EconoIndicators

Producer Price Index At a Glance

• Finished Goods Index: Down 2.8%
• Finished Goods Core: Up 0.4%
• Finished Goods Annual Change: Up 5.2%
• Finished Goods Energy: Down 12.8%
• Finished Goods Food: Down 0.2%
• Intermediate Goods Index: Down 3.9%
• Crude Goods Index: Down 18.6%

Technorati Tags: PPI, inflation, Producer, Price, Index

Producer Price Indexes - October 2008

The Producer Price Index for Finished Goods fell 2.8 percent in October, seasonally
adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This
decrease followed a 0.4-percent decline in September and a 0.9-percent fall in August. At the
earlier stages of processing, prices received by manufacturers of intermediate goods moved
down 3.9 percent in October after declining 1.2 percent in September, and the crude goods index
dropped 18.6 percent subsequent to a 7.9-percent decrease in the previous month. (See table A.)

Among finished goods in October, prices for energy goods fell 12.8 percent compared
with a 2.9-percent decline a month earlier. The index for consumer foods edged down 0.2
percent following a 0.2-percent increase in the prior month. Prices for goods other than foods
and energy rose 0.4 percent for the second consecutive month.
Before seasonal adjustment, the Producer Price Index for Finished Goods declined
2.6 percent in October to 177.3 (1982 = 100). For the 12 months ended in October, finished
goods prices advanced 5.2 percent. Over the same period, prices for finished consumer foods
climbed 6.5 percent, the index for finished energy goods increased 5.5 percent, and the index for
finished goods other than foods and energy rose 4.4 percent. From October 2007 to October
2008, prices received by intermediate goods producers advanced 10.2 percent, while the crude
goods index decreased 1.4 percent.

Finished goods

The index for finished energy goods moved down 12.8 percent in October following a
2.9-percent decline in September. Gasoline prices dropped 24.9 percent after falling 0.5 percent
a month earlier. The indexes for liquefied petroleum gas, diesel fuel, and residential electric
power also decreased more than in the prior month. Prices for asphalt and finished lubricants
turned down in October. By contrast, partially offsetting the faster rate of decline in finished
energy goods prices, the index for residential natural gas moved down 5.9 percent compared with
an 8.2-percent decline in September. Prices for home heating oil also fell less than in the
previous month. (See table 2.)

The index for finished consumer foods edged down 0.2 percent in October after rising 0.2
percent in September. Leading this downturn, meat prices decreased 5.6 percent subsequent to a
0.6-percent fall a month earlier. Prices for mayonnaise, salad dressings, and sandwich spreads;
unprocessed finfish; and canned fruits and juices turned down in October. By contrast, the
processed young chickens index increased 5.9 percent following a 0.6-percent decline in
September. Prices for natural cheese (except cottage cheese) and melons also turned up in
October. The indexes for fresh vegetables (except potatoes) and for sugar and confectionary
products advanced more than they had a month earlier.
The index for finished goods other than foods and energy increased 0.4 percent in
October, the same as in September. Price increases for light motor trucks, civilian aircraft, malt
beverages, rubber and rubber products, consumer plastic products, and for commercial nonwood
furniture and store fixtures were partially offset by price decreases for passenger cars,
pharmaceutical preparations, and for electronic computers and computer equipment. In
accordance with usual practice, most new-model-year passenger cars and light motor trucks were
introduced into the PPI in October. (See Report on Quality Changes for 2009 Model Vehicles,
USDL 08-1712.) In October, the index for passenger cars moved down 1.7 percent and light
motor truck prices rose 2.6 percent. For the 12 months ended October 2008, the passenger cars
index rose 2.4 percent and prices for light motor trucks advanced 2.6 percent.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components declined
3.9 percent in October after falling 1.2 percent in September. The indexes for intermediate
energy goods, materials for nondurable manufacturing, intermediate foods and feeds, and
materials for durable manufacturing also decreased more in October than they had a month
earlier. Prices for materials and components for construction turned down after rising in
September. (See table B.)

