Monthly Labor Review July 2002 3

Producer prices, 2001

Producer price highlights

during 2001

The decline of the PPI for finished goods in 2001

was the largest in 15 years; prices for natural gas

and crude petroleum fell back to 1999 levels

William F. Snyders,

Jon Weinhagen,

and

Amy Popick

William F. Snyders,

Jon Weinhagen,

and

Amy Popick

are economists for the

Producer Price Index

Program, Bureau of

Labor Statistics.

Email:

Snyders_W@bls.gov

Weinhagen_J@bls.gov

Popick_A@bls.gov

T

he Producer Price Index (PPI) for Finished

Goods declined 1.6 percent in 2001, the

largest calendar year decrease since a 2.3-

percent drop in 1986. This index rose 3.6 percent

in 2000, and 2.9 percent in 1999. Finished goods

are commodities that are ready for sale to the final-demand user, either an individual consumer

or a business firm. The majority of the 2001 decline in finished goods prices can be traced to a

17.1-percent drop in finished energy prices. Excluding energy, the index for finished goods advanced 1.2 percent in 2001. Following a 1.7-percent gain in the prior year, the index for finished

consumer foods rose 1.8 percent in 2001. Prices

for finished goods less foods and energy—a category that includes both consumer goods and

capital equipment—increased 0.9 percent in 2001,

following a 1.3-percent advance throughout the

previous 12 months.

Prices for commodities at the overall crude

and intermediate stages of processing also experienced declines for the 2001 calendar year.

The PPI for intermediate materials, supplies,

and components fell 4 percent in 2001, after

posting a 4.1-percent gain in 2000. Intermediate goods in the PPI reflect material inputs to

the manufacturing process, as well as various

supplies consumed in the production process.

Prices for crude materials for furthering processing dropped 32.5 percent, following a 35.5-

percent jump in the prior calendar year. Crude

goods are unprocessed goods that are primarily outputs from mining industries and agricultural production.

Throughout 2001, energy prices turned down

at both the crude and intermediate stages of processing. The index for intermediate foods and

feeds rose at a much slower rate in 2001 than it

did in 2000. Prices for crude foodstuffs and

feedstuffs turned down, after falling a year earlier. Excluding foods and energy, the indexes for

intermediate goods and crude materials posted

declines. (See table 1.)

Energy goods

Falling prices for both natural gas and petroleumbased commodities pushed energy prices down

in 2001 at all three stages of processing. The

crude energy index dropped 52.9 percent, compared with an 85.6-percent jump in 2000. This

decrease was primarily the result of declining

prices for natural gas and crude petroleum. Prices

for energy goods at the intermediate stage of

processing fell 16.9 percent, subsequent to a 19-

percent gain a year earlier. The indexes for jet

fuels, diesel fuel, and industrial and commercial

natural gas registered declines in 2001, after rising in the prior year. At the final stage of processing, the index for finished energy goods decreased 17.1 percent, following a 16.6-percent

advance in 2000. Falling prices were observed

for gasoline, residential natural gas, liquefied petroleum gas, and home heating oil. (See table 2.)
4 Monthly Labor Review July 2002

Producer Prices, 2001

Annual percent changes for major categories of the Producer Price Index by stage of processing, 1992–2001

Index 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Finished goods ........................................ 1.6 0.2 1.7 2.3 2.8 –1.2 0.0 2.9 3.6 –1.6

Foods ................................................. 1.6 2.4 1.1 1.9 3.4 –.8 .1 .8 1.7 1.8

Energy ................................................ –.3 –4.1 3.5 1.1 11.7 –6.4 –11.7 18.1 16.6 –17.1

Other .................................................. 2.0 .4 1.6 2.6 .6 0 2.5 .9 1.3 .9

Intermediate materials, supplies,

and components ................................... 1.0 1.0 4.4 3.3 .7 –.8 –3.3 3.7 4.1 –4.0

Foods and feeds .................................. –.5 5.5 –4.5 10.3 2.1 –1.7 –7.3 –4.2 3.6 .3

Energy ................................................ .7 –4.2 2.9 1.1 11.2 –7.0 –12.1 19.6 19.0 –16.9

Other .................................................. 1.2 1.6 5.2 3.2 –.9 .3 –1.6 1.9 1.6 –-1.6

Crude materials for further processing ........ 3.3 .1 –.5 5.5 14.7 –11.3 –16.7 15.3 35.5 –32.5

Foodstuffs and feedstuffs ...................... 3.0 7.2 –9.4 12.9 –1.0 –4.0 –11.0 –.1 7.4 –7.6

Energy ................................................ 2.3 –12.3 –.1 3.7 51.2 –23.1 –23.8 36.9 85.6 –52.9

Other .................................................. 5.7 10.7 17.3 –4.2 –5.5 0 –16.0 14.0 –5.5 –9.9

Table 1.

Annual percent changes in Producer Price Indexes for selected energy items, 1996–2001

Index 1996 1997 1998 1999 2000 2001

Finished energy goods ..................................... 11.7 –6.4 –11.7 18.1 16.6 –17.1

Gasoline ....................................................... 27.1 –15.0 –33.1 74.8 17.2 –33.1

Residential natural gas .................................... 11.2 2.4 –2.4 .9 41.8 –22.1

Liquefied petroleum gas .................................. 71.4 –29.3 –32.6 87.0 49.3 –55.3

Home heating oil ............................................ 25.0 –21.7 –36.1 89.4 37.0 –42.9

Residential electric power ................................ .6 –.2 –2.5 –.5 3.2 3.6

Intermediate energy goods ................................ 11.2 –7.0 –12.1 19.6 19.0 –16.9

Jet fuels ....................................................... 26.1 –22.3 –35.8 90.9 42.6 –44.3

Diesel fuels ................................................... 26.2 –22.5 –33.8 86.4 39.8 –44.7

Industrial natural gas ...................................... 22.3 3.1 –9.7 7.4 91.9 –36.7

Commercial natural gas ................................... 16.8 .9 –4.7 4.1 56.0 –24.3

Natural gas to electric utilities .......................... 6.1 9.3 –24.3 15.6 83.1 –39.9

Residual fuel ................................................. 32.8 –7.6 –39.8 91.1 29.8 –29.1

Industrial electric power .................................. 0 .5 –1.3 –.1 4.9 3.2

Commercial electric power ............................... –.1 0 –1.8 .6 4.4 4.4

Crude energy materials ..................................... 51.2 –23.1 –23.8 36.9 85.6 –52.9

Natural gas ................................................... 92.0 –27.9 –17.8 7.9 192.6 –65.6

Crude petroleum ............................................. 35.8 –28.3 –48.6 172.0 11.0 –42.4

Coal ............................................................. –1.1 4.9 –1.2 –9.3 0 10.1

Table 2.

Natural gas. The last 5 years have shown volatile price movements within the natural gas market, especially looking at the

years 2000 and 2001. Prices were relatively lower and more

stable in 1998 compared with 1997. Throughout the 1998–99

winter heating season, the natural gas index fell, but at a smaller

magnitude compared with the previous season. Mild winter

weather caused less demand for consumption, and therefore

resulted in higher storage levels. By the winter of 1999–2000,

weather conditions continued to be much warmer than expected; therefore, prices remained low.

