The Bureau of Labor Statistics reported that producer prices for finished goods were down 0.2 percent in April. They had been unchanged in March following a run-up in energy prices that lifted them higher in January and February. Reflecting the recent easing of petroleum prices, finished energy goods costs fell 1 percent in March and 1.4 percent in April. Core producer prices, which exclude food and energy, rose 0.2 percent in April, or 2.8 percent over the past year.
Producer prices within manufacturing industry fell 0.1 percent, reversing the larger gains in the first three months of the year (including a 1.5 percent jump in March). Year-over-year producer price increases for manufacturers are modest – especially when compared to the numbers seen last spring – as they are currently up 2.4 percent since August 2011.
Sectors with the greatest producer price gains in April include leather and allied products (up 0.8 percent), plastics and rubber products (up 0.8 percent) and beverage and tobacco products (up 0.7 percent). Not surprisingly, petroleum and coal products manufacturers saw the largest monthly decline in producer prices, down 1.1 percent.
Intermediate and crude goods costs were also lower, down 0.5 percent and 4.4 percent, respectively. Energy costs were the main driver of pushing them lower in each case.
This report shows that producer prices have eased somewhat due to lower petroleum prices. This trend has continued into May, with West Texas crude oil currently hovering around $96 a barrel. Manufacturers still remain very concerned about the high price of energy and still more need to be done to lower the cost of energy.
On Tuesday, the BLS will report data on consumer prices, which should tell a similar story.
Chad Moutray is chief economist, National Association of Manufacturers.