Producer Price Index News Release

Transmission of material in this release is embargoed until                          USDL 23-1303
8:30 a.m. (ET) Wednesday, June 14, 2023

Technical information:      (202) 691-7705  *  ppi-info@bls.gov  *  www.bls.gov/ppi
Media contact:              (202) 691-5902  *  PressOffice@bls.gov


                             PRODUCER PRICE INDEXES - MAY 2023


The Producer Price Index for final demand declined 0.3 percent in May, seasonally adjusted, the
U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.2 percent in April and
fell 0.4 percent in March. (See table A.) On an unadjusted basis, the index for final demand
moved up 1.1 percent for the 12 months ended in May.

In May, the decline in the final demand index can be traced to prices for final demand goods,
which fell 1.6 percent. The index for final demand services increased 0.2 percent.

Prices for final demand less foods, energy, and trade services were unchanged in May after
inching up 0.1 percent in April. For the 12 months ended in May, the index for final demand less
foods, energy, and trade services increased 2.8 percent.

Final Demand

Final demand goods: Prices for final demand goods moved down 1.6 percent in May, the largest
decrease since falling 1.6 percent in July 2022. Most of the May decline is attributable to the index
for final demand energy, which dropped 6.8 percent. Prices for final demand foods moved down 1.3
percent. In contrast, the index for final demand goods less foods and energy increased 0.1 percent.

Product detail: Sixty percent of the May decline in the index for final demand goods can be traced to
a 13.8-percent drop in prices for gasoline. The indexes for diesel fuel, chicken eggs, jet fuel, fresh
and dry vegetables, and iron and steel scrap also fell. Conversely, prices for tobacco products
advanced 1.7 percent. The indexes for electric power and for beverages and beverage materials also
increased. (See table 2.)

Final demand services: The index for final demand services moved up 0.2 percent in May following
a 0.3- percent advance in April. Leading the May increase, margins for final demand trade services
rose 1.0 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.)
Prices for final demand services less trade, transportation, and warehousing edged up 0.1 percent. In
contrast, the index for final demand transportation and warehousing services declined 1.4 percent.

Product detail: Over 40 percent of the May increase in prices for final demand services can be
attributed to margins for automobiles and automobile parts retailing, which rose 4.2 percent. The
indexes for fuels and lubricants retailing; apparel, footwear, and accessories retailing; securities
brokerage, dealing, investment advice, and related services; machinery and vehicle wholesaling; and
food wholesaling also advanced. Conversely, prices for truck transportation of freight fell 2.1
percent. The indexes for portfolio management and for health, beauty, and optical goods retailing
also decreased.

Intermediate Demand by Commodity Type

Within intermediate demand in May, the index for processed goods fell 1.5 percent, prices for
unprocessed goods dropped 4.8 percent, and the index for services advanced 0.2 percent. (See tables
B and C.)

Processed goods for intermediate demand: Prices for processed goods for intermediate demand
moved down 1.5 percent in May, the largest decrease since falling 2.5 percent in December 2022.
Most of the May decline can be traced to a 6.9-percent drop in the index for processed energy goods.
Prices for processed foods and feeds decreased 1.9 percent, while the index for processed materials
less foods and energy was unchanged. For the 12 months ended in May, prices for processed goods
for intermediate demand fell 7.1 percent, the largest 12-month decline since moving down 7.2
percent in May 2020.

Product detail: In May, over 40 percent of the decrease in prices for processed goods for
intermediate demand can be traced to the index for diesel fuel, which dropped 13.7 percent. Prices
for gasoline, natural gas to electric utilities, jet fuel, primary basic organic chemicals, and prepared
animal feeds also fell. Conversely, the index for commercial electric power rose 1.8 percent. Prices
for cold rolled steel sheet and strip and for snack chips also advanced.

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate
demand fell 4.8 percent in May after increasing 1.6 percent in April. Almost 60 percent of the broad-
based decrease is attributable to a 7.8-percent drop in prices for unprocessed energy materials. The
indexes for unprocessed foodstuffs and feedstuffs and for unprocessed nonfood materials less energy
also moved lower, falling 3.0 percent and 3.3 percent, respectively. For the 12 months ended in May,
prices for unprocessed goods for intermediate demand declined 27.5 percent, the largest 12-month
decrease since dropping 28.6 percent in April 2020.

