FOR DATA ONLY:  (202) 691-5200      USDL 08-1711
FOR TECHNICAL INFORMATION:          TRANSMISSION OF MATERIAL IN
(202) 691-7705                      THIS RELEASE IS EMBARGOED
MEDIA CONTACT:  (202) 691-5902      UNTIL 8:30 A.M. (EST), TUESDAY,
http://www.bls.gov/ppi              NOVEMBER 18, 2008

                             Producer Price Indexes - October 2008

	The Producer Price Index for Finished Goods fell 2.8 percent in October, seasonally 
adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today.  This 
decrease followed a 0.4-percent decline in September and a 0.9-percent fall in August.  At the 
earlier stages of processing, prices received by manufacturers of intermediate goods moved 
down 3.9 percent in October after declining 1.2 percent in September, and the crude goods index 
dropped 18.6 percent subsequent to a 7.9-percent decrease in the previous month.  (See table A.)

	Among finished goods in October, prices for energy goods fell 12.8 percent compared 
with a 2.9-percent decline a month earlier.  The index for consumer foods edged down 0.2 
percent following a 0.2-percent increase in the prior month.  Prices for goods other than foods 
and energy rose 0.4 percent for the second consecutive month.  

	Before seasonal adjustment, the Producer Price Index for Finished Goods declined 
2.6 percent in October to 177.3 (1982 = 100).  For the 12 months ended in October, finished 
goods prices advanced 5.2 percent.  Over the same period, prices for finished consumer foods 
climbed 6.5 percent, the index for finished energy goods increased 5.5 percent, and the index for 
finished goods other than foods and energy rose 4.4 percent.  From October 2007 to October 
2008, prices received by intermediate goods producers advanced 10.2 percent, while the crude 
goods index decreased 1.4 percent.

Finished goods
	
        The index for finished energy goods moved down 12.8 percent in October following a 
2.9-percent decline in September.  Gasoline prices dropped 24.9 percent after falling 0.5 percent 
a month earlier.  The indexes for liquefied petroleum gas, diesel fuel, and residential electric 
power also decreased more than in the prior month.  Prices for asphalt and finished lubricants 
turned down in October.  By contrast, partially offsetting the faster rate of decline in finished 
energy goods prices, the index for residential natural gas moved down 5.9 percent compared with 
an 8.2-percent decline in September.  Prices for home heating oil also fell less than in the 
previous month.  (See table 2.)

        The index for finished consumer foods edged down 0.2 percent in October after rising 0.2 
percent in September.  Leading this downturn, meat prices decreased 5.6 percent subsequent to a 
0.6-percent fall a month earlier.  Prices for mayonnaise, salad dressings, and sandwich spreads; 
unprocessed finfish; and canned fruits and juices turned down in October.  By contrast, the 
processed young chickens index increased 5.9 percent following a 0.6-percent decline in 
September.  Prices for natural cheese (except cottage cheese) and melons also turned up in 
October.  The indexes for fresh vegetables (except potatoes) and for sugar and confectionary 
products advanced more than they had a month earlier. 

      
        The index for finished goods other than foods and energy increased 0.4 percent in 
October, the same as in September.  Price increases for light motor trucks, civilian aircraft, malt 
beverages, rubber and rubber products, consumer plastic products, and for commercial nonwood 
furniture and store fixtures were partially offset by price decreases for passenger cars, 
pharmaceutical preparations, and for electronic computers and computer equipment.  In 
accordance with usual practice, most new-model-year passenger cars and light motor trucks were 
introduced into the PPI in October.  (See Report on Quality Changes for 2009 Model Vehicles, 
USDL 08-1712.)  In October, the index for passenger cars moved down 1.7 percent and light 
motor truck prices rose 2.6 percent.  For the 12 months ended October 2008, the passenger cars 
index rose 2.4 percent and prices for light motor trucks advanced 2.6 percent. 

Intermediate goods

	The Producer Price Index for Intermediate Materials, Supplies, and Components declined 
3.9 percent in October after falling 1.2 percent in September.  The indexes for intermediate 
energy goods, materials for nondurable manufacturing, intermediate foods and feeds, and 
materials for durable manufacturing also decreased more in October than they had a month 
earlier.  Prices for materials and components for construction turned down after rising in 
September.  (See table B.)

