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Producer Price Indexes
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Producer Price Indexes Introduced for the Wholesale Trade Sector—NAICS 423 and 424

To expand service sector coverage in the Producer Price Index (PPI), the Bureau of Labor Statistics (BLS) in July 2005 introduced a group of indexes for the wholesale trade sector of the U.S. economy. The indexes include coverage for two subsectors, merchant wholesalers, durable goods— North American Industry Classification System (NAICS) 423 and merchant wholesalers, nondurable goods— NAICS 424. Data for NAICS 423 date back to July 2004, while data for NAICS 424 date back to December 2004. The 2002 NAICS definition represents a major change from the 1997 definition for the wholesale trade sector. According to the 2002 definition, merchant wholesalers include only those establishments that buy or sell goods on their own account. The key characteristics of wholesale establishments included in these subsectors, 423 and 424, is retaining title to the goods being sold.

Wholesale output can be defined as the efficient transfer of goods from the manufacturer to another party for resale. Wholesalers perform one or more of the following functions: Selling and promoting, buying and assortment building, bulk breaking, warehousing, transporting, bearing risk, and providing market information.

The prices of services provided by merchant wholesalers are measured by margins. The gross margin is the difference between the acquisition price and the selling price to the next-level buyer. The most prevalent margin price for merchant wholesalers is the average gross margin per unit for a particular customer class or supplier class for all sales within a product group. Margin prices based on transactions for a single product are acceptable when average prices cannot be provided by a company.

Merchant wholesalers, durable goods—NAICS 423

Industries in the merchant wholesalers, durable goods subsector sell capital or durable goods to other businesses. Merchant wholesalers take title to the goods that they sell; in other words, they buy and sell goods on their own account. Durable goods are new or used items generally with a normal life expectancy of 3 years or more. This subsector contains the following industry group indexes, with historical data back to February 2009:

Merchant wholesalers, nondurable goods—NAICS 424

Industries in the merchant wholesalers, nondurable goods subsector sell nondurable goods to other businesses. Nondurable goods are items generally with a normal life expectancy of less than 3 years. Nondurable goods merchant wholesale trade establishments are engaged in wholesaling items such as paper and paper products, chemicals and chemical products, drugs, textiles and textile products, apparel, footwear, groceries, farm products, petroleum and petroleum products, alcoholic beverages, books, magazines, newspapers, flowers and nursery stock, and tobacco products. The index for this subsector includes historical data back to December 2004.

Data for these indexes appear in table 11 of the PPI Detailed Report and are available online through the BLS website.

For additional information on the PPI Wholesale Trade sector, please contact Michael Conforti at Conforti.Michael@bls.gov or (202) 691-7728.

 

Last Modified Date: July 12, 2019