Economic News Release

FOR DATA ONLY:  (202) 691-5200      USDL 08-0830
FOR TECHNICAL INFORMATION:          TRANSMISSION OF MATERIAL IN
(202) 691-7705                      THIS RELEASE IS EMBARGOED
MEDIA CONTACT:  (202) 691-5902      UNTIL 8:30 A.M. (EDT), TUESDAY,
http://www.bls.gov/ppi              June 17, 2008

                     Producer Price Index - May 2008


	The Producer Price Index for Finished Goods increased 1.4 percent in May, 
seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor 
reported today.  This rise followed a 0.2-percent advance in April and a 1.1-percent 
increase in March.  At the earlier stages of processing, prices received by producers of 
intermediate goods rose 2.9 percent following a 0.9-percent advance a month earlier, and 
the crude goods index increased 6.7 percent after climbing 3.2 percent in April.  (See 
table A.)

       In May, the index for finished energy goods turned up 4.9 percent after falling 0.2 
percent a month earlier.  Prices for finished consumer foods increased 0.8 percent 
following no change in April.  By contrast, partially offsetting the acceleration in the 
finished goods index, the rise in the index for finished goods less foods and energy 
slowed to 0.2 percent from 0.4 percent in the previous month.
       
       Before seasonal adjustment, the Producer Price Index for Finished Goods 
increased 1.6 percent in May to 179.6 (1982 = 100).  From May 2007 to May 2008, 
finished goods prices advanced 7.2 percent.  Over the same period, the finished energy 
goods index rose 19.7 percent, prices for finished goods less foods and energy increased 
3.0 percent, and the index for finished consumer foods climbed 6.5 percent.  For the 12 
months ended May 2008, prices received by manufacturers of intermediate goods 
advanced 12.6 percent, and the crude goods index jumped 41.5 percent.
       	
Finished goods

	The index for finished energy goods turned up 4.9 percent in May after decreasing 
0.2 percent in the preceding month.  The index for gasoline rose 9.3 percent following a 
4.6-percent decrease in April.  Prices for diesel fuel also turned up after declining in the 
prior month.  The indexes for home heating oil, liquefied petroleum gas, and kerosene 
rose more than they had in April.  Conversely, partially offsetting the upturn in finished 
energy goods prices, the advance in the index for residential electric power slowed to 0.6 
percent in May from 1.2 percent a month earlier.  Prices for residential natural gas also 
rose less than in April.  The index for lubricating and similar oils was unchanged in May 
after increasing in the preceding month.  (See table 2.)

	The index for finished consumer foods rose 0.8 percent in May following no 
change in the prior month.  The index for beef and veal turned up 2.5 percent after falling 
1.7 percent in April.  Prices for natural cheese (except cottage cheese) also increased 
following declines a month earlier.  The indexes for pork and snack chips rose more in 
May than in the preceding month.  Prices for chicken eggs fell less than in April.  By 
contrast, the index for melons turned down 14.3 percent in May after jumping 90.7 
percent in the previous month.  Prices for packaged fluid milk products and for dry, 
condensed, and evaporated milk products also fell after rising in April.

	The rise in the index for finished goods less foods and energy slowed to 0.2 
percent in May from 0.4 percent in the prior month.  The index for pharmaceutical 
preparations increased 0.2 percent after rising 0.7 percent in April.  Prices for light motor 
trucks, passenger cars, nonwood furniture and store fixtures, periodical circulation, and 
distilled bottled liquor (except brandy) turned down after advancing a month earlier.  By 
contrast, the increase in the index for tobacco products accelerated to 2.2 percent in May 
from 0.1 percent in the previous month.  Prices for aircraft also rose more than in April.  
The indexes for plastic products and for communication and related equipment turned up 
after falling in the preceding month.

