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New wherever-provided services and construction indexes for PPI
Jonathan C. Weinhagen and Bonnie H. Murphy
Jonathan C. Weinhagen is an economist, and Bonnie H. Murphy is a supervisory economist, in the Office of Prices and Living Conditions, Bureau of Labor Statistics. E-mail: weinhagen.jonathan@bls.gov or murphy.bonnie@bls.gov
A new set of wherever-provided services and construction price indexes expands the BLS products covering the services and construction sectors of the economy; these indexes combine prices from all industries producing a specific service or construction product into a single price index for that service or product.
Effective with the release of July data on August 18, 2009, the Bureau of Labor Statistics (BLS) introduced a new set of wherever-provided (that is, commodity-based) services and construction price indexes. The new indexes measure price change for specific services and construction products, regardless of the provider’s industry of origin.
Background and definitions
Prior to the mid-1980s, the BLS published industry and commodity-based price indexes for only the goods sector of the economy (mining, manufacturing, agriculture, and utilities). Due to the rapid growth of the U.S. services sector, the BLS undertook an effort to expand its coverage to include services and construction price indexes. This effort resulted in the publication of the first BLS industry-based service price index, the PPI for rail transportation, in January 1985. Through the mid-1990s, the services expansion effort continued, with the development of price indexes for many industries in the transportation sector that had relatively straightforward pricing methodologies. Over the past two decades, expansion efforts have moved forward to include indexes for more complex industries in the information, health care, real estate, professional services, administrative services, finance and insurance, and wholesale and retail trade sectors. Measuring price changes for industries in these sectors required the development of new, innovative pricing concepts, diverse sampling strategies, and unique data collection techniques. The BLS currently calculates and publishes price indexes representing approximately 77.4 percent of services1 and 28.6 percent of total nonresidential construction.2 Still, gaps in the coverage of services exist; for example, education services, computer systems design and related services, and scientific research and development services are not covered.
This excerpt is from an article published in the August 2009 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
Footnotes
1 Based on 1992 Bureau of Economic Analysis data from the Gross Product Originating Industry Accounts.
2 Based on 2007 Census Bureau data from the Value of Construction Put in Place series.
Producer prices reverse course in 2008.—Jul. 2009.
Producer price inflation accelerates in 2007 due to rising prices for energy and food.—Jul. 2008.
Price highlights, 2006: energy goods retreat, moderating producer prices.—Jul./Aug. 2007.
Price highlights 2005: higher energy prices again dominate producer prices.—Jul. 2006.
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