Natural gas prices began to rise considerably in 2000 when

the combination of decreasing supplies, high crude oil prices,

and weather-related demand pushed natural gas prices to new

heights. Demand for natural gas rose as consumers began

switching from higher-priced crude oil to lower-priced natural

gas. During the spring and early summer of 2000, supplies

began to tighten, causing the price of natural gas to climb

throughout the rest of the year.

After surging 192.6 percent in 2000, the PPI for natural gas

decreased 65.6 percent for the 2001 calendar year. Prices began to drop significantly in February and March as milder

temperatures moved into the high consumption regions, causing storage levels to rebound. Mild temperatures continued

through October, which allowed prices to continue to decline.

In November, the natural gas index shot up 56.4 percent as a

result of colder weather. By the end of the year, mild weather

pushed gas storage stocks to record levels, which helped

push prices down again.1

For the 12 months ended in December 2001, industrial and

commercial natural gas prices declined 36.7 and 24.3 percent

respectively, falling to their lowest levels since May 2000. A

sharp decrease in spot natural gas prices pulled gas prices

substantially lower from their record highs in January 2001,

when the conjunction of falling supplies, rising crude oil

prices, and higher weather-related demand helped push natural gas prices to unprecedented heights. After an 83.1-percent jump in 2000, the index for natural gas to electric utilities

fell 39.9 percent in 2001. The index for residential natural gas

decreased 22.1 percent in 2001, following a 41.8-percent gain

in 2000. After January 2001—the peak of residential natural
Monthly Labor Review July 2002 5

gas prices—this index declined sharply as a result of increased

production levels and record supply numbers. In December

2001, residential natural gas prices were at their lowest point

since May 2000.

The liquefied petroleum gas (LPG) index decreased 55.3

percent in 2001, after an increase of 49.3 percent in 2000. Prices

fell with the help of mild weather throughout the summer and

fall of 2001. Over the last 6 years, liquefied petroleum gas

prices have experienced a period of volatility. In 1996, prices

increased as a cold winter season created higher demand and

a large drop in inventories. By the start of 1997, however,

prices began to fall and continued in a downward trend until

the end of 1998. This period was marked by decreasing demand due to warmer-than-normal temperatures, restored inventories, higher production levels, and strong imports in the

LPG market. Lower prices in the crude petroleum and natural

gas markets also helped lower the LPG index for 1997 and

1998. From January 1999 until February 2001, LPG prices rallied with rising prices for crude oil and natural gas.

Petroleum-based products. Prices for crude petroleum

dropped 42.4 percent in 2001, following an 11-percent gain in

2000 and a 172-percent surge in 1999. In March of 1999, both

Organization of Petroleum Exporting Countries (OPEC) and

major non-OPEC member countries announced an agreement

to reduce oil production, in order to bolster lackluster prices

from previous years. Throughout 1999, oil prices increased

dramatically, which ultimately resulted in OPEC receiving international pressure to raise their output. In March of 2000,

OPEC decided to raise output by 1.7 million barrels per day.2

Consequently, production from OPEC members increased

throughout the year 2000. However, prices continued to climb

as worldwide economic growth generated demand that outpaced the increased supply. By 2001, the combination of improved oil supplies and lower demand due to the economic

recession in the United States helped bring prices down from

their previous year’s level.

Looking further down the pipeline for petroleum-based

products, the index for jet fuels fell 44.3 percent in 2001, after

advancing 42.6 percent a year earlier. From the spring of 1999

through the summer of 2000, jet fuel prices rose due to the

large increase in crude oil prices during the same period. After

peaking in September 2000, prices finally leveled off with the

increase in inventories and began falling in the early part of

2001 as a result of declining oil prices. Starting in April, volatile supply levels created a price roller coaster for jet fuels

causing the index to jump up in May, fall in July, and rebound

in early September. Following the events surrounding the

September 11, 2001, terrorist attacks, prices once again

dropped due to falling demand.

The PPI for gasoline declined 33.1 percent, following a 17.2-

percent increase in 2000. Prices were relatively stable up until

April, when gasoline shortages caused a significant rise in

prices. Refineries then greatly advanced production, pulling

prices down considerably during the late spring. In response

to lower prices, refineries once again adjusted and set production levels lower. These production cuts, combined with a

late summer surge in demand, put upward pressure on gasoline prices. Demand, however, declined due to the events of

September 11th and the end of the driving season. Furthermore, OPEC’s inability to reduce global output resulted in an

excess supply of oil in the world market, causing a substantial

drop in gasoline prices.

In 2001, prices for diesel fuel decreased 44.7 percent, compared with a 39.8-percent rise in the previous year. For the

first quarter of 2001, prices declined as distillate supplies increased. By April, distillate production began to taper off

because refineries shifted more of their resources to gasoline

production. Hence, prices climbed in the spring. Prices were

then pulled back down in the summer as a result of oversupply. Due to the slowing of the U.S. economy, prices collapsed

more rapidly in the last quarter of 2001.

The downward trend in the natural gas market helped lower

residual fuel prices. The index for residual fuel fell 29.1 percent, following a 29.8-percent gain in 2000. Also adding to the

downward price pressure were the events of September 11th,

the contracting economy, the drop in oil prices, and unseasonably warm temperatures.

Home heating oil prices decreased 42.9 percent in 2001,

compared with a 37-percent rise in the prior year. The supply

of distillates remained quite low throughout the summer of

2000, and consequently put upward pressure on home heating oil prices. Supplies then rebounded in the beginning of

October and continued through March of 2001, pulling down

prices for this period. In April and May, the rising tide of

gasoline prices carried other petroleum-based products along

with it, including home heating oil. Prices then dropped in the

summer months as supplies once again began to climb. The

months of August and September saw a brief rebound in the

home heating oil index resulting from increased demand. Like

other petroleum-based commodities, prices then collapsed

following the events of September 11th.

Electric power. The PPI for residential electricity increased

3.6 percent in 2001, after rising 3.2 percent in the previous

year. Subsequent to price increases in 2000, the indexes for

commercial electric power and industrial electric power advanced 4.4 percent and 3.2 percent, respectively. Residential

electricity prices continued to increase through the first half

of 2001 due to the ongoing crisis in California. Contrary to

predictions, the crisis in California failed to widen in the summer of 2001 as lower fuel costs, cooler summer temperatures,

and increased conservation within the State prevented the

crisis from escalating further. However, the higher prices
6 Monthly Labor Review July 2002

Producer Prices, 2001

brought on by the crisis did not subside much by the end of

the year. Electricity prices as a whole continued to be high

due to the rate increases in California and the Pacific Northwest. Drought conditions in the Pacific Northwest lowered

reservoirs, putting a strain on the hydroelectric power industry found in that region.