	The index for intermediate energy goods dropped 10.6 percent in October after falling 3.8 
percent in the prior month.  Diesel fuel prices declined 16.4 percent following a 6.4-percent 
decrease in September.  The indexes for gasoline, jet fuel, residual fuels, natural gas to electric 
utilities, commercial natural gas, and liquefied petroleum gas also fell more in October.  By 
contrast, partially offsetting the faster rate of decline in the intermediate energy goods index, 
industrial electric power prices advanced 2.6 percent after decreasing 1.4 percent in September.  
The index for commercial electric power moved up after no change a month earlier.  (See table 
2.)

        The index for materials for nondurable manufacturing decreased 4.6 percent in October 
following a 2.9-percent decline in the previous month.  Prices for primary basic organic 
chemicals plunged 20.8 percent after moving down 7.4 percent in September.  The indexes for 
fertilizer materials and synthetic fibers turned down in October.  Prices for basic inorganic 
chemicals, medicinal and botanical chemicals, and synthetic rubber rose less than in the 
preceding month.  The indexes for inedible fats and oils and for meats fell more than they had in 
September.  By contrast, the index for cyclic intermediate chemicals and dyes was unchanged in 
October following a 2.2-percent decline a month earlier.  Prices for woodpulp fell less than in 
September.  
        
        Prices for intermediate foods and feeds decreased 5.5 percent in October compared with a 
0.9-percent decline in the prior month.  The index for prepared animal feeds fell 8.6 percent after 
edging down 0.3 percent in the preceding month.  Prices for meats, fats and oils, and fluid milk 
products also decreased more than they had in September.  The indexes for processed eggs and 
for mayonnaise, salad dressings, and sandwich spreads turned down in October.  Conversely, the 
index for processed young chickens advanced 5.9 percent after falling 0.6 percent in September.  
Prices for natural cheese (except cottage cheese) also turned up in October.  The indexes for 
sugar and confectionery products and for canned, cooked, smoked, and prepared poultry rose 
more than they had in September.  

	Prices for materials and components for construction declined 0.7 percent in October 
after increasing at the same rate in the preceding month.  The index for paving mixtures and 
blocks fell 3.7 percent following a 3.1-percent September gain.  Prices for structural, 
architectural, and pre-engineered metals products; ready-mix concrete; treated wood; cast iron 
pressure and soil pipe and fittings; and sheet metal products also turned down in October.  The 
indexes for nonferrous wire and cable and for softwood lumber decreased more than they had a 
month earlier.  Conversely, millwork prices rose 0.6 percent in October after inching up 0.1 
percent in the prior month.  Prices for gypsum products turned up after falling in September.  

        Prices for materials for durable manufacturing declined 4.1 percent in October after 
falling 3.2 percent in the preceding month.  The index for hot rolled steel bars, plates, and 
structural shapes dropped 8.5 percent following a 4.4-percent decrease in September.  Prices for 
nonferrous wire and cable, both hot and cold rolled steel sheet and strip, softwood lumber, and 
primary nonferrous metals also fell more in October than a month earlier.  The index for 
synthetic fibers turned down after increasing in the previous month.  By contrast, the rate of 
decline in prices for semifinished steel mill products slowed from 4.8 percent in September to 
1.9 percent in October.  The index for copper and brass mill shapes also fell less than it had in 
the prior month. 

Crude goods

	The Producer Price Index for Crude Materials for Further Processing dropped 18.6 
percent in October following a 7.9-percent decline in September.  The faster rate of decrease in 
crude goods prices was broad based:  the indexes for energy goods, foodstuffs and feedstuffs, 
and nonfood materials less energy all fell more in October than they had in the prior month.  (See 
table B.)

	The index for crude energy goods decreased 24.9 percent in October after moving down 
11.7 percent in September.  Crude petroleum prices fell 26.0 percent subsequent to a 9.0-percent 
decline in the preceding month.  The natural gas index also dropped more in October than it had 
in September - 29.1 percent and 16.5 percent, respectively.  Coal prices advanced 0.4 percent in 
October following a 0.7-percent increase a month earlier.  (See table 2.)

	The index for crude foodstuffs and feedstuffs declined 11.1 percent in October after 
falling 1.1 percent in the preceding month.  Prices for Irish potatoes for processing dropped 41.8 
percent following a 258.7-percent surge in September.  The indexes for ungraded chicken eggs 
and slaughter sows also turned down in October.  Prices for corn, soybeans, wheat, and slaughter 
cattle decreased more than they had in September.  By contrast, slightly counteracting the faster 
rate of decline in crude foodstuffs and feedstuffs prices, the index for slaughter chickens jumped 
7.0 percent in October subsequent to a 1.0-percent drop in the prior month.  Prices for fluid milk 
and for slaughter barrows and gilts decreased at slower rates than they had in September.

