Monthly Labor Review • August 2009 19

Wherever-Provided Producer Price Indexes

New wherever-provided services

and construction indexes for PPI

A new set of wherever-provided services and construction

price indexes expands the BLS products covering

the services and construction sectors of the economy;

these indexes combine prices from all industries producing

a specific service or construction product into a single

price index for that service or product

Effective with the release of July data 

on August 18, 2009, the Bureau of 

Labor Statistics (BLS) introduced a 

new set of wherever-provided (that is, commodity-based) services and construction 

price indexes. The new indexes measure price 

change for specific services and construction 

products, regardless of the provider’s industry of origin.

Background and definitions

Prior to the mid-1980s, the BLS published 

industry and commodity-based price indexes for only the goods sector of the economy 

(mining, manufacturing, agriculture, and 

utilities). Due to the rapid growth of the 

U.S. services sector, the BLS undertook an 

effort to expand its coverage to include services and construction price indexes. This effort resulted in the publication of the first 

BLS industry-based service price index, the 

PPI for rail transportation, in January 1985. 

Through the mid-1990s, the services expansion effort continued, with the development 

of price indexes for many industries in the 

transportation sector that had relatively 

straightforward pricing methodologies. 

Over the past two decades, expansion efforts 

have moved forward to include indexes for 

more complex industries in the information, 

health care, real estate, professional services, 

administrative services, finance and insurance, and wholesale and retail trade sectors. 

Measuring price changes for industries in 

these sectors required the development of 

new, innovative pricing concepts, diverse 

sampling strategies, and unique data collection techniques. The BLS currently calculates and publishes price indexes representing approximately 77.4 percent of services1

and 28.6 percent of total nonresidential 

construction.2 Still, gaps in the coverage of 

services exist; for example, education services, computer systems design and related 

services, and scientific research and development services are not covered.

As the BLS has expanded its coverage 

to include both the services and construction sectors of the economy, the expansion effort has focused primarily on the 

development of industry-based price indexes—indexes that measure price change 

for the output of an industry, including its 

primary, secondary, and miscellaneous production. Primary production is considered 

the industry’s main revenue-generating 

activity, whereas secondary and miscellaneous production encompasses additional 

activities from which the industry generates revenue. Secondary production is the 

production of nonprimary goods, while 

Jonathan C. Weinhagen

and

Bonnie H. Murphy

Jonathan C. Weinhagen 

is an economist, and 

Bonnie H. Murphy is a 

supervisory economist, 

in the Office of Prices and 

Living Conditions, Bureau 

of Labor Statistics. E-mail: 

weinhagen.jonathan@bls.

gov or murphy.bonnie@

bls.gov
Wherever-Provided Producer Price Indexes

20 Monthly Labor Review • August 2009

miscellaneous production is the provision of nonprimary services. For instance, the primary output of the 

wired telecommunications industry (NAICS 517110) is 

telephone-line provision services, such as local services, 

toll services, and private-line services. Miscellaneous 

production of this industry would include wired telecommunications services. 

In contrast to industry-based indexes, commoditybased price indexes measure price change for a (wherever-provided) service or (wherever-made) good, regardless of the producer’s industry of origin. For example, a 

wherever-provided index for air transportation of freight 

would measure price change for air transportation of 

freight from all industries which provide that service. 

Price changes from industries in which air transportation of freight is classified as either primary production 

or miscellaneous production would be included in the 

price index.

In 2006, the BLS began an effort to develop a set of 

wherever-provided services and construction indexes. This 

effort included the creation of wherever-provided index 

weights, the development of an index construction methodology, the identification of the set of detailed whereverprovided indexes whose calculation and publication the 

BLS could support, and the development of an aggregation 

and publication structure for the detailed indexes.

Aggregation and publication structure

Instead of using an established product classification 

structure, the BLS developed its own publication structure for the new, wherever-provided indexes. Doing so 

allowed the Agency to build on and remain consistent 

with its already existing commodity-based structure for 

goods. The newly developed publication structure includes detailed product-level indexes, as well aggregate 

indexes that combine detailed price indexes for related 

services into higher level indexes. In developing the 

index publication structure, the BLS employed a set of 

six main principles. This section discusses each of these 

principles in detail and gives an overview of the publication structure.

