1
EPA
included
only
manufacturing
SIC
codes
in
this
calculation
because
value
of
shipments
for
non­
manufacturing
SIC
codes
are
available
only
every
five
years.
Memorandum
Date
May
14,
2002
To
MP&
M
Public
Record
From
Riley
Newbert,
Elena
Besedin,
and
Nancy
Hammett,
Abt
Associates
Inc.

Subject
Calculation
of
Sector
Specific
Producer
Price
Indices
This
memo
describes
the
methodology
used
to
derive
sector­
specific
producer
price
indices
(
PPIs)
to
inflate
survey
data
to
1996
dollars.
The
first
section
of
this
memo
describes
the
methodology
used
to
calculate
sector­
specific
values.
The
second
section
summarizes
the
methods
used
to
fill
in
missing
PPI
data.
The
third
section
shows
the
average
PPI
values
by
sector
and
year.

Methodology
To
calculate
average
PPI
values
by
sector
and
year,
EPA
collected
PPI
values
by
4­
digit
SIC
code
from
the
Bureau
of
Labor
Statistics
for
1987
through
1996.
EPA
also
collected
data
on
the
value
of
shipments
from
the
Annual
Survey
of
Manufacturers
for
non­
Census
years
and
from
the
Economic
Census
for
Census
years
(
i.
e.,
1987
and
1992).
1
EPA
multiplied
each
PPI
value
by
the
value
of
shipments
for
that
SIC
code
and
year.
The
Agency
then
aggregated
the
value
of
shipment­
weighted
PPIs
and
total
value
of
shipments
for
each
year
by
sector.
Finally,
EPA
divided
the
value
of
shipment­
weighted
PPI
value
by
the
value
of
shipments
for
that
sector
to
calculate
a
sector­
specific
PPI
value
by
year.

EPA
inflated
the
following
survey
data
using
sector­
specific
PPIs:

°
Phase
1
Detailed
Questionnaires:
Facilities
reported
three
years
of
financial
data
from
1987
to
1989.
EPA
estimated
three­
year
averages
in
1989
dollars
for
the
Phase
I
analysis
and
used
the
sector­
specific
PPIs
to
inflate
those
average
data
to
1996
dollars
for
the
final
MP&
M
analysis.

°
Phase
2
Detailed
Questionnaires:
Facilities
reported
three
years
of
financial
data
from
1994
to
1996.
EPA
inflated
the
financial
data
from
1994
and
1995
to
1996
dollars
using
the
sectorspecific
PPIs
and
then
calculated
an
average
value.

Filling
in
Missing
PPI
Data
Nineteen
4­
digit
SIC
codes
in
eight
sectors
had
missing
PPI
series
data
during
the
ten­
year
analysis
period
(
1987­
1996).
EPA
used
the
following
five
parameters
to
fill
in
these
data
gaps:

°
Information
at
the
3­
digit
SIC
code
level
if
data
were
unavailable
at
the
4­
digit
SIC
code
level;
°
The
percentage
change
in
price
at
the
3­
digit
level,
applied
to
the
4­
digit
level
to
calculate
missing
values,
if
data
at
the
4­
digit
level
were
available
for
several
years;
°
GDP
price
indices
for
National
Defense
Consumption
Expenditures
and
Gross
Investment
by
Type
for
military
related
industries;
°
Excluding
the
4­
digit
SIC
code
from
the
calculation
of
sector­
specific
PPI's;
and
°
A
best­
fit
line
to
extrapolate
data
for
years
with
missing
data.
2
Data
come
from
the
Bureau
of
Economic
Analysis,
Table
7.12.
Chain­
Type
Quantity
and
Price
Indexes
for
National
Defense
Consumption
Expenditures
and
Gross
Investment
by
Type.
http://
www.
bea.
doc.
gov/
bea/
dn/
nipaweb/
TableViewFixed.
asp?
SelectedTable=
155&
FirstYear=
1995&
LastYear=
2000
&
Freq=
Year
3
Data
come
from
the
Bureau
of
Economic
Analysis,
Table
7.12.
Chain­
Type
Quantity
and
Price
Indexes
for
National
Defense
Consumption
Expenditures
and
Gross
Investment
by
Type.
http://
www.
bea.
doc.
gov/
bea/
dn/
nipaweb/
TableViewFixed.
asp?
SelectedTable=
155&
FirstYear=
1995&
LastYear=
2000
&
Freq=
Year
Hardware
(
Sector
1):
One
SIC
code,
3492
in
the
hardware
sector,
is
missing
PPI
data
for
the
five
years
1987­
1991.
The
value
of
shipments
in
that
SIC
code
represent
a
maximum
of
three
percent
of
the
total
value
of
shipments
in
that
sector.
EPA
dropped
this
SIC
code
from
the
sector­
specific
PPI
calculation,
assuming
that
the
price
change
in
SIC
code
3492
is
similar
to
the
average
price
change
of
the
other
SIC
codes
in
the
hardware
sector.

