FOR DATA ONLY:  (202) 691-5200      USDL 09-0677
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 16, 2009

                                   Producer Price Index - May 2009

	The Producer Price Index for Finished Goods increased 0.2 percent in May, seasonally 
adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today.  This 
rise followed a 0.3-percent advance in April and a 1.2-percent decrease in March.  At the earlier 
stages of processing, prices received by producers of intermediate goods rose 0.3 percent 
following a 0.5-percent decline a month earlier, and the crude goods index climbed 3.6 percent 
after rising 3.0 percent in April.  (See table A.)
        
        In May, a 2.9-percent increase in finished energy goods prices more than offset a 1.6-
percent decline in the index for finished consumer foods and a 0.1-percent decrease in prices for 
finished goods other than foods and energy.

        Before seasonal adjustment, the Producer Price Index for Finished Goods increased 0.5 
percent in May to 170.8 (1982 = 100).  From May 2008 to May 2009, finished goods prices 
decreased 5.0 percent.  Over the same period, the finished energy goods index fell 27.3 percent 
and prices for finished consumer foods declined 2.1 percent.  By contrast, partially offsetting the 
decrease in finished goods prices, the index for finished goods less foods and energy increased 
3.0 percent.  At the earlier stages of processing, prices received by manufacturers of intermediate 
goods moved down 12.5 percent for the 12 months ended May 2009, and the crude goods index 
decreased 41.1 percent.

Finished goods

	The index for finished energy goods turned up 2.9 percent in May after decreasing 0.1 
percent in the preceding month.  Gasoline prices rose 13.9 percent following a 2.6-percent 
increase in April.  The indexes for residential natural gas, residential electric power, and finished 
lubricants fell less than they had in the prior month.  Prices for liquefied petroleum gas advanced 
more than in April.  Conversely, the rise in the index for diesel fuel slowed to 4.5 percent in May 
from 17.0 percent a month earlier.  Prices for home heating oil and kerosene also increased less 
than in April.  (See table 2.)

        Prices for finished consumer foods fell 1.6 percent in May following a 1.5-percent 
advance in the prior month.  The index for eggs for fresh use declined 27.0 percent after jumping 
43.7 percent in April.  Prices for fresh vegetables (except potatoes), raspberries, pork, soft drinks, 
and canned specialties also turned down in May.  The index for natural cheese (except cottage 
cheese) fell more than in the previous month.  By contrast, prices for beef and veal rose 9.2 
percent in May after increasing 4.5 percent a month earlier.  Prices for cooked or smoked 
prepared poultry products declined less than they had in April, and the index for fats and oils 
turned up in May.  

        The index for finished goods less foods and energy edged down 0.1 percent in May 
following a 0.1-percent increase in the prior month.  Prices for pharmaceutical preparations 
declined 0.3 percent after rising 1.3 percent in April.  The indexes for perfume, cologne, and 
toilet water and for household laundry equipment and parts also turned down after advancing a 
month earlier.  Prices for light motor trucks were unchanged subsequent to increases in April.  
By contrast, the increase in the index for newspaper circulation accelerated to 2.9 percent in May 
from 0.3 percent in the previous month.  Prices for cigarettes and electronic computers were 
unchanged after declining in April.  The indexes for apparel and other fabricated textile products 
and for non-wood commercial furniture turned up after falling in the preceding month.

Intermediate goods

	The Producer Price Index for Intermediate Materials, Supplies, and Components moved 
up 0.3 percent in May following a 0.5-percent decline in April.  The indexes for intermediate 
energy goods and for intermediate foods and feeds increased more than in the previous month.  
Prices for materials for both nondurable and durable manufacturing, as well as for materials and 
components for construction, declined less than in April.  Excluding foods and energy, the index 
for intermediate goods moved down 0.2 percent in May subsequent to a 0.9-percent decrease in 
the prior month.  (See table B.)