The index for intermediate energy goods dropped 10.6 percent in October after falling 3.8
percent in the prior month. Diesel fuel prices declined 16.4 percent following a 6.4-percent
decrease in September. The indexes for gasoline, jet fuel, residual fuels, natural gas to electric
utilities, commercial natural gas, and liquefied petroleum gas also fell more in October. By
contrast, partially offsetting the faster rate of decline in the intermediate energy goods index,
industrial electric power prices advanced 2.6 percent after decreasing 1.4 percent in September.
The index for commercial electric power moved up after no change a month earlier. (See table
2.)

The index for materials for nondurable manufacturing decreased 4.6 percent in October
following a 2.9-percent decline in the previous month. Prices for primary basic organic
chemicals plunged 20.8 percent after moving down 7.4 percent in September. The indexes for
fertilizer materials and synthetic fibers turned down in October. Prices for basic inorganic
chemicals, medicinal and botanical chemicals, and synthetic rubber rose less than in the
preceding month. The indexes for inedible fats and oils and for meats fell more than they had in
September. By contrast, the index for cyclic intermediate chemicals and dyes was unchanged in
October following a 2.2-percent decline a month earlier. Prices for woodpulp fell less than in
September.

Prices for intermediate foods and feeds decreased 5.5 percent in October compared with a
0.9-percent decline in the prior month. The index for prepared animal feeds fell 8.6 percent after
edging down 0.3 percent in the preceding month. Prices for meats, fats and oils, and fluid milk
products also decreased more than they had in September. The indexes for processed eggs and
for mayonnaise, salad dressings, and sandwich spreads turned down in October. Conversely, the
index for processed young chickens advanced 5.9 percent after falling 0.6 percent in September.
Prices for natural cheese (except cottage cheese) also turned up in October. The indexes for
sugar and confectionery products and for canned, cooked, smoked, and prepared poultry rose
more than they had in September.

Prices for materials and components for construction declined 0.7 percent in October
after increasing at the same rate in the preceding month. The index for paving mixtures and
blocks fell 3.7 percent following a 3.1-percent September gain. Prices for structural,
architectural, and pre-engineered metals products; ready-mix concrete; treated wood; cast iron
pressure and soil pipe and fittings; and sheet metal products also turned down in October. The
indexes for nonferrous wire and cable and for softwood lumber decreased more than they had a
month earlier. Conversely, millwork prices rose 0.6 percent in October after inching up 0.1
percent in the prior month. Prices for gypsum products turned up after falling in September.

Prices for materials for durable manufacturing declined 4.1 percent in October after
falling 3.2 percent in the preceding month. The index for hot rolled steel bars, plates, and
structural shapes dropped 8.5 percent following a 4.4-percent decrease in September. Prices for
nonferrous wire and cable, both hot and cold rolled steel sheet and strip, softwood lumber, and
primary nonferrous metals also fell more in October than a month earlier. The index for
synthetic fibers turned down after increasing in the previous month. By contrast, the rate of
decline in prices for semifinished steel mill products slowed from 4.8 percent in September to
1.9 percent in October. The index for copper and brass mill shapes also fell less than it had in
the prior month.

Crude goods

The Producer Price Index for Crude Materials for Further Processing dropped 18.6
percent in October following a 7.9-percent decline in September. The faster rate of decrease in
crude goods prices was broad based: the indexes for energy goods, foodstuffs and feedstuffs,
and nonfood materials less energy all fell more in October than they had in the prior month. (See
table B.)

The index for crude energy goods decreased 24.9 percent in October after moving down
11.7 percent in September. Crude petroleum prices fell 26.0 percent subsequent to a 9.0-percent
decline in the preceding month. The natural gas index also dropped more in October than it had
in September - 29.1 percent and 16.5 percent, respectively. Coal prices advanced 0.4 percent in
October following a 0.7-percent increase a month earlier. (See table 2.)

The index for crude foodstuffs and feedstuffs declined 11.1 percent in October after
falling 1.1 percent in the preceding month. Prices for Irish potatoes for processing dropped 41.8
percent following a 258.7-percent surge in September. The indexes for ungraded chicken eggs
and slaughter sows also turned down in October. Prices for corn, soybeans, wheat, and slaughter
cattle decreased more than they had in September. By contrast, slightly counteracting the faster
rate of decline in crude foodstuffs and feedstuffs prices, the index for slaughter chickens jumped
7.0 percent in October subsequent to a 1.0-percent drop in the prior month. Prices for fluid milk
and for slaughter barrows and gilts decreased at slower rates than they had in September.