Product detail: Nearly 60 percent of the May decline in the index for unprocessed goods for
intermediate demand can be traced to prices for crude petroleum, which fell 10.2 percent. The
indexes for ungraded chicken eggs, corn, iron and steel scrap, slaughter hogs, and natural gas also
moved lower. In contrast, raw milk prices increased 4.8 percent. The indexes for coal and for
aluminum base scrap also moved higher.

Services for intermediate demand: The index for services for intermediate demand advanced 0.2
percent in May after moving up 0.7 percent in April. A major factor in the May increase was a 0.4-
percent rise in prices for services less trade, transportation, and warehousing for intermediate
demand. Margins for trade services for intermediate demand advanced 0.2 percent. Conversely, the
index for transportation and warehousing services for intermediate demand decreased 0.9 percent.
For the 12 months ended in May, prices for services for intermediate demand increased 3.9 percent.

Product detail: Leading the May advance in the index for services for intermediate demand, prices
for business loans (partial) rose 3.2 percent. The indexes for securities brokerage, dealing, investment
advice, and related services; food wholesaling; fuels and lubricants retailing; investment banking;
and ground courier and messenger services also moved higher. In contrast, prices for truck
transportation of freight fell 2.1 percent. The indexes for portfolio management and for machinery
and equipment parts and supplies wholesaling also declined.

Intermediate Demand by Production Flow

Stage 4 intermediate demand: Prices for stage 4 intermediate demand decreased 0.2 percent in May
after increasing 0.4 percent in April. In May, the index for total goods inputs to stage 4 intermediate
demand moved down 0.6 percent. Conversely, prices for total services inputs edged up 0.1 percent.
(See table D.) Decreases in the indexes for gasoline; diesel fuel; portfolio management; machinery
and equipment parts and supplies wholesaling; warehousing, storage, and related services; and grains
outweighed rising prices for securities brokerage, dealing, investment advice, and related services;
business loans (partial); and commercial electric power. For the 12 months ended in May, the index
for stage 4 intermediate demand advanced 1.5 percent.

Stage 3 intermediate demand: The index for stage 3 intermediate demand declined 1.0 percent in
May, the fourth consecutive decrease. In May, prices for total goods inputs to stage 3 intermediate
demand fell 2.4 percent. In contrast, the index for total services inputs inched up 0.1 percent.
Declines in prices for diesel fuel; ungraded chicken eggs; jet fuel; grains; gasoline; and warehousing,
storage, and related services outweighed increases in the indexes for business loans (partial), raw
milk, and asphalt. For the 12 months ended in May, prices for stage 3 intermediate demand fell 6.5
percent, the largest 12-month decrease since dropping 8.1 percent in May 2020.

Stage 2 intermediate demand: The index for stage 2 intermediate demand declined 1.4 percent in
May after rising 1.3 percent in April. In May, prices for total goods inputs to stage 2 intermediate
demand moved down 4.0 percent. Conversely, the index for total services inputs advanced 0.6
percent. Falling prices for crude petroleum, gas fuels, iron and steel scrap, prepared animal feeds,
broadcast and network television advertising time sales, and primary basic organic chemicals
outweighed increases in the indexes for business loans (partial), fuels and lubricants retailing, and
coal. For the 12 months ended in May, prices for stage 2 intermediate demand decreased 9.8 percent,
the largest 12-month decline since dropping 10.3 percent in April 2020.

Stage 1 intermediate demand: The index for stage 1 intermediate demand declined 0.9 percent in
May, the largest decrease since moving down 1.8 percent in December 2022. In May, prices for total
goods inputs to stage 1 intermediate demand fell 1.8 percent, while the index for total services inputs
was unchanged. Decreasing prices for diesel fuel, gasoline, natural gas to electric utilities, grains,
iron and steel scrap, and truck transportation of freight outweighed advances in the indexes for
securities brokerage, dealing, investment advice, and related services; residual fuels; and commercial
electric power. For the 12 months ended in May, prices for stage 1 intermediate demand declined 3.6
percent, the largest 12-month decrease since dropping 4.5 percent in July 2020.

________________
The Producer Price Index for June 2023 is scheduled to be released on Thursday, July 13, 2023,
at 8:30 a.m. (ET).