	The index for intermediate energy goods advanced 2.0 percent in May after rising 0.7 
percent in April.  Prices for liquefied petroleum gas climbed 8.6 percent compared with a 5.0-
percent gain a month earlier.  The increase in the index for gasoline also accelerated in May.  
Prices for utility natural gas, industrial electric power, and finished lubricants declined less than 
they had in the previous month.  Conversely, partially offsetting the acceleration in the 
intermediate energy goods index, the increase in the index for diesel fuel slowed to 4.5 percent 
from 17.0 percent in April.  Prices for heating oil also rose less than in the preceding month.  The 
index for jet fuel turned down in May, and prices for commercial electric power fell more than in 
April.  (See table 2.)

	Prices for materials for nondurable manufacturing moved down 0.3 percent in May 
following a 1.9-percent decrease in the previous month.  The index for phosphates declined 2.0 
percent after dropping 31.6 percent in April.  Prices for primary basic organic chemicals and for 
medicinal and botanical chemicals turned up in May after falling a month earlier.  The indexes 
for thermoplastic resins and basic inorganic chemicals declined less than in the preceding month.  
By contrast, prices for synthetic fibers decreased 5.3 percent compared with a 6.6-percent 
increase in April.  The indexes for thermosetting resins, synthetic rubber, and nitrogenates turned 
down as well.

	The index for materials for durable manufacturing declined 0.6 percent in May 
subsequent to a 2.1-percent decrease in April.  Prices for hot rolled steel sheet and strip moved 
down 4.9 percent following a 13.2-percent drop in the prior month.  Prices for hot rolled steel 
bars, plates, and structural shapes; steel pipe and tube; and basic inorganic chemicals also fell 
less in May.  The index for primary nonferrous metals turned up after declining in April.  By 
contrast, the index for copper and brass mill shapes advanced 0.8 percent compared with a 19.5-
percent jump in April.  Prices for nonferrous wire and cable also increased less than in the 
previous month.  The indexes for synthetic fibers and unfinished softwood lumber (not made 
from purchased materials) turned down in May after rising a month earlier.

	Prices for materials and components for construction inched down 0.1 percent compared 
with a 0.9-percent drop in April.  The index for prefabricated metal buildings moved down 0.7 
percent in May following a 6.2-percent decline in the previous month.  The indexes for plastic 
construction products and for steel pipe and tube also declined less in May.  Prices for prepared 
asphalt and tar roofing and siding products, paving mixtures and blocks, and ready-mixed 
concrete rose after falling a month earlier.  By contrast, prices for nonferrous wire and cable 
advanced 2.0 percent subsequent to an 8.3-percent gain in April.  The index for fabricated 
structural metal fell more than in the prior month.  Prices for unfinished softwood lumber (not 
made from purchased materials) and for architectural and ornamental metalwork turned down in 
May.

	The increase in the index for intermediate foods and feeds accelerated to 1.3 percent in 
May from 0.3 percent in the previous month.  Prices for prepared animal feeds advanced 3.5 
percent after rising 0.2 percent in April.  The index for beef and veal also increased more than a 
month earlier.  Prices for fats and oils and for flour turned up in May after falling in the 
preceding month.  The index for cooked or smoked prepared poultry products declined less than 
it had in the prior month.  By contrast, prices for pork dropped 4.3 percent following a 2.5-
percent increase in April.  The index for natural cheese (except cottage cheese) fell more in May 
than in the preceding month.  Prices for bulk fluid milk and cream were unchanged after 
climbing in April, and the index for soft drinks turned down subsequent to an increase in the 
prior month.

Crude goods

	The Producer Price Index for Crude Materials for Further Processing increased 3.6 
percent in May after rising 3.0 percent in April.  Prices for crude nonfood materials less energy 
moved up after declining a month earlier, and the index for crude energy materials advanced 
more than it had in April.  By contrast, partially offsetting the acceleration in prices for crude 
goods, the index for crude foodstuffs and feedstuffs increased less in May than it had in the prior 
month.  (See table B.)

