FOR DATA ONLY:  (202) 691-5200      USDL 09-0034
FOR TECHNICAL INFORMATION:          TRANSMISSION OF MATERIAL IN
(202) 691-7705                      THIS RELEASE IS EMBARGOED
MEDIA CONTACT:  (202) 691-5902      UNTIL 8:30 A.M. (EST), THURSDAY,
http://www.bls.gov/ppi              JANUARY 15, 2009

                         Producer Price Indexes - December 2008

	The Producer Price Index for Finished Goods fell 1.9 percent in December, seasonally 
adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today.  This 
decrease followed a 2.2-percent decline in November and a 2.8-percent drop in October.  At the 
earlier stages of processing, prices received by producers of intermediate goods fell 4.2 percent 
in December after decreasing 4.3 percent in the prior month, and the crude goods index declined 
5.3 percent following a 12.5-percent drop in November.  (See table A.)  

        The slower rate of decrease in finished goods prices was led by the index for energy 
goods, which fell 9.3 percent in December after declining 11.2 percent in November.  Prices for 
finished goods other than foods and energy rose 0.2 percent in December compared with a 0.1-
percent increase in the preceding month.  By contrast, partially offsetting the slower rate of 
decline in the finished goods index, prices for consumer foods moved down 1.5 percent 
following no change in November.

	Before seasonal adjustment, the Producer Price Index for Finished Goods decreased 1.9 
percent in December to 168.8 (1982 = 100).  In 2008, finished goods prices fell 0.9 percent 
compared with a 6.2-percent advance in 2007.  The 2008 downturn is mostly attributable to 
energy prices, which dropped 20.3 percent after rising 17.8 percent a year earlier.  Price 
increases for finished consumer foods slowed to 3.7 percent in 2008 from 7.6 percent in 2007.  
Conversely, the index for finished goods other than foods and energy advanced 4.3 percent in 
2008 following a 2.0-percent gain in the preceding year.  At the earlier stages of processing, 
prices received by manufacturers of intermediate goods fell 1.7 percent in 2008 after rising 7.1 
percent in the prior year, and the crude goods index dropped 25.0 percent following a 19.8-
percent jump in 2007.  (See summary table.)  

Finished goods

	The index for finished energy goods fell 9.3 percent in December after decreasing 11.2 
percent in November.  Prices for liquefied petroleum gas moved down 21.8 percent in December 
following a 33.4-percent drop a month earlier.  The index for residential natural gas also declined 
less than it had in November, and prices for finished lubricants turned up in December.  By 
contrast, partially counteracting the slower rate of decrease in the index for finished energy 
goods, prices for residential electric power increased 0.3 percent compared with a 1.4-percent 
advance in November.  The indexes for kerosene, home heating oil, and diesel fuel fell more 
than in the prior month.  Gasoline prices decreased 25.7 percent for the second consecutive 
month.  (See table 2.)  

        The index for finished goods other than foods and energy increased 0.2 percent in 
December after edging up 0.1 percent in November.  In December, higher prices for passenger 
cars, pharmaceutical preparations, light motor trucks, and civilian aircraft outweighed lower 
prices for consumer plastic products; storage units, files, and tables; alcoholic beverages; and 
power and distribution transformers. 

	The index for finished consumer foods declined 1.5 percent in December after no change 
in November.  Prices for fresh and dry vegetables dropped 14.9 percent  compared with a 3.8-
percent rise in the preceding month.  The indexes for beef and veal, packaged fluid milk, and 
canned fruits and juices also turned down in December.  Prices for citrus fruits increased less 
than in November, and the index for chewing gum was unchanged after rising in the previous 
month.  By contrast, prices for natural cheese (except cottage) advanced 3.4 percent in December 
following a 5.0-percent decline in the prior month.  The index for noncarbonated soft drinks also 
turned up after decreasing a month earlier.  Prices for pork and eggs for fresh use fell less than 
they had in November.  

