U.S. November Producer Price Index Report (Text)

The following is the text of the U.S. producer price report for Nov. released by the Labor Department.

The Producer Price Index for finished goods advanced 0.3 percent in November, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Finished goods prices fell 0.3 percent in October and moved up 0.8 percent in September. At the earlier stages of processing, the index for intermediate goods rose 0.2 percent and crude goods prices increased 3.8 percent. On an unadjusted basis, the finished goods index advanced 5.7 percent for the 12 months ended November 2011, the smallest year-over-year rise since a 5.6-percent increase in March 2011.

Stage-of-Processing Analysis

Finished goods

In November, the increase in the finished goods index was broad based with prices for finished consumer foods moving up 1.0 percent. The indexes for both finished goods less foods and energy and for finished energy goods inched up 0.1 percent.

Finished foods:

The index for finished consumer foods jumped 1.0 percent in November, the sixth consecutive monthly increase. Over half of the November advance can be attributed to the index for fresh and dry vegetables, which rose 11.5 percent. Higher prices for processed young chickens and meats also were factors in the increase in the finished consumer foods index.

Finished core:

The index for finished goods less foods and energy advanced 0.1 percent in November after no change a month earlier. Leading this rise, the index for pharmaceutical preparations jumped 0.9 percent. Price increases for passenger cars also contributed to the advance in the finished core index.

Finished energy:

The index for finished energy goods edged up 0.1 percent in November after declining 1.4 percent in the prior month. Leading this increase was a 9.4-percent advance in home heating oil prices.

Intermediate goods

The Producer Price Index for intermediate materials, supplies, and components moved up 0.2 percent in November after declining 1.1 percent in October. Leading this increase, prices for intermediate energy goods rose 1.9 percent. The index for intermediate foods and feeds also contributed to the advance, moving up 0.6 percent. By contrast, prices for intermediate materials less foods and energy decreased 0.4 percent. For the 12 months ending in November, the intermediate goods index increased 7.7 percent, the smallest year-over-year rise since a 6.2- percent increase in January 2011.

Intermediate energy:

Prices for intermediate energy goods advanced 1.9 percent in November following a 2.6-percent decline in October. Over forty percent of this rise can be attributed to a 7.5-percent increase in the diesel fuel index. Higher prices for industrial electric power and jet fuels also were factors in the November advance in the intermediate energy goods index.

Intermediate foods:

The index for intermediate foods and feeds increased 0.6 percent in November after falling 1.5 percent a month earlier. The index for processed young chickens accounted for over three-quarters of the advance, moving up 8.0 percent. Higher prices for natural cheese, except cottage cheese, also contributed to the November rise in the index for intermediate foods and feeds.

Intermediate core:

Prices for intermediate goods less foods and energy fell 0.4 percent in November, the second consecutive monthly decline. The November decrease was mostly due to a 4.1- percent drop in the index for basic organic chemicals.

Crude goods

The Producer Price Index for crude materials for further processing moved up 3.8 percent in November. For the 3 months ending in November, prices for crude materials advanced 4.0 percent following a 1.5-percent decline from May to August. In November, the monthly increase in the crude goods index is mostly attributable to prices for crude energy materials, which jumped 10.5 percent. Also contributing to the November climb was the index for crude foodstuffs and feedstuffs, which advanced 0.5 percent. By contrast, prices for crude nonfood materials less energy decreased 2.5 percent.

Crude energy:

The index for crude energy materials rose 10.5 percent in November. From August to November, prices for crude energy materials jumped 16.4 percent subsequent to an 11.0- percent decline for the 3 months ending in August. The monthly increase in November was led by a 22.7-percent jump in the crude petroleum index. Higher prices for coal also were a factor in the rise in the crude energy index.

Crude foods:

Prices for crude foodstuffs and feedstuffs climbed 0.5 percent in November. For the 3 months ending in November, the crude foods index moved down 2.1 percent after rising 5.9 percent from May to August. The November monthly increase was led by a 3.2-percent advance in prices for slaughter cattle. A rise in the slaughter poultry index also contributed to the climb in crude foods prices.

