US Producer Price Index Changes Gears
Summary
After a 1.4 percent decline in February, the Producer Price Index shifted to a .5 percent increase.
Net Output of Total Manufacturing Industries advanced at an annualized rate of 5.6 percent, compared with a 3.6-percent annualized rate of decline in the prior quarter.
Below is the summary table for key indexes.
Producer Price Indexes - March 2006
Source: www.bls.gov as retrieved on April 18, 2006.
A PDF Version of the March 2006 Producer Price Index is available here
The Producer Price Index for Finished Goods rose 0.5 percent in March, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This increase followed a 1.4-percent decline in February and a 0.3-percent advance in January. At the earlier stages of processing, prices received by manufacturers of intermediate goods decreased 0.1 percent in March, after moving down 0.3 percent in February, and the crude goods index fell 2.7 percent, following a 9.2-percent drop in the prior month. (See table A.)
Table A. Monthly and annual percent changes in selected stage-of-processing price indexes, seasonally adjusted ______________________________________________________________________________________
| | | | |
| | Finished goods | | |
| | | | |
| |---------------------------------------------------------| | |
| | | | | | Change in | | |
| | | | | Except |finished goods| Inter- | |
| | | | |foods and|from 12 months| mediate | Crude |
| Month | Total | Foods | Energy | energy | ago(unadj.) | goods | goods |
|--------------------------------------------------------------------------------------|
2005
Mar. 0.8 0.6 3.0 0.1 5.0 0.9 4.7
Apr. .5 -.1 2.1 .3 4.8 .7 2.7
May -.2 -.2 -1.6 .2 3.6 -.3 -3.1
June .1 -.7 1.5 -.1 3.7 .2 -1.7
July .8 -.7 3.9 .3 4.7 1.0 5.1
Aug. .5 -.2 3.0 0 5.3 .5 3.5
Sept. 1.4 1.2 5.4 .2 6.9 2.3 10.5
Oct. .8 .1 4.3 -.3 5.9 3.0 5.7
Nov. r -.5 r .6 r -3.1 r .1 4.4 r -1.3 r -1.4
Dec. r .8 r .5 r 2.5 r .2 5.4 .1 r -2.7
2006
Jan. .3 .2 0 .4 5.7 1.2 -.5
Feb. -1.4 -2.7 -4.7 .3 3.7 -.3 -9.2
Mar. .5 .5 1.8 .1 3.5 -.1 -2.7
r=revised. Some of the figures shown above and elsewhere in this release may differ
from those previously reported because data for November 2005 have been revised to reflect the availability of late reports and corrections by respondents.
2
The March upturn in finished goods prices was led by the index for finished energy goods, which climbed 1.8 percent following a 4.7-percent decline in February. Prices for finished consumer foods also turned up-increasing 0.5 percent after falling 2.7 percent in the preceding month. By contrast, the index for finished goods less foods and energy rose 0.1 percent in March, following a 0.3-percent advance in February.
During the first quarter of 2006, the finished goods index decreased at a 2.5-percent seasonally adjusted annual rate (SAAR), after moving up at a 4.1-percent SAAR during the fourth quarter of 2005. For the 3 months ended March 2006, prices for finished energy goods fell at an 11.6-percent SAAR, after increasing at a 15.1-percent SAAR for the 3 months ended December 2005. The index for finished consumer foods went down at a 7.6- percent SAAR during the first quarter of 2006, after rising at a 5.0- percent SAAR during the fourth quarter of 2005. By contrast, prices for finished goods other than foods and energy, which were unchanged for the 3 months ended in December, advanced at a 3.1-percent SAAR for the 3 months ended in March. At earlier stages of process, the intermediate goods index moved up a 3.0-percent SAAR during the first quarter of 2006, after increasing at a 7.0-percent SAAR during the fourth quarter of 2005, and prices for crude goods dropped at a 40.3-percent SAAR for the 3 months ended in March, after climbing a 5.9-percent SAAR for the 3 months ended in December. (See summary table below.)
Summary of December-to-December and 3-month seasonally adjusted annual rates for selected
stages of processing
_____________________________________________________________________________________________
| | Percentage | |
| | change 12 | Seasonally adjusted annual rate for |
| | months ended | 3 months ended |
| Grouping | December | |
| |--------------------|----------------------------------------|
| | 2003 | 2004 | 2005 |June 2005|Sept.