Intermediate goods

	Following a 4.3-percent drop in November, the Producer Price Index for Intermediate 
Materials, Supplies, and Components fell 4.2 percent in December.  This decrease was broad 
based, with prices for energy goods, materials for both nondurable and durable manufacturing, 
materials and components for construction, and foods and feeds all declining in December.  The 
index for intermediate goods excluding foods and energy posted a record decline for the third 
straight month in December - 3.0 percent.  This index fell 2.3 percent in November and 1.7 
percent in October.  (See table B.)

	The index for intermediate energy goods decreased 9.5 percent in December following a 
12.3-percent drop in November.  Price declines for utility natural gas slowed in December to 1.6 
percent from 4.9 percent in the prior month.  The indexes for residual fuel and liquefied 
petroleum gas also fell less than they had in November.  Prices for industrial electric power and 
finished lubricants turned up in December.  By contrast, partially offsetting the slower rate of 
decrease in the intermediate energy goods index, jet fuel prices declined 16.8 percent after 
moving down 11.6 percent in November.  The indexes for diesel fuel and kerosene also fell more 
in December than they had in the previous month.  Prices for commercial electric power rose less 
than in November.  (See table 2.)  The index for intermediate energy goods decreased 19.8 
percent in 2008 after increasing at the same rate in 2007.

	The index for materials for nondurable manufacturing dropped 9.1 percent in December 
following an 8.5-percent decline in November.  In December, lower prices for basic organic 
chemicals, plastic resins and materials, phosphates, rubber and rubber products, inedible fats and 
oils, processed yarns and threads, and surface active agents outweighed higher prices for basic 
inorganic chemicals and knit gray fabrics.  The index for materials for nondurable manufacturing 
decreased 3.6 percent in 2008 after climbing 12.8 percent in 2007.

	The index for materials for durable manufacturing fell 7.2 percent in December following 
a 6.2-percent decline in November.  Prices for cold rolled steel sheet and strip dropped 16.6 
percent in December after moving down 5.4 percent a month earlier.  The indexes for hot rolled 
steel sheet and strip, plastic resins and materials, basic organic chemicals, semifinished steel mill 
products, and cold finished steel bars also decreased more than they had in November.  
Conversely, price declines for nonferrous wire and cable slowed to 2.9 percent in December 
from 10.8 percent in the preceding month.  The indexes for primary nonferrous metals; hot rolled 
steel bars, plates, and structural shapes; and copper and brass mill shapes also fell less than they 
had in November.  Prices for materials for durable manufacturing decreased 5.5 percent in 2008 
following a 1.7-percent advance in 2007.

	The index for materials and components for construction declined 1.2 percent in 
December after decreasing 1.1 percent in November.  In December, lower prices for steel mill 
products, paving mixtures and blocks, plastic construction products, nonferrous wire and cable, 
fabricated structural metal, prefabricated wood buildings and components, and sheet metal 
products outweighed higher prices for architectural coatings and millwork.  The index for 
materials and components for construction rose 7.3 percent in 2008 following a 2.0-percent 
increase in 2007.

	Prices for intermediate foods and feeds fell 3.4 percent in December after declining 2.4 
percent in November.  The index for corn, cottonseed, and soybean cake and meal decreased 1.8 
percent following a 9.1-percent advance in November.  Prices for beef and veal and for packaged 
fluid milk and related products also turned down in December.  The indexes for processed eggs, 
bulk fluid milk and cream, shortening and cooking oils, and flour fell more in December than 
they had in the prior month.  Conversely, price declines for formula feeds slowed to 4.7 percent 
in December from 9.3 percent in November.  The index for pork also decreased less than it had 
in the previous month, while prices for natural cheese (except cottage cheese) turned up in 
December.  Prices for intermediate foods and feeds increased 3.4 percent in 2008 after climbing 
17.2 percent in 2007.
 
Crude goods

	The Producer Price Index for Crude Materials for Further Processing fell 5.3 percent in 
December after declining 12.5 percent in November.  Prices for crude energy materials and crude 
nonfood materials less energy decreased less than they had in November.  Conversely, partially 
offsetting the slower rate of decline in crude materials prices, the index for crude foodstuffs and 
feedstuffs fell at a faster rate compared with the prior month.  (See table B.)

