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Statistical bulletin: Services Producer Price Indices, Quarter 2 2013 This product is designated as National Statistics

Released: 21 August 2013 Download PDF

Key Points

  • The net sector aggregate of selected SPPIs rose 0.7% in the 12 months to quarter 2 of 2013, compared with a rise of 1.2% in quarter 1 of 2013.
  • Between quarter 1 and quarter 2 of 2013 the net sector aggregate of selected SPPIs rose 0.1%.
  • The gross sector aggregate of selected SPPIs rose 0.4% in the 12 months to quarter 2 of 2013.
  • Between quarter 1 and quarter 2 of 2013 the gross sector aggregate of selected SPPIs fell 0.1%.

Summary of Services Producer Price Index

The Services Producer Price Index (SPPI), formerly the Corporate Services Price Index (CSPI), is constructed from a statutory quarterly survey. The SPPIs are primarily a suite of individual price indices that provide information on price change for a limited range of service industries. Each SPPI captures quarterly changes in the price received for services provided by GB businesses to other UK businesses and Government. These individual price indices are also aggregated together to create a 'service industry' SPPI with limited coverage (it does not provide full coverage of the 'service sector').

At the aggregate level, there are two types of SPPI series produced, which are:

  • Net Sector Output (NSO) series:

The net sector series measures transactions between business services and other sectors excluding business services.

  • Gross Sector Output (GSO) series:

    The gross sector series measures transactions between business services and other sectors including business services.

The aggregate level SPPI is published on a NSO basis (unless otherwise stated).

These National Statistics are produced to high professional standards and released according to the arrangements approved by the UK Statistics Authority.

Suspension of the advertising placement SPPI index and its removal from the SPPI aggregates

As noted in Q4 2012 SPPI Statistics Bulletin, the two external sources used in the compilation of the advertising placement SPPI are no longer available in the format required. ONS considered whether it was feasible to maintain this index but  given that a new experimental index for advertising placement and creation services has been developed, published quarterly since Q1 2011, it concluded that it would not be an efficient use of resource to invest in redeveloping the current advertising placement index. Therefore, from Q1 2013, the advertising placement index is no longer published and the partial net and gross service sector aggregates are calculated excluding this industry. The aggregates remain the best estimate of inflation from the services sector.

The new experimental advertising creation and placement index has been published since Q1 2011 in a quarterly article, alongside other experimental SPPIs for professional business services, cargo handling and storage & warehousing. Previous articles can be found on the relevant section of the ONS website, and the next article will be published on Friday 23 August 2013.

ONS will continue to monitor the quality of these experimental indices, with a view to having them designated as National Statistics at some point in the next 12-18 months, subject to them meeting the standards set out in the Code of Practice for Official Statistics. Should they be deemed to be National Statistics, they will be weighted in to the aggregate SPPIs. This will change the composition of the aggregate SPPIs, increasing the coverage of the service industry and improving the measure.

ONS does not produce an SPPI for every industry in the services sector and so the SPPI aggregates are partial, best estimates, of the overall inflation to UK businesses from the services sector. As resources allow, ONS will continue to review the existing SPPIs and expand coverage through developing SPPIs for new industries. As such, the SPPI aggregates will change composition from time to time but will always remain ONS's best estimate of overall inflation to UK businesses from the services sector. The fact that coverage may change over time should be considered by users when deciding which indices best meet their needs.

ONS will give users as much advanced warning of any change to the composition of the aggregate estimates as possible, continuing to publish the best estimate it can with the available data.

 

Supplementary analysis: Services Producer Price Index - Net Sector

In quarter 2 of 2013, movements in the net sector aggregate of selected services producer price index were as follows:

  • 12 month inflation rose 0.7%, compared with a rise of 1.2% in quarter 1 of 2013.

  • Between quarter 1 and quarter 2 of 2013 the net sector aggregate services producer price index rose 0.1%. The main upward contributors to the index were from price rises in publishing services, sewerage services and waste disposal. These increases were offset by price falls in freight forwarding and sorted materials recovery services.

Table A: Output Prices (Net Sector) - Aggregate SPPI

United Kingdom

Percentage change (not seasonally adjusted)1,2
    12 month   3 month
 2011 Q2 2.3   1.0
  Q3  2.3    0.0
  Q4  1.8    0.2
         
2012 Q1  1.5   0.3
  Q2 1.0   0.6
  Q3 1.2   0.2
  Q4  1.1    0.1
         
2013 Q1 1.2   0.3
  Q2  0.7    0.1

Table source: Office for National Statistics

Table notes:

  1. The aggregate SPPI is an aggregate of the individual industry level SPPIs published in this Statistical Bulletin. It does not provide full coverage of the service sector.

  2. Aggregate indices exclude Financial Intermediation (Banks)

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Figure A: Aggregate SPPI (Net Sector)

United Kingdom

Figure A: Aggregate SPPI (Net Sector)
Source: Services Producer Price Index (SPPI) - Office for National Statistics

Notes:

  1. The graph shows how the annual net sector aggregate SPPI inflation compares with the producer price index for all manufactured products.