Foods and related products

The producer price index for finished consumer foods advanced 1.8 percent in 2001, following a 1.7-percent increase in

the previous year. Leading this gain, prices for fresh fruits

and melons rose 24 percent during 2001. The indexes for dairy

products, soft drinks, processed fruits and vegetables, and

pork also rose, contributing to the overall increase. By contrast, prices for eggs for fresh use, beef and veal, and finfish

and shellfish turned down in 2001, partially offsetting the rise

in finished consumer food prices. (See table 3.)

Prices for intermediate foods and feeds rose 0.3 percent in

2001, after increasing 3.6 percent in 2000. Most of this deceleration can be traced to the index for prepared animal feeds

that fell 3.6 percent in 2001, following an 8.3-percent gain in

the preceding year. The index for beef and veal also fell in the

current year, after posting an increase in 2000, while prices for

fluid milk products and flour rose at a slower pace in 2001 than

they did in the year before. Partly offsetting the intermediate

foods and feeds deceleration, crude vegetable oils; refined

sugar; and natural, processed, and imitation cheese prices

turned up in 2001, after falling in the prior year. The index for

confectionery materials escalated at a faster rate in 2001 than

in the year before.

Following a 7.4-percent increase in 2000, the index for crude

foodstuffs and feedstuffs posted a 7.6-percent decline in 2001.

Contributing most significantly to this deceleration, the index

for slaughter cattle fell 15.1 percent in 2001, after advancing

9.1 percent in the previous year. Prices for slaughter hogs and

soybeans also posted declines in the current year, after increasing in 2000. Fluid milk, wheat, and corn prices moved

upward at a slower rate in 2001 than they did in 2000. Alternatively, the indexes for fresh and dry vegetables and for fresh

fruits and melons turned up in 2001.

Fruits and melons. Prices for fresh fruits and melons turned

up 24 percent in 2001, following a 1.3-percent drop in the previous year. Underlying this increase, the index for strawberries shot up 95.7 percent in 2001, after rising 25 percent in

2000. The index for citrus fruits turned up as a result of price

increases for navel oranges, lemons, and grapefruits. Price

increases in 2001 were also registered for red delicious apples

and pears. On the other hand, prices for McIntosh and Granny

Smith apples turned down in 2001.

Grains. Corn prices rose 2.8 percent in 2001, after increasing

7.8 percent in the preceding year. The index for corn exhibited

a spike in July, rising 16.2 percent as a result of decreased

supplies due to abnormally hot weather. In addition, elevated

corn prices for 2001 were the result of increased foreign consumption of U.S. corn due to diminished production from forAnnual percent changes in Producer Price Indexes for selected food items, 1996–2001

Index 1996 1997 1998 1999 2000 2001

Finished consumer foods ................... 3.4 –0.8 0.1 0.8 1.7 1.8

 Fresh fruits and melons ................... 37.2 –8.2 –19.0 8.2 –1.3 24.0

 Dairy products ............................... 2.4 4.7 10.7 –11.1 3.2 2.3

 Soft drinks .................................... .1 –1.0 1.9 3.3 3.6 3.0

 Pork ............................................. 21.9 –13.6 –27.3 29.8 5.0 4.7

 Fresh and dry vegetables ................ –24.3 21.6 8.8 4.4 –23.7 9.7

 Bakery products ............................ 3.6 1.1 1.0 1.6 2.7 2.1

 Processed poultry .......................... 2.6 –6.3 3.8 –3.7 1.1 1.4

 Unprocessed and packaged fish....... 5.1 4.7 –3.4 8.8 .6 –7.8

 Beef and veal ................................ 7.4 –5.4 –2.7 10.8 8.2 –4.5

 Eggs for fresh use ......................... 15.0 –15.6 –6.2 –27.4 46.3 –27.5

Intermediate foods and feeds .............. 2.1 –1.7 –7.3 –4.2 3.6 .3

 Crude vegetable oils ....................... –9.3 13.9 –2.7 –37.5 –16.5 15.9

 Refined sugar ................................ 4.2 –4.5 .6 –2.2 –9.6 6.3

 Confectionery materials ................... 2.2 –15.8 –1.0 1.7 .7 15.1

 Flour ............................................ –9.0 –8.2 –5.6 –7.5 7.9 4.1

 Prepared animal feeds .................... 5.4 –3.1 –20.4 –2.7 8.3 –3.6

Crude foodstuffs and feedstuffs .......... –1.0 –4.0 –11.0 –.1 7.4 –7.6

 Slaughter cattle ............................. –2.5 2.0 –12.0 19.4 9.1 –15.1

 Slaughter hogs .............................. 23.2 –21.7 –76.8 266.9 14.9 –24.9

 Soybeans ..................................... –3.7 1.8 –21.3 –17.5 9.9 –12.5

 Wheat .......................................... –19.3 –11.3 –15.0 –13.9 13.9 1.7

 Corn ............................................. –21.0 2.2 –22.5 –12.4 7.8 2.8

 Fluid milk ...................................... 1.1 2.8 25.6 –31.3 7.0 3.0

Table 3.
Monthly Labor Review July 2002 7

eign suppliers. Following July’s upsurge, corn prices decelerated through October 2001.

The index for wheat posted a 1.7-percent gain for the 12

months ended December 2001, following a 13.9-percent increase in 2000. Prices fluctuated throughout 2001; however,

the yearly increase can be attributed mostly to a 9.4-percent

rise in May. Wheat supplies, which were at their lowest level

since 1988 due to adverse weather conditions, caused prices

to increase.3 Due to planting flexibility allowed for under

current Government programs, wheat crops were substituted

by other crops that yielded higher returns.

Soybean prices fell 12.5 percent over the past 12 months,

compared with a 9.9-percent advance in 2000. In addition to

declines in January, February, and April, the soybean index

posted price decreases for the last 4 months of 2001. Most of

this annual decline can be attributed to record supplies that

exceeded 3 billion bushels in 2001.4 Soybean production increased, “in part because the soybean loan rate has supported

expected returns and because per-acre costs of fertilizer and

energy inputs are lower than those of corn,” according to the

USDA.

5

Lower prices for soybeans led to depressed prices for prepared animal feeds in 2001. The index for prepared animal

feeds fell 3.6 percent in 2001, following an 8.3-percent gain in

the prior year. U.S. feed grain production increased 4 percent

in 2001 from the year before, contributing to the fall in prepared animal feed prices.6

Meats. The PPI for slaughter livestock fell 16.7 percent in

2001, after moving up 9.8 percent in the previous year. Driving this downturn, prices for slaughter cattle dropped 15.1

percent over the 12 months ended December 2001, compared

with a 9.1-percent advance in 2000. This significant decrease

resulted from the record numbers of cattle remaining in feed

lots without bids from packing houses. Decreased demand,

both foreign and domestic, could not meet the overwhelming

supply of slaughter cattle in 2001. Due to reduced travel and

dining in the United States throughout the fall, domestic demand for slaughter cattle waned. Japan, which makes up approximately 50 percent of foreign beef exports, had reduced

demand for slaughter cattle since the detection of mad cow

disease (bovine spongiform encephalopathy), which had

raised concern about the safety of beef products.