Coding structure. Indexes were grouped in accordance 

with a coding methodology similar to the current PPI 

commodity structure for goods indexes. Major groupings are coded at the two-digit level, and within these 

two-digit groupings are more detailed commodity 

groupings that descend in order of aggregation to the 

detailed-product level (typically, the eight-digit level). 

In order to remain consistent with current practice 

within the BLS goods-based aggregation structure, in 

some cases identical indexes are included at various 

levels of aggregation. For example, PPI 301401 and PPI 

30140101 are identical indexes for air transportation of 

freight. Weight and price data do not support breaking 

out additional detail under 301401; therefore, no further eight-digit products could be added beneath the 

six-digit index. Instead, an eight-digit index denoting 

the same service was added. 

Although the current goods indexes encompass the 

two-digit groupings 01 through 15, the services groupings were numbered beginning with code 30. This choice 

permits a degree of flexibility that otherwise would be 

unavailable if the services structures began at two-digit 

group 16, directly following the last goods groupings. 

There may, for example, come a time when the numbering 

system for traditional commodities needs to be expanded 

or reorganized. The final services code in the structure is 

60. Following the same line of reasoning, the BLS numbered the construction groupings beginning with twodigit group code 80.

Similarity of product. Detailed indexes were grouped 

into higher level aggregates according to similarity of 

product. Data users often find this type of grouping useful, and the methodology is consistent with the current 

BLS organizational structure for goods-based commodity indexes, which also groups commodities according to 

similarity of product. For example, the two-digit index 30 

encompasses all transportation services, the two-digit index 40 all investment services.

Avoidance of multiple counting. In organizing the wherever-provided services indexes into two-digit groupings, 

the BLS attempted to avoid aggregations that would result 

in substantial multiple counting of price changes. Multiple counting, which can lead to inaccurate and distorted 

measures of price change, occurs when an aggregate index 

includes not only the price for a product, but also prices 

for one or more inputs to the product. The wherever-provided structure, for example, includes separate two-digit 

aggregations, one for transportation services and the other 

for services related to transportation, because services related to transportation are most often inputs to transportation services. Avoiding multiple counting will permit 

two-digit services commodity PPIs to provide meaningful 

information on price changes.

Wherever-provided structure and PPI industry structure. In 
Monthly Labor Review • August 2009 21

small number of cases, the traditional PPI goods structure 

contained indexes for services. With the arrival of wherever-provided services indexes, the affected services indexes were removed from the goods structure and added 

to the new services structure. The areas affected by this 

change were publishing, metal treatment services, and 

mining services.

Exhibit 1 presents an overview of the publication 

structure for services and construction up to the threedigit level.4

Weights

An important step in developing the wherever-provided 

services and construction indexes was to construct a set 

of weights. The primary data source for these weights was 

Census Bureau revenue data—specifically, data for “Product Lines by Kind of Business.” These data are organized 

according to the North American Industry Classification 

System (NAICS) and indicate specific products provided 

by industries and the revenue value for these products. 

The products are organized according to Census Product 

Codes (CPCs).5 Note that, with its 2007 Economic Census 

survey, to be published by 2011, the Census Bureau will 

have completed its classification of service product-line 

data according to the North American Product Classification System (NAPCS), and PPI commodity weights for 

services will then be based on revenue figures from that 

system. The transition to NAPCS-based weights may result in some structural changes to the wherever-provided 

services indexes.6 However, in order to minimize future 

structural changes, the BLS reviewed the NAPCS structure 

while developing both the individual wherever-provided 

services indexes and the publication structure for those 

indexes. 

Wherever-provided weights were created by aggregating Census Bureau revenue data for individual products, 

regardless of the providers’ industries of origin. For example, the wherever-provided weight for auditing services 

was constructed by summing the revenues from all the industries that provide auditing services into a single value 

representing the total revenue of auditing services. (See 

exhibit 2.) 

The 2002 Census of Services classifies auditing services 

into two product lines: financial auditing services (CPC 

34060) and tax auditing services (CPC 35800). Exhibit 

2 presents the revenue for both of these products on an 

industry-by-industry basis. The first and second columns 

indicate, respectively, the Census of Services product code 

and title of the service being provided. The third and 

developing the index publication structure, an effort was 

made to develop alternative index aggregations not found 

in the industry structure. Within transportation services, 

for example, transportation of freight and mail were 

separated from passenger transportation. Then, separate 

aggregate indexes for total passenger transportation 

services, as well as total freight and rail transportation 

services, were created. By contrast, within the PPI industry structure, aggregations are based on mode of transportation. The industry structure includes, for instance, 

an aggregate index for air transportation that combines 

detailed indexes for air passenger and air freight transportation into a single index.