                                          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 measures the average change over time in prices received (price changes) by
producers for domestically produced goods, services, and construction.  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.

   More than 10,000 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. Over time, new PPIs have been introduced for products of
industries in the services and construction sectors of the U.S. economy. As of January
2023, the PPI covered 69 percent of services as measured by 2017 Census revenue, and 17
percent of construction.

   More than 64,000 price quotations per month are organized into three sets of PPIs:
(1) Final demand-Intermediate demand (FD-ID) indexes, (2) commodity indexes, and (3)
indexes for the net output of industries and their products.  The FD-ID structure
organizes products by class of buyer and degree of fabrication as well as by stage of
production.  The commodity structure organizes products by similarity of end use or
product type.  The entire output of various industries is sampled to derive price indexes
for the net output of industries and their products.


Final Demand-Intermediate Demand Indexes

   The PPI FD-ID structure measures price change for goods, services, and construction
sold to final demand and to intermediate demand. The FD-ID system replaced the PPI stage-
of-processing (SOP) system as PPI's primary aggregation model with the release of data
for January 2014. The FD-ID model expands coverage beyond that of the SOP system through
the addition of services, construction, exports, and government purchases.

   Compared with finished goods under the SOP system, the PPI for final demand goods
includes nearly a 50 percent expansion of coverage. This increase can be traced to the
addition of government purchases and exports. For overall final demand, expansion to
include final demand services represents an even larger increase in coverage. In December
2022, final demand goods were about 30.7 percent of overall final demand, final demand
services were roughly 66.6 percent, and final demand construction was about 2.7 percent
of final demand. Within intermediate demand, coverage of services for intermediate demand
resulted in about a 45 percent increase in coverage of the intermediate demand portion of
the economy.

   FD-ID indexes are constructed from commodity-based producer output price indexes.
Commodities are allocated to aggregate indexes primarily based on the type of buyer.  The
main source of data used to determine the type of buyer is the "Use of commodities by
industries, before redefinition," table from the Benchmark Input-Output Accounts of the
U.S. In many cases, the same commodity is purchased by different types of buyers.  As a
result, commodities are often included in several FD-ID indexes.  For example, regular
gasoline is purchased for personal consumption, export, government use, and business use.
The PPI program publishes only one commodity index for regular gasoline (wpu057104),
reflecting sales to all types of buyers, and this index is used in all aggregations
regardless of whether the gasoline is sold for personal consumption, as an export, to
government, or to businesses.  Proportions based on BEA "Use of Commodities" data are
used to allocate the correct portion of the total weight of gasoline to each use
category.  In cases when buyer type is an important price determining characteristic,
indexes are created based on specific buyer type. For example, within the PPI category
for loan services, separate indexes for consumer loans and business loans were
constructed. For more information relating to the FD-ID structure, see "A new,
experimental system of indexes from the PPI program" in the February 2011 Monthly Labor
Review.

Final Demand:  The final demand portion of the FD-ID structure measures price change for
commodities sold for personal consumption, capital investment, government, and export.
The system is composed of six main price indexes: final demand goods; final demand trade
services; final demand transportation and warehousing services; final demand services
less trade, transportation, and warehousing; final demand construction; and overall final
demand.

   The final demand goods index measures price change for both unprocessed and processed
goods sold to final demand.  Fresh fruits sold to consumers and computers sold for
capital investment are examples of transactions included in the final demand goods price
index. The final demand trade services index measures price change for the retailing and
wholesaling of merchandise sold to final demand, generally without transformation. (Trade
indexes measure changes in margins received by wholesalers and retailers.) The final
demand transportation and warehousing services index tracks price change for
transportation of passengers, as well as, transportation of cargo sold to final demand,
and also includes prices for warehousing and storage of goods sold to final demand.  The
final demand services less trade, transportation, and warehousing index measures price
change for all services other than trade and transportation sold to final demand.
Publishing, banking, lodging, and health care are examples of these services.  The final
demand construction index tracks price change for new construction, as well as
maintenance and repair construction sold to final demand.  Construction of office
buildings is an example of a commodity that would be included in the final demand
construction index.  Lastly, the overall final demand index tracks price change for all
types of commodities sold to final demand by combining the five final demand component
indexes described above.