The index for crude nonfood materials less energy fell 17.0 percent in October
subsequent to a 9.4-percent decline in the previous month. Prices for carbon steel scrap dropped
39.8 percent after decreasing 22.5 percent in September. The indexes for nonferrous scrap,
wastepaper, soybeans, and grains also moved down more in October than they had a month
earlier. Prices for raw cotton and phosphates turned down after rising in September.
Conversely, the gold ores index increased 10.5 percent in October following a 6.0-percent
decline in the prior month. Prices for copper ores fell less than in September, while the index for
construction sand, gravel, and crushed stone rose more in October 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 dropped 3.4 percent after decreasing 0.5
percent in September. (Net output price indexes are not seasonally adjusted.) The industry
index for petroleum refineries declined 22.6 percent in October after falling 0.9 percent a month
earlier. Prices received by the industries for electric power distribution, crude petroleum and
natural gas extraction, and livestock slaughtering also decreased more than in the prior month.
Indexes for the phosphatic fertilizer and for the medicinal and botanical manufacturing
industries, as well as, for potassium and sodium compounds (except bleaches, alkalies, and
aluminum compounds) turned down after rising in September. By contrast, partially offsetting
the faster rate of decline in the index for Total Mining, Utilities, and Manufacturing Industries,
the rise in the index for automobile, light truck, and utility vehicle manufacturing accelerated to
7.6 percent in October from 0.1 percent in the preceding month. Prices received by the electric
power generation industry turned up after declining in September. In October, the index for total
mining, utilities, and manufacturing industries was 112.6 (December 2006 = 100), 7.5 percent
above its year-ago level.

Trade Industries. The Producer Price Index for the Net Output of Total Trade Industries turned
up 2.8 percent following a 1.2-percent decrease in September. (Trade indexes measure changes
in margins received by wholesalers and retailers.) About half of the upturn can be accounted for
by the margin index for gasoline stations with convenience stores, whose increase accelerated to
46.1 percent in October from 0.4 percent in the prior month. Margins received by merchant
wholesalers of both nondurable and durable goods, fuel dealers, department stores, specialty
food stores, and supermarkets and other grocery stores turned up after declining a month earlier.
Conversely, the margin index for family clothing stores turned down 4.8 percent after rising 1.9
percent in September. In October, the index for total trade industries was 114.2 (December 2006
= 100), 8.7 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 0.4 percent in October
from 0.9 percent in the prior month. The index for the general freight trucking industry sector
fell 0.6 percent following a 2.3-percent decrease in September. Prices received by the scheduled
air transportation industry group turned up after declining in the prior month. Conversely, the
industry index for couriers turned down 3.1 percent in October after rising 0.1 percent a month
earlier. Prices received by line-haul railroads also fell after climbing in September. The industry
indexes for freight transportation arrangement and long distance specialized freight trucking of
new goods decreased more than in the preceding month. Prices received by the industry for local
specialized freight trucking of new goods declined in October after no change in the previous
month, and the index for inland water freight transportation rose less than in September. In
October, the index for total transportation and warehousing industries was 114.5 (December
2006 = 100), 8.4 percent above its year-ago level.

Traditional Service Industries. The Producer Price Index for the Net Output of Total
Traditional Service Industries turned up 0.3 percent in October after falling 0.2 percent a month
earlier. The index for non-casino hotels and motels increased 3.5 percent following a 6.4-percent
drop in September. Prices received by software publishers and savings institutions also turned
up after decreasing in the previous month. The indexes for investment banking and securities
dealing and for general medical and surgical hospitals rose more than in September. Conversely,
the advance in the index for commercial banking slowed to 0.1 percent in October from 1.3
percent in the prior month. Prices received by portfolio managers and by securities brokers
decreased more than in September. In October, the index for total traditional service industries
was 102.6 (December 2006 = 100), 0.4 percent above its year-ago level.

Source: Department of Labor, Bureau of Labor Statistics