Intermediate goods

	The Producer Price Index for Intermediate Materials, Supplies, and Components 
advanced 2.9 percent in May following a 0.9-percent increase in April.  Prices for 
intermediate energy goods, materials for both durable and nondurable manufacturing, and 
materials and components for construction rose more than they had in the previous 
month.  The index for intermediate foods and feeds turned up in May after falling a 
month earlier.  By contrast, partially offsetting the acceleration in intermediate goods 
prices, the index for containers rose slightly less than in the prior month.  Excluding 
prices for foods and energy, intermediate goods moved up 2.0 percent in May after rising 
1.2 percent a month earlier.  (See table B.)

	The intermediate energy goods index climbed 6.2 percent following a 0.5-percent 
increase in the preceding month.  Diesel fuel prices jumped 11.2 percent after falling 0.9 
percent in April.  The indexes for gasoline and residual fuels also turned up in May 
following decreases in the prior month.  Prices for commercial electric power, utility 
natural gas, home heating oil, industrial electric power, and liquefied petroleum gas rose 
more than they had a month earlier.  By contrast, the index for finished lubricants moved 
up 0.4 percent after advancing 2.9 percent in April.  (See table 2.)

	Prices for materials for durable manufacturing climbed 4.5 percent following a 
1.9-percent increase in April.  The steel mill products index advanced 10.7 percent after 
rising 5.5 percent in the previous month.  Prices for primary nonferrous metals, 
nonferrous wire and cable, refined lead, building paper and board, and cement turned up 
in May after falling a month earlier.  The index for unfinished softwood lumber (not 
made from purchased materials) rose more than it had in the preceding month.  By 
contrast, prices for aluminum mill shapes inched down 0.1 percent in May after 
increasing 3.2 percent in the prior month.  The index for secondary aluminum rose less 
than it had in April.  
	
       The index for materials for nondurable manufacturing increased 3.2 percent after 
moving up 1.7 percent a month earlier.  Prices for primary basic organic chemicals 
climbed 7.5 percent in May following a 3.8-percent advance in the preceding month.  The 
indexes for plastic resins and materials, nitrogenates, newsprint, alkalies and chlorine, 
and for writing and printing papers also increased more than they had in the prior month.  
Conversely, the rise in prices for phosphates slowed from 11.1 percent in April to 5.4 
percent in May.  The indexes for intermediate basic organic chemicals and for processed 
yarns and threads also rose less than they had in April.

       Prices for intermediate foods and feeds advanced 3.2 percent following a 0.6-
percent decline in April.  The index for corn, cottonseed, and soybean cake and meal 
increased 15.7 percent after falling 1.6 percent in the previous month.  Prices for beef and 
veal and for natural cheese (except cottage cheese) also turned up in May.  The indexes 
for shortening and cooking oils, pork, and for sugar and confectionery products rose more 
than they had in April.  Flour prices fell less than in the prior month.  By contrast, the 
index for fluid milk products declined 2.3 percent subsequent to a 2.9-percent gain in 
April.  Prices for dry, condensed, and evaporated milk products and processed eggs also 
turned down after rising in the preceding month.  
	
       The index for materials and components for construction advanced 2.1 percent 
after rising 1.0 percent in the preceding month.  The nonferrous wire and cable index 
increased 2.2 percent subsequent to a 3.1-percent decline a month earlier.  Prices for steel 
mill products, unfinished softwood lumber (not made from purchased materials), paving 
mixtures and blocks, and for asphalt felts and coatings rose more than they had in April.  
The indexes for plastic construction products and treated wood turned up in May 
following declines in the prior month.  Conversely, prices for precast concrete products 
fell 2.3 percent after climbing 6.1 percent in April.  The index for fabricated structural 
metal advanced less in May than a month earlier.  Prices for switchgear and switchboard 
equipment turned down after rising in the preceding month.
       
       The index for containers moved up 0.5 percent, slightly less than the 0.6-percent 
gain in April.  In May, higher prices for barrels, drums, and pails; paper, plastic, and foil 
bags; steel cans; paper boxes and containers; and wooden boxes outweighed lower prices 
for glass containers; fiber and composite cans and related products; and aluminum cans.