Transmission of weakened slaughter cattle prices led to

declines in beef and veal prices over 2001. The PPI for beef

and veal dropped 4.5 percent in 2001, following an 8.2-percent

gain in the preceding year. Excess supply due to increased

slaughter numbers and weights put downward pressure on

beef and veal prices. In addition, the weakened economy in

the second half of 2001 reduced demand by the restaurant

and hotel industry for beef products. Similar to the slaughter

cattle market, foreign demand dropped in 2001 due to anxiety

about mad cow disease and hoof-and-mouth disease in Japan

and Europe.

Slaughter hog prices also exhibited a significant drop, falling 24.9 percent in 2001, after advancing 14.9 percent in 2000.

This decline, like that of slaughter cattle prices, can be traced

to reduced demand from the restaurant and hotel industry

throughout the second half of 2001. Increased supplies as

well as record weights of existing hogs also applied downward pressure on slaughter hog prices. In spite of declining

slaughter hog prices, the index for pork rose in 2001, although

at a slower rate than it did in the prior year.

Dairy products. Posting monthly price increases from March

through September, fluid milk prices moved up 3 percent in

2001, compared with a 7-percent gain in the previous year.

Most of this price increase can be traced to diminished supplies as a result of inclement weather in top milk-producing

States. Bad winter weather makes dairy cattle less productive

and increases the cases of mastitis (inflammation of the udder) among cattle, which also hinders their ability to produce

milk. Winter weather conditions can also stop milk from arriving at the processor before it spoils. Excessive heat in summer months, especially in California, also caused stress to

dairy cattle, decreasing the milk-per-cow ratio. In addition to

weather problems, the tight supplies of top forage, such as

high-quality alfalfa hay, added to the overall reduction of fluid

milk supplies. The high prices of replacement cattle also left

many dairy farms operating below capacity.

At later stages of processing, dairy product prices rose 2.3

percent over the 12 months ended December 2001. The increase in fluid milk prices, as well as energy problems in California, the top milk-producing State, led to decreased supplies of dairy products. The rolling blackouts and high energy prices in California cut milk processing times and spoiled

some milk in refrigeration. Increased demand for cheese; ice

cream; butter; and dry, condensed and evaporated milk products also contributed to the rise in dairy product prices in

2001.

Finished goods other than foods

and energy

The PPI for finished goods other than foods and energy—the

core index—rose 0.9 percent in 2001, after increasing 1.3 percent in the previous year. Capital equipment prices showed

no change, following a 1.2-percent gain in 2000. The index for

finished consumer goods other than foods and energy increased 1.5 percent in 2001, after rising 1.4 percent a year

earlier.
8 Monthly Labor Review July 2002

Producer Prices, 2001

Within capital equipment, the index for civilian aircraft

moved up at a slower pace in 2001 than it did in the previous

year. Prices for light motor trucks, metal-cutting machine tools,

truck trailers, and construction machinery and equipment

turned down, after increasing in 2000. The indexes for electronic computers and passenger cars fell more than they did

in the prior year. By contrast, prices for x-ray and

electromedical equipment, and for office and store machines

and equipment advanced in 2001, after declining a year earlier.

The communications and related equipment index fell less than

it did in the previous year. Prices for pumps, compressors,

and equipment, and agricultural machinery and equipment

advanced at a faster rate than in 2000.

The index for finished consumer goods other than foods

and energy moved up 1.5 percent in 2001, after advancing 1.4

percent a year earlier. Rising prices for cigarettes, alcoholic

beverages, book publishing, newspaper circulation, household furniture, sanitary papers and health products, pet food,

and periodical circulation outweighed falling prices for light

motor trucks, passenger cars, men’s and boy’s apparel,

women’s apparel, and floor coverings. (See table 4.)

Civilian aircraft. The index for civilian aircraft increased 3.8

percent in 2001, following a 6.7-percent gain in 2000. Prices

for civilian aircraft rose throughout the majority of 2001; however, price increases slowed toward the end of the year, and

the index declined in September and November (the index had

not fallen since August 1999). The slower rate of increase for

civilian aircraft prices in the latter months of 2001 resulted

from declining sales, as civilian aircraft shipments fell to 3,483

in 2001, down from 3,780 in 2000.7 Within civilian aircraft,

sales for general aviation aircraft and helicopters decreased,

and sales for transport aircraft advanced.

Motor vehicles. Prices for motor vehicles declined significantly in 2001, as prices fell for both light trucks and passenger cars; however, prices for heavy trucks rose. A 3.7-percent

fall in the October passenger car index represented the largest

monthly decline in the index since a 5.2-percent decrease in

October 1972. Manufacturer incentives, including 0 percent

financing, were primarily responsible for driving down light

truck and passenger car prices, helping to boost U.S. automobile sales to their second highest level on record.8 Light truck

sales finished 2 percent higher in 2001 than in the prior year.

Electronic computers. Prices for electronic computers

dropped 29.9 percent in 2001, after showing a 14.2-percent

decline in the previous year. Prices fell sharply for personal

computers and workstations (31.6 percent); mid-range general purpose computers (34.5 percent); large-scale general

purpose computers (31.2 percent); and portable computers

(31.5 percent). Manufacturers of electronic computers benefited from declining input costs in 2001, as MOS memory

prices dropped 40.7 percent, MOS microprocessor prices fell

38.7 percent, and prices for computer storage devices decreased 12.9 percent.

Tobacco products and alcohol. The index for tobacco products rose 12.6 percent in 2001, following a 2.3-percent gain in

2000. The majority of the increase in tobacco prices was due

to a 14.1-percent jump in the index for cigarettes, which followed a 1.9-percent gain in 2000. In January and May, tobacco manufacturers instituted two 14-cent-per-pack price

increases to offset losses from a $206 billion legal settlement

with 46 U.S. States, causing the index to rise significantly in

these 2 months.9 Tobacco producers also raised prices in

anticipation of a 5-cent-per-pack increase in the Federal excise tax on cigarettes that went into effect January 2002. Alcohol prices advanced 2.6 percent in 2001, following a 4.2-percent rise in 2000. Accounting for the majority of this gain, the

index for malt beverages increased at a 3.3-percent rate, after

rising at a 4.4-percent rate in 2000. Advancing prices for grains

Table 4. Annual percent changes in Producer Price Indexes for selected finished goods other than foods and energy,

1996–2001

Index 1996 1997 1998 1999 2000 2001

Finished goods other than foods and energy ........ 0.6 0.0 2.5 0.9 1.3 0.9

Finished consumer goods less foods and energy .. .8 .3 4.2 1.2 1.4 1.5

Cigarettes .................................................. 3.3 10.0 49.4 9.6 1.9 14.1

Alcoholic beverages .................................... 3.8 –.5 1.5 .6 4.2 2.6

Books ....................................................... 3.2 3.3 4.1 1.8 3.4 3.4

Newspapers ............................................... 4.2 .1 1.1 1.4 4.3 3.2

Sanitary papers and health products .............. –2.6 –2.0 –.6 –1.0 2.7 1.6

Men’s and boys’ apparel ............................... 1.1 .2 .6 –.3 .2 –1.7

Passenger cars .......................................... –.8 –2.6 .5 1.2 –.7 –1.6

Light trucks ................................................ .2 –3.6 1.0 .3 1.8 –3.3

Capital equipment ............................................ .4 –.6 0 .3 1.2 0

Civilian aircraft ............................................ 3.2 .5 .5 2.1 6.7 3.8

Computers ................................................. –22.3 –21.6 –26.6 –19.7 –14.2 –29.9

Construction machinery ................................ 1.8 1.9 1.7 1.4 .9 –.1

Communication and related equipment ............ 1.5 .8 –1.1 –1.9 –1.3 –.7

Heavy trucks .............................................. -4.5 .6 3.9 1.4 .7 .3
Monthly Labor Review July 2002 9

in 2001 may have contributed to the rise in the malt beverage

index. The indexes for wine and brandy and for distilled spirits also increased in 2001.

