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Friday, February 21, 2014

New Producer Price Index methodology and latest editions of Beyond the Numbers

I want to tell you about three things this week: A major advance in a BLS Principal Federal Economic Indicator and two analyses that showcase some of the breadth and relevance of the work of BLS.

First, I call your attention to the culmination of a challenging effort to reconfigure and broaden an important economic series so that it can adapt to structural changes in the economy. BLS reported this past Wednesday that the Producer Price Index (PPI) for final demand increased 0.2 percent from December 2013 to January 2014 and by 1.2 percent over the 12 months ended in January. This release was the first to present data using new methods to calculate the PPI estimates. The PPI has now transitioned from the Stage of Processing (SOP) to the Final Demand-Intermediate Demand (FD-ID) aggregation system. This new system is the result of a longstanding objective to improve the measures by incorporating indexes for services, construction, government purchases, and exports. In comparison to the SOP system, the FD-ID system more than doubles current PPI coverage of the U.S. economy to over 75 percent of in-scope domestic production. Final demand includes goods, services, and construction which are sold for personal consumption, capital investment, government purchases, and export. Intermediate demand includes goods, services, and maintenance and repair construction sold to businesses, excluding capital investment. You can learn more about the new PPI aggregation system from two articles published recently in the Monthly Labor Review:

BLS also published two very interesting new editions of Beyond the Numbers this week. One examines the persistence of a high unemployment rate in New York City during the recovery from the 2007–2009 recession. From the end of the recession in June 2009 to the end of 2012, the unemployment rate in New York City declined by only 0.6 percentage point, to 8.8 percent. This relatively small drop in the New York City unemployment rate occurred during a period of robust growth in payroll jobs in the city (up 6.2 percent). This article examines the behavior of New York City’s unemployment rate from several perspectives.

The other edition of Beyond the Numbers published this week looks at the extent to which occupations are concentrated within industries. Some occupations are found in nearly every industry in the United States, while others are specific to one or only a few industries. Occupations concentrated in a single industry may require skills that are highly specific to that industry. If workers in these occupations become unemployed, it may be difficult for them to use their skills in other industries. However, workers in more widely distributed occupations may find it easier to transfer their skills in response to job loss. Occupational composition also may affect a growing industry’s ability to attract workers from elsewhere in the economy. For example, industries that rely on specialized, highly qualified workers may find that the high skill and training requirements act as a barrier to entry for displaced workers from other sectors.