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

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

The Producer Price Index for finished goods advanced 0.1 percent in January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Prices for finished goods declined 0.1 percent in December and moved up 0.2 percent in November. At the earlier stages of processing, the index for intermediate goods fell 0.4 percent in January, and crude goods prices increased 1.5 percent. On an unadjusted basis, the finished goods index advanced 4.1 percent for the 12 months ended January 2012, the smallest year-over-year rise since a 3.6-percent increase in January 2011. (See table A.) falling 0.9 percent in December. Over eighty percent of the January decline can be attributed to the index for fresh and dry vegetables, which fell 8.8 percent.

Intermediate goods

The Producer Price Index for intermediate materials, supplies, and components moved down 0.4 percent in January following a 0.2-percent decline in December. Over three-fourths of the broad-based decrease in January is attributable to prices for intermediate energy goods, which fell 1.4 percent. Also contributing to the decline in intermediate goods prices, the index for intermediate goods less foods and energy inched down 0.1 percent, and prices for intermediate foods and feeds decreased 0.4 percent. For the 12 months ended in January, the intermediate goods index rose 4.2 percent, the smallest year- over-year advance since a 2.9-percent increase in December 2009. (See table B.)

Intermediate energy: Prices for intermediate energy goods fell 1.4 percent in January after two consecutive increases. The index for utility natural gas, which dropped 2.7 percent, was a major contributor to this decrease. Lower prices for commercial electric power and residual fuel also were factors in the decline in the intermediate energy goods index. (See table 2.)

Intermediate core: Prices for intermediate goods less foods and energy edged down 0.1 percent in January, the fourth consecutive decline. Leading the January decrease was the index for basic organic chemicals, which fell 4.4 percent. Lower prices for cold rolled steel sheet and strip also contributed to the decline in the intermediate core index.

Intermediate foods: The index for intermediate foods and feeds fell 0.4 percent in January following a 0.8-percent decrease in December. A 5.4-percent drop in prices for natural cheese (except cottage cheese) accounted for most of the January decline in the intermediate foods and feeds index.

Crude goods

The Producer Price Index for crude materials for further processing moved up 1.5 percent in January. For the 3-month period ending in January, crude material prices rose 2.6 percent following a 1.1-percent decline from July to October. In January, nearly half of the broad-based monthly advance is attributable to a 1.6-percent increase in prices for crude energy materials. Also contributing to the January advance, the index for crude foodstuffs and feedstuffs moved up 1.6 percent, and prices for crude nonfood materials less energy rose 0.6 percent. (See table B.)

Crude energy: The index for crude energy materials increased 1.6 percent in January. For the 3-month period ending in January, prices for crude energy materials climbed 7.5 percent subsequent to a 2.2- percent decline for the 3 months ended October 2011. A 5.7-percent jump in the index for crude petroleum was responsible for the January monthly advance in crude energy prices. (See table 2.)

Crude foods: The index for crude foodstuffs and feedstuffs increased 1.6 percent in January. From October to January, prices for crude foodstuffs and feedstuffs edged down 0.2 percent after rising 0.9 percent in the 3 months ended October 2011. Almost sixty percent of the monthly advance in January can be traced to a 6.4-percent increase in the corn index. Higher prices for slaughter steers and heifers and for soybeans also were factors in the rise in the crude foodstuffs and feedstuffs index.

Crude core: The index for crude nonfood materials less energy moved up 0.6 percent in January. For the 3 months ending in January, crude core prices fell 1.7 percent subsequent to a 2.9-percent decline from July to October. The January monthly rise was led by a 3.3-percent increase in the index for carbon steel scrap. Higher prices for corn also contributed to the advance in the crude core index.

Table B. Monthly and 12-month percent changes in selected price indexes for intermediate goods and crude goods, seasonally adjusted

Services Analysis

Trade industries: The Producer Price Index for the net output of total trade industries was unchanged in January following a 0.2-percent increase in December. (Trade indexes measure changes in margins received by wholesalers and retailers.) In January, higher margins received by wholesale trade industries and grocery stores offset lower margins received by discount department stores and gasoline stations.

Transportation and warehousing industries: The Producer Price Index for the net output of transportation and warehousing industries moved up 1.0 percent in January after rising 0.6 percent in December. Over half of the January increase can be traced to prices received by couriers, which increased 6.0 percent. Higher prices for scheduled passenger air transportation and long-distance general freight trucking (truckload) also contributed to the advance in the transportation and warehousing industries index.

Traditional service industries: The Producer Price Index for the net output of total traditional service industries increased 0.4 percent in January following a 0.1-percent decline in December. Leading this advance, prices received by offices of lawyers moved up 1.6 percent. Higher prices received by depository credit intermediaries and portfolio managers also were factors in the rise in the index for total traditional service industries. The Producer Price Index for February 2012 is scheduled to be released on Thursday, March 15, 2012 at 8:30 a.m. (EDT).

Effective with this release, the Producer Price Index (PPI) includes data for 19 resampled industries and updated industry definitions reflecting the 2012 North American Industry Classification System (NAICS). Industry samples and NAICS definitions are periodically updated to reflect current conditions more accurately when the structure, membership, technology, or product mix of industries shift. The first results of the resampling process were published in July 1986, with subsequent efforts completed at 6-month intervals. NAICS industry definitions are routinely updated in conjunction with PPI weight updates.

Industries selected for resampling in January 2012 are noted below. For information on specific index additions, deletions, and recodes effective in January as a result of both the resampling and NAICS classification system update, see the January 2012 issue of the PPI Detailed Report online at www.bls.gov/ppi/ppidr201201.pdf, or contact the PPI's Section of Index Analysis and Public Information at ppi-info@bls.gov or (202) 691-7705.

Recalculation of Seasonal Adjustment Factors

Effective with this release, seasonal adjustment factors have been recalculated to reflect price-movement patterns during 2011 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 2007 through December 2011. Revised seasonally adjusted data for this period, as well as seasonal adjustment factors for commodity indexes to be used through December 2012, were released February 14, 2012. 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 2011, based on former and recalculated seasonal factors. These percent changes include final price data through August 2011 and may differ from values shown in tables A and B of this release, which include final price data through September 2011.

PPI Weights Updated

The Bureau of Labor Statistics has updated the value weights used to calculate Producer Price Indexes to more accurately reflect recent production and marketing patterns. The new weights, which were introduced in February 2012 with the release of January 2012 index data, are 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 had been based on 2002 census shipment values since January 2007.

All PPIs were affected by this weight update, including all the industry net output indexes, as well as indexes for traditional commodity groupings. In addition, weights were 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 did not change the arithmetic reference base for any indexes, the period when PPIs were set to 100.

The basic structures of the PPI commodity and stage-of- processing classification systems did not change as a result of the weight revision. The PPIs classified according to the North American Industry Classification System (NAICS), however, were 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 also did result in significant shifts in the relative importance of some 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.

To contact the reporter on this story: Alex Tanzi in Washington atanzi@bloomberg.net

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

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.