"Friendly" Producer Price Index for February

The Producer Price Index for finished goods rebounded from its nerve-racking 1.1% rise in January -- its largest jump since September of 1990 -- with a friendlier 0.1% gain in February. The core rate, which strips out prices for foods and energy, dropped 0.3%. While many analysts were expecting no change in eithe

The Producer Price Index for finished goods rebounded from its nerve-racking 1.1% rise in January -- its largest jump since September of 1990 -- with a friendlier 0.1% gain in February. The core rate, which strips out prices for foods and energy, dropped 0.3%. While many analysts were expecting no change in either rate, the modest changes were overshadowed by more prominent concerns.

"The PPI is a friendly number, but the market is not weighing it too heavily because there are much bigger issues at work in the market,'' including warnings about earnings from corporations, said Tony Richards, managing director at Brinson Partners. 

In the manufacturing industry, prices for nondurable manufacturing materials once again made the biggest move, albeit in the opposite direction of January, by falling 0.7%.    

Finished goods

Price declines for passenger cars (1.5%) and light motor trucks (3.6%) had a big impact on finished goods pricing. The index for finished goods other than foods and energy would have edged up 0.1% had it not been for these declines. Additional finished goods details for January are as follows:

  • Before seasonal adjustment, the index for finished goods rose 0.2% to 141.5 (1982=100).
  • Over the past 12 months, prices for finished goods and finished energy goods increased 4.0% and 18.4%, respectively.
  • The finished consumer goods index dropped 0.4%, after gaining 0.8% in January.
  • Led by the light motor truck decline, its largest drop since October 1982, the capital equipment index dipped 0.3% in January.
    - Price gains: civilian aircraft, furniture
    - Price drops: passenger cars, heavy/light motor trucks, construction machinery/equipment

Intermediate goods

The producer price index for intermediate materials, supplies, and components dipped 0.1% in February after a 0.7% gain in January. Prices for intermediate energy goods fell 1.1%, pushed by a 2.6% decline in commercial electric power prices. February index results for construction and manufacturing materials are as follows:

  • Durable manufacturing materials: down 0.2% (down 0.7% in January)
    - rising prices: aluminum mill shapes, cement, hardwood lumber
    - falling prices: steel mill products (1.0%), flat glass, hardwood lumber, copper and brass mill shapes, metal powders, platinum
  • Nondurable manufacturing materials: down 0.7% (up 1.1% in January)
    - rising prices: nitrogenates, synthetic fiber, inorganic chemicals
    - falling prices: paperboard
  • Construction materials/components: up 0.3% (down 0.3% in January)
    - rising prices: softwood lumber, fabricated structural metal products, air conditioning and refrigeration equipment, steel 
    - falling prices: asphalt coatings, plywood, gypsum products, nonferrous wire/cable, millwork, heating equipment, fabricated ferrous wire

Crude goods

The Index for Crude Materials for Further Processing followed its largest rise since 1983 with its largest one-month decrease, dropping 14.2% in February; the index for basic industrial materials also fell.

Net Output of Total Domestic Manufacturing

The Index for Net Output of Total Domestic Manufacturing Industries was unchanged in February, after 0.2% rise the previous month. The index remained at 134.7 (December 1984 = 100) and has increased 1.9% over the last 12 months.

Some changes for the net output of major industry groups are listed below.

Industry % change, Dec to Jan
Petroleum refinery - 0.4
Food 0.2
Chemicals 0.7
Paper - 0.3
Rubber and plastics 0.1
Primary metal - 0.4
Fabricated metal 0.1
Industrial machinery 0.1
Electronic/electrical equipment - 0.1
Transportation equipment - 0.8
Instruments 0.2

The March 2001 Producer Price Index report will be released on April 12, 2001.

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