| 2005|Dec. 2005|Mar. 2006|
|---------------------------------------------------------------------------------------------|
Finished goods 4.0 4.2 5.4 1.6 11.3 4.1 -2.5
Finished consumer foods 7.7 3.1 1.4 -4.0 1.3 5.0 -7.6
Finished energy goods 11.4 13.4 23.9 8.3 61.9 15.1 -11.6
Finished goods less foods and
energy 1.0 2.3 1.7 1.6 2.1 0 3.1
Finished consumer goods,
excluding foods and energy 1.1 2.2 1.9 2.0 2.2 .2 3.2
Capital equipment .8 2.4 1.3 1.4 2.0 -.3 2.5
Intermediate materials, supplies
and components 3.9 9.2 8.4 2.1 16.5 7.0 3.0
Intermediate foods and feeds 12.9 -2.3 2.1 2.1 -1.5 1.8 -2.4
Intermediate energy goods 10.9 15.8 26.5 16.9 78.3 4.7 -8.4
Intermediate materials
less foods and energy 2.1 8.3 4.5 -1.0 4.2 8.2 6.7
Materials for nondurable
manufacturing 4.9 13.7 7.5 -2.2 19.6 4.6 12.1
Materials for durable
manufacturing 4.0 18.3 6.1 -7.1 1.8 22.0 12.4
Materials and components
for construction 3.0 10.1 6.1 .9 3.5 12.3 7.4
Crude materials for further
processing 19.5 17.4 22.1 -8.4 108.9 5.9 -40.3
Foodstuffs and feedstuffs 24.1 -2.6 1.4 -20.9 -.3 13.9 -28.2
Crude energy materials 14.4 35.9 44.8 4.9 259.0 1.2 -57.9
Crude nonfood materials less
energy 21.6 20.5 4.8 -16.1 52.5 9.8 16.9
NOTE: Late reports and corrections by respondents may cause some indexes to change 4 months
after original publication. In addition, seasonally adjusted indexes may be revised for 5
years, due to the recalculation of seasonal factors each January.
3
Before seasonal adjustment, the Producer Price Index for Finished Goods rose 0.8 percent in March to 159.0 (1982 = 100). From March 2005 to March 2006, prices for finished goods increased 3.5 percent. Over the same period, the index for finished energy goods advanced 15.6 percent, prices for finished goods other than foods and energy moved up 1.7 percent, and the index for finished consumer foods declined 1.4 percent. At the earlier stages of processing, prices received by manufacturers of intermediate goods rose 7.0 percent, and the crude goods index increased 4.9 percent.
Finished goods
The index for finished energy goods increased 1.8 percent in March, following a 4.7-percent drop a month earlier. Most of this upturn may be traced to gasoline prices, which jumped 9.1 percent, after falling 11.0 percent in February. The indexes for residential natural gas, liquefied petroleum gas, and diesel fuel declined at slower rates in March than they had in the previous month. Kerosene prices moved up, following decreases in the prior month. By contrast, the index for residential electric power, which was unchanged in February, fell 0.7 percent in March. Prices for home heating oil declined more than they had in the preceding month. (See table 2.)
Table B. Monthly and annual percent changes in selected price indexes for
intermediate goods and crude goods, seasonally adjusted __________________________________________________________________________________
| | | |
| | Intermediate goods | Crude goods |
| | | |
| |---------------------------------------------------------------------------|
| | | | |Change in | | | | Change |
| | | | | interme- | | | |in crude |
| | | | | diate | | | | goods |
| | | | |goods from| | | | from 12 |
| | | | Except |12 months | | | Except | months |
| | | |foods and| ago | | Energy |foods and| ago |
|Month | Foods | Energy | energy | (unadj.) | Foods | (unadj.)| energy
||(unadj.) |
|----------------------------------------------------------------------------------|
2005
Mar. 1.0 3.4 0.4 8.7 4.7 7.0 -0.5 11.4
Apr. -.1 3.2 .1 8.1 -2.2 6.5 2.2 12.4
May .7 -.9 -.3 6.3 -1.2 -4.5 -2.9 5.4
June -.1 1.7 -.1 6.2 -2.4 -.5 -3.6 2.5
July -.2 4.4 .1 6.8 -.6 10.8 .6 7.9
Aug. -.1 3.0 -.1 6.3 -1.2 6.0 4.6 12.1
Sept. -.1 7.4 1.0 8.7 1.7 17.1 5.6 29.7
Oct. .4 8.8 1.4 10.9 -.1 10.9 -1.5 31.8
Nov. r 0 r -6.9 r .4 r 8.5 r 1.0 r -3.4 r 2.4 r 21.6
Dec. r .1 r -.1 r .1 8.4 r 2.4 r -6.4 r 1.5 22.1
2006
Jan. .9 1.9 1.0 9.3 -3.0 .6 -.1 23.6
Feb. -1.2 -3.1 .5 8.2 -3.0 -16.2 3.3 12.9
Mar. -.3 -.9 .1 7.0 -2.2 -4.5 .8 4.9
r=revised. Some of the figures shown above and elsewhere in this release may differ
from those previously reported because data for November 2005 have been revised to
reflect the availability of late reports and corrections by respondents.
4
The index for finished consumer foods advanced 0.5 percent in March, following a 2.7-percent decrease in the prior month. Prices for fresh and dry vegetables rose 3.7 percent, after dropping 27.1 percent in February. Also turning up in March were the indexes for eggs for fresh use, pork, finfish and shellfish, fresh fruits and melons, and confectionery end products. Prices for beef and veal and for processed young chickens fell less than they had in February. Conversely, the dairy products index moved down 3.1 percent in March, compared with a 1.8-percent decline a month earlier. Soft drink prices decreased, after rising in February.