In a second example, for book, periodical, and newspaper publishing, sales and subscriptions were separated 

from advertising space sales, and the latter category was 

combined into a two-digit grouping with advertising 

from all other media—for instance, television, Web sites, 

and radio. The industry structure, in contrast, aggregates 

indexes according to medium. Thus, the industry structure 

contains an aggregate index for all periodical publishers, 

and that index combines indexes for sales and advertising 

from all types of periodicals.

A third example is that the wherever-provided structure 

separates wired telecommunications into residential services and business services and creates separate aggregate 

indexes for each. These indexes combine detailed indexes 

for local and long-distance telecommunications services 

into either the aggregate residential or the business telecommunications services index. The industry structure, by 

contrast, aggregates indexes according to long-distance or 

local telecommunications services. 

Partial coverage. Although the PPI covers all industries 

in the mining and manufacturing sectors, that is not the 

case in the services or construction sectors. Consequently, 

higher level aggregate indexes within the wherever-provided structure may be missing products that would be 

included if the PPI covered all services and construction 

industries. In cases where the PPI does cover a service area, 

but not all products under the aggregate area, the index is 

still published and the term “partial” is added to the end 

of the index title if the coverage is less than 80 percent. 

Within the transportation grouping, for example, only 

about 75 percent coverage exists for passenger transportation services. The PPI covers passenger transportation from 

air and rail, but does not currently cover boat, bus, taxicab, 

or several other forms of passenger transportation.3

Index reassignment from goods to services structure. In a 
Wherever-Provided Producer Price Indexes

22 Monthly Labor Review • August 2009

30 Transportation services

301 Transportation of freight and mail

302 Transportation of passengers (partial)

31 Services related to transportation activities

311 Services related to water transportation

312 Services related to air transportation

313 Other selected services related to transportation activities (partial)

32 Warehousing, storage, and related services

321 Warehousing, storage, and related services

33 Publishing sales, excluding software 

331 Book, periodical, and newspaper publishing sales and subscriptions

332 Directory, mailing list, and related compilations publishing sales

333 Greeting card publishing sales

334 Calendars, yearbooks, and other miscellaneous publishing sales

34 Software publishing 

341 System software publishing 

342 Application software publishing

35 Network compensation from broadcast and cable television

 and radio

351 Network compensation from broadcast and cable television

352 Network compensation from radio

36 Advertising space and time sales

361 Advertising space sales in periodicals, newspapers, directories, 

 and mailing lists

362 Television advertising time sales

363 Radio advertising time sales

364 Internet advertising space sales (partial)

37 Telecommunication, cable, and Internet user services

371 Wired telecommunication services 

372 Wireless telecommunication services

373 Cable and satellite subscriber services

374 Internet access services

38 Data processing and related services

381 Data processing and related services

39 Credit intermediation services (partial)

391 Loan services (partial)

392 Deposit services (partial)

393 Other credit intermediation services, including trust services

40 Investment services

401 Securities brokerage, dealing, investment advice, 

 and related services

402 Portfolio management

403 Investment banking

41 Insurance and annuities

411 Insurance 

412 Annuities

42 Commissions from sales of insurance 

421 Commissions from sales of insurance 

43 Real estate services (partial)

431 Nonresidential real estate services

432 Residential real estate services (partial)

433 Real estate appraisal fees

44 Rental and leasing of goods (partial)

441 Passenger car rental

442 Truck, utility trailer, and RV rental and leasing

443 Construction, mining, and forestry machinery 

 and equipment rental and leasing

45 Professional services (partial)

451 Legal services

452 Accounting services (partial)

453 Architectural and engineering services

454 Management, scientific, and technical consulting services

455 Advertising and related services (partial)

 456 Information technology (IT) technical support 

 and consulting services (partial)