Newspaper circulation and book publishing. In 2001, the

index for newspaper circulation rose 3.2 percent, after increasing 4.3 percent a year earlier. Price increases were observed

for subscriptions and sales of both daily and weekly publications. The book publishing index advanced 3.4 percent, following a similar increase in 2000. Prices moved up for the

publication of text books; technical, scientific, and professional books; general books; pamphlets; and religious books;

however, prices fell for the publication of general reference

books.

Intermediate industrial materials

The PPI for intermediate materials other than foods and energy decelerated, falling 1.6 percent in 2001, following a 1.6-

percent gain in the previous year. Prices also turned down for

nondurable manufacturing materials and durable manufacturing materials. The index for construction materials showed no

change after inching up in 2000. (See table 5.)

Nondurable manufacturing materials. Prices for nondurable

manufacturing materials dropped 5.5 percent in 2001, following a 4.1-percent increase in 2000. Not since 1951, when the

index closed down 6.1 percent, has the nondurable manufacturing materials index fallen at such a steep rate over a calendar year. Much of the 2001 deceleration was the result of a

downturn in prices for basic organic chemicals. The indexes

for nitrogenates, plastic resins and materials, paperboard,

woodpulp, and paper also decreased in 2001, after advancing

in the prior year. By contrast, prices for fats and oils (inedible)

turned up in 2001, after falling a year earlier. Prices for phosphates declined less than they did in 2000.

Prices for basic organic chemicals moved down 11.6 percent in 2001, after rising 5.8 percent a year earlier. The index

for primary basic organic chemicals decreased 29.5 percent,

following a 13.4-percent gain in 2000. Intermediate basic organic chemical prices fell at a faster rate than they did in the

previous year. Petroleum is a major input to primary basic

organic chemicals, which include aromatics (not made in a

refinery), liquefied refinery gases, and other basic organic

chemicals, making primary basic organic chemical prices especially sensitive to changes in the petroleum market. In 2001,

a 42.4-percent drop in crude petroleum prices coupled with

weak demand put downward pressure on basic organic chemical prices.

Price decreases were widespread within the pulp and paper products industry in 2001. Woodpulp prices plummeted

24.3 percent, falling each month of the year with the excepAnnual percent changes in Producer Price Indexes for selected intermediate and crude materials other than

foods and energy, 1996–2001

Index 1996 1997 1998 1999 2000 2001

Intermediate goods other than foods and

energy ....................................................... –0.9 0.3 –1.6 1.9 1.6 –1.6

 Nondurable manufacturing materials ................. –3.3 .3 –5.3 4.0 4.1 –5.5

Basic organic chemicals ................................ 3.6 –1.7 –6.4 6.9 5.8 –11.6

Nitrogenates ................................................ 5.9 –13.5 –19.0 2.2 44.9 –25.5

Plastic resins and materials ........................... 4.2 –2.8 –13.4 15.9 2.2 –9.8

Woodpulp .................................................... –33.0 4.1 –12.5 12.1 14.8 –24.3

Paperboard ................................................. –19.0 5.8 –8.0 13.0 10.6 –7.0

Paper ......................................................... –14.2 3.8 –4.1 2.8 4.1 –3.1

Durable manufacturing materials ...................... –1.4 0 –5.5 2.4 .2 –4.0

Steel mill products ........................................ –1.4 .5 –6.5 –2.4 –.6 –6.1

Aluminum mill shapes .................................... –7.9 6.8 –8.5 4.2 4.7 –2.9

Copper and brass mill shapes ........................ –10.6 –6.5 –11.5 8.6 3.8 –9.5

Cement ....................................................... 5.0 3.5 5.2 1.6 –.9 1.0

Plywood ...................................................... –1.3 –1.1 4.9 –.2 –6.2 –1.9

Building paper and board ............................... –5.8 –2.0 –1.3 10.3 –9.3 –3.0

 Construction materials ................................... 1.8 1.2 .1 2.2 .1 0

Plastic construction products ......................... –1.1 –2.0 –2.2 5.6 1.6 –2.7

Nonferrous wire and cable ............................. –3.1 –2.2 –4.6 .3 4.6 –4.0

Hardwood lumber .......................................... 1.6 7.4 –1.2 3.5 2.4 –5.0

Softwood lumber .......................................... 19.6 –3.8 –10.1 10.1 –14.5 –2.4

Millwork ...................................................... 3.5 1.0 .2 2.4 .5 1.7

Gypsum products ......................................... 6.6 7.1 7.3 23.1 –27.1 .4

Crude nonfood materials less energy ................ –5.5 0 –16.0 14.0 –5.5 –9.9

Raw cotton .................................................. –13.0 –11.2 –8.0 –20.8 30.2 –46.7

Nonferrous metal ores ................................... –16.8 –18.0 –10.0 6.6 4.4 –11.2

Wastepaper ................................................. –1.3 11.6 –28.9 110.5 –18.5 –30.2

Iron and steel scrap ..................................... –11.1 14.5 –39.9 40.0 –28.8 –5.6

Table 5.
10 Monthly Labor Review July 2002

Producer Prices, 2001

tions of November and December. Weak demand, resulting

from a slow domestic economy, in conjunction with high supplies of woodpulp drove down prices. Paper prices turned

down 3.1 percent in 2001, following a 4.1-percent increase in

the previous year. The paper index rose in the first 4 months

of 2001 in spite of falling prices for woodpulp, a major input to

paper, but then showed eight consecutive decreases—more

closely reflecting the decline in price for woodpulp. Within

paper, the indexes for newsprint, writing and printing papers,

and packaging and industrial converting paper all decreased

in 2001. The index for paperboard moved down 7 percent in

2001, after rising 10.6 percent in the previous year, as prices

fell for the first 11 months in 2001. Price changes for woodpulp,

paper, and paperboard are closely related because woodpulp

is a major input for both paper and paperboard. (See chart 1.)

Prices for plastic resins and materials declined in 2001, falling 9.8 percent. Both the indexes for thermoplastic resins and

thermosetting resins decreased, after advancing a year earlier.