	The index for crude nonfood materials less energy rose 6.7 percent in May after declining 
0.6 percent in April.  Leading this upturn, prices for carbon steel scrap climbed 20.6 percent 
compared with a 12.6-percent decrease in the previous month.  The indexes for gold ores, hides 
and skins, and wheat also turned up in May.  Prices for corn, copper ores, and aluminum base 
scrap increased more than they had a month earlier.  The phosphates index declined less than it 
had in April.  Conversely, the index for copper base scrap moved up 7.5 percent subsequent to a 
29.5-percent surge in the prior month.  Prices for raspberries turned down in May after rising a 
month earlier.  (See table 2.)  

	Prices for crude energy materials moved up 5.3 percent following a 2.9-percent increase 
in April.  Leading this acceleration, the crude petroleum index surged 18.6 percent in May 
following a 9.2-percent rise in the prior month.  By contrast, prices for natural gas declined 5.7 
percent subsequent to a 3.1-percent decrease a month earlier.  The coal index advanced 2.0 
percent compared with a 3.9-percent increase in April. 

	The index for crude foodstuffs and feedstuffs moved up 0.4 percent in May following a 
4.6-percent advance in the preceding month.  Soybean prices rose 9.8 percent after climbing 16.7 
percent a month earlier.  Prices for slaughter cattle, fluid milk, fresh vegetables (except potatoes), 
raspberries, and ungraded chicken eggs turned down in May.  The index for slaughter barrows 
and gilts fell more than in the preceding month.  Conversely, corn prices increased 10.7 percent 
following a 1.5-percent advance in April.  The index for slaughter chickens also rose more than it 
had in the prior month.  Prices for wheat turned up in May. 

Net output price indexes

Mining, Utilities, and Manufacturing Industries.  The Producer Price Index for the Net Output 
of Total Mining, Utilities, and Manufacturing Industries increased 1.1 percent in May following 
a 0.2-percent rise in April.  (Net output price indexes are not seasonally adjusted.)  Prices 
received by petroleum refineries climbed 13.9 percent in May after advancing 11.5 percent in the 
prior month.  The index for the livestock slaughtering industry also rose more than it had in 
April.  Prices received by the industries for electric power generation, transmission, and 
distribution; poultry and livestock feed manufacturing; and gasoline engine and engine parts 
manufacturing turned up in May.  The indexes for natural gas distribution and phosphatic 
fertilizer manufacturing fell less than they had in April.  By contrast, partially offsetting the 
faster rate of increase in prices received by mining, utilities, and manufacturing industries, the 
index for pharmaceutical preparation manufacturing declined 0.4 percent in May following a 1.7-
percent rise a month earlier.  Prices received by producers of automobiles, light trucks, and 
utility vehicles and by soft drink manufacturers also decreased after advancing in April.  In May, 
the index for total mining, utilities, and manufacturing industries was 105.2 (December 1986 = 
100), 8.0 percent below its year-ago level.

Trade Industries.  The Producer Price Index for the Net Output of Total Trade Industries fell 
0.9 percent in May following a 0.5-percent decline in April.  (Trade indexes measure changes in 
margins received by wholesalers and retailers.)  Leading this faster rate of decrease, margins 
received by merchant wholesalers of durable goods dropped 1.2 percent after rising at the same 
rate in April.  The margin indexes for general merchandise stores, family clothing stores, 
pharmacies and drug stores, new car dealers, and for radio, television, and other electronics 
stores also turned down in May.  Conversely, margins received by supermarkets climbed 0.8 
percent following a 4.8-percent decline in April.  The margin indexes for electronic shopping and 
mail-order houses and for gasoline stations with convenience stores also turned up in May.  
Margins received by women's clothing stores decreased less than they had in April.  In May, the 
index for total trade industries was 110.4 (December 1986 = 100), 3.2 percent above its year-ago 
level.

