Differences between industry-based and commodity-based PPI indexes
Users may note some apparent inconsistencies between industry-based and commodity-based PPI indexes for January 2004. These differences result from different PPI methods for treating late reports in the two index families, and are not related to the timing of the release of January 2004 data.
NAICS conversion required the PPI program to reclassify all of its index series and sampled products from the SIC to the NAICS industry structure. In addition, it was necessary to link the NAICS industry-based indexes to the commodity indexes and to other indexes with a commodity-based structure, such as those defined by product durability and stage of processing (SOP). In most cases, it was possible to construct a continuous commodity-based index series simply by replacing an SIC index with a NAICS index in its computation. Other commodity-based indexes, however, were judged not to be continuous with any preceding published series, and were defined as new with December 2003=100.
In implementing this industry-to-commodity series mapping, the PPI followed its longstanding procedures for computing commodity index series movements in the unusual situations in which underlying industry codes change. An important component of these procedures involves the treatment of prior-month index values that have been published but that are scheduled for later revision under the PPI policy of revising data four months after publication. Specifically, the January 2004 index changes for most commodity-based PPI series reflect all reported price data for December 2003, including those price reports that were received by BLS after the publication of the December PPI. By contrast, the procedure used in most months, as well as in the industry-based PPI indexes for January 2004, is to compare the index level for the current month to the already-published index level for the previous month.
The procedure described above ensures that the new commodity index series, those that begin in December 2003 at a value of 100, will be computed accurately using the best information available for their base period. A byproduct of this procedure is that for the other, continuous commodity-based series, the preliminary published index movements from December 2003 to January 2004 in table 6 of PPI Detailed Report and elsewhere are computed differently from the monthly index movements for similar industry series shown in table 5 of PPI Detailed Report and elsewhere.
This difference in treatment between the industry-based and commodity-based series affects all calculations in which January 2004 index levels are compared to index levels for prior time periods.
It is important to note that all January 2004 industry and commodity PPI series are preliminary and subject to revision with release of May 2004 data. It should also be emphasized that the results of the differential procedures described above are transitory in nature. As the published data for 2004 undergo the usual PPI revision process that accounts for late reports, all current-month and historical comparisons will become fully consistent between the industry-based and commodity-based PPI series.
Last Modified Date: March 18, 2004