Falling prices for crude petroleum and the economic downturn were the most likely causes of declining prices for plastic

resins and materials.

Durable manufacturing materials. The index for durable

manufacturing materials fell 4 percent in 2001, after increasing

0.2 percent in the prior year. Prices for aluminum mill shapes,

cold rolled sheet and strip, primary aluminum (except extrusion billet), copper and brass mill shapes, and hardwood lumber turned down, after rising in 2000. The indexes for hot

rolled sheets and strip and hot rolled bars, plates, and structural shapes declined at a faster pace in 2001 than in the previous year. On the other hand, prices for building paper and

board, plywood, and semi-finished steel mill products fell less

in 2001 than they did a year earlier. The index for cement

advanced, after moving down in 2000.

Prices for steel mill products declined substantially in 2001

as the indexes for cold rolled sheet and strip; hot rolled sheet

and strip; hot rolled bars, plates, and structural shapes; and

semi-finished steel mill products fell 9.5, 8.2, 4.3, and 0.2 percent, respectively. Steel producers faced fierce import competition throughout 2001, causing the steel mill product index to

decline 11 months out of the year. Domestic steel manufacturers complained of unfair foreign competition, prompting the

Bush Administration to request the International Trade Commission to investigate whether restrictions on steel imports

were needed.

The index for aluminum dropped 14.5 percent in 2001, registering 8 monthly price declines during the year, after moving

up 3.3 percent in 2000. The American Metal Market reported

that primary aluminum production levels declined to a 33-year

low in 2001, reflecting extremely weak demand conditions. In

Chart 1. Paper-related indexes

Index level Index level

Woodpulp

Paperboard

Paper

Jan-82 Jan-84 Jan-86 Jan-88 Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00

75

100

125

150

175

200

225

75

100

125

150

175

200

225
Monthly Labor Review July 2002 11

addition, high producer inventories contributed to falling aluminum prices in 2001. Prices for aluminum mill shapes fell 2.9

percent in 2001, following a 4.7-percent increase in the previous year. Decreasing aluminum prices may have been partially responsible for the fall in the index for aluminum mill

shapes.

In 2001, the index for building paper and board fell 3.0 percent, following a 9.3-percent drop a year earlier. Accounting

for the majority of the decline in building paper and board

prices, the hardboard, particleboard, and fiberboard product

index moved down 3.3 percent. The index for plywood decreased 1.9 percent in 2001, after declining 6.2 percent in the

previous year. Falling prices for softwood plywood were primarily responsible for the drop in plywood prices. Manufacturers of softwood plywood benefited from lower prices for

softwood lumber, which decreased 2.4 percent in 2001. Although the index for plywood finished down for the year,

prices exhibited a high degree of volatility, resulting from uncertainty surrounding the March 31, 2002, termination of the

Canada-U.S. Softwood Lumber Agreement.10 Under the agreement, Canada was entitled to unlimited access to the U.S.

market without threat of trade action.

Materials and Components for Construction. The PPI for

materials and components for construction showed no change

in 2001, after edging up 0.1 percent in the prior year. Falling

prices for plastic construction products, nonferrous wire and

cable, hardwood lumber, softwood lumber, fabricated structural metal products, plywood, and wiring devices offset rising prices for millwork, asphalt felts and coatings, switchgear

and switchboard equipment, air conditioning and refrigeration equipment, and metal valves (except fluid power).

From December 2000 to December 2001, prices for plastic

construction products fell 2.7 percent. Manufacturers were

able to lower output prices as input costs declined. Prices for

plastic resins and materials fell substantially in 2001 due to

weak demand resulting from a slow economy and plummeting

prices for crude petroleum.

Prices for nonferrous wire and cable declined 4 percent in

2001, following a 4.6-percent increase in 2000. Within nonferrous wire and cable, price declines for electric wire and cable,

telephone and telegraph wire and cable, control and signal

wire and cable, building wire and cable, apparatus wire and

cordage, power wire and cable, copper and copper alloy wire

and cable, aluminum wire and cable (bare), and fiber optic

cable outweighed price increases for magnet wire and for

appliance and flexible cord sets. Manufacturers of nonferrous wire and cable may have been able to pass decreasing

costs forward through the chain of production as prices for

copper base scrap, nonferrous metal ores, and primary nonferrous metals (except precious) all declined in 2001. Over

the same time period, prices for fabricated structural metal

products declined 0.4 percent, after increasing 0.3 percent in

2000.

 The index for lumber decreased 3.2 percent in 2001, after

falling 9.6 percent in the previous year. Prices for hardwood

lumber moved down 5 percent, following a 2.4-percent increase

in 2000. After rising 10 percent in May and falling 5.9 percent

in July, the index for softwood lumber decreased 2.4 percent in

2001. As mentioned in the previous section, uncertainty surrounding the end of the Canadian-U.S softwood lumber agreement resulted in larger than normal price swings for softwood

lumber. Canadian producers, fearing retroactive tariffs on U.S.

exports, limited their supplies to U.S. markets, and U.S. buyers

held off purchasing in anticipation of a surge in Canadian

imports.

Basic industrial materials

Prices for basic industrial materials dropped 9.9 percent in

2001, following a 5.5-percent decline in the preceding year.

Contributing most significantly to this overall deceleration,

the index for raw cotton plunged 46.7 percent, after advancing

30.2 percent in 2000. Prices for nonferrous metal ores, copper

base scrap, and leaf tobacco turned down in 2001, while prices

for wastepaper, aluminum base scrap, and pulpwood fell at a

faster rate in 2001 than they did in the prior year. By contrast,

the index for iron and steel scrap fell 5.6 percent in 2001, compared with a 28.8-percent drop in 2000. Prices for softwood

logs, bolts, and timber also fell at a slower pace in 2001 than

they did in the previous year. The index for hardwood logs,

bolts, and timber turned up in 2001. (See table 5.)

Raw cotton prices dropped considerably in 2001, registering declining monthly prices from January through October.

Supplies of raw cotton increased approximately 17 percent in

2001 from the year before due to larger planting areas and

increased yield. Despite the drought in the southwestern

States, other areas of the Cotton Belt experienced decreased

abandonment levels and increased harvested areas. Cotton

exports rose in 2001; however, overall demand declined as a

result of decreased U.S. cotton mill consumption. Increases

in cotton textile and apparel imports, as well as the general

slowdown of the U.S. economy, weakened the demand for

cotton from the spinning and from the textile and apparel industries. The gain in supplies and reduction in demand has

increased ending stocks to their highest level since 1986.11

Prices for nonferrous metal ores fell 11.2 percent in 2001,

turning down from a 4.4-percent gain in 2000. The index for

nonferrous scrap decreased 14.7 percent, following a 6.4-percent drop a year earlier. Prices for both nonferrous ores and

scrap declined as a result of weak demand from the automotive, construction, and aerospace industries. This diminished

consumption, which primarily affected the copper and aluminum sectors, had been sliding since 1999. However, with the
12 Monthly Labor Review July 2002

Producer Prices, 2001

downturn of the U.S. economy and the effects of the terrorist

attacks on September 11th, demand softened even further than

had been expected. The high inventories that remained from

2000 magnified the effects of the waning demand for nonferrous metals in 2001.