46 Employment services

461 Permanent placement services

462 Executive search services

463 Staffing services

47 Travel arrangement services (partial)

471 Arrangement of flights from travel agencies (partial)

472 Arrangement of vehicle rentals and lodging (partial)

473 Arrangement of cruises and tours (partial)

474 Other travel arrangements (partial)

48 Security services (partial)

481 Guard services

49 Cleaning and building maintenance services (partial)

491 Janitorial services

50 Waste collection and remediation services (partial)

501 Waste collection

51 Health care services

511 Outpatient care (partial)

512 Inpatient care

513 Sales of blood and blood products, organs, and tissues

52 Educational services (partial)

521 Computer training school services

53 Accommodation services

531 Travelers’ accommodation services

54 Food and beverage for immediate consumption services (partial)

541 Food and beverage for immediate consumption services (partial)

55 Repair and maintenance services (partial)

551 Commercial and industrial machinery and equipment repair 

 and maintenance

552 Motor vehicle repair and maintenance (partial)

553 Ship repair and maintenance

554 Aircraft repair and maintenance

56 Entertainment services (partial)

561 Membership dues and admissions and recreation facility 

 use fees (partial)

562 Recreational activity instruction fees (partial)

563 Gaming receipts (partial)

564 Amusement machine receipts (partial)

57 Wholesale trade services

571 Machinery and equipment and parts and supplies wholesaling

572 Furnishings wholesaling

573 Building materials and hardware wholesaling

574 Metals, minerals, and ores wholesaling

575 Chemicals and allied products wholesaling

576 Paper and plastics products wholesaling

577 Apparel wholesaling

578 Food and alcohol wholesaling

579 Other commodities wholesaling

58 Retail trade services

581 Food and alcohol retailing

582 Health and beauty care retailing, including optical goods

Exhibit 1. Summary of wherever-provided structure
Monthly Labor Review • August 2009 23

Exhibit 1. Continued—Summary of wherever-provided structure

fourth columns respectively designate the NAICS code 

and title of the industry or industry group providing the 

services. The last column shows the revenue for the specific service. Thus, the first row shows that industry group 

541 (professional, scientific, and technical services) produced $11,243,910,000 of commodity financial auditing 

services (CPC 34060) in 2002. 

Exhibit 2 shows that the total revenue generated by 

all industries for financial auditing services in 2002 was 

$11,339,564,000 and that the total revenue generated 

by all industries for tax auditing services that same year 

was $700,415,000. Therefore, the total 2002 revenue and 

the wherever-provided weight for auditing services is 

$11,339,564,000 + $700,415,000 = $12,039,979,000. This 

figure represents the weight the BLS would assign auditing services within the wherever-provided structure. 

Index construction

This section describes both how the wherever-provided 

weights are used to construct the commodity-based services 

indexes and some additional aspects of index construction. 

The wherever-provided services indexes are calculated by 

the same methodology that is used for calculating commodity PPIs for mining, manufacturing, agriculture, and 

utilities.

Like other commodity PPIs, the wherever-provided 

services indexes are typically published at the eight-digit 

product level. However, additional detailed indexes are 

calculated below the eight-digit level, and these indexes 

are aggregated to create the published eight-digit index. 

The detailed indexes are created to increase accuracy by allowing for a more precise weighting structure than would 

exist if just the eight-digit index were calculated.

For a specific commodity, unpublished detailed indexes measuring the average change in the selling price from 

every industry that is a primary producer of the commodity are calculated. In addition, a single index tracking 

price change in industries in which the commodity does 

not represent their primary production is calculated. The 

unpublished indexes are then aggregated into an eightdigit wherever-made index. 

Prior to the implementation of the updated PPI estimation system in 2008, the BLS was unable to calculate detailed indexes for nonprimary producers to use in 

wherever-provided index estimation. The new estimation 

system allowed for this improvement in index calculation 

methodology. The new system also resulted in additional 

improvements for commodity-based calculation, including more accurate monthly weights and the possibility of 

calculating detailed product indexes not found within the 

industry-based indexes.

As stated earlier, the PPI does not cover all industries 

in the services or construction sector. In cases where the 

index covers some industries producing a specific product, 

but is missing more than 20 percent of the production 

of the service, the uncovered weight is removed from the 

wherever-provided index. As mentioned earlier, the suffix 

“partial” in the title of the index informs the data user that 

the index includes only a portion of the wherever-provided service. Conversely, the PPI includes the weight of 

the missing industry (or industries) within the whereverprovided index in cases where coverage of a specific commodity is at least 80 percent. These indexes are published 

without the “partial” designation, and the weight is imputed with the use of standard PPI imputation methodology. 