Electronic
Equipment
(
Sector
3):
Two
4­
digit
SIC
codes
in
the
electronic
equipment
sector,
3663
and
3669,
are
missing
data
for
the
five
years
1987­
1991.
EPA
used
3­
digit
SIC
code
366
(
Communications
Equipment)
to
estimate
the
price
changes
in
both
4­
digit
SIC
codes.
There
is
one
other
4­
digit
SIC
code,
3661
in
SIC
code
366.
SIC
codes
3663
and
3669
represent
between
48
and
56
percent
of
the
total
value
of
shipments
in
the
3­
digit
SIC
code.

Stationary
Industrial
Equipment
(
Sector
4):
Two
4­
digit
SIC
codes,
3593
and
3594,
are
missing
data
for
the
four
years
1987­
1990.
One
SIC
code,
3565,
is
missing
data
for
the
two
years
1987­
1988.
The
value
of
shipments
in
SIC
codes
3565,
3593,
and
3594
represent
a
maximum
of
1.6,
1.5
and
1.3
percent,
respectively,
of
the
total
value
of
shipments
in
the
stationary
industrial
equipment
sector.
EPA
dropped
all
three
SIC
codes
from
the
sector­
specific
PPI
calculation,
assuming
that
the
price
change
in
those
SIC
codes
is
similar
to
the
average
price
change
of
the
other
SIC
codes
in
the
stationary
industrial
equipment
sector.

Aerospace
(
Sector
6):
PPI
series
data
are
not
available
in
the
Aerospace
sector,
which
includes
SIC
codes
3761,
3764,
and
3769.
In
the
absence
of
PPI
series
data,
EPA
used
the
price
index
for
National
Defense
Gross
Investment
for
missiles
from
the
Bureau
of
Economic
Analysis
(
BEA).
2
Mobile
Industrial
Equipment
(
Sector
7):
No
PPI
data
are
available
for
SIC
3795
(
tanks
and
tank
components)
over
the
ten­
year
analysis
period
1987­
1996.
In
the
absence
of
PPI
series
data,
EPA
used
the
price
index
for
National
Defense
Gross
Investment
for
vehicles
from
the
Bureau
of
Economic
Analysis
(
BEA).
3
Instruments
(
Sector
8):
SIC
code
3812
is
missing
data
for
the
five
years
1987­
1991.
EPA
used
the
price
change
in
the
PPI
series
for
SIC
code
381
to
estimate
the
PPI
series
for
3812.
SIC
code
3812
is
the
only
4­
digit
SIC
code
in
SIC
code
381,
a
3­
digit
SIC
code
for
which
data
are
available.

Two
4­
digit
SIC
codes
,
3821
and
3827,
in
the
3­
digit
SIC
code
382
(
Laboratory
Apparatus
and
Analytical,
Optical,
Measuring,
and
Controlling
Instruments)
are
missing
data
for
the
five
years
1987­
1991.
EPA
used
the
3­
digit
SIC
code
to
estimate
the
price
changes
in
both
4­
digit
SIC
codes.
SIC
codes
3821
and
3827
represent
between
11
and
14
percent
of
the
total
value
of
shipments
in
the
3­
digit
SIC
code.

SIC
code
3844
is
missing
data
for
the
four
years
1987­
1990.
The
value
of
shipments
in
SIC
code
3844
represent
a
maximum
of
three
percent
of
the
total
value
of
shipments
in
the
instruments
sector.
EPA
dropped
this
SIC
code
from
the
sector­
specific
PPI
calculation,
assuming
that
the
price
change
in
SIC
code
3844
is
similar
to
the
average
price
change
of
the
other
SIC
codes
in
the
instruments
sector.