The index for finished goods less foods and energy increased 0.1 percent in March, following a 0.3-percent advance in the preceding month. Prices for light motor trucks inched up 0.1 percent, after rising 0.5 percent in February. The indexes for pharmaceutical preparations, periodical circulation, construction machinery and equipment, and civilian aircraft also moved up at slower rates in March than they had a month earlier. Prices for cigarettes, metal cutting machine tools, and floor coverings turned down, after increasing in February. Alternatively, the passenger car index climbed 0.4 percent in March, following a 0.8-percent decline in the previous month. Commercial furniture prices also rose, after falling in February, while the index for sanitary papers and health products advanced more in March than it had in the prior month.
Intermediate goods
The Producer Price Index for Intermediate Materials, Supplies, and Components edged down 0.1 percent in March, following a 0.3-percent decline in the prior month. Prices for intermediate energy goods and the index for intermediate foods and feeds fell at slower rates than they had in February. The index for materials and components for construction advanced more than in the prior month. By contrast, prices for materials for nondurable manufacturing turned down in March, and the index for materials for durable manufacturing rose less than it had in the preceding month. Prices for intermediate materials less foods and energy edged up 0.1 percent, after advancing 0.5 percent in February. (See table B.)
The intermediate energy goods index decreased 0.9 percent in March, subsequent to a 3.1-percent decline in the prior month. Prices for liquefied petroleum gas edged down 0.1 percent, after falling 14.3 percent in February. The indexes for commercial and industrial natural gas, commercial electric power, and diesel fuel also decreased less than they had a month earlier. Gasoline prices turned up in March. Alternatively, the jet fuels index inched up 0.2 percent in March, following a 3.0-percent increase in the preceding month. The indexes for industrial electric power and home heating oil fell more than they had a month earlier, and prices for residual fuel turned down in March. (See table 2.) The intermediate energy goods index declined at an 8.4-percent SAAR from December 2005 to March 2006, after rising at a 4.7-percent SAAR during the final quarter of 2005.
The intermediate foods and feeds index moved down 0.3 percent in March, following a 1.2-percent decrease in the prior month. Prices for beef and veal declined 1.2 percent, after falling 4.2 percent in February. The indexes for processed young chickens and natural, processed, and imitation cheese also decreased less than they had a month earlier. Prices for pork, prepared animal feeds, and shortening and cooking oils turned up in March. Conversely, prices for flour fell 1.1 percent in March, subsequent to a 3.5-percent gain in February. The index for fluid milk products declined more than it had in the preceding month, while prices for refined sugar and byproducts rose less than in February. The index for intermediate foods and feeds decreased at a 2.4-percent SAAR in the first quarter of 2006, after rising at a 1.8-percent SAAR in the final quarter of 2005.
5
Prices for materials and components for construction gained 0.4 percent in March, after increasing 0.3 percent in the prior month. In March, rising prices for concrete products, fabricated structural metal products, paving mixtures and blocks, architectural coatings, wiring devices, and for air conditioning and refrigeration equipment outweighed falling prices for both hardwood and softwood lumber. The index for materials and components for construction advanced at a 7.4-percent SAAR in the first quarter of 2006, after moving up at a 12.3-percent SAAR in the prior quarter.
Prices for materials for nondurable manufacturing declined 0.6 percent in March, after increasing 1.6 percent a month earlier. The index for basic organic chemicals went down 2.4 percent, following a 1.0-percent rise in February. Prices for plastic resins and materials, gray fabrics, synthetic rubber, and medicinal and botanical chemicals also decreased in March, after moving up in the prior month. The paperboard index rose less than it had in February. Alternatively, the index for inedible fats and oils increased 3.8 percent, after falling 2.8 percent in February. Prices for phosphates and rock salt also turned up in March. The indexes for paper and leather advanced more than they had a month earlier. From December 2005 to March 2006, prices for materials for nondurable manufacturing increased at a 12.1-percent SAAR, after rising at a 4.6- percent SAAR in the prior quarter.
The rate of increase in the index for materials for durable manufacturing slowed from 1.6 percent in February to 0.3 percent in March. Prices for aluminum mill shapes rose 0.9 percent, after advancing 2.4 percent a month earlier. The indexes for copper and brass mill shapes, cold rolled steel sheet and strip, and cement also rose less than they had in February. Prices for titanium mill shapes, primary aluminum, softwood lumber, and thermoplastic resins turned down in March. By contrast, the hot rolled steel sheet and strip index edged up 0.1 percent in March, compared with a 1.4-percent decrease in the preceding month. The index for prepared paint increased more than it had in February. The index for materials for durable manufacturing advanced at a 12.4-percent SAAR for the 3 months ended March 2006, after moving up at a 22.0-percent SAAR in the preceding quarter.
Crude goods
The Producer Price Index for Crude Materials for Further Processing declined 2.7 percent in March, after falling 9.2 percent in the previous month. Prices for crude energy materials and for crude foodstuffs and feedstuffs decreased less than they had in February. By contrast, the basic industrial materials index increased at a slower rate in March than it had in the preceding month. (See table B.)