Crude goods

	The Producer Price Index for Crude Materials for Further Processing climbed 6.7 
percent in May after rising 3.2 percent in April.  Leading this acceleration, prices for 
crude energy materials advanced significantly more in May than they had a month earlier.  
Also contributing to this faster rate of increase, the index for crude foodstuffs and 
feedstuffs turned up after falling in April.  By contrast, partially offsetting the 
acceleration in prices for crude goods, the index for crude nonfood materials less energy 
moved up less in May than it had in the previous month.  (See table B.)

	The index for crude energy materials jumped 13.1 percent in May after increasing 
4.1 percent in April.  Leading this broad-based acceleration, prices for natural gas surged 
17.0 percent in May following a 4.3-percent advance in the prior month.  The crude 
petroleum index rose 11.1 percent compared with a 4.5-percent gain in April.  Coal prices 
climbed 2.9 percent in May after edging up 0.3 percent a month earlier.  (See table 2.)  

	The index for crude foodstuffs and feedstuffs increased 1.8 percent in May 
following a 0.9-percent decline in April.  Slaughter cattle prices moved up 3.7 percent in 
May after no change in the preceding month.  The indexes for wheat and for ungraded 
chicken eggs fell less than they had in April.  Prices for slaughter hogs rose more in May 
than they had a month earlier.  The fluid milk index was unchanged following a decrease 
in April, and prices for citrus fruits turned up in May.  Conversely, corn prices declined 
1.7 percent in May following a 6.6-percent advance in April.  The indexes for Irish 
potatoes for processing and melons also turned down in May.  Prices for rough rice 
increased less than they had in April.

	The index for crude nonfood materials less energy rose 5.0 percent in May after 
climbing 7.9 percent in April.  Price increases for iron and steel scrap slowed to 9.0 
percent in May from 32.2 percent in the previous month.  The indexes for phosphates and 
for cattle hides and skins also moved up less than they had in April.  Prices for gold ores 
and corrugated wastepaper fell more than they had a month earlier.  The nonferrous scrap 
index turned down in May, and iron ore prices were unchanged following advances in 
April.  By contrast, the index for construction sand, gravel, and crushed stone rose 0.5 
percent in May after declining 0.7 percent in the prior month.  Prices for high grade 
wastepaper and for plant and animal fibers also turned up after decreasing in April.

Net output price indexes

Mining, Utilities, and Manufacturing Industries.  The Producer Price Index for the Net 
Output of Total Mining, Utilities, and Manufacturing Industries advanced 2.3 percent in 
May after increasing 1.2 percent in April.  (Net output price indexes are not seasonally 
adjusted.)  Prices received by the petroleum refining industry climbed 10.9 percent 
subsequent to a 3.4-percent gain a month earlier.  The industry indexes for crude 
petroleum and natural gas extraction and for electric power distribution also rose more 
than they had in April.  Prices received by animal slaughterhouses (excluding poultry) 
and cheese manufacturers turned up in May.  By contrast, slightly offsetting the 
acceleration in the index for total mining, utilities, and manufacturing industries, the 
industry index for electric power generation declined 2.9 percent following a 7.0-percent 
increase in April.  Prices received by manufacturers of automobile, light truck and utility 
vehicles also declined after rising in the prior month.  In May, the index for total mining, 
utilities, and manufacturing industries was 114.2 (December 2006 = 100), 9.7 percent 
above its year-ago level.

Trade Industries.  The Producer Price Index for the Net Output of Total Trade 
Industries increased 1.3 percent after moving up 1.2 percent in April.  (Trade indexes 
measure changes in margins received by wholesalers and retailers.)  In May, rising 
margins received by merchant wholesalers of both durable and nondurable goods, 
supermarkets and grocery stores, family clothing stores, and sporting goods stores 
outweighed falling margins received by gasoline stations, women's clothing stores,  
department stores, and hardware stores.  In May, the index for total trade industries was 
108.1 (December 2006 = 100), 3.3 percent above its year-ago level.