Office
Machines
(
Sector
15):
Four
4­
digit
SIC
codes
in
the
office
machinery
sector,
3571,
3572,
3575,
and
3577,
are
missing
PPI
data.
EPA
used
a
best­
fit
line
based
on
the
years
in
which
data
were
available
for
each
SIC
code
to
extrapolate
data
for
years
with
missing
data.

Printed
Circuit
Board
(
Sector
16):
The
printed
circuit
board
sector
has
only
one
4­
digit
SIC
code,
3672.
Data
for
this
sector
are
missing
for
the
five
years
1987­
1991.
EPA
used
the
known
percent
change
in
SIC
code
3674
(
Semiconductors
and
Related
Devices)
as
a
proxy
for
SIC
code
3672
(
Printed
Circuit
Boards)
because
the
industry
seems
similar
and
had
similar
price
changes
for
those
years
with
available
data.

Table
1:
Summary
of
M
issing
PPI
Data
SIC
Code
Description
Sector
Years
Missing
Proposed
Solution
3492
Fluid
Power
Valves
and
Hose
Fittings
Hardware
(
Sector
1)
1987­
1991
Exclude
from
sector­
specific
PPI
calculation
3663
Radio
and
Television
Broadcasting
and
Communications
Equipment
Electronic
Equipment
(
Sector
3)
1987­
1991
Use
3­
digit
SIC
code
366
(
Communications
Equipment)

3669
Communications
Equipment,
Not
Elsewhere
Classified
Electronic
Equipment
(
Sector
3)
1987­
1991
Use
3­
digit
SIC
code
366
(
Communications
Equipment)

3565
Packaging
Machinery
Stationary
Industrial
Equipment
(
Sector
4)
1987­
1988
Exclude
from
sector­
specific
PPI
calculation
3593
Fluid
Power
Cylinders
and
Actuators
Stationary
Industrial
Equipment
(
Sector
4)
1987­
1990
Exclude
from
sector­
specific
PPI
calculation
3594
Fluid
Power
Pumps
and
Motors
Stationary
Industrial
Equipment
(
Sector
4)
1987­
1990
Exclude
from
sector­
specific
PPI
calculation
3761
Guided
missiles
and
space
vehicles
Aerospace
(
Sector
6)
All
Use
price
index
for
National
Defense
Gross
Investment
for
missiles
Table
1:
Summary
of
M
issing
PPI
Data
SIC
Code
Description
Sector
Years
Missing
Proposed
Solution
3764
Guided
missile
and
space
vehicle
propulsion
units
and
propulsion
unit
parts
Aerospace
(
Sector
6)
All
Use
price
index
for
National
Defense
Gross
Investment
for
missiles
3769
Guided
missile
and
space
vehicle
parts
and
auxiliary
equipment,
not
elsewhere
classified
Aerospace
(
Sector
6)
All
Use
price
index
for
National
Defense
Gross
Investment
for
missiles
3795
Tanks
and
Tank
Components
Mobile
Industrial
Equipment
(
Sector
7)
All
Use
price
index
for
National
Defense
Gross
Investment
for
vehicles
3812
Search,
Detection,
Navigation,
Guidance,
Aeronautical,
and
Nautical
Systems
and
Instruments
Instruments
(
Sector
8)
1987­
1991
Use
known
percent
change
in
3­
digit
SIC
code
382
(
Laboratory
Apparatus
and
Analytical,
Optical,
Measuring,
and
Controlling
Instruments)
to
estimate
PPI
series.

3821
Laboratory
Apparatus
and
Furniture
Instruments
(
Sector
8)
1987­
1991
Use
known
percent
change
in
3­
digit
SIC
code
382
(
Laboratory
Apparatus
and
Analytical,
Optical,
Measuring,
and
Controlling
Instruments)
to
estimate
PPI
series.

3827
Optical
Instruments
and
Lenses
Instruments
(
Sector
8)
1987­
1991
Use
known
percent
change
in
3­
digit
SIC
code
382
(
Laboratory
Apparatus
and
Analytical,
Optical,
Measuring,
and
Controlling
Instruments)
to
estimate
PPI
series.