Intermediate Demand: The intermediate demand portion of the FD-ID system tracks price
change for goods, services, and construction products sold to businesses as inputs to
production, excluding capital investment. The system includes two parallel treatments of
intermediate demand. The first treatment organizes intermediate demand commodities by
type. The second organizes intermediate demand commodities into production stages, with
the explicit goal of developing a forward-flow model of production and price change.

   The intermediate demand by commodity type portion of the system organizes commodities
by similarity of product.  The system is composed of six main price indexes: unprocessed
goods for intermediate demand; processed goods for intermediate demand; intermediate
demand trade services; intermediate demand transportation and warehousing services;
intermediate demand services less trade, transportation, and warehousing; and
intermediate demand construction.

   The unprocessed goods for intermediate demand price index measures price change for
goods sold to businesses as inputs to production that have undergone no fabrication.
Crude petroleum sold to refineries is an example of an unprocessed good sold to
intermediate demand.  The processed goods for intermediate demand index tracks price
change for fabricated goods sold as business inputs.  Examples include car parts sold to
car manufacturers and gasoline sold to trucking companies.  The index for trade services
for intermediate demand measures price change for the services of retailing and
wholesaling goods purchased by businesses as inputs to production. The intermediate
demand transportation and warehousing services index measures price change for business
travel, as well as, transportation and warehousing of cargo sold to intermediate demand.
The intermediate demand services less trade, transportation, and warehousing index
measures price change for services other than trade, transportation, and warehousing sold
as inputs to production.  Legal and accounting services purchased by businesses are
examples of intermediate demand services excluding trade, transportation, and
warehousing.  Finally, the construction for intermediate demand index measures price
change for construction purchased by firms as inputs to production.  The index for
construction for intermediate demand tracks price change for maintenance and repair
construction purchased by firms.

   The production flow treatment of intermediate demand is a stage-based system of price
indexes. These indexes can be used to study price transmission across stages of
production and final demand. This system is constructed in a manner that maximizes
forward flow of production between stages, while minimizing back-flow of production. The
production flow treatment contains four main indexes: intermediate demand stage 1,
intermediate demand stage 2, intermediate demand stage 3, and intermediate demand stage
4.

   Indexes for the four stages were developed by first assigning each industry in the
economy to one of four stages of production, where industries assigned to the fourth
stage primarily produce output consumed as final demand, industries in the third stage
primarily produce output consumed by stage 4 industries, industries assigned to the
second stage primarily produce output consumed by stage 3 industries, and industries
assigned to the first stage produce output primarily consumed by stage 2 industries.  The
four indexes then track prices for the net inputs consumed by industries in each of the
four stages of production.  The stage 4 intermediate demand index, for example, tracks
price change for inputs consumed, but not produced, by industries included in the fourth
stage of production.  Hence, the index tracks price change in inputs to industries that
primarily produce final demand commodities (stage 4 producers primarily produce
commodities sold to final demand).

   Examples of heavily weighted goods-producing industries in stage 4 include the
manufacture of light trucks and utility vehicles, automobiles, and pharmaceuticals.
Retail trade, food service and drinking places, and hospitals are examples of heavily
weighted service industries included in stage 4.  Stage 4 also includes all new
construction industries.  Examples of goods consumed by stage 4 industries include motor
vehicle parts, commercial electric power, plastic construction products, biological
products, and beef and veal.  Engineering services, machinery and equipment wholesaling,
long distance motor carrying, and legal services constitute examples of services consumed
by stage 4 industries.

   Examples of highly weighted goods-producing industries included in stage 3 are motor
vehicle parts manufacturing, animal (except poultry) slaughtering and processing, and
semiconductor manufacturing.  Services industries classified in stage 3 include wholesale
trade; insurance carriers; architecture, engineering, and related services; and hotels
and motels.  Examples of goods consumed by stage 3 industries include slaughter steers
and heifers, industrial electric power, and hot rolled steel bars, plates, and structural
shapes.  Services commonly consumed by stage 3 industries include commissions from sales
of property and casualty insurance, business loans, temporary help services, and
administrative and general management consulting services.

