Revised Methodology for Inputs to Industries Producer Price Indexes
Effective with the release of Producer Price Index (PPI) data for January 2015, on February 18, 2015, the methodology employed to generate the PPI inputs to industries indexes has been revised. This update resulted in considerable changes to table 14 of the PPI Detailed Report, which previously presented data for material and supply inputs to construction industries. The methodology will be expanded to include: (1) services and construction inputs and (2) inputs to selected goods and services industries. Please note that the inputs to industries indexes will still exclude capital investment, labor, and imports.
Changes to Methodology
From its inception in 1986, the PPI inputs to industries data was limited to indexes tracking the average changes in prices for material and supply inputs to construction industries. Those indexes currently are derived from industry-based primary product PPIs for goods, utility electric power, and utility natural gas. However, with the PPI update in January 2015 that incorporates 2007 benchmark input-output relationship data from the Bureau of Economic Analysis (BEA), the inputs to industries indexes will be constructed from commodity-based PPIs for goods, services, and construction.  These changes not only provide updated weight allocations, they also allow for more detailed product-level input assignments and the inclusion of services and construction inputs, resulting in a more robust set of input indexes.  
In addition, improvements in PPI processes and systems now make it feasible for the PPI to expand the inputs to industries concept to include industries from other sectors. In July 2014, PPI introduced a set of experimental indexes for net inputs to the industries titled:
Effective with the release of PPI data for January 2015, these indexes no longer are considered experimental. Over time, more goods and services industries may be added to the current set of industries based on data user input, public interest, and economic usefulness.
Changes to Tabular Presentation of PPI Detailed Report Table 14
Previously, table 14 of the PPI Detailed Report was titled �Producer price indexes for material and supply inputs to construction industries, not seasonally adjusted.�  As of January 2015, this table includes all the inputs to industries indexes for goods, services, and construction published by PPI, including the inputs to construction industries indexes. With this transition, substantial changes were required to the table title, individual index titles, and overall structure. The updated titles and tabular structure will emphasize the goods, services, and construction inputs now included in the model, while also stressing that capital investment, labor, and imports are excluded from the system.
The long-standing indexes for material and supply inputs to construction industries will remain intact. Title and index code changes will be required to conform to the new table structure, and additional indexes capturing specific goods inputs, as well as, aggregated and detailed services inputs, will be introduced. The table provided below provides a title and coding concordance between the historical inputs to construction industries indexes and their successor indexes within the updated table structure.
For more information on the inputs to industries indexes, including methodology, visit the webpage Updated Inputs to Industries PPIs.
For assistance, email PPI at firstname.lastname@example.org, or call the Division of Industrial Prices and Price Indexes, Section of Index Analysis and Public Information at (202) 691-7705.
 For more information relating to the benchmark I-O update, see the notice titled PPI Updates Commodity Weight Allocations for the Final Demand–Intermediate Demand Aggregation Structure. ↩
 For example, in terms of utility electric power, the ability to use more detailed input assignments allows for the assignment of industrial electric power instead of overall electric power, thereby excluding residential and commercial electric power distribution. Regarding services inputs, the ability to assign inputs at a more detailed level permits PPI to drill down to business wired telecommunications and business loans, while excluding consumer sales. ↩
 The PPI introduced wherever-provided services and construction indexes into the PPI commodity structure with the release of index data for July 2009. For more information about this topic see PPI Introduces Wherever-Provided Services and Construction Indexes. ↩
 See PPI Introduces Experimental Net Inputs to Industry Indexes for more information about the introduction of experimental net inputs to industries indexes. ↩
Last Modified Date: November 8, 2016