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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: patron_anejo_por_favor who wrote (9746)	3/8/2004 6:36:39 PM
From: russwinter	Read Replies (1) \| Respond to of 110194

Here's the crock they are dishing out about this. They can run but can't hide, credibility at stake. Reuters U.S. Blames Aging Computers for PPI Delay Monday March 8, 4:30 pm ET By Andrea Hopkins WASHINGTON (Reuters) - Outdated computers are partly to blame for the delayed release of the U.S. producer price index and only "God knows when" the data will be ready, a top analyst at the Bureau of Labor Statistics said on Monday. ADVERTISEMENT The U.S. Labor Department statistical agency has indefinitely delayed the release of the January and February PPI reports due to problems converting the data to a new industry classification system. The January PPI, which measures prices paid to farms, factories and refineries, was originally scheduled for release on Feb. 19. The February report was due to be released this coming Friday. The nearly three-week delay for the January report is unheard of in the government's statistics system. Some economists said they miss the wholesale price data, in part because it can offer early clues on profits and, by extension, hiring. Irwin Gerduk, assistant commissioner for BLS' PPI section, said the January and February data will be released in separate reports as soon as accurate data can be calculated. "A January index will be released first -- God knows when -- and some time subsequent to that there would be a February index release," Gerduk said, adding that it would take "quite a bit of time" to produce the February report even after the calculation problems were solved in the January report. Gerduk said several problems arose in an attempt to switch the PPI to the North American Industry Classification System from the Standard Industrial Classification -- a process already completed for most U.S. data series. He said while other series needed only to reclassify industries, PPI had to remap some 40,000 industry units and about 120,000 items before reaggregating the data into four indexes that are produced each month as part of PPI. "MULTITUDE OF PROBLEMS" Worse still, Gerduk said the aging computers at BLS were not capable of handling a dry run of the reclassified data, so analysts could only begin computing the January data once the December report was published. "It wasn't a single problem, it was a multitude of problems. It was the complexity of the conversion itself, tied to the fact we had 30-year-old systems that were never designed to handle a widespread classification conversion," he said. "So you're basically doing everything at the last minute." Gerduk said the agency got funding last year to modernize the computer system but that it is a five-year process. Economists said that while PPI is not as crucial to market watchers as the consumer price index, the most popular inflation index, it is still being missed on Wall Street. Anthony Chan, chief economist at Banc One Investment Advisors, said the PPI can provide important information on whether corporate profit margins are being squeezed -- and can offer an early clue on future hiring. If the prices producers receive are rising more quickly than inflation at the consumer level, it means companies are swallowing the difference and thus would have smaller profits to fuel investment and hiring. "As profits margins narrow, you're not going to have as much capital spending, and if you don't have that much capital spending, guess what? You're not going to hire a lot of workers," said Chan. "So early on, the PPI gives you some potential information about what hiring patterns may look like over the next couple of months."