3844
X­
Ray
Apparatus
and
Tube
and
Related
Irradiation
Apparatus
Instruments
(
Sector
8)
1987­
1990
Exclude
from
sector­
specific
PPI
calculation
3571
Electronic
Computers
Office
Machines
(
Sector
15)
1987­
1990
Use
a
best­
fit
line
to
extrap
olate
data
for
years
with
missing
d
ata
3572
Computer
Storage
Devices
Office
Machines
(
Sector
15)
1987­
1992
Use
a
best­
fit
line
to
extrap
olate
data
for
years
with
missing
d
ata
3575
Computer
Terminals
Office
Machines
(
Sector
15)
1987­
1993
Use
a
best­
fit
line
to
extrap
olate
data
for
years
with
missing
d
ata
3577
Computer
Peripheral
Equipment,
Not
Elsewhere
Classified
Office
Machines
(
Sector
15)
1987­
1993
Use
a
best­
fit
line
to
extrap
olate
data
for
years
with
missing
d
ata
Table
1:
Summary
of
M
issing
PPI
Data
SIC
Code
Description
Sector
Years
Missing
Proposed
Solution
3672
Printed
Circuit
Boards
Printed
Circuit
Board
(
Sector
16)
1987­
1991
Use
known
percent
change
in
SIC
code
3674
(
Semiconductors
and
Related
Devices)
to
estimate
PPI
series.

Results
Table
2
shows
the
final
sector­
specific
producer
price
indices
by
year.
Table
2:
Summary
of
Sector­
Specific
Producer
Indices
by
Year
Name
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
Hardware
108.0
113.8
119.1
122.1
124.0
124.3
125.7
128.5
133.0
135.2
Aircraft
101.2
103.9
109.9
115.3
119.8
124.3
127.9
131.7
134.8
138.0
Electronic
Equipment
105.7
106.7
108.6
110.1
111.3
112.5
114.4
114.9
114.9
114.9
Stationary
Industrial
Equipment
109.4
113.3
118.4
123.0
125.9
128.0
130.5
132.8
136.3
139.3
Ordnance
102.4
105.0
107.8
109.0
113.0
117.3
121.3
123.1
125.2
125.8
Aerospace
122.3
120.5
118.7
114.2
110.6
108.2
111.2
107.6
103.1
100.0
Mobile
Industrial
Equipment
112.2
115.4
121.1
125.3
128.3
131.8
135.3
138.4
142.5
146.5
Instruments
99.6
102.7
106.9
110.8
114.1
117.4
120.9
123.1
125.0
126.4
Precious
Metals
and
Jewelry
106.6
110.2
113.2
116.8
118.9
120.1
121.7
123.0
124.6
126.3
Ships
and
Boats
110.0
113.3
117.7
120.9
122.3
126.3
131.4
135.0
137.6
141.1
Household
Equipment
112.8
117.0
121.2
123.8
124.9
125.8
127.4
129.8
132.9
136.8
Railroad
101.9
103.7
110.0
114.2
117.3
118.7
119.8
122.6
127.6
129.6
Motor
Vehicle
109.7
111.0
114.1
116.2
119.9
122.3
124.8
127.8
128.8
129.7
Bus
&
Truck
115.4
118.6
123.9
125.5
128.1
131.1
133.4
137.6
146.9
149.1
Office
Machine
118.4
113.4
106.2
99.9
95.5
86.1
79.2
72.5
66.3
62.0
Printed
Circuit
Boards
107.0
107.0
106.2
103.7
101.5
99.4
97.1
95.0
95.1
95.9
Job
Shop
106.7
110.6
115.7
117.5
118.7
119.5
121.3
122.0
124.3
125.5
Other
Metal
Products
103.7
106.6
111.0
114.0
115.0
116.5
117.7
118.8
121.7
123.4
Iron
and
Steel
99.6
110.0
113.1
111.6
110.4
109.6
112.3
117.7
123.8
121.6
Sources
U.
S.
Department
of
Commerce.
1987,1992.
Bureau
of
the
Census.
Census
of
Manufacturers.

U.
S.
Department
of
Commerce.
1988­
1991,1993­
1996.
Bureau
of
the
Census.
Annual
Survey
of
Manufacturers.

Bureau
of
Labor
Statistics.
Producer
Price
Index.
http://
www.
bls.
gov/
ppi/
home.
htm