   Petroleum refineries; electricity generation, transmission, and distribution; natural
gas distribution; cattle ranching and farming; and plastic materials and resin
manufacturing are among the goods-based industries assigned to stage 2.  Services
industries that are heavily weighted in stage 2 include management of companies and
enterprises; non-depository credit intermediation; insurance agencies and brokerages; and
services to buildings and dwellings. Goods commonly purchased by stage 2 industries
include crude oil, natural gas, formula feeds, and primary basic organic chemicals.
Services that are heavily weighted in the intermediate demand stage 2 index are legal
services, business loans, and cellular phone and other wireless telecommunication.

   Goods producing industries in stage 1 include oil and gas extraction, paper mills, and
grain farming.  Real estate, legal services, and advertising services are examples of
highly weighted services industries included in stage 1.  Examples of goods consumed by
stage 1 industries are commercial and industrial electric power and gasoline. Services
commonly consumed by stage 1 industries include solid waste collection, chemicals and
allied products wholesaling, and guestroom or unit rental.  It should be noted that all
inputs purchased by stage 1 industries are by definition produced either within stage 1
or by latter stages of processing, leaving stage 1 less useful for price transmission
analysis. For additional information on industry stage assignments, see www.bls.gov/ppi/
fd-id/ppi-intermediate-demand-by-production-flow-industry-stage-assignments.htm.


Comparing the PPI with CPI

   Although some data users utilize the PPI as a potential indicator of the Consumer
Price Index (CPI), there are many reasons why the PPI and the CPI may diverge. The scope
of the personal consumption portion of the PPI includes all marketable output sold by
domestic producers for households. The scope of the CPI includes goods and services
provided by business or government, where explicit user charges are paid by consumers.
For example, the most heavily weighted item in the CPI, owners' equivalent rent, is
excluded from the PPI. The scope of the CPI includes imports. The PPI excludes imports.
The CPI only includes components of personal consumption directly paid for by the
consumers, while the PPI includes components of personal consumption that may not be paid
for by consumers. For example, the PPI includes medical services paid for by third
parties. In contrast to CPI, PPI does not completely cover services. PPIs exclude taxes,
since they do not represent producer revenue. Conversely, sales and other taxes paid by
consumers are part of household expenditure and are included in the CPI. Additional
technical differences between PPI and CPI also exist. For more information see "Comparing
new final demand producer price indexes with other Government price indexes," Monthly
Labor Review, January 2014, at www.bls.gov/opub/mlr/.


Commodity Indexes

   The commodity classification of the PPI organizes goods, services, and construction by
similarity of product or end use, disregarding industry of origin. With the release of
data for July 2009, PPI expanded its commodity structure to include indexes for services
and construction products. Prior to this date, the PPI commodity structure only included
products from goods producing sectors. Table 9 of the PPI Detailed Report includes data
for commodity indexes, organized in a hierarchal structure, including major groupings,
subgroups, product classes, sub-product classes, and individual items.


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 11 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), more detailed sub-products (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 that 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 for
products chiefly made in some other industry. Some industries have miscellaneous receipts
indexes that track price changes for 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 constructed using 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 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. The survey is conducted online via the BLS Internet Data Collection
Facility (IDCF).) Data provided by survey respondents are supplemented with data from
other sources for some areas.

   Price data are provided by survey respondents on a voluntary and confidential basis;
only sworn BLS employees are allowed access to individual company price reports.  BLS
publishes price indexes, not actual prices.  All PPIs are subject to monthly revisions
up to 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.
Information on these resampling efforts are noted in the PPI News Release and PPI
Detailed Report in the months they occur.

   As part of an ongoing effort to expand coverage to sectors of the economy other than
mining and manufacturing, an increasing number of service and construction sector
industries have been introduced into the PPI.  The following is a list of service and
construction sector industries introduced into the Producer Price Index, organized by
SIC or NAICS code at their date of introduction, and the PPI Detailed Report issue
that announced their introduction.
                                                                      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
New health care building construction.........................236224  January 2013
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
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
Pipeline transportation of natural gas........................486210  June 2022
Internet service providers....................................518111  July 2005
Internet publishing and web search portals....................519130  January 2010
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
Offices of dentists...........................................621210  January 2011
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 commodity groupings of the PPI, as well as, weights for commodity-
based aggregate indexes calculated from commodity groupings, such as FD-ID indexes,
currently reflect 2017 values of shipments as reported in the Census of Manufactures
and other sources. From January 2018 to December 2022, PPI weights were derived from
2012 shipment values. Industry indexes now are calculated under the 2022 NAICS structure
utilizing 2017 value of shipment weights and 2012 net output ratios. The 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 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 (which is
composed of major commodity groupings 01 through 15), are affected by the multiple
counting of price change at successive stages of processing, which can lead to
exaggerated or misleading signals about inflation. The intermediate demand by commodity
type FD-ID indexes partially correct for this defect, but industry indexes, final demand
FD-ID indexes, and intermediate demand by production flow FD-ID indexes consistently
correct for this at all levels of aggregation.  Therefore, industry and FD-ID indexes are
more appropriate than broad commodity groupings for analysis of general price trends.


