01-30892. 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 12, 2002.

ADDRESSES:

Send comments to Amy A. Hobby, BLS Clearance Officer, Division of Management Systems, Bureau of Labor Statistics, Room 3255, 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 is also 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 of the economic environment. Price data are vital in helping both the President and Congress set fiscal spending targets. Producer prices are monitored by the Federal Reserve Board Open Market Committee to help decide monetary policy. Federal policy-makers at the Department of Treasury and the Council of Economic Advisors use these statistics to help form and evaluate monetary and fiscal measures, and to help interpret the general business environment. Furthermore, dollar-denominated measures of economic performance, such 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 policy-makers when setting objectives and targets. 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.

In addition to governmental uses, 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 for making calculations. 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 make and 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. In the end, both policy and business planning are affected by the completeness of price trend descriptions.

II. Desired Focus of Comments

The Bureau of Labor Statistics 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.

A description of recent and projected improvements meant to improve data completeness, increase efficiency, and reduce overall respondent burden to the maximum degree possible follows.

A. Disaggregation—Recent modifications made to disaggregation (i.e., item selection procedures) help 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. In order to obtain and maintain publishability of an entire structure, data are now collected using a method where price-quotation selection is spread across predetermined product categories that correspond to the publication cells for a Standard Industrial Classification (SIC). The design of the revised disaggregation method nearly guarantees that the PPI will collect enough price quotations to populate more lightly weighted cells. More heavily weighted (and populated) cells will receive slightly fewer price quotations than would have been selected under the previous method. As a result, indexes constituting the PPI's publication objectives are much more likely to remain published over time. (For a complete description, see “Change in PPI Publication Structures for Resampled Industries Introduced in January 1997,” PPI Detailed Report, January 1997.)

B. Sampling—Recent modifications made to sampling procedures 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 has also made it operationally feasible to augment the sample of price quotations for a single product line within an SIC, rather than having to initiate an entirely new set of respondents when such needs arise. These capabilities are major breakthroughs, since they enable the PPI program to reduce both data-collection expenses and respondent burden, while permitting efficient reallocation of program resources. Volatile, technologically sophisticated, and never-before-sampled SICs may now be updated or introduced into the PPI in a timelier manner.

C. Publication—The PPI mission includes a mandate requiring the program work toward publication, wherever possible, of output price indexes for every four-digit industry defined by the SIC Manual. Historically, the PPI had been a family of indexes focusing on the mining, manufacturing, agriculture, and forestry sectors. This publication mandate has resulted in expansion of coverage into non-goods producing sectors of the economy. PPI sampling and data-collection methodology have permitted systematic retrieval of specific service-industry classifications, and have resulted in the publication of various four-digit SIC aggregate indexes, as well as service-line and detailed service-category price indexes. The PPI currently publishes about seventy-five industry-based indexes for service-sector activities. Over the preceding decade, the PPI has introduced indexes encompassing transportation, real estate, health, legal, accounting, and many other service-based industries. Industry expansion continues on a regular basis, as funding permits. Since 1999, the PPI has introduced price indexes for SIC 6311 (Life insurance carriers), SIC 54 (Food stores), SIC 59 (Retail trade), and SIC 6211 (Security brokers, dealers, and investment banking companies).

D. NAICS Classification—At present, sampling and data collection are conducted according to the SIC Manual system of organization. However, the PPI survey has begun to make modifications that will permit smooth conversion to the North American Industrial Classification System (NAICS).

E. Electronic Data Collection—The vast majority of data collected by the BLS is confidential respondent information. The BLS is currently developing electronic data collection procedures that will reduce respondent burden and increase efficiency. However, procedures must exist to safeguard respondent information. Transmission of data by e-mail presents at least two types of security risks: The data could be intercepted and/or altered by unauthorized persons; and the data are subject to inadvertent disclosure by the use of incorrect group names and accidental forwarding. Complete elimination of e-mail for data collection purposes likely would decrease response and is not a feasible option. The BLS is pursuing technological solutions to increase the security of e-mail transmission. In the interim, however, short-term restrictions in e-mail use are needed to reduce the risks of disclosing confidential data. Effective November 16, 2001, the BLS authorized the use of e-mail for collection of confidential data through a pilot test conducted by the BLS National Compensation Survey. Policies regarding: (1) Communication of confidential respondent information within the BLS, (2) BLS contacts with government agencies participating in BLS statistical surveys, and, (3) BLS contacts with respondents were also updated. These revised policies permit limited use of e-mail in communications pertaining to confidential respondent information outside the BLS pilot study being conducted by National Compensation Survey. E-mail communication between the BLS and respondents containing confidential data can now occur if the following conditions are met: (1) It is necessary, as a last resort, to obtain a usable response, and the transmission contains the fewest data elements necessary. (2) Purely logistical information, although it could tend to disclose an individual respondent's identification, may be exchanged with individual respondents (or potential respondents) using regular Internet e-mail if doing so promotes the efficiency of survey collection and is acceptable to the respondent. (3) E-mail must only be used as a data collection mechanism if it is necessary to obtain cooperation from the respondent. (4) No group names are to be used when addressing an e-mail message containing confidential data. Whenever confidential communications occur, the BLS e-mail must include the “BLS Statement to Respondent in the Use of Electronic Data transmission,” which states the inherent risks to information confidentiality.

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.

Form	Total respondents	Frequency	Total responses	Average time per response (minutes)	Estimated total burden (hours)
BLS 1810A, A1, B, C, C1, and E	1,585	Once	6,340	120	12,680
BLS 473P	26,250	Monthly	1,260,000	18	378,000
Totals	27,835		1,266,340		390,680

Estimated Total Burden Hours: 390,680 hours.

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.

Signed at Washington, DC, this 7th day of December, 2001.

Jesús Salinas,

Acting Chief, Division of Management Systems, Bureau of Labor Statistics.