Prices for crude energy materials moved down 4.5 percent in March, after dropping 16.2 percent in the preceding month. Accounting for the majority of this slower rate of decline, the natural gas index went down 11.5 percent, compared with a 24.0-percent decrease in February. Prices for crude petroleum rose 5.2 percent, after declining at the same rate in the previous month, while the coal index increased 0.8 percent in March, after moving up 0.3 percent a month earlier. (See table 2.) During the first quarter of 2006, prices for crude energy materials fell at a 57.9- percent SAAR, after inching up at a 1.2-percent SAAR in the prior quarter.
The crude foodstuffs and feedstuffs index fell 2.2 percent in March, after moving down 3.0 percent in the previous month. The rate of decrease in prices for fresh vegetables (except potatoes) slowed from 33.1 percent in February to 0.8 percent in March. The indexes for slaughter hogs and slaughter cattle also fell less than they had in the previous month, while prices for unprocessed finfish, slaughter turkeys, and unprocessed shellfish turned up in March. Alternatively, the fluid milk index decreased 7.8 percent, following a 4.1-percent decline in February. Prices for slaughter broilers and fryers also fell more in March than they had in the previous month. The index for alfalfa hay turned down, and wheat prices rose less than they had a month earlier. The index for crude foodstuffs and feedstuffs fell at a 28.2-percent SAAR in the first quarter of 2006, after rising at a 13.9-percent SAAR in the last quarter of 2005.
6
Prices for crude nonfood materials less energy advanced 0.8 percent in March, after gaining 3.3 percent in the preceding month. Leading this deceleration, the iron and steel scrap index rose 1.5 percent, after jumping 7.1 percent in February. Prices for copper base scrap also rose
less than they had in the previous month. The indexes for aluminum base
scrap and gold ores turned down in March, while prices for iron ore were unchanged, after rising a month earlier. By contrast, the wastepaper index fell 0.5 percent, after decreasing 3.6 percent in the prior month. Prices for raw cotton and phosphates turned up, following declines in February. The index for basic industrial materials increased at a 16.9-percent SAAR during the first quarter of 2006, after rising at a 9.8-percent SAAR during the fourth quarter of 2005.
Net output price indexes for mining, manufacturing, and services industries
Mining. The Producer Price Index for the Net Output of Total Mining Industries fell 3.0 percent in March, following a 12.8-percent drop in February. (Net output price indexes are not seasonally adjusted.) Contributing to this slower rate of decline, prices received by the crude petroleum and natural gas extraction industry decreased 4.8 percent, after falling 15.8 percent in February. The industry index for natural gas liquid extraction also moved down at a slower rate in March than it had a month earlier. Prices received by the industry for oil and gas operations support activities turned up, following decreases in the prior month. Conversely, the industry index for gold ore mining moved down 3.4 percent in March, compared with a 3.6-percent climb in February. Prices received by the industries for oil and gas well drilling and for bituminous coal and lignite surface mining rose less in March than they had in the previous month. The industry index for bituminous coal underground mining turned down, after increasing in February, while prices received by the iron ore mining industry were unchanged in March, following gains in the preceding month. For the 3 months ended in March 2006, the Producer Price Index for the Net Output of Total Mining Industries declined at a 49.2-percent annualized rate, compared with an 8.9-percent annualized rate of increase in the final quarter of 2005. In March, the Producer Price Index for Total Mining Industries was 201.0 (December 1984 = 100), 14.2 percent above its year-ago level.
Manufacturing. The Producer Price Index for the Net Output of Total Manufacturing Industries advanced 0.9 percent in March, following a 0.4- percent decline in February. The majority of this upturn may be attributed to prices received by the petroleum and coal products manufacturing industry group, which climbed 7.9 percent in March after falling 4.3 percent in February. Prices received by the transportation equipment and the medical equipment and supplies industry groups also turned up, after moving down in February. The industry group index for food manufacturing decreased at a slower rate in March than in the previous month. The paper manufacturing industry group index increased more in March than it had a month earlier. By contrast, prices received by chemical manufacturers declined 0.6 percent, after rising 1.1 percent in the previous month. The industry group indexes for beverage and tobacco manufacturing and for plastics and rubber products manufacturing also turned down in March. Prices received by the primary metals industry group rose less than they had in February. For the first quarter of 2006, the Producer Price Index for the Net Output of Total Manufacturing Industries advanced at an annualized rate of 5.6 percent, compared with a 3.6-percent annualized rate
of decline in the prior quarter. In March, the Producer Price Index for
Total Manufacturing Industries was 154.9 (December 1984 = 100), 4.0 percent above its year-ago level.
7
Services. Among services industries in March, prices received by commercial bankers decreased 8.9 percent, after declining 0.8 percent in February. Prices received by savings institutions and software publishers also fell more in March than they had a month earlier. The industry indexes for investment banking and securities dealing, engineering services, and offices of certified public accountants turned down, following increases in the preceding month. The index for the general medical and surgical hospitals industry group was unchanged in March, after increasing a month earlier. Alternatively, prices received by the scheduled passenger air transportation industry rose 4.7 percent, after gaining 0.1 percent in February. Prices received by the industries for casino hotels and wired telecommunications carriers turned up in March, after falling a month earlier. The industry index for offices of physicians (excluding mental health) advanced more than it had in February.