Crude core:

The index for crude nonfood materials less energy fell 2.5 percent in November. From August to November, crude core prices declined 5.8 percent following a 3.3-percent rise in the prior 3-month period. In November, a 6.6-percent drop in prices for iron and steel scrap accounted for almost three- quarters of the monthly decrease in the crude core index.

Services Analysis

Trade industries:

The Producer Price Index for the net output of total trade industries was unchanged in November following a 1.0- percent drop in October. (Trade indexes measure changes in margins received by wholesalers and retailers.) In November, higher margins received by family clothing stores and discount department stores offset lower margins received by wholesale trade industries and non-discount department stores.

Transportation and warehousing industries:

The Producer Price Index for the net output of transportation and warehousing industries moved down 0.2 percent in November after rising 0.4 percent in October. Most of this decline can be traced to prices received by the scheduled passenger air transportation industry, which fell 1.8 percent. Lower prices for deep sea freight transportation and local general freight trucking also contributed to the decrease in the transportation and warehousing industries index.

Traditional service industries:

The Producer Price Index for the net output of total traditional service industries edged up 0.1 percent in November following a 0.1-percent decline in October. Leading this advance, prices received by general medical and surgical hospitals increased 0.6 percent. Higher prices received by the portfolio management industry and by direct health and medical insurance carriers also were factors in the rise in the index for total traditional service industries.

The Producer Price Index for December 2011 is scheduled to be released on Wednesday, January 18, 2012 at 8:30 a.m. (EST).

Recalculated Seasonal Adjustment Factors and Relative Importance Figures to be Available on February 14, 2012

Each year with the release of PPI data for January, seasonal adjustment factors are recalculated to reflect price movements from the just-completed calendar year. The following information will be available on February 14, 2012 (2 workdays prior to the release of PPI data for January 2012 on February 16): * Direct seasonal factors for commodity indexes for the year 2012, * Recalculated seasonal factors for the last 5 years (2007- 2011) for the commodity indexes, * Recalculated seasonal factors for the last 5 years (2007- 2011) for the stage-of-processing indexes.

This routine annual calculation may result in revisions to seasonally adjusted indexes for the previous 5 years, which will be available on the BLS website. In addition, December 2011 relative importance figures also will be available on February 14, 2012.

To obtain this information, visit the PPI website at www.bls.gov/ppi or call the Division of Industrial Prices and Price Indexes, Section of Index Analysis and Public Information at (202) 691-7705.

PPI Weights to be Updated

The Bureau of Labor Statistics will soon update the value weights used to calculate Producer Price Indexes to more accurately reflect recent production and marketing patterns. The new weights, which will be introduced in February 2012 with the release of January 2012 index data, will be based on shipment values from the year 2007. These value weights come from the Census of Manufactures, the Census of Mining, the Census of Services, and the Census of Agriculture. PPI weights have been based on 2002 census shipment values since January 2007.

All PPIs will be affected by this weight update, including all the industry net output indexes, as well as indexes for traditional commodity groupings. In addition, weights will be updated from the 2002 to the 2007 census for all stage-of-processing indexes, durability of product indexes, and special commodity-grouping indexes. This weight revision will not change any arithmetic reference bases for indexes, the dates when PPIs were set to 100.

The basic structures of the PPI commodity and stage-of- processing classification systems will not change as a result of the weight revision. The PPIs classified according to the North American Industry Classification System (NAICS), however, will be updated in February 2012 with the release of January 2012 index data to reflect 2012 NAICS definitions established by the U.S. Census Bureau. The weight update will also result in significant shifts in the relative importance of various industries and products. These shifts will impact aggregate indexes in a manner commensurate with the relative gains and losses in value weights from 2002 to 2007.

Commodity and stage-of-processing relative importance figures for December 2011 will be available on February 14, 2012, two business days prior to the release of January 2012 PPI data. This information will be available on the PPI website at www.bls.gov/ppi or by calling the Division of Industrial Prices and Price Indexes, Section of Index Analysis and Public Information at (202) 691-7705.

To contact the reporter on this story: Chris Middleton in Washington cmiddleton2@bloomberg.net

To contact the editor responsible for this story: Marco Babic at mbabic@bloomberg.net

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