The index for materials and components for construction moved up 0.4
percent in June after advancing 0.3 percent a month earlier. Price
increases for nonferrous wire and cable, plywood, asphalt felts and
coatings, wiring devices, softwood lumber, treated wood, and concrete
products outweighed price decreases for plastic construction products.
From December 2006 to June 2007, prices for materials and components for
construction moved up at a 3.5-percent SAAR after advancing at a 1.0-
percent SAAR from June to December 2006.
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The index for materials for durable manufacturing increased 0.3
percent in June after moving up 0.2 percent in the prior month. Rising
prices for copper and brass mill shapes, cold rolled steel sheet and strip,
semifinished steel mill products, plywood, softwood lumber, and secondary
aluminum more than offset falling prices for aluminum mill shapes and cold
finished steel bars. The index for materials for durable manufacturing
climbed at an 11.1-percent SAAR in the first half of 2007 after rising at a
2.0-percent SAAR in the prior 6-month period.
Crude goods
The Producer Price Index for Crude Materials for Further Processing
moved up 0.3 percent in June following a 2.0-percent increase in May.
Prices for crude energy materials and for crude foodstuffs and feedstuffs
rose less than they had in May. The index for basic industrial materials
turned down after edging up in the prior month. (See table B.)
Prices for crude energy materials moved up 0.6 percent in June
subsequent to a 4.3-percent increase a month earlier. In June, rising
prices for crude petroleum and coal outweighed falling prices for natural
gas. (See table 2.) During the first half of 2007, the crude energy
materials index advanced at a 3.5-percent SAAR after rising at a 13.7-
percent SAAR in the previous 6-month period.
The crude foodstuffs and feedstuffs index advanced 0.5 percent
following a 1.1-percent increase in May. In June, higher prices for fluid
milk, corn, wheat, soybeans, slaughter hogs, and slaughter turkeys
outweighed lower prices for slaughter cattle, slaughter broilers and
fryers, fresh fruit and melons, and unprocessed finfish. The index for
crude foodstuffs and feedstuffs increased at a 33.9-percent SAAR in the
first half of 2007 subsequent to rising at a 20.7-percent SAAR in the
second half of 2006.
Prices for crude nonfood materials less energy inched down 0.2 percent
in June after edging up 0.1 percent in the preceding month. The copper
base scrap index declined 6.6 percent following a 10.3-percent gain in May.
Similarly, prices for wastepaper and pulpwood also turned down in June.
The indexes for aluminum base scrap and for construction sand, gravel, and
crushed stone were unchanged after increasing in the previous month.
Prices for gold ores fell more than they had a month earlier. By contrast,
partially offsetting the downturn in the basic industrial materials index,
prices for iron and steel scrap advanced 1.4 percent in June subsequent to
an 8.3-percent decrease in the prior month. The indexes for phosphates and
for hardwood logs, bolts, and timber also turned up in June. Prices for
raw cotton declined less than they had in May. From December 2006 to June
2007, the index for basic industrial materials increased at a 26.5-percent
SAAR after decreasing at a 4.2-percent SAAR in the prior 6-month period.
Net output price indexes
Mining, Utilities, and Manufacturing Industries. The Producer Price Index
for the Net Output of Total Mining, Utilities, and Manufacturing Industries
advanced 0.2 percent in June following a 1.2-percent rise in May. (Net
output price indexes are not seasonally adjusted.) In June, prices
received by electric power distributors increased 3.3 percent. The
industry indexes for electric power generation; natural gas distribution;
mining support activities; as well as, food, chemical, and electrical
equipment and appliance manufacturing also moved up in June. By contrast,
prices received by petroleum and coal products manufacturers fell 3.1
percent in June. The industry indexes for printing and related support
activities and for beverage and tobacco manufacturing also declined in
June.
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Trade Industries. The Producer Price Index for the Net Output of Total
Trade Industries decreased 1.2 percent in June after climbing 2.0 percent
in May. (Trade indexes measure changes in margins received by wholesalers
and retailers.) Margins received by gasoline stations dropped 8.4 percent
in June compared with a 43.3-percent jump in the prior month. The margin
indexes for merchant wholesalers of both durable and nondurable goods,
grocery stores, health and personal care stores, and florists also turned
down following advances in May. Margins received by building materials and
supplies dealers rose less in June than they had a month earlier. By
contrast, partially counteracting the downturn in the trade industries
index, margins received by shoe stores increased 18.6 percent following a
15.2-percent decline in May. The margin indexes for department stores,
wholesale trade agents and brokers, and recreational vehicle dealers also
moved up in June after falling in the previous month.
Transportation and Warehousing Industries. The Producer Price Index for
the Net Output of Total Transportation and Warehousing Industries advanced
0.8 percent in June after inching down 0.1 percent in May. Prices received
by the industry for scheduled passenger air transportation rose 4.5 percent
in June following an 8.4-percent decrease in the preceding month. Prices
received by the industries for line-haul railroad transportation, inland
water freight transportation, and courier services increased more in June
than they had a month earlier. The index for long-distance general freight
trucking (by the truckload) was unchanged following a decline in May.
Conversely, prices received by the United States Postal Service were
unchanged in June after rising 6.5 percent in the prior month. The indexes
for scheduled freight air transportation, long distance general freight
trucking (less than truckload), and local general freight trucking turned
down after advancing in May.
Traditional Service Industries. The Producer Price Index for the Net
Output of Total Traditional Service Industries climbed 0.7 percent in June
following a 0.3-percent decline in May. Prices received by the commercial
banking industry jumped 4.7 percent in June after falling 3.8 percent a
month earlier. The indexes for savings institutions, lessors of
nonresidential buildings (except miniwarehouses), offices of real estate
agents and brokers, and passenger car rental also turned up following
decreases in May. Prices received by non-casino hotels and motels moved up
more in June than they had in the previous month. The indexes for wired
telecommunications carriers and general medical and surgical hospitals rose
after no change in May. By contrast, prices received by cellular and other
wireless carriers declined 2.2 percent in June after increasing 3.0 percent
in the preceding month. The indexes for management consulting services and
offices of lawyers also turned down following advances in May.
*****
Producer Price Index data for July 2007 are scheduled to be released on
Tuesday, August 14, 2007 at 8:30 a.m. (EDT).
Technical Note
Brief Explanation of Producer Prices Indexes
The Producer Price Index (PPI) of the Bureau of Labor Statistics (BLS)
is a family of indexes that measure the average change over time in the
prices received by domestic producers of goods and services. PPIs measure
price change from the perspective of the seller. This contrasts with other
measures, such as the Consumer Price Index (CPI). CPIs measure price
change from the purchaser's perspective. Sellers' and purchasers' prices
can differ due to government subsidies, sales and excise taxes, and
distribution costs.
More than 8,000 PPIs for individual products and groups of products
are released each month. PPIs are available for the products of virtually
every industry in the mining and manufacturing sectors of the U.S. economy.
New PPIs are gradually being introduced for the products of industries in
the construction, trade, finance, and services sectors of the economy.
More than 100,000 price quotations per month are organized into three
sets of PPIs: (1) Stage-of-processing indexes, (2) commodity indexes, and
(3) indexes for the net output of industries and their products. The stage-
of-processing structure organizes products by class of buyer and degree of
fabrication. The commodity structure organizes products by similarity of
end use or material composition. The entire output of various industries
is sampled to derive price indexes for the net output of industries and
their products.
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