*****
Producer Price Index data for April 2006 are scheduled to be released on Tuesday, May 16, 2006, at 8:30 a.m. (EDT).
Technical Note
Brief Explanation of Producer Prices Indexes
The Producer Price Index (PPI) of the Bureau of Labor Statistics (BLS)
is a family of indexes that measure the average change over time in
the prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller. This contrasts with other measures, such as the Consumer Price Index (CPI). CPIs measure price change from the purchaser's perspective. Sellers' and purchasers' prices can differ due to government subsidies, sales and excise taxes, and distribution costs.
More than 8,000 PPIs for individual products and groups of products are released each month. PPIs are available for the products of virtually every industry in the mining and manufacturing sectors of the U.S. economy. New PPIs are gradually being introduced for the products of industries in the trade, finance, and services sectors of the economy.
More than 100,000 price quotations per month are organized into three sets of PPIs: (1) Stage-of-processing indexes; (2) commodity indexes; and
(3) indexes for the net output of industries and their products. The stage- of-processing structure organizes products by class of buyer and degree of fabrication. The commodity structure organizes products by similarity of end use or material composition. The entire output of various industries is sampled to derive price indexes for the net output of industries and their products.
Stage-of-Processing Indexes
Within the stage-of-processing system, finished goods are commodities that will not undergo further processing and are ready for sale to the final-demand user, either an individual consumer or business firm. Consumer foods include unprocessed foods such as eggs and fresh vegetables, as well as processed foods such as bakery products and meats. Other finished consumer goods include durable goods such as automobiles, household furniture, and appliances, as well as nondurable goods such as apparel and home heating oil. Capital equipment includes producer durable goods such as heavy motor trucks, tractors, and machine tools.
The stage-of-processing category for intermediate materials, supplies, and components consists partly of commodities that have been processed but require further processing. Examples of such semifinished goods include flour, cotton yarn, steel mill products, and lumber. The intermediate goods category also encompasses nondurable, physically complete items purchased by business firms as inputs for their operations. Examples include diesel fuel, belts and belting, paper boxes, and fertilizers.
Crude materials for further processing are products entering the market for the first time that have not been manufactured or fabricated and that are not sold directly to consumers. Crude foodstuffs and feedstuffs include items such as grains and livestock. Examples of crude nonfood materials include raw cotton, crude petroleum, coal, hides and skins, and iron and steel scrap.
Commodity Indexes
The commodity classification structure of the PPI organizes products by similarity of end use or material composition, disregarding industry of origin. Fifteen major commodity groupings (2-digit commodity codes) make up the All Commodities Index. Each major commodity grouping includes (in descending order of aggregation) subgroups (3-digit), product classes (4- digit), subproduct classes (6-digit), and individual items (8-digit). Nearly all 8-digit commodities under the traditional commodity coding system are now derived from corresponding industry-classified product indexes. In such instances, movements in the traditional commodity price indexes and corresponding percent changes will be virtually identical to their industry-based counterparts, even if their index levels differ.
Industry Net-Output Price Indexes
PPIs for the net output of industries and their products are grouped according to the North American Industry Classification System (NAICS). Prior to the release of January 2004, industry-based PPIs were published according to the Standard Industrial Classification (SIC) system. Industry price indexes are compatible with other economic time series organized by industry, such as data on employment, wages, and productivity. Table 5 of the PPI Detailed Report includes data for NAICS industries and industry groups (3-, 4-, 5-, and 6-digit codes); Census product classes (7- and
8-digits), products (9-digits), and more detailed subproducts (11-digits);
and, for some industries, indexes for other sources of revenue.
Indexes may represent one of three kinds of product indexes. Every industry has primary product indexes to show changes in prices received by establishments classified in the industry for products made primarily, but not necessarily exclusively, by that industry. The industry classification of an establishment is determined by which products comprise a plurality of its total shipment value. In addition, most industries have secondary product indexes that show changes in prices received by establishments classified in the industry for products chiefly made in some other industry. Finally, some industries have miscellaneous receipts indexes to show price changes in other sources of revenue received by establishments within the industry that are not derived from sales of their products, for example, resales of purchased materials, or revenues from parking lots owned by a manufacturing plant.
Data Collection
PPIs are based on selling prices reported by establishments of all sizes selected by probability sampling, with the probability of selection proportionate to size. Individual items and transaction terms from these firms are also chosen by probability proportionate to size. The BLS strongly encourages cooperating companies to supply actual transaction prices at the time of shipment to minimize the use of list prices. Prices submitted by survey respondents are effective on the Tuesday of the week containing the 13th day of the month. This survey is conducted primarily through the mail.
Price data are provided on a voluntary and confidential basis; only sworn BLS employees are allowed access to individual company price reports. BLS publishes price indexes instead of unit dollar prices. All PPIs are subject to revision 4 months after original publication to reflect the availability of late reports and corrections by respondents.
BLS periodically updates the PPI sample of survey respondents to better reflect current conditions when the structure, membership, technology, or product mix of an industry shifts significantly and to spread reporting burden among smaller firms. Results of these resampling efforts are incorporated into the PPI with the release of data for January and July.
