We don’t have to tell you that gasoline prices jumped again, as you can see it on the gas stations along our streets and highways. But for the nation as a whole, the price rose 8.4 percent September over August. The approximately 13.8 percent drop in the price of gasoline we enjoyed during August just couldn’t last.

So we get to work feeling a little poorer and then we’re greeted by supplier price hikes.

Producer Price Index
According to the U.S. Department of Labor Bureau of Labor Statistics (BLS), all four indices — crude goods, crude core, all commodities and industrial commodities — showed prices climbing.

The Producer Price Index (PPI), which measures the average change over time in the selling prices received by domestic producers for their output, climbed 1.1 percent September over August.

Industrial Commodities
The industrial commodities category excludes fuels and related products and power. It does include copper, cotton, lumber, etc. At any rate, the preliminary price rise amounted to 0.5 percent September over August, according to the BLS. However, as this followed a drop of 1.6 percent (preliminary) from July to August, we didn’t give up all the gain.

The current increase hurts, but not so bad as the February-through-May numbers, when month-over-month price hikes ranged from 1.2 to 1.5 percent.

All Commodities
For all commodities, prices rose 0.6 percent from August to September after dropping 1.4 percent from July to August. With the exception of January and August, prices have been rising month over month during 2007. For those having to buy commodities from offshore, the weakly dollar bodes poorly.

For Durable Manufacturing
The index for materials for durable manufacturing declined 1.3 percent in September compared with a 1.5-percent decrease in August. In September, falling prices for primary nonferrous metals; hot rolled steel sheet and strip; copper and brass mill shapes; aluminum mill shapes; hot rolled steel bars, plates, and structural shapes; and semifinished steel mill products outweighed rising prices for cold rolled steel sheet and strip, cement and prepared paint.

The index for materials for durable manufacturing dropped at a 12.5-percent seasonally adjusted annual rate (SAAR) for the three months ended in September after surging at a 20.8 percent SAAR for the 3 months ended in June.

Intermediate Goods
The PPI for intermediate materials, supplies and components increased 0.4 percent last month after falling 1.2 percent in August. Prices for intermediate energy goods and for materials for nondurable manufacturing rose in September following declines a month earlier. The index for intermediate foods and feeds advanced more than it had in August, while prices for materials for durable manufacturing decreased less in September than in the previous month.

Slightly counteracting the upturn in prices for intermediate goods, the index for materials and components for construction moved down more than it had in August.

Crude Goods
Prices for crude goods or raw materials rose only 0.1 percent from August to September, far better than the 9 percent hike of February or the 11.7 skyrocket of last November. Nonetheless, after a drop of 3 percent in August, we hate to see the relapse and backsliding. “Overall crude prices are up 11.4 percent from last September,” according to The New York Times.

Crude Core
Crude core (nonfood materials less energy) prices climbed 1.6 percent from August to September after rising 1.3 percent between July and August. This may force some pass-along increases to downstream processors unless the rise can be offset through productivity gains and labor concessions.

Finished Goods
The prices for finished goods climbed 1.1 percent from August to September after a 1.4 percent decline in August. But good luck explaining an increase to your customers. These are the days for honing your negotiating skills to a fine edge.

Warehousing and Storage, General Freight Trucking and Long-Distance Truckload
Although warehousing and storage costs remained neutral between August and September, general freight trucking and long-distance truckload pricing rose slightly — 0.2 percent (preliminary).

These slight increases can add up, though. Every month in 2007, except for February and March, the increases have ranged from 0.2 to 0.5 percent.

Unfortunately, the PPI for the net output of total trade industries declined 2.2 percent in September compared with a 1.0 percent rise in August.

According to the BLS:

Margins received by merchant wholesalers of nondurable goods fell 4.2 percent after increasing 4.5 percent a month earlier. The margin indexes for wholesalers of durable goods, department stores, motor vehicle and parts dealers, fuel dealers, and for health and personal care stores also turned down in September. … Margins received by building materials and supply dealers fell 0.4 percent in September after declining 1.5 percent a month earlier. … During the third quarter of 2007, the total trade industries index decreased at a 1.9-percent annual rate after rising at a 5.6-percent annual rate in the second quarter.

Trade indexes measure changes in margins received by wholesalers and retailers.

Consumer Actions & Confidence
Consumers, for their part “may be faced with still higher prices next quarter as businesses pass along higher costs for materials and goods used in production,” the NYT reports:

Retail sales jumped 0.6 percent in September after a 0.3 percent increase in August. Gasoline sales rose 2 percent, their largest increase since May. … Despite increased sales, consumer confidence stayed flat in September, holding steady at the lowest level in a year, according to a survey released by Reuters and the University of Michigan.

On the positive side, U.S. travel and tourism revenues are expected to reach $1.7 billion in 2007, according to a study by the World Travel & Tourism Council (WTTC) sponsored by Accenture and prepared by Oxford Economics (via WebMetro).

Any chance we can give tours through our manufacturing plants (assuming you have no proprietary processes/equipment to view) for a few shekels?

Overall Economic View
To keep it all in perspective, here’s an abridged view of the 2007 U.S. Economic Outlook:

* forecast
Credit: The National Association of Realtors

Resources

Producer Price Indexes
U.S. Dept. of Labor Statistics, Oct. 12, 2007

Energy Costs Push Up Producer Prices
by Michael Grynbaum
The New York Times, Oct. 12, 2007

US travel and tourism revenues expected to reach $1.7 billion in 2007
Web Metro, March 16, 2007

U.S. Economic Outlook: October 2007
National Association of Realtors, October 2007