	The index for crude nonfood materials less energy fell 17.0 percent in October 
subsequent to a 9.4-percent decline in the previous month.  Prices for carbon steel scrap dropped 
39.8 percent after decreasing 22.5 percent in September.  The indexes for nonferrous scrap, 
wastepaper, soybeans, and grains also moved down more in October than they had a month 
earlier.  Prices for raw cotton and phosphates turned down after rising in September.  
Conversely, the gold ores index increased 10.5 percent in October following a 6.0-percent 
decline in the prior month.  Prices for copper ores fell less than in September, while the index for 
construction sand, gravel, and crushed stone rose more in October than it had a month earlier.

Net output price indexes

Mining, Utilities, and Manufacturing Industries.  The Producer Price Index for the Net Output 
of Total Mining, Utilities, and Manufacturing Industries dropped 3.4 percent after decreasing 0.5 
percent in September.  (Net output price indexes are not seasonally adjusted.)  The industry 
index for petroleum refineries declined 22.6 percent in October after falling 0.9 percent a month 
earlier.  Prices received by the industries for electric power distribution, crude petroleum and 
natural gas extraction, and livestock slaughtering also decreased more than in the prior month.  
Indexes for the phosphatic fertilizer and for the medicinal and botanical manufacturing 
industries, as well as, for potassium and sodium compounds (except bleaches, alkalies, and 
aluminum compounds) turned down after rising in September.  By contrast, partially offsetting 
the faster rate of decline in the index for Total Mining, Utilities, and Manufacturing Industries, 
the rise in the index for automobile, light truck, and utility vehicle manufacturing accelerated to 
7.6 percent in October from 0.1 percent in the preceding month.  Prices received by the electric 
power generation industry turned up after declining in September.  In October, the index for total 
mining, utilities, and manufacturing industries was 112.6 (December 2006 = 100), 7.5 percent 
above its year-ago level.

Trade Industries.  The Producer Price Index for the Net Output of Total Trade Industries turned 
up 2.8 percent following a 1.2-percent decrease in September.  (Trade indexes measure changes 
in margins received by wholesalers and retailers.)  About half of the upturn can be accounted for 
by the margin index for gasoline stations with convenience stores, whose increase accelerated to 
46.1 percent in October from 0.4 percent in the prior month.  Margins received by merchant 
wholesalers of both nondurable and durable goods, fuel dealers, department stores, specialty 
food stores, and supermarkets and other grocery stores turned up after declining a month earlier.  
Conversely, the margin index for family clothing stores turned down 4.8 percent after rising 1.9 
percent in September.  In October, the index for total trade industries was 114.2 (December 2006 
= 100), 8.7 percent above its year-ago level.

Transportation and Warehousing Industries.  The decline in the Producer Price Index for the 
Net Output of Total Transportation and Warehousing Industries slowed to 0.4 percent in October 
from 0.9 percent in the prior month.  The index for the general freight trucking industry sector 
fell 0.6 percent following a 2.3-percent decrease in September.  Prices received by the scheduled 
air transportation industry group turned up after declining in the prior month.  Conversely, the 
industry index for couriers turned down 3.1 percent in October after rising 0.1 percent a month 
earlier.  Prices received by line-haul railroads also fell after climbing in September.  The industry 
indexes for freight transportation arrangement and long distance specialized freight trucking of 
new goods decreased more than in the preceding month.  Prices received by the industry for local 
specialized freight trucking of new goods declined in October after no change in the previous 
month, and the index for inland water freight transportation rose less than in September.  In 
October, the index for total transportation and warehousing industries was 114.5 (December 
2006 = 100), 8.4 percent above its year-ago level.

Traditional Service Industries.  The Producer Price Index for the Net Output of Total 
Traditional Service Industries turned up 0.3 percent in October after falling 0.2 percent a month 
earlier.  The index for non-casino hotels and motels increased 3.5 percent following a 6.4-percent 
drop in September.  Prices received by software publishers and savings institutions also turned 
up after decreasing in the previous month.  The indexes for investment banking and securities 
dealing and for general medical and surgical hospitals rose more than in September.  Conversely, 
the advance in the index for commercial banking slowed to 0.1 percent in October from 1.3 
percent in the prior month.  Prices received by portfolio managers and by securities brokers 
decreased more than in September.  In October, the index for total traditional service industries 
was 102.6 (December 2006 = 100), 0.4 percent above its year-ago level.

                                          *****
Producer Price Index data for November 2008 are scheduled to be released on Friday, December 
12, 2008 at 8:30 a.m. (EST).


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

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

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

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

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.