Performance Evaluation of the Federal Reserve G.17 (419) Statistical Release — June 2017

II. Changes in Indexes since June 2014

Since mid-2014, when the Federal Reserve last reported to the Office of Management and Budget (OMB) on the G.17 statistical release, the methods for estimating a number of industrial production indexes and capacity series were changed in response to either the availability of new data or the discontinuance of previous data sources. Detailed descriptions of the revisions and descriptions of the changes to the indexes are available in the press releases for the 2015, 2016, and 2017 annual revisions and also in an addendum to the 2015 annual revision, which covers some of the technical aspects to the revision in more detail.

The annual revision issued in July 2015 incorporated annual benchmark data for manufacturing production from the 2012 Census of Manufactures (COM) and from the 2013 Annual Survey of Manufactures (ASM). The annual revisions published in April 2016 and March 2017 incorporated benchmark data from the 2014 and 2015 ASMs, respectively.

II.A. Introduction of Reliability Estimates for Major Industry Aggregates

With the monthly G.17 released on April 18, 2017, the Federal Reserve published new estimates of the reliability of the reported production indexes and rates of change for total industry, manufacturing, mining, and utilities. The reliability estimates are measures designed to give data users a sense of the typical range into which a statistic will likely end up, given its currently published value, after its final (fifth) revision in a monthly release (the indexes may be further revised at the time of an annual revision, but the bulk of those revisions reflect the incorporation of new annual benchmarks rather than the incorporation of new or updated high-frequency data). The reliability estimates are published for those months that are still subject to revision in a subsequent monthly release. An introductory explanation of the reliability estimates was provided in the press release for the 2017 annual revision, and a more comprehensive discussion was published on the G.17's Technical Q&A section on the G.17 website.

II.B. Increased Availability of Historical Real-Time Data

The new reliability estimates are based on the revision histories using real-time data for the production indexes. The revision history for total industrial production back to 1972 has been available on the Federal Reserve's website for many years, but the revision histories for manufacturing (beginning in late 1990), mining (beginning in late 2002), and utilities (also beginning in late 2002) were made available with the introduction of the reliability measures in April 2017. In addition, the Release Dates page of the G.17 website contains files that include all of the data published in each monthly and annual G.17 release since April 15, 2016.

II.C. 2012 North American Industry Classification System

With the 2015 annual revision, the IP and capacity indexes were classified according to the 2012 version of the North American Industry Classification System (NAICS); previously they were classified according to the 2007 version of NAICS. For the IP and capacity indexes, the most important difference between the 2007 NAICS and the 2012 NAICS was the consolidation of multiple closely related six-digit 2007 NAICS categories into single six-digit 2012 NAICS categories (manufacturing comprised 472 six-digit industries under 2007 NAICS and only 364 six-digit industries under 2012 NAICS). The implementation of the 2012 NAICS resulted in reductions in the number of individual IP indexes (from 312 to 299) and in the number of capacity indexes (from 89 to 88).

II.D. Incorporation of BEA’s 2007 Input-Output Tables

With the 2015 annual revision, the IP indexes incorporated information from the BEA's 2007 Input-Output (I-O) tables; data from the 2002 I-O tables had been used previously. Information from the I-O tables is used in constructing IP in two ways.

First, the output associated with an individual IP index that covers either a single NAICS six-digit industry or a group of industries is assigned to one or several market groups based on information from the Use table from the I-O accounts. The Use table provides data on the share of a commodity that is purchased by industries within the industrial sector ("materials" in IP parlance), that is supplied to industries outside of the industrial sector ("nonindustrial supplies"), or that is a final product ("consumer goods" or "equipment").

Second, the stage-of-processing groups, which order each industry by how upstream or downstream it is in comparison to other industries within the industrial sector, are determined based on the Make table from the I-O accounts. Every industry within the IP system is assigned a stage of processing group: crude, primary, semifinished, or finished.

II.E. High-Technology Industries

The IP indexes for communications equipment and for computer peripherals were improved with the 2015 annual revision:

  1. The benchmark price deflators for different types of communications equipment were updated with detailed product-level information from Dell'Oro. The improvements generally reflected the use of more detailed data that better identified the capacity of the equipment than had the data used previously. Some of these deflators are published on the Federal Reserve's website.
  2. The benchmark price deflator for computer storage devices was updated with product-level data from IDC. The new deflator falls considerably faster than its predecessor, yielding faster real output growth for the industry.

II.F. Other Changes to the Indexes

In addition to the changes to the high-technology indexes, the methods for estimating several other indexes were revised in the past three years.

The following changes were instituted with the 2015 annual revision:

  1. Data from the Gypsum Association were introduced as preliminary indicators for gypsum production. These quarterly data are available one month prior to the publication of gypsum production estimates by the U.S. Geological Survey.
  2. Data on uranium enrichment capacity at URENCO were introduced as the monthly indicator for the IP index for nuclear materials. The enrichment technology used by URENCO dictates that their production processes are always operating at full capacity, and URENCO is the nation's sole supplier of enriched uranium to nuclear power plants.
  3. The formulas that are used to construct the production indicators for non-metallic mineral mining, farm machinery, and travel trailers and campers were revised. These indexes each reflect the production of multiple products, which are aggregated based on relative prices for the products. The update reflects changes in the relative prices of the underlying products compared with the past.
  4. The capacity index for fertilizer for 1997 forward was based on capacity data for a variety of types of fertilizer from The Fertilizer Institute. Capacity had previously been based on the results from the Census Bureau's Survey of Plant Capacity.

The following changes were instituted with the 2016 annual revision:

  1. The IP index fertilizer was updated to reflect only the production of the two base fertilizer products—anhydrous ammonia and phosphate rock. Previously, the index added to that the output of their downstream products.
  2. The name of one market group was changed. The name "Non-energy business supplies" replaced "General business supplies".

The following change was instituted with the 2017 annual revision:

  1. A new aggregate for chemicals excluding pharmaceuticals was introduced.

Table of Contents | Section I | Section II | Section III | Section IV | Section V | Section VI |

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Last Update: June 30, 2017