After dropping 18.5 percent in 2000, the PPI for wastepaper

decreased 30.2 percent over the 12 months ended December

2001. The index registered declining prices for the first 6

months of 2001 due to weakened demand. Decreased overseas shipments and the weakening U.S. economy softened

demand for wastepaper, while large stocks leftover from 2000

forced consumers of wastepaper to reduce orders. During the

second half of 2001, prices rose minimally as demand began to

increase.

Iron and steel scrap prices declined at a slower rate in 2001

than in the prior year. The iron and steel scrap market experienced another year of falling prices due to continued weak

demand from the steel industry. This diminished demand was

most significant in the automobile and appliances sectors that

felt the effects of the weakening U.S. economy. A reduction in

scrap exports from Eastern Europe—especially Russia,

Ukraine, and Romania—helped to increase foreign demand

for U.S. steel scrap, and kept prices from falling further in

2001.

Selected service industries

A majority of the service industries tracked in the PPI exhibited advancing prices in 2001. Rising prices were registered

by the following indexes: property and casualty insurance;

grocery stores; offices and clinics of doctors of medicine;

general medical and surgical hospitals; new car dealers; skilled

and intermediate care facilities; real estate agents and managers; legal services; drug stores and proprietary stores; operators and lessors of non-residential buildings; United States

Postal Service; engineering design, analysis, and consulting

services; air transportation (scheduled); and home healthcare

services. Alternatively, prices declined for security brokers,

dealers, and investment bankers; telephone communications

(except radiotelephone); travel agencies; truck rental and leasing (without drivers); camera and photographic supply stores;

catalog and mail order houses; optical goods stores; and

trucking (except local) during 2001. (See table 6.)

The index for property and casualty insurance moved up

3.7 percent over the 12 months ended December 2001 due

partially to rising prices for private passenger automobile insurance and homeowner’s insurance. Private passenger automobile insurance advanced 5.9 percent in 2001, with significant increases in California and Florida. In Florida, cases of

automobile insurance fraud are currently being investigated

as causes for rising premiums. Prices for homeowner’s insurance rose 5.1 percent in 2001, with large gains in California,

Florida, and Texas. The gain in prices resulted from an increase in claims surrounding mold problems that arise in warm

climates after water damage.

Prices for health services climbed upward in 2001, rising

3.1 percent over the 12 months. Contributing most significantly to this price increase was the index for offices and

clinics of doctors of medicine, which rose 2.8 percent in 2001.

Medicare increased payments to physicians by approximately

4.5 percent in 2001, allowing doctors to increase prices.12 The

Medicare increase affected not only direct Medicare payments

to physicians, but also the payments by private payers and

State Medicaid agencies that adjust contracts according to

Medicare rates. This increase in the payment rate, along with

a change in the Medicare payment system, caused prices for

physician’s offices to advance in 2001. The index for general

medical and surgical hospitals rose 2.7 percent in 2001 due to

increased labor, pharmaceutical and supply expenses, and increased liability insurance costs. The weakening economy

also decreased investment returns used to subsidize hospital

operating losses. Similarly to physician offices, prices for

skilled and intermediate care facilities and home healthcare

services rose partly as a result of increased Medicare payments in 2001.

The grocery store index rose 5.6 percent in 2001. Margin

increases were influenced by rising produce, bakery, dairy,

and health and beauty care margins. On the other hand, the

index for convenience food stores dropped due to falling margins for convenience food/gasoline stores.

From December 2000 to December 2001, prices for real estate agents and managers rose 1.6 percent. Leading this price

increase, prices for real estate brokerage (residential sales)

advanced 4.1 percent in 2001, due partly to an increase in the

median price of existing homes—to $147,500 in 2001, up from

$139,000 in 2000.13 This index also registered a decline in

prices between the third and fourth quarters of 2001, mirroring

the trend of median housing prices in those quarters. The

index for operators and lessors of nonresidential buildings

also moved up in 2001, posting a 1.3-percent gain.

Prices for the United States Postal Service advanced 7.5

percent from December 2000 to December 2001. The indexes

for first class mail, periodicals (second class mail), standard

class A mail (third class mail), and standard class B mail (fourth

class mail) moved up in 2001 as the United States Postal Service implemented rate increases in January and July. Postal

rates were raised to offset large projected losses for 2001.

Even after the January rate increase, the Postal Service projected losses of up to $2.4 billion for the year 2001, leading to

the July rate hike.14

The index for security brokers, dealers, and investment

bankers dropped 13.2 percent in 2001. Falling share prices in

the stock market translated into lower fees for security brokers and dealers in 2001 as the S&P 500 index declined 14.4
Monthly Labor Review July 2002 13

Percent change in Producer Price Indexes for the net output of selected service industries, 1996–2001

Industry 1996–97 1997–98 1998–99 1999–2000 2000–01

Distribution:

4011 Railroads, line-haul operating .............................................. 1.0 0.5 0.1 1.8 2.3

4212 Local trucking without storage ............................................. .2 1.7 1.1 4.2 2.8

4213 Trucking, except local ........................................................ 2.6 3.4 3.4 6.3 –.4

4214 Local trucking with storage ................................................. .6 .5 .5 1.4 1.0

4215 Courier services, except by air ............................................ 3.8 4.2 3.4 4.4 2.6

4221 Farm product warehousing and storage ................................. 2.0 .6 5.3 1.6 3.3

4222 Refrigerated warehousing and storage .................................. .1 .5 1.2 1.7 1.2

4225 General warehousing and storage ........................................ .7 2.9 2.6 3.0 3.0

4311 United States Postal Service .............................................. 0 0 2.2 0 7.5

4412 Deep sea foreign transportation of freight ............................. –3.7 4.7 22.9 12.8 7.4

4424 Deep sea domestic transportation of freight .......................... –.6 .2 1.2 4.8 2.1

4432 Freight transportation on the Great Lakes-St. Lawrence

Seaway ........................................................................ 1.4 .8 –.1 –.1 .1

