New producer price index for the construction, mining, and forestry machinery and equipment rental and leasing industry—NAICS 532412

PPI Detailed Report, Jan, 2005

In January 2005, in its ongoing effort to expand service sector coverage in the Producer Price Index, the Bureau of Labor Statistics (BLS) introduced a new price index for NAICS 532412--Construction, Mining, and Forestry Machinery and Equipment Rental and Leasing. These data appear in table 5 of this publication and are available online through the BLS homepage: www.bls.gov. These indexes include data back to December 2003.

The indexes for this industry measure changes in revenue received by companies that rent and lease the aforementioned machinery and equipment. Each month, respondents provide price data for current rental contracts or short-term lease contracts to BLS using a standard price-update methodology that has been in place for 13 years, tracking prices received by the industries for passenger car rental (NAICS 532111) and truck, utility trailer, and RV rental and leasing (NAICS 532120). This price-update methodology uses actual transaction prices for contracts when that information is available, but when no transactions for a sampled contract have taken place, respondents estimate what the net transaction price would have been based on prices for similar transactions.

Leases longer than 2 years are measured by averaging the lease payments for a fixed-lease term. The cumulative lease payments (which are updated annually) capture the revenue companies receive each month from long-term leases that were contracted in previous years, in addition to the current year. By capturing lease payments for all the years of the lease in the reported price, the index takes into account the continued flow of services that companies provide through these long-term leases. To ensure that the quality of service is held constant, respondents also are asked to report (or estimate) the cost of the leased equipment for each year. Using this methodology, interest rate fluctuations will be incorporated in the reported lease payments and shown as price changes.

The leasing portion of this industry is very small. Only establishments that provide operating and capital (that is, finance) leases without loanmaking are included in this industry. The 1997 Economic Census reported a minimal amount of finance leasing in NAICS 532412.

The service lines for which price indexes are available include the following:

* Construction equipment rental and leasing

* Oil field and well drilling equipment rental and leasing

For further information on NAICS 532412, contact John D. Giorgis at (202) 691-7854. Mr. Giorgis also can be reached by e-mail: giorgis.jd@bls.gov.

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