Proposed Collection, Comment Request

ACTION:

Notice.

SUMMARY:

The Department of Labor, as part of its continuing effort to reduce paperwork and respondent burden, conducts a pre-clearance consultation program to provide the general public and Federal agencies with an opportunity to comment on proposed and/or continuing collections of information in accordance with the Paperwork Reduction Act of 1995 (PRA95) [44 U.S.C. 3506(c)(2)(A)]. This program helps to ensure that requested data can be provided in the desired format, reporting burden (time and financial resources) is minimized, collection instruments are clearly understood, and the impact of collection requirements on respondents can be properly assessed. The Bureau of Labor Statistics (BLS) is soliciting comments concerning the proposed extension of the “Producer Price Index Survey.” A copy of the proposed information collection request (ICR) can be obtained by contacting the individual listed below in the ADDRESSES section of this notice.

DATES:

Written comments must be submitted to the office listed in the ADDRESSES section of this notice on or before February 22, 2005.

ADDRESSES:

Send comments to Amy A. Hobby, BLS Clearance Officer, Division of Management Systems, Bureau of Labor Statistics, Room 4080, 2 Massachusetts Avenue, NE., Washington, DC 20212, telephone number 202-691-7628. (This is not a toll free number.)

FOR FURTHER INFORMATION CONTACT:

Amy A. Hobby, BLS Clearance Officer, telephone number 202-691-7628. (See ADDRESSES section.)

SUPPLEMENTARY INFORMATION:

I. Background

The Producer Price Index (PPI), one of the Nation's leading economic indicators, is used as a measure of price movements, as an indicator of inflationary trends, for inventory valuation, and as a measure of purchasing power of the dollar at the primary-market level. It also is used for market and economic research and as a basis for escalation in long-term contracts and purchase agreements.

PPI data provide a description of the magnitude and composition of price change within the economy, and serve a wide range of governmental needs. These monthly indexes are closely followed and are viewed as sensitive indicators. Price data are vital in helping both the President and Congress set fiscal spending targets. PPIs are monitored by the Federal Reserve Board Open Market Committee to help decide monetary policy. The Department of Treasury and the Council of Economic Advisors use PPI data to help form and evaluate monetary and fiscal measures, and to help interpret the business environment. Furthermore, dollar-denominated measures of economic performance, such as the Gross Domestic Product, require accurate price data in order to convert nominal-dollar values to constant-dollar values. Inflation-free national income accounting figures are vital to fiscal and monetary policymakers when setting objectives. In addition, it is common to find one or more PPIs, alone or in combination with other measures, used to escalate the delivered price of goods for government purchases.

PPI data are used by the private sector. Private industry uses PPI data for contract escalation. For one particular method of tax-related Last-In-First-Out (LIFO) inventory accounting, the Internal Revenue Service suggests that firms use PPI data. Private businesses make extensive use of industrial-price data for planning and operating. Price trends are used to assess market conditions. Firms commonly compare the prices they pay for material inputs and the prices they receive for products that they sell with changes in similar PPIs.

Economic researchers and forecasters also use the PPI. Price indexes are widely used to probe and measure the interaction of market forces. Some examples of research topics that require extensive price data include: the identification of varying price elasticities and the degree of cost pass-through in the economy, the identification of potential lead and lag structures among price changes, and the identification of prices which exert major impacts throughout market structures.

A description of program enhancements that improve data completeness, streamline collection procedures, and reduce overall respondent burden follows.

A. Disaggregation—Improvements made to disaggregation (i.e., item selection) procedures have helped to better define a publication structure that is: (1) Publishable in its entirety, (2) meets user needs, (3) continuous, and (4) permits meaningful classification of current production. Data now are collected using a method where price-quotation selection is spread across predetermined product categories that correspond to the complete output for a North American Industry Classification System (NAICS) industry. This modification nearly guarantees that the PPI will collect enough price quotations to populate more lightly weighted cells.

B. Sampling—Modifications made to sampling procedures now permit the PPI to update weights of industry indexes without initiating a new set of respondents. This process change is called “recycling without resampling.” The PPI also has made it operationally feasible to augment the sample of price quotations for a single product line within a NAICS industry, rather than having to initiate an entirely new set of respondents when such needs arise. These improvements enable the PPI program to reduce both data-collection expenses and respondent burden, while permitting efficient reallocation of program resources.

C. Publication—Historically, the PPI had been a family of indexes focusing on the mining, manufacturing, agriculture, and forestry sectors. However, the PPI's mission now includes a mandate requiring the program work toward publication, wherever possible, of output price indexes for every six-digit NAICS industry, including coverage of non-goods producing industries. The PPI currently publishes 128 industry-based indexes for non-goods producing industries. PPI coverage efforts are now focusing on the development of price indexes that would track the construction sector of the U.S. economy.

D. NAICS Classification—Effective with the release of data for January 2004, the PPI converted its sampling, data collection, and industry-based publication structures to the NAICS. Through December 2003, PPI's industry-based procedures were linked to the Standard Industrial Classification (SIC) organizational system.

E. Electronic Data Collection—The BLS currently is developing electronic data collection procedures that will reduce respondent burden and increase efficiency. In addition, the BLS continues to investigate and pursue technological solutions that permit secure e-mail transactions between the BLS and its respondents. However, these technological improvements also must safeguard the confidential respondent information the BLS receives.

II. Desired Focus of Comments

The BLS is particularly interested in comments that:

• Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
• Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
• Enhance the quality, utility, and clarity of the information to be collected; and
• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submissions of responses.

III. Current Action

Office of Management and Budget clearance is being sought for the Producer Price Index Survey.

Type of Review: Extension of a currently approved collection.

Agency: Bureau of Labor Statistics.

Title: Producer Price Index Survey.

OMB Number: 1220-0008.

Affected Public: Business and other for-profit.

Total Burden Cost (Capital/Startup): $0.

Total Burden Cost (Operating/Maintenance): $0.

Comments submitted in response to this notice will be summarized and/or included in the request for Office of Management and Budget approval of the information collection request; they also will become a matter of public record.