For the product index, either removing or imputing the 

weight will yield the same index calculation. For higher 

level aggregate indexes, however, removing or imputing a 

commodity index’s weight will yield a different result.7 

Finally, note that the wherever-provided indexes for 

new construction are methodologically identical to the 

industry-based new-construction indexes. These two sets 

of indexes are built from identical weights and share the 

583 Apparel and jewelry retailing

584 Computer hardware, software, and supplies retailing

585 TV, video, and photographic equipment and supplies retailing

586 Automobiles and automobile parts retailing 

587 Manufactured (mobile) homes retailing 

588 RVs, trailers, and campers retailing

589 Sporting goods, including boats, retailing

58A Lawn, garden, and farm equipment and supplies retailing

58B Furniture retailing

58C Flooring and floor coverings retailing

58D Hardware and building materials and supplies retailing

58E Major household appliances retailing

58F Fuels and lubricants retailing

58G Cleaning supplies and paper products retailing

58H Book retailing

58I Other merchandise retailing (partial)

59 Metal treatment services

591 Metal treatment services

60 Mining services

601 Mining services

80 Construction

801 New nonresidential building construction

802 Nonresidential building maintenance and repair construction 

 (partial)
Wherever-Provided Producer Price Indexes

24 Monthly Labor Review • August 2009

 

 Exhibit 2. Example of construction of wherever-provided index weight: auditing services 

 Census of 

Census of Services

NAICS

Services product product title industry NAICS industry title Revenue

 code code (thousands)

 

34060 Financial auditing services 541 Professional, scientific, and technical services $11,243,910

34060 Financial auditing services 541211 Offices of certified public accountants 10,831,314

34060 Financial auditing services 541611 Administration management and general 

 management consulting services 394,940

34060 Financial auditing services 541612 Human resources and executive search consulting services 4,068

34060 Financial auditing services 541613 Marketing consulting services 8,357

34060 Financial auditing services 541614 Process, physical distribution, and logistics consulting services 3,978

34060 Financial auditing services 541620 Environmental consulting services 1,253

34060 Financial auditing services 561 Administrative and support services 95,654

34060 Financial auditing services 561110 Office administrative services 95,654

34060 Financial auditing service total 11,339,564

 

35800 Tax auditing services 541 Professional, scientific, and technical services 700,415

35800 Tax auditing services 541211 Offices of certified public accountants 665,489

35800 Tax auditing services 541219 Other accounting services 34,926

35800 Tax auditing services 

 

 total 700,415

 

 

 total auditing services 12,039,979

SOURCES: U.S. Census Bureau, Census of Services, 2002; North American Industry Classification System (NAICS). 

same base dates and history. The wherever-provided newconstruction indexes and their respective industry-based 

indexes therefore will exhibit identical month-to-month 

percent changes. For construction, the industry and wherever-provided indexes are the same because the BLS defines 

all types of new construction as primary production in all 

new-construction industries. The wherever-provided construction indexes were developed simply to provide completeness within the commodity-based PPI structure.

WITH THE RELEASE OF JULY 2009 DATA IN AUGUST, 

the BLS expanded its coverage of the services and construction sectors of the economy to include whereverprovided producer price indexes. These indexes track price 

change for services and construction products, regardless 

of their industry of origin. 

Wherever-provided price indexes add analytical value 

to the PPI by allowing data users to examine price movements for a specific service or construction product within 

a single price index that combines prices from all industries producing that product. In addition, detailed price 

indexes are aggregated into many higher level indexes not 

found in the industry-based PPI aggregation structure. 

These wherever-provided aggregations give data users a 

large number of additional aggregate indexes, thereby further increasing the analytical usefulness of the PPI. 

NOTES

1 Based on 1992 Bureau of Economic Analysis data from the Gross Product 

Originating Industry Accounts.

2

 Based on 2007 Census Bureau data from the Value of Construction Put in 

Place series.

3

 For a list of all partial-coverage indexes and explanations of missing coverage, go to www.bls.gov/ppi/partialcoverage.pdf. 

4 For the entire publication structure, go to www.bls.gov/ppi/wep_rel_

imp_200906. 

5 A concordance between the wherever-provided services indexes and CPCs 

can be found at www.bls.gov/ppi/wep_cpc_concord.pdf. 

6

 NAPCS-based weights have not yet been implemented in the 2007 Economic Census for the goods-producing sector, so the weighting structure for 

goods will not be affected. 

7

 Again, the complete list of partial-coverage indexes, as well as explanations of missing coverage, can be found at www.bls.gov/ppi/partialcoverage.pdf.