Prices for materials for durable manufacturing climbed 0.6 percent compared with a 0.5-percent advance in June. In July, rising prices for both cold and hot rolled steel sheet and strip; unfinished softwood lumber (not made from purchased materials); thermoplastics resins and materials; primary nonferrous metals; aluminum mill shapes; and hot rolled steel bars, plates and structural shapes more than offset declining prices for copper and brass mill shapes and for steel pipe and tube.

Crude goods

The Producer Price Index for Crude Materials for Further Processing turned down 4.5 percent in July after rising 4.6 percent in the previous month. Prices for crude energy materials fell after increasing in June and the index for crude foodstuffs and feedstuffs declined more than in the prior month. By contrast, partially offsetting the downturn in crude materials prices, the index for crude nonfood materials less energy rose more than in June.

The index for crude energy materials turned down 6.2 percent in July after rising 10.9 percent a month earlier. Prices for crude petroleum fell 15.9 percent following a 20.3-percent advance in June. The index for coal declined 1.4 percent in July after increasing 1.7 percent in the preceding month. By contrast, price advances for natural gas accelerated to 5.0 percent from 3.5 percent in June.

The index for crude foodstuffs and feedstuffs fell 6.1 percent in July following a 0.4-percent decrease in the previous month. The index for hay, hayseeds and oilseeds turned down 14.1 percent after rising 6.2 percent in June. Prices for corn, slaughter poultry, fresh vegetables (except potatoes), and wheat also declined after advancing in the prior month. Conversely, the index for slaughter steers and heifers turned up 2.0 percent in July after falling 3.7 percent in the prior month. Prices for slaughter barrows and gilts and for Irish potatoes for processing also rose following June declines.

The advance in the index for crude nonfood materials less energy accelerated to 2.9 percent in July from 2.6 percent in the preceding month. The index for carbon steel scrap jumped 20.6 percent following a 0.5-percent increase in June. Prices for aluminum base scrap also rose more than a month earlier. The index for phosphates turned up in July after falling in the previous month. Conversely, prices for grains fell 17.9 percent after advancing 4.1 percent in June. The indexes for gold ores and soybeans also turned down after increasing in the prior month. Prices for iron ore fell in July after no change in the preceding month, and the index for copper base scrap rose less than 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 fell 0.5 percent in July after rising 1.7 percent in June. (Net output price indexes are not seasonally adjusted.) Prices received by petroleum refineries dropped 5.2 percent in July following a 17.9-percent surge in the previous month. The industry indexes for automobile, light truck, and utility vehicle manufacturing; crude petroleum and natural gas extraction; livestock slaughtering; animal feed manufacturing; and poultry processing also turned down after advancing in June. Prices received by electric power distributors increased less in July than they had a month earlier. By contrast, partially offsetting the downturn in mining, utilities, and manufacturing industries prices, the index for the electric power generation industry advanced 4.0 percent following a 0.4-percent rise in June. Prices received by the phosphatic fertilizer and by the plastic material and resin manufacturing industries climbed after decreasing in the prior month. In July, the index for total mining, utilities and manufacturing industries was 106.5 (December 2006 = 100), 10.4 percent below its year-ago level.

Trade Industries: The Producer Price Index for the Net Output of Total Trade Industries decreased 0.4 percent in July following a 1.2-percent increase in June. (Trade indexes measure changes in margins received by wholesalers and retailers.) Margins received by merchant wholesalers of durable goods declined 1.8 percent after rising 1.2 percent in the preceding month. The margin indexes for women's clothing stores, discount department stores, new car dealers and supermarkets also turned down in July. Margins received by gasoline stations with convenience stores advanced less than in June. By contrast, margins received by warehouse clubs and supercenters jumped 7.8 percent in July compared with a 3.1-percent drop in the prior month. The margin indexes for fuel dealers and non-discount department stores also turned up after falling in June. In July, the index for total trade industries was 111.3 (December 2006 = 100), 2.0 percent above its year-ago level.

Transportation and Warehousing Industries: The Producer Price Index for the Net Output of Total Transportation and Warehousing Industries increased 1.2 percent in July following a 0.3-percent advance in June. Leading this acceleration, prices received by the scheduled air transportation industry group climbed 4.7 percent after moving up 0.3 percent in the previous month. The industry index for long-distance general freight trucking (by the truckload) also rose more in July than it had a month earlier. Prices received by the industries for both deep sea and for Coastal and Great Lakes freight transportation turned up in July. The index for pipeline transportation of crude petroleum products advanced after no change in June. By contrast, prices received by the specialized freight trucking industry group edged down 0.1 percent following a 1.7-percent jump in the previous month. The indexes for inland water freight transportation and local general freight trucking also turned down in July. Prices received by line-haul railroads increased less than they had in June. In July, the index for total transportation and warehousing industries was 107.9 (December 2006 = 100), 7.0 percent below its year-ago level.

Traditional Service Industries: The Producer Price Index for the Net Output of Total Traditional Service Industries was unchanged in July after inching down 0.1 percent in the preceding month. In July, higher prices received by non-casino hotels and motels, direct property and casualty insurers, offices of physicians, savings institutions, and the automotive equipment rental and leasing industry group were offset by lower prices received by commercial banks, the industry group for security and commodity contract intermediaries and brokerages, software publishers, and cable networks. In July, the index for total traditional service industries was 102.4 (December 2006 = 100), 0.2 percent above its year-ago level.

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http://www.bls.gov/news.release/ppi.nr0.htm