        The index for crude energy materials decreased 6.0 percent in December after dropping 
18.7 percent a month earlier.  Coal prices edged down 0.3 percent subsequent to a 0.5-percent 
decline in November.  Prices for natural gas advanced 14.7 percent in December following a 
10.9-percent decrease in the previous month.  By contrast, the crude petroleum index moved 
down 31.0 percent after falling 30.2 percent in the prior month.  (See table 2.)  In 2008, prices for 
crude energy materials declined 33.5 percent following a 16.2-percent advance in 2007.

        The crude nonfood materials less energy index declined 2.2 percent in December 
subsequent to a 20.4-percent drop a month earlier.  Nonferrous scrap prices moved down 9.2 
percent following a 25.4-percent decrease in November.  The indexes for iron and steel scrap, 
wastepaper, gold ores, and plant and animal fibers turned up after declining in the prior month.  
By contrast, the phosphates index moved down 21.6 percent in December following a 7.6-
percent decrease a month earlier.  Prices for hides and skins also fell at faster rates compared 
with the previous month, and the index for soybeans turned down in December.  The crude 
nonfood materials less energy index declined 24.3 percent in 2008 compared with a 15.6-percent 
gain in 2007.

	Prices for crude foodstuffs and feedstuffs decreased 5.3 percent in December after 
moving down 1.2 percent in the preceding month.  Leading this faster rate of decline, the 
slaughter cattle index fell 8.9 percent following a 2.4-percent increase in November.  Prices for 
fresh vegetables (except potatoes) and soybeans also turned down in December.  The indexes for 
fluid milk, corn, and wheat declined more than they had a month earlier.  By contrast, prices for 
slaughter hogs advanced 4.6 percent after moving down 15.8 percent in November.  The index 
for slaughter chickens rose more than it had a month earlier.  Prices for Irish potatoes for 
processing increased following no change in the prior month, and the index for slaughter turkeys 
fell less than it had in November.  In 2008, crude foodstuffs and feedstuffs prices moved down 
14.3 percent following a 24.9-percent jump in 2007. 
	
Net output price indexes

Mining, Utilities, and Manufacturing Industries.  The decline in the Producer Price Index for 
the Net Output of Total Mining, Utilities, and Manufacturing Industries slowed to 2.8 percent 
from 4.0 percent in November.  (Net output price indexes are not seasonally adjusted.)  The 
index for the electric power generation, transmission, and distribution industry group fell 0.2 
percent in December after moving down 2.8 percent a month earlier.  Prices received by 
petroleum refineries and farm-feed manufacturers also decreased less than in November.  The 
industry indexes for automobile, light truck, and utility vehicle manufacturing and for natural gas 
liquid extraction turned up after falling in the prior month.  Prices received by pharmaceutical 
preparation manufacturers moved up more than in November.  Conversely, partially offsetting 
the slower rate of decline in the total mining, utilities, and manufacturing industries index, prices 
received by phosphatic fertilizer manufacturers dropped 23.1 percent in December following a 
6.5-percent decrease in the preceding month.  The index for the fluid milk manufacturing 
industry turned down after rising in November.  In December, the index for total mining, 
utilities, and manufacturing industries was 105.1 (December 2006 = 100).  In 2008, the total 
mining, utilities, and manufacturing industries index fell 1.0 percent after rising 6.2 percent in 
2007. 

Trade Industries.  The Producer Price Index for the Net Output of Total Trade Industries turned 
up 0.5 percent in December after decreasing 3.2 percent a month earlier.  (Trade indexes measure 
changes in margins received by wholesalers and retailers.)  The margin index for gasoline 
stations with convenience stores increased 8.9 percent following a 53.4-percent drop in 
November.  Margins received by merchant wholesalers of durable goods, non-discount 
department stores, fuel dealers, and family clothing stores also turned up after falling in the 
preceding month.  The margin index for merchant wholesalers of nondurable goods increased 
more than in November.  By contrast, the margin index for supermarkets turned down 2.1 
percent in December after rising 4.8 percent in the prior month.  Margins received by electronic 
shopping and mail-order houses also fell following advances in November.  In December, the 
index for total trade industries was 111.1 (December 2006 = 100).  In 2008, the total trade 
industries index rose 6.9 percent after increasing 3.9 percent in 2007.