Transportation and Warehousing Industries.  The Producer Price Index for the Net 
Output of Total Transportation and Warehousing Industries moved up 1.7 percent 
compared with a 1.2-percent gain in April.  The index for the U.S. Postal Service rose 2.8 
percent in May following no change a month earlier.  Prices received by couriers, local 
general freight truckers, long distance general freight truckers (truckload), line haul 
railroads, and nonscheduled passenger air transporters advanced more than they had in 
the prior month.  By contrast, the industry index for local specialized freight trucking of 
new goods increased 1.0 percent subsequent to a 6.9-percent rise in April.  Prices 
received by the industries for scheduled passenger air transportation, freight 
transportation arrangement, and long distance general freight trucking (less than 
truckload) also advanced less in May than a month earlier.  In May, the index for total 
transportation and warehousing industries was 112.4 (December 2006 = 100), 8.7 percent 
above its year-ago level.

Traditional Service Industries.  The Producer Price Index for the Net Output of Total 
Traditional Service Industries edged down 0.1 percent after advancing 0.7 percent in 
April.  The industry index for commercial banking declined 1.4 percent in May compared 
with a 4.7-percent gain a month earlier.  Prices received by cellular and other wireless 
carriers, investment bankers and securities dealers, non-casino hotels and motels, and 
software publishers also turned down in May.  The industry index for offices of real 
estate agents and brokers decreased more than it had in April.  By contrast, prices 
received by portfolio managers moved up 3.8 percent after falling 0.7 percent a month 
earlier.  The indexes for the securities brokerage and passenger car rental industries also 
turned up in May.  In May, the total traditional service industries index was 101.9 
(December 2006 = 100), 1.0 percent above its year-ago level.

                                      *****

Producer Price Index data for June 2008 are scheduled to be released on Tuesday, July 
15, 2008 at 8:30 a.m. (EDT).

                        PPI Transitions to New Computer System

The Producer Price Index (PPI) program is converting its monthly processing to a new 
computer system with the release of data for May 2008.  As a result of this conversion, 
there will be some changes to previous PPI practices: 

*	The traditional concordance between the detailed Commodity indexes and Industry-
classified product indexes will cease to exist. All detailed Commodity indexes will 
continue to include price data from their primary Industry-classified counterparts, but 
these data will be supplemented with similar item specific data of other Industries. 
This will result in additional price quotations, thus larger sample sizes for the 
Commodity indexes. 

*	The visual representation of some PPI publication tables will change. Although most 
information previously provided will continue to be published, some tables will differ 
visually from what had been traditionally produced. The only piece of information 
that will no longer be published is the Finished Goods index on a 1967 = 100 basis, 
which had been provided as a courtesy to users. 
Further information is available from the PPI Section of Index Analysis and Public 
Information at: (202) 691-7705.

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 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), and
individual items (eight-digit codes).  Nearly all eight-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-
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
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 900 seasonally adjusted series, only
16 were subject to intervention 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 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 1.6 million instances of PPI series being
downloaded from the Internet during the 12 months ended December 31, 2003.

                 Retrieving PPI data from the PPI Web site
                                     
     PPI data can be obtained from the WWW address (www.bls.gov/ppi).
Scrolling down the page to the "Get Detailed PPI Statistics" header reveals
the following 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.  The application 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,
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 for products 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

     Flat Files 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 "Get Detailed Statistics" page or the PPI homepage.  Data and
documentation available for download include the following:

                                      Directory:
NAICS series, current                 /pub/time.series/pc
NAICS series, discontinued            /pub/time.series/nd
SIC series, discontinued              /pub/time.series/pd
Commodity series, current             /pub/time.series/wp
Commodity series, discontinued        /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.  The following methods
are available for retrieving 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 (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.