As part of an ongoing effort to expand coverage to sectors of the economy other than mining and manufacturing, an increasing number of service sector industries have been introduced into the PPI. The following list of recently introduced industries includes the month and year in which an article describing the industry's content appeared in the PPI Detailed Report.
PPI
Detailed
Title Code Report
Issue
SIC
Wireless Telecommunications..............................4812 July 1999
Telephone Communications, Except Radio Telephone.........4813 July 1995
Television Broadcasting..................................4833 July 2002
Grocery Stores...........................................5411 July 2000
Meat and Fish (Seafood) Markets..........................5421 July 2000
Fruit and Vegetable Markets..............................5431 July 2000
Candy, Nut, and Confectionery Stores.....................5441 July 2000
Retail Bakeries..........................................5461 July 2000
Miscellaneous Food Stores................................5499 July 2000
New Car Dealers..........................................5511 July 2000
Gasoline Service Stations................................5541 January 2002
Boat Dealers.............................................5551 January 2002
Recreational Vehicle Dealers.............................5561 January 2002
Miscellaneous Retail.....................................59 January 2001
Security Brokers, Dealers, and Investment Bankers........6211 January 2001
Investment Advice........................................6282 January 2003
Life Insurance Carriers..................................6311 January 1999
Property and Casualty Insurance..........................6331 July 1998
Insurance Agencies and Brokerages........................6412 January 2003
Operators and Lessors of Nonresidential Buildings........6512 January 1996
Real Estate Agents and Managers..........................6531 January 1996
Prepackaged Software.....................................7372 January 1998
Data Processing Services.................................7374 January 2002
Home Health Care Services................................8082 January 1997
Legal Services...........................................8111 January 1997
Engineering Design, Analysis, and Consulting Services....8711 January 1997
Architectural Design, Analysis, and Consulting Services..8712 January 1997
Premiums for Property and Casualty Insurance.............9331 July 1998
NAICS
New Warehouse Building Construction......................236221 July 2005
Merchant Wholesalers, Durable Goods......................423 July 2005
Merchant Wholesalers, Nondurable Goods...................424 July 2005
Wholesale Trade Agents and Brokers.......................425120 July 2005
Furniture and Home Furnishings Stores....................442 January 2004
Electronics and Appliance Stores.........................443 January 2004
Building Material and Garden Equipment and Supplies
Dealers..................................................444 January 2004
Clothing and Clothing Accessories Stores.................448 January 2004
Sporting Goods, Hobby, Book, and Music Stores............451 January 2004
General Merchandise Stores...............................452 January 2004
Miscellaneous Store Retailers............................453 January 2004
Internet Service Providers...............................518111 July 2005
Web Search Portals.......................................518112 July 2005
Commercial Banking.......................................522110 January 2005
Savings Institutions.....................................522120 January 2005
Direct Health and Medical Insurance Carriers.............524114 July 2004
Construction, Mining, and Forestry Machinery and
Equipment Rental and Leasing.............................532412 January 2005
Security Guards and Patrol Services......................561612 July 2005
Fitness and Recreational Sports Centers..................713940 July 2005
Weights
Weights for most traditional commodity groupings of the PPI, as well as weights for commodity-based aggregate indexes calculated using traditional commodity groupings, such as stage-of-processing indexes, currently reflect 1997 values of shipments as reported in the Census of Manufactures and other sources. From January 1996 through December 2001, PPI weights were derived from 1992 shipment values. Industry indexes also are now calculated with 1997 net output weights. This periodic update of the value weights used to calculate the PPI is done to more accurately reflect changes in production and marketing patterns in the economy. Net output values of shipments are used as weights for industry indexes. Net output values refer to the value of shipments from establishments within the industry to buyers outside the industry. However, weights for commodity price indexes are based on gross shipment values, including shipment values between establishments within the same industry. As a result, broad commodity grouping indexes, such as the PPI for All Commodities, are affected by the multiple counting of price change at successive stages of processing, which can lead to exaggerated or misleading signals about inflation. Stage-of-processing indexes partially correct this defect, but industry indexes consistently correct for this at all levels of aggregation. Therefore, industry and stage-of-processing indexes are more appropriate than broad commodity groupings for economic analysis of general price trends.
Price Index Reference Base
Effective with publication of January 1988 data, many important PPI series (including stage-of-processing groupings and most commodity groups and individual items) were placed on a new reference base, 1982=100. From 1971 through 1987, the standard reference base for most PPI series was 1967=100. Except for rounding differences, the shift to the new reference base did not alter any previously published percent changes for affected PPI series. (See "Calculating Index Changes," below.) The 1982 reference base is not used for commodity indexes with a base later than December 1981 or for industry net output indexes and their products.
For further information on the underlying concepts and methodology of the Producer Price Index, see chapter 14, "Producer Prices," in BLS Handbook of Methods (April 1997), Bulletin 2490. This document can be downloaded
from the BLS Web site at (http://www.bls.gov/opub/hom/homch14_itc.htm),
and reprints are available on request.