Transportation and Warehousing Industries.  The Producer Price Index for the Net Output of 
Total Transportation and Warehousing Industries fell 2.8 percent in December after decreasing 
1.7 percent in the previous month.  The industry index for couriers dropped 5.5 percent following 
no change in November.  Prices received by scheduled air transporters, line-haul railroads, and 
local specialized freight truckers of new goods fell more than in the preceding month.  The 
industry index for Coastal and Great Lakes freight transportation turned down after advancing in 
November.  By contrast, the decline in the industry index for long distance specialized freight 
trucking of new goods slowed to 0.7 percent in December from 2.8 percent in the prior month.  
Prices received by long distance general freight truckers (less than truckload) also fell less than 
in November, and the industry index for deep sea freight transportation was unchanged after 
decreasing in the prior month.  In December, the index for total transportation and warehousing 
industries was 109.5 (December 2006 = 100).  In 2008, the total transportation and warehousing 
industries index increased 2.7 percent following a 6.6-percent rise in 2007.

Total Traditional Service Industries.  The Producer Price Index for the Net Output of Total 
Traditional Service Industries turned down 0.8 percent in December after rising 0.1 percent in 
the prior month.  The index for the commercial banking industry decreased 6.5 percent following 
a 2.8-percent advance in November.  Prices received by securities brokers, software publishers, 
television broadcasters, and casino hotels also turned down after rising in the preceding month.  
Conversely, the industry index for lessors of nonresidential buildings turned up 0.7 percent in 
December after decreasing 2.0 percent a month earlier.  Prices received by cellular and other 
wireless carriers and by general medical and surgical hospitals also increased after November 
declines.  In December, the index for total traditional services industries was 101.9 (December 
2006 = 100).  In 2008, the total traditional services industries index inched up 0.1 percent after 
increasing 1.8 percent in 2007.

                                                   *****

Producer Price Index data for January 2009 are scheduled to be released on Thursday, February 
19, 2009 at 8:30 a.m. (EST).

          PPI Commodity Weight Allocations to Stage-of-Processing Indexes to be Updated

	Effective with the release of January 2009 data on February 19, 2009, the Bureau of 
Labor Statistics will update the weight allocations used to calculate its stage-of-processing (SOP) 
indexes to more accurately reflect recent sales patterns.  While PPI weights will continue to be 
based on shipment values from the 2002 economic census, the proportion of these weights 
allocated to the various SOP categories within and, in some cases, across the Finished, 
Intermediate, and Crude goods stages will change.  The new allocations will be based primarily 
on data contained in the 2002 Input/Output Accounts published by the Bureau of Economic 
Analysis.

	It is important to note that the allocation update will not change the PPI classification 
system, reference base, or aggregation structure.  It may, however, result in significant shifts in 
the relative importance of component series in the stage-of-processing indexes.  

	Relative importance figures as of December 2008, will be available on February 17, 
2009 on the BLS Web site at:  www.bls.gov/ppi.  Choose the "PPI Tables" link, under the "On 
This Page" heading.  The revised SOP relative importance figures will be available through the 
links:  "Component series by stage of processing" and "Commodity groupings by major stage of 
processing category."  The information may also be requested from the Division of Industrial 
Prices and Price Indexes, Section of Index Analysis and Public Information, at 202-691-7705.  
For further information on this change, please contact Jon Weinhagen at (202) 691-7709.


 Recalculated Seasonal Adjustment Factors and Relative Importance Figures to be Available on 
                                     February 17, 2009

        Each year with the release of PPI data for January, seasonal adjustment factors are 
recalculated to reflect price movements from the just-completed calendar year.  This routine 
annual calculation may result in revisions to seasonally adjusted indexes for the previous 5 years.  
The following information will be available on February 17, 2009 (2 workdays prior to the 
release of PPI data for January 2009 on February 19):

*	Direct seasonal factors for commodity indexes for the year 2009,

*	Recalculated seasonal factors for the last 5 years (2004-2008) for the commodity indexes, 

*	Recalculated seasonal factors for the last 5 years (2004-2008) for the stage-of-processing 
indexes.