4449 Water transportation of freight, n.e.c. ................................... –.4 –2.2 8.1 9.8 –.5

4491 Marine cargo handling ........................................................ 1.2 1.8 1.5 2.6 1.1

4492 Tugging and towing services ............................................... 2.2 2.8 2.9 4.1 .9

4513 Air courier services ........................................................... –3.9 3.1 5.1 8.3 3.3

4581 Airports, flying fields, and airport services ............................ 3.0 3.0 3.9 5.8 0

4612 Crude petroleum pipelines ................................................... –3.7 1.4 –1.7 6.1 11.1

4613 Refined petroleum pipelines ................................................ 1.2 –1.1 .3 1.0 5.0

4731 Freight transportation arrangement ....................................... –1.4 –.6 –2.8 4.5 –2.7

5411 Grocery stores ................................................................. – – – 4.7 5.6

5421 Meat and fish (seafood) markets ......................................... – – – 6.9 2.1

5431 Fruit and vegetable market ................................................. – – – 5.2 1.3

5441 Candy, nut, and confectionery stores ................................... – – – 5.0 3.4

5461 Retail bakeries .................................................................. – – – 1.0 3.3

5499 Miscellaneous food stores .................................................. – – – 10.0 15.6

5511 New car dealers ................................................................ – – – 1.0 3.0

5912 Drug stores and proprietary stores ....................................... – – – – 6.3

5921 Liquor stores .................................................................... – – – – 1.9

5941 Sporting goods stores ........................................................ – – – – 8.8

5942 Book stores ..................................................................... – – – – –1.5

5943 Stationery stores .............................................................. – – – – 2.1

5944 Jewelry stores .................................................................. – – – – –1.6

5945 Hobby, toy, and game shops ............................................... – – – – 1.0

5946 Camera and photographic supply stores ............................... – – – – –13.9

5947 Gift, novelty, and souvenir shops ........................................ – – – – –1.0

5948 Luggage and leather goods stores ....................................... – – – – 1.3

5949 Sewing, needlework, and piece goods stores ......................... – – – – –9.2

5961 Catalog and mail-order houses ............................................ – – – – –1.5

5962 Automatic merchandising machine operators ......................... – – – – .8

598 Fuel dealers ..................................................................... – – – – 5.7

5992 Florists ............................................................................ – – – – 5.2

5995 Optical goods stores ......................................................... – – – – –8.9

5999 Miscellaneous retail stores, n.e.c. ....................................... – – – – –.6

Communications:

4812 Wireless telecommunications .............................................. – – – –6.1 –1.2

4813 Telephone communications, except radiotelephone ................. –.4 –1.7 –3.0 –1.7 –4.0

4832 Radio broadcasting ............................................................ 3.1 .8 7.7 4.9 –2.3

4841 Cable and other pay television services ................................ 4.7 3.7 3.3 5.7 .8

Real estate:

6512 Operators and lessors of nonresidential buildings ................... 2.2 1.2 5.7 1.3 1.3

6531 Real estate agents and managers ........................................ 1.4 2.6 1.5 4.6 1.6

Professional, scientific, and technical:

7311 Advertising agencies ......................................................... 2.5 1.3 2.8 4.0 2.5

8111 Legal services .................................................................. 4.1 2.5 2.9 3.9 4.2

8711 Engineering design, analysis, and consulting services ............ 3.1 2.9 3.1 3.1 5.9

8712 Architectural design, analysis, and consulting services ........... 3.0 5.3 4.9 2.5 1.2

8721 Accounting, auditing, and bookkeeping services .................... 2.1 3.0 3.5 3.3 .6

Healthcare:

8011 Offices and clinics of doctors of medicine ............................. 1.2 2.6 2.1 1.6 2.8

8053 Skilled and intermediate care facilities .................................. 4.2 4.4 4.0 6.3 5.4

8062 General medical and surgical hospitals ................................. .5 1.3 1.8 3.7 2.7

8063 Psychiatric hospitals ......................................................... –6.7 .5 .9 –.6 2.2

8069 Specialty hospitals, except psychiatric ................................. .6 2.3 2.7 2.6 3.1

8071 Medical laboratories ........................................................... .9 .2 –.8 4.6 2.3

8082 Home healthcare services .................................................. 6.2 .5 4.0 1.0 3.2

 SIC

code

Table 6.
14 Monthly Labor Review July 2002

Producer Prices, 2001

Industry 1996–97 1997–98 1998–99 1999–2000 2000–01 SIC

code

Table 6.

Other:

4512 Air transportation, scheduled .............................................. .9 2.5 6.7 18.6 2.0

4522 Air transportation, nonscheduled ......................................... –1.6 2.6 2.0 8.1 1.1

4724 Travel agencies ................................................................. 1.5 –2.3 .3 14.6 –7.8

6211 Security brokers, dealers, and investment bank companies ..... – – – – –13.2

6311 Life insurance carriers ....................................................... – – –.3 –.6 1.4

6331 Property and casualty insurance ......................................... – – 1.1 1.1 3.7

7011 Hotels and motels ............................................................. 4.1 4.2 2.8 5.7 .8

7349 Building cleaning and maintenance services, n.e.c. ................ 1.4 1.1 2.6 3.9 3.7

7361 Employment agencies ........................................................ 1.0 2.9 2.2 2.4 1.8

7363 Help supply services ......................................................... 1.8 2.2 1.8 1.2 0

7372 Prepackaged software ....................................................... – .9 –2.4 2.4 –2.6

7513 Truck rental and leasing, without drivers ............................... .5 –.9 .3 4.5 –4.2

7514 Passenger car rental, without drivers ................................... 13.7 –4.0 3.8 2.8 –1.0

NOTE: Calculations are based on a 12-month change from December to December of indicated years. Dashes indicate index was not used in estimation.

1996–2001

Continued—Percent change in Producer Price Indexes for the net output of selected service industries,

4-Dec-00 2-Jan-01 1-Feb-01 1-Mar-01 2-Apr-01 1-May-01 1-Jun-01 2-Jul-01 1-Aug-01 4-Sep-01 1-Oct-01 1-Nov-01 3-Dec-01

1000

1050

1100

1150

1200

1250

1300

1350

1400

1000

1050

1100

1150

1200

1250

1300

1350

1400

Chart 2. S&P 500

Closing points Closing points

percent during the same period. (See chart 2.) Security broker fees are often based on a percentage of stock prices; thus,

decreasing share prices lead to lower commissions for security brokers.

Notes

1

 On the Internet at http://www.eia.doe.gov/emeu/aer/txt/tab0607.htm

 2 On the Internet at http://abcnews.go.com/sections/business/DailyNews/

opec000328.html

n.e.c. = not elsewhere classified.
Monthly Labor Review July 2002 15

3

 “U.S. Corn & Wheat Acreage Decline, While Soybean & Cotton

Rise,”Agricultural Outlook, (USDA Economic Research Service, August

2001).

4

 “Abundant Field Crop Supplies Expected in 2001/02,” Agricultural

Outlook, (USDA Economic Research Service, June–July 2001).

5

Ibid.

6 Feed Situation and Outlook Yearbook, (USDA Economic Research

Service, April 2001).

7

 “2001 Year-End Review and Forecast,” Aerospace Industries Association.

8

 “2001 auto sales were second highest ever,” Milwaukee Journal Sentinel, January 4, 2002.

9

 On the Internet at http://www.money.cnn.com/2001/04/25/news/

philipmorris/index.htm

10 On the Internet at http://www.dfait-maeci.gc.ca/~eicb/softwood/

Archive/background-e.pdf

11 Cotton and Wool Situation and Outlook Yearbook 2001, (USDA Economic Research Service).

12 Federal Register, November 2000.

13 National Association of Realtors, “2001 A New Record, December

Existing Home Sales Strong – NAR Reports,” January 25, 2002.

14 “Postal Mess,” May 15, 2001, on the Internet at http://

www.cbsnews.com/stories/2001/05/15/national/main291449.shtml

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