Calculating Index Changes
Each PPI measures price changes from a reference period which equals 100.0. An increase of 5.5 percent from the reference period in the Finished Goods Price Index, for example, is shown as 105.5. This change also can be expressed in dollars, as follows: Prices received by domestic producers of a sample of finished goods have risen from $100 in 1982 to $105.50. Likewise, a current index of 90.0 would indicate that prices received by producers of finished goods are 10 percent lower than they were in 1982.
Movements of price indexes from one month to another are usually expressed as percent changes, rather than as changes in index points. Index point changes are affected by the level of the index in relation to its base period, whereas percent changes are not. The following example shows the computation of index point and percent changes.
Index point change
Finished Goods Price Index 107.5
Less previous index 104.0
Equals index point change 3.5
Index percent change
Index point change 3.5
Divided by the previous index 104.0
Equals 0.034
Result multiplied by 100 0.034 × 100
Equals percent change 3.4
Seasonally Adjusted and Unadjusted Data
Because price data are used for different purposes by different groups, BLS publishes seasonally adjusted and unadjusted changes each month. Seasonally adjusted data are preferred for analyzing general price trends in the economy, because these data eliminate the effect of changes that normally occur at about the same time, and in about the same magnitude, every year-such as price movements resulting from normal weather patterns, regular production and marketing cycles, model changeovers, seasonal discounts, and holidays. For these reasons, seasonally adjusted data more clearly reveal underlying cyclical trends. Unadjusted data are of primary interest to users who need information that can be related to actual dollar values of transactions. Individuals requiring this information include marketing specialists, purchasing agents, budget and cost analysts, contract specialists, and commodity traders. It is the unadjusted data that are generally cited when escalating long-term contracts such as purchasing agreements or real estate leases. (See Escalation and Producer Price Indexes: A Guide for Contracting Parties, BLS Report 807, September 1991, available on request from the BLS.)
In 1998, the PPI implemented the X-12-ARIMA Seasonal Adjustment Method; prior to that year the PPI employed the X-11 method. Each year, the seasonal status of most commodity indexes is re-evaluated to reflect more recent price behavior. Industry net output indexes are not seasonally adjusted. For time series that exhibit seasonal pricing patterns, new seasonal factors are estimated and applied to the unadjusted data for the previous 5 years. These updated seasonally adjusted indexes replace the most recent 5 years of seasonal data.
Seasonal factors may be applied to series using either a direct or aggregative method. Generally, commodity indexes are seasonally adjusted using direct seasonal adjustment, which produces a more complete elimination of seasonal movements than the aggregative method. However, the direct seasonal adjustment process may not yield figures that possess additive consistency. Thus, a seasonally adjusted index for a broad category that is directly adjusted may not be logically consistent with all seasonally adjusted indexes for its components. Seasonal movements for stage-of-processing indexes are derived indirectly through an aggregative method that combines movements of a wide variety of subproduct class (6-
digit) series.
Seasonally adjusted indexes can become problematic when previously stable and predictable price patterns abruptly change. If the new pattern persists, the seasonal adjustment method will eventually reflect it adequately; if these patterns keep shifting, however, seasonally adjusted data will become chronically troublesome. This problem occurs relatively infrequently for farm and food-related products but has more often affected manufactured products such as automobiles and steel.
Since January 1988, the PPI has used Intervention Analysis Seasonal Adjustment methods to enhance the calculation of seasonal factors. With this technique, outlier values that may distort the seasonal pattern are removed from the data prior to applying the standard seasonal factor estimation procedure. For example, a possible economic cause for large price movements for petroleum-based products might have been the Persian Gulf War. In this case, intervention techniques allowed for better estimates of seasonally adjusted data. On the whole, very few series have required intervention. Out of nearly 900 seasonally adjusted series, only 16 interventions were performed in 1997.
For more information relating to seasonal adjustment methods, see (1) "Appendix A: Seasonal Adjustment Methodology at BLS," in the BLS Handbook of Methods (April 1997), Bulletin 2490 and (2) "Summary of Changes to the PPI's Seasonal Adjustment Methodology" in the January 1995 issue of Producer Price Indexes.
Producer Price Index Data Via the Internet
In 1995, the BLS began posting PPI series, news releases, and technical information to both a World Wide Web (WWW) site and a file transfer protocol (FTP) site. During the years following the introduction of PPI Internet services, usage of these sites eclipsed more traditional methods of data dissemination, such as subscriptions to the PPI Detailed Report. There were more than 1.6 million accesses of PPI series over the Internet during the 12 months ended December 31, 2003.
Retrieving PPI data from the PPI Website
PPI data can be obtained from the WWW address (http://www.bls.gov/ppi). Scrolling down the page to the "Get Detailed Statistics" header reveals
the following 5 methods of data retrieval:
Most Requested Series is a form-based application that allows the user to quickly obtain PPI time series data by selecting from two separate lists (commodity and industry) of the most commonly requested time series, including the All Commodities Index and the stage-of-processing indexes (for example, Finished Goods). Within each list, any one-or all-of the time series shown can be selected. A user can modify the date range and output options after executing the query, using the reformat button above the data output table.