        In addition to recalculated seasonal factors, December 2008 relative importance figures 
also will be available on February 17, 2009.
        
        To obtain this information, visit the PPI website at http://www.bls.gov/ppi/ or call the 
Division of Industrial Prices and Price Indexes, Section of Index Analysis and Public 
Information at (202) 691-7705.

Technical Note

               Brief Explanation of Producer Price 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 construction, 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 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 (two-digit commodity codes) make
up the All Commodities Index. Each major commodity grouping includes (in
descending order of aggregation) subgroups (three-digit codes), product
classes (four-digit codes), subproduct classes (six-digit codes), item 
groupings (seven-digit codes) and individual items (eight-digit codes).  
                                     
                     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-
digit codes), products (9-digit codes), and more detailed subproducts (11-
digit codes); and, for some industries, indexes for other sources of
revenue.

     Indexes may represent one of three kinds of product categories.  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 make up 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 also are chosen by probability proportionate to size.  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 actual 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
                                                                      Report
              Title                                           Code    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 industrial building construction..........................236211  January 2008
New warehouse building construction...........................236221  July 2005
New school construction.......................................236222  July 2006
New office construction.......................................236223  January 2007
Concrete contractors, nonresidential building work............23811X  July 2008
Roofing contractors, nonresidential building work.............23816X  July 2008
Electrical contractors, nonresidential building work..........23821X  July 2008
Plumbing / HVAC contractors, nonresidential building work.....23822X  July 2008
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
Management consulting services................................541610  January 2007
Security guards and patrol services...........................561612  July 2005
Computer training.............................................611420  July 2007
Blood and organ banks.........................................621991  January 2007
Amusement and theme parks.....................................713110  July 2006
Golf courses and country clubs................................713910  July 2006
Fitness and recreational sports centers.......................713940  July 2005
Commercial machinery repair and maintenance...................811310  July 2007
                                     
                                  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
2002 values of shipments as reported in the Census of Manufactures and 
other sources. From January 2002 through December 2006, PPI weights were 
derived from 1997 shipment values.  Industry indexes now are calculated 
with 2002 weights and 1997 net output ratios.  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
values of shipments 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 for 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 (www.bls.gov/opub/hom/homch14_itc.htm).
Reprints are available on request.

                         Calculating Index Changes
                                     
     Each PPI measures price changes from a reference period that 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 x 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.  For more
information, see Escalation and Producer Price Indexes: A Guide for
Contracting Parties, BLS Report 807, September 1991, on the Web at
(www.bls.gov/ppi/ppiescalation.htm).  Reprints are available on request.

     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 reevaluated 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 an
aggregative method.  Generally, commodity indexes are seasonally adjusted
using direct seasonal adjustment, which produces a more complete
elimination of seasonal movements than does 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 (six-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 the pattern keeps 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 800 seasonally adjusted series, only
16 were subject to intervention in 2008.

     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 on 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, use of these sites eclipsed more traditional
methods of data dissemination, such as subscriptions to the PPI Detailed
Report.  There were more than 2.1 million instances of PPI series being
downloaded from the Internet during the 12 months ended December 31, 2007.

                 Retrieving PPI data from the PPI Web site
                                     
     PPI data can be obtained from the WWW address (www.bls.gov/ppi).
Clicking on the "PPI Databases" link reveals the following methods of data 
retrieval:
     
     Top picks is a form-based application for both industry Data and 
Commodity Data that allows the user to quickly obtain PPI time series data 
by selecting 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.

     One-Screen Data Search and Multi-Screen Data Search are form-based query 
applications for both Industry Data and Commodity Data designed for users 
unfamiliar with the PPI coding structure.  These applications guide 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, non-Java-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 users who are familiar
with the format of PPI time series identifiers.  Up to 300 indexes can be
extracted at a time.