Transportation and Warehousing Industries.  The Producer Price Index for the Net Output of 
Total Transportation and Warehousing Industries fell 0.7 percent in May after advancing 0.4 
percent in April.  Leading this downturn, prices received by the scheduled air transportation 
industry group dropped 6.1 percent in May following a 1.3-percent increase in the previous 
month.  The indexes for local specialized freight trucking of new goods and inland water 
transportation of freight also declined after rising in April.  By contrast, prices received by the 
United States Postal Service moved up 2.9 percent in May after no change a month earlier.  The 
index for couriers was unchanged after falling in April.  Prices received by the general freight 
trucking industry group and the nonscheduled air passenger chartering industry turned up in 
May.  The index for line-haul railroads increased more than it had in April.  In May, the index 
for total transportation and warehousing industries was 106.3 (December 1986 = 100), 5.7 
percent below its year-ago level.

Traditional Service Industries.  The Producer Price Index for the Net Output of Total 
Traditional Service Industries rose 0.5 percent in May, the same as in April.  In May, higher 
prices received by the depository credit intermediation industry group, telecommunication 
carriers, general medical and surgical hospitals, the accommodation sector, investment bankers 
and securities dealers, insurance carriers, and the portfolio management industry outweighed 
lower prices received by the temporary help services industry and by management consultants.  
In May, the index for total traditional service industries was 102.5 (December 1986 = 100), 0.5 
percent above its year-ago level.

                                                *****

Producer Price Index data for June 2009 are scheduled to be released on Tuesday, July 14, 2009 
at 8:30 a.m. (EDT).



                             PPI Introduces Wherever Provided Services Indexes

        Effective with the release of July 2009 data on August 18, 2009, the Producer Price Index 
(PPI) program will begin publishing Wherever Provided (WEP) Services indexes.  Similar to 
current PPI commodity indexes, the new WEP service indexes are constructed with pricing 
information collected from PPI's industry-based survey, aggregated on a service-specific basis 
rather than by industry of origin.  Therefore, the WEP services indexes measure price changes 
for specific services, regardless of the type of companies providing the services.

        Since the WEP services indexes are conceptually similar to traditional PPI commodity 
indexes, they will be included in Table 6 of the PPI Detailed Report, with major WEP services 
grouping codes ranging from 30 through 80.

        Since the WEP services indexes do not include data for physical products, they will not 
contribute to the PPI's current Stage-of-Processing structure.

        Further information is available from the PPI Section of Index Analysis and Public 
Information, at ppi-info@bls.gov or (202) 691-7705.






                                 PPI Expands Commodity Code Detail

        Effective with the release of July 2009 data on August 18, 2009, the Producer Price Index 
(PPI) program will have the capability to publish commodity indexes at a greater level of detail 
than previously has been available.  As such, the July 2009 data release will include some newly 
introduced commodity indexes associated with 9-digit or 10-digit commodity codes.  (The 
maximum code length permitted for commodity indexes will become 12 digits.)  These indexes 
will be available in both the PPI Detailed Report and on the BLS website at www.bls.gov/ppi, 
using the current commodity data retrieval tools.

        Further information is available from the PPI Section of Index Analysis and Public 
Information, at ppi-info@bls.gov or (202) 691-7705.






                              PPI Updates Industry Net Output Ratios

	Effective with the release of August 2009 data on September 15, 2009, the Producer Price 
Index (PPI) program will update the net output ratios used to calculate industry indexes based on 
the North American Industry Classification System (NAICS).  With this update, net output ratios 
will be based on 2002 Input-Output Account data from the Bureau of Economic Analysis (BEA) 
of the U.S. Department of Commerce.  Net output ratios represent the proportion of an industry's 
or industry grouping's output consumed outside its respective area.  Prior to this update, net 
output ratios for calculating NAICS-based PPIs reflected values from BEA 1997 Input-Output 
Accounts.  This update does not affect commodity-grouping indexes from the PPI.

	Further information is available from the PPI Section of Index Analysis and Public 
Information, at ppi-info@bls.gov or (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.