Price Index Reference Base

   Effective with publication of January 1988 data, many important PPI series (including
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.  The FD-
ID indexes typically have a reference base of November 2009 = 100.

   For further information on the underlying concepts and methodology of the Producer
Price Index, see chapter 14, "Producer Prices," in the BLS Handbook of Methods.  This
chapter can be downloaded from the BLS Web site at www.bls.gov/opub/hom/homch14.htm.


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 Final Demand 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 final demand goods have
risen from $100 in November 2009 to $105.50.  Likewise, a current index of 90.0 would
indicate that prices received by producers of final demand goods are 10 percent lower
than they were in November 2009.

   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
      Final Demand 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
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 Price Adjustment Guide for Contracting Parties,
on the Web at www.bls.gov/ppi/publications/price-adjustment-guide-for-contracting-
parties.htm.

   Seasonal adjustment is accomplished using X-13 ARIMA, a software package published by
the U.S. Census Bureau.  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 from the prior 5 years.
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 FD-ID 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; 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 COVID-19 pandemic. In
this case, intervention techniques allowed for better estimates of seasonally adjusted
data. On the whole, very few series have required intervention.  Out of over 400 seasonally
adjusted commodity series, 69 were subject to intervention in 2023.

   For more information relating to seasonal adjustment methods, see “PPI and CPI Seasonal
Adjustment: an Update” in the July 2010 Monthly Labor Review, and “PPI and CPI Seasonal
Adjustment During the COVID-19 Pandemic” in the May 2022 Monthly Labor Review.


Producer Price Index Data on the Internet

   In 1995, the BLS began posting PPI series, news releases, and technical information to
the internet. There were more than 13 million instances of PPI data being downloaded from
the BLS website during 2022.


Retrieving PPI data from the PPI Web site

   PPI data can be obtained online (www.bls.gov/ppi). On this page, under the tab labeled
"Featured PPI databases" links provide 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 high-level
aggregate and other commonly requested time series, including the All Commodities Index
and the FD-ID indexes (for example, Final Demand).  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 by
listing index titles and do 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.  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 allows users to input multiple,
formatted PPI time series identifiers (commodity or industry codes) as inputs 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.  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. Examples are provided below.

   For commodity and FD-ID 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
wpufd4           Final demand, not seasonally adjusted
wpsid63          Services for intermediate demand, 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
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

   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 in 2004.)

Industry-product code,
discontinued SIC series     Provides data for:
pdu28_ _#                   Chemicals and allied products
pdu331_#                    Blast furnaces, steel works, and rolling and finishing mills
pdu3711#111                 Passenger cars

   Price indexes for discontinued series grouped by industry according to NAICS have
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 group codes.

Industry-product code,
discontinued NAICS series   Provides data for
ndu212231212231             Lead and zinc ore mining
ndu2122312122312            Lead, zinc concentrates
ndu212231212231214          Lead  concentrates

   Text Files 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 tables and
relative importance tables. The text files can be accessed at download.bls.gov/ or
directly from 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 (incl. FD-ID)           /pub/time.series/wp
Commodity Data - Discontinued          /pub/time.series/wd
Special requests                       /pub/special.requests/ppi


Additional information

   The PPI homepage (www.bls.gov/ppi) contains additional information regarding PPI
data and methodology. The "PPI Publications" section of the homepage provides PPI news
releases, both current and archived, as well as general PPI information.  The “PPI Tables”
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. If you are deaf, hard of hearing, or
have a speech disability, please dial 7-1-1 to access telecommunications relay services.