     There are five alphabetic prefixes used to create unique PPI time
series identifiers:  WP, WD, PC, PD, and ND.  Each provides the user access
to a different PPI database.  Adding either a "u" (not seasonally adjusted)
or an "s" (seasonally adjusted) to the end of these prefixes further
specifies the type of data needed.

     For commodity and stage-of-processing indexes, series identifiers
combine a "wpu" prefix (not seasonally adjusted) or a "wps" prefix
(seasonally adjusted) with a commodity code.
  
Commodity code            Provides data for:
wps141101                 Passenger cars, seasonally adjusted
wpu141101                 Passenger cars, not seasonally adjusted
wpusop3000                Finished goods, not seasonally adjusted
     
     For discontinued commodity indexes, series identifiers combine a "wdu"
prefix (not seasonally adjusted) or a "wds" prefix (seasonally adjusted)
with a commodity code.
     
Commodity code            Provides data for:
wds019                    Other farm products, seasonally adjusted
wdu0635                   Preparations, ethical (prescription), not seasonally
                          adjusted
wdusi138011               Stainless steel mill products, not seasonally adjusted
     
     Current price indexes grouped by industry according to NAICS have series 
identifiers that begin with the prefix "pcu." After the prefix, there are 12 
digits (the 6-digit industry code is listed twice) followed by up to 7 
alphanumeric characters identifying product detail.  Dashes are used as 
placeholders for higher-level industry group codes.

Industry-product code,
current NAICS series       Provides data for:
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 practice
pcu325412325412A           Pharmaceutical preparation manufacturing, pharmaceuticals 
                           acting on the respiratory system                    
  
     Discontinued industry-product codes based on SIC combine a "pdu"
prefix and "#" between the fourth and fifth characters of the product code.
Series identifiers for the discontinued dataset use underscores as
placeholders to complete a reference to an SIC industry group code of fewer
than four digits.  (All PPI industry-based indexes organized by SIC were
discontinued with the introduction of NAICS.)
  
Industry-product code,
discontinued SIC series    Provides data for:
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
  
     Price indexes for discontinued series grouped by industry according to
NAICS have series identifiers that begin with the prefix "ndu." After the
prefix, there are 12 numeric digits (the 6-digit industry code is listed
twice), and up to 7 additional alphanumeric characters that identify
product detail.  Dashes are used as placeholders for higher-level industry
group codes.
  
Industry-product code,
discontinued NAICS series  Provides data for:
ndu212231212231            Lead ore and zinc ore mining
ndu2122312122312           Lead and zinc concentrates
ndu212231212231214         Lead concentrates

     Text Files (FTP) and the FTP server are best suited for 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 "PPI Databases" page or the PPI homepage.  Data and
documentation available for download include the following:

                                      Directory:
Industry Data                         /pub/time.series/pc
Industry Data - Discontinued           
		      NAICS basis		  /pub/time.series/nd
		      SIC basis           /pub/time.series/pd
Commodity Data                        /pub/time.series/wp
Commodity Data, Discontinued        
                Series                /pub/time.series/wd
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, the overview.txt file contains an overview relating to all BLS
data available through the FTP site.  For current commodity-based PPI data,
the program help file is wp.txt; for discontinued commodity series, wd.txt;
for current industry-based PPI data based on NAICS, pc.txt; for industry-
based SIC time series that have been discontinued, pd.txt; and for industry-
based NAICS series that have been discontinued, nd.txt.
      
     Users who prefer downloading PPI datasets as individual ZIP files
should go to the directory labeled /pub/time.series/compressed/tape.format/
on the FTP site.  This directory includes six PPI-specific ZIP files, one
for each of the PPI databases-WP, WD, PC, ND, and PD-and a ZIP file for the
annual 5-year revision to historical seasonal PPIs.
                                     
                         Other Sources of PPI Data

     PPI data can also be accessed via the BLS homepage (www.bls.gov).
Clicking on the "Get Detailed Statistics" link at the top of the homepage
calls up a chart listing all available BLS programs.  

                          Additional information

     The PPI homepage (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 at (202) 691-7705 or ppi-
info@bls.gov.