Create Customized Tables is a form-based query application designed for users unfamiliar with the PPI coding structure. It guides a user through the PPI classification system by listing index titles and does not require knowledge of commodity or industry codes. Data retrieved are based on a query formulated by selecting data characteristics from lists provided. Two options are available to create customized tables, depending on a user's browser capability. The one-screen option is a JavaScript application that uses a single screen to guide a user through the available time series data. The second option is a multiple screen, nonJava-based application. Both methods allow a user to browse the PPI coding structure and select multiple series codes. Using the one-screen option, users can modify the date range and output options after executing the query using the reformat button above the data output table.
Series Report is a form-based application that uses formatted PPI time series identifiers (commodity or industry codes) as input in extracting data according to a specified set of date ranges and output options. This application provides the most efficient path for those users who are familiar with the format of PPI time series identifiers. Up to 300 indexes can be extracted at one time.
There are three basic formats for creating a unique PPI time series identifier. For commodity and stage-of-processing indexes, enter a "wpu" prefix (not seasonally adjusted) or a "wps" prefix (seasonally adjusted) in combination with a commodity-based code to create a series identifier.
Commodity code Will provide data for:
wps063 Drugs and pharmaceuticals, seasonally adjusted
wpu063803 Pharmaceutical preparations, cardiovascular system
wpusop3000 Finished goods, not seasonally adjusted
For a current industry-based price index organized according to the North American Industry Classification System (NAICS), enter the prefix "pcu" followed by the industry-product code. The series identifier for products primary to an industry include 12 numeric digits, the six-digit industry code is repeated, and up to seven additional digits of product detail. Dashes are used as place holders for higher-level industry group codes.
Industry-product code, Will provide data for:
Current NAICS series
pcu325---325--- Chemical manufacturing, not seasonally adjusted
pcu336110336110 Automobile and light duty motor vehicle manufacturing
pcu621111621111411 Offices of physicians, one and two physician practices
and single specialty group practices, general/family
practices
To identify a discontinued industry-product code based on the Standard Industrial Classification (SIC), enter a "pdu" prefix and "#" between the fourth and fifth characters of the product code. A series identifier for the discontinued dataset uses underscores as placeholders to complete a reference to an SIC industry group code of less than four digits. (All PPI industry-based indexes organized by SIC were discontinued with the introduction of the NAICS.) In all cases, no spaces are permitted.
Industry-product code, Will provide data for:
Discontinued SIC series
pdu28__# Chemicals and allied products, not seasonally adjusted
pdu331_# Blast furnaces, steel works, and rolling and
finishing mills, not seasonally adjusted
pdu3711#111 Passenger cars
Flat Files and the FTP server are best suited for those users requiring access to either a large volume of time series data or other PPI-related documentation (such as, seasonal factor and relative importance tables). The FTP site can be accessed at (ftp://ftp.bls.gov) or directly from the links on the "Get Detailed Statistics" page or the PPI homepage. Data and documentation available for download include:
Data/Documentation Directory:
NAICS Current Series /pub/time.series/pc
SIC Discontinued Series /pub/time.series/pd
Commodity Series /pub/time.series/wp
Special Requests /pub/special.requests/ppi
Latest News Release /pub/news.release/ppi.txt
The FTP site maintains files to help with searches and downloads.
These files are centrally located in the /pub/doc directory. Within this directory, go to the overview.txt file for an overview relating to all BLS data available through the FTP site. For commodity-based PPI data (which appear in tables 1, 2, 3, 6, 7, and 8 of the PPI monthly detailed report and tables 1, 2, 3, and 5 of the monthly news release), the program help file is wp.txt. For current industry-based PPI data based on the NAICS (which appear in tables 4, 5, and 9 of the monthly PPI report and table 4 of the monthly news release), the file is pc.txt. For industry-based SIC time series that have been discontinued, go to pd.txt. (These and other help files are also maintained within each of the five directories listed
above.)
Other Sources of PPI Data
PPI data can also be accessed via the BLS homepage (http://www.bls.gov). After clicking the "Get Detailed Statistics" link at the top of the homepage a chart appears listing all of the available BLS programs. The following four methods are available for PPI data: Most requested statistics, create customized tables (one screen or multiple screens), and flat files. Additional sources of BLS data also are
accessible from this page including: Economic news releases, series report, and economy at a glance.
Additional information
The PPI homepage (http://www.bls.gov/ppi) contains additional information regarding PPI data and methodology. The top section of the homepage provides PPI news releases, both current and archived, as well as general PPI information. The "Tables Created by BLS" section found beneath the statistics section provides relative importance and seasonal factor tables. The remaining sections offer special notices and publications pertaining to PPI methodology and applications.
For questions or comments regarding PPI data classification, methodology, or data availability on the Internet, call or e-mail the Section of Index Analysis and Public Information directly at (202) 691-7705 or ppi-info@bls.gov. Data also can be obtained by calling the national fax- on-demand service at (202) 691-6325. This service enables customers to request faxes of BLS data 24 hours a day, 7 days a week.
Please Refer to PDF for table data: available here
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