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Notable industry movements and contributions to the net aggregate Services Producer Price Index - Three month change to Quarter 2 2013

Table B: Three month change to quarter 2 2013: Industry specific percentage change, latest quarter on previous quarter

United Kingdom

Percentage change
National Post/Parcel Force 2.9
Waste Disposal 2.6
Sewerage Services 2.4
Publishing Services 1.4
Computer Software 0.3
Freight Transport By Road 0.0
Employment Services -0.4
Freight Forwarding -1.6
Security Services -2.6
Sorted Materials Recovery Services -6.4

Table source: Office for National Statistics

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Figure B: Notable contributions to the net aggregate SPPI, latest quarter on previous quarter percentage change

United Kingdom

Figure B: Notable contributions to the net aggregate SPPI, latest quarter on previous quarter percentage change
Source: Services Producer Price Index (SPPI) - Office for National Statistics

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Notable industry movements and contributions to the net aggregate Services Producer Price Index - 12 month change to Quarter 2 2013

Table C: 12 month change to quarter 2 2013: Industry specific percentage change, latest quarter on corresponding quarter of previous year

United Kingdom

Percentage change
Publishing Services 4.3
Waste Disposal 3.1
Maintenance & Repair Of Motor Vehicles 2.4
Sewerage Services 2.4
Computer Software 0.9
Property Rentals -0.4
Security Services -2.5
Sea & Coastal Water Freight -5.9
Sorted Recovered Materials Services -10.4

Table source: Office for National Statistics

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Figure C: Notable contributions to the net aggregate SPPI, latest quarter on same quarter of previous year percentage change

United Kingdom

Figure C: Notable contributions to the net aggregate SPPI, latest quarter on same quarter of previous year percentage change
Source: Services Producer Price Index (SPPI) - Office for National Statistics

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Main contributions to the net aggregate Services Producer Price Index 12 month rate

The largest upward contributions to the net aggregate services producer price index over the past 12 months came from:

  • Publishing Services.

  • Maintenance and Repair of Motor Vehicles.

  • Waste disposal.

These upward movements were partially offset by a downward contribution from Sorted Materials Recovery Services and Property Rentals.

Figure D: Publishing Services

United Kingdom

Figure D: Publishing Services
Source: Services Producer Price Index (SPPI) - Office for National Statistics

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Figure E: Maintenance and Repair of Motor Vehicles

United Kingdom

Figure E: Maintenance and Repair of Motor Vehicles
Source: Services Producer Price Index (SPPI) - Office for National Statistics

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Figure F: Waste Disposal

United Kingdom

Figure F: Waste Disposal
Source: Services Producer Price Index (SPPI) - Office for National Statistics

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Services Producer Price Index - Gross Sector

In quarter 2 of 2013, movements in the gross sector aggregate of selected services producer price index were as follows:

  • 12 month inflation rose 0.4%, compared with a rise of 1.1% to quarter 1 of 2013.

  • Between quarter 1 and quarter 2 of 2013 the gross sector aggregate services producer price index fell 0.1% compared with a rise of 0.5% between quarter 4 of 2012 and quarter 1 of 2013.

Figure G: Aggregate SPPI (Net and Gross Sectors)

United Kingdom

Figure G: Aggregate SPPI (Net and Gross Sectors)
Source: Services Producer Price Index (SPPI) - Office for National Statistics

Notes:

  1. This graph depicts the aggregate SPPI annual percentage change for both the net and gross sector series.

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Background notes

  1. Real Estate Agencies

    During the quality assurance of the SPPI, an error was identified with the production of the Real Estate Agencies index. This error affected the last 12 months data used in the calculation of the index and has now been corrected. This has led to small revisions to the Real Estate Agencies index back to quarter 2 of 2012. The impact of this revision on the aggregate SPPI is insignificant.

  2. Improvements introduced

    From quarter 2 of 2013, ONS stopped producing the SPPI records within its statistical bulletin. These records are available separately on the ONS website. (65.5 Kb Excel sheet)

  3. Correction to the business telecoms SPPI

    ONS published a correction notice on 3 May 2013, to inform users that ONS had discovered an error in part of the data that are provided to ONS for use in the business telecoms SPPI. As a result, the business telecoms SPPI was revised to reflect corrections to the data. The revision goes back to Q1 2005. The main impact is that business telecoms prices have declined slightly quicker than previously estimated.

    The corrections to business telecoms price data had minimal effect at the aggregate SPPI level. Consequently, the aggregates have not been revised at this point, but the full impact of the correction will be accounted for when the indices are rebased towards the end of 2013 (see background note 4).

    Full details are available in the correction notice on the ONS website.

  4. Article about rebasing the PPI and SPPI onto 2010=100

    An article outlining plans to rebase the Producer Prices Index and Services Producer Price Index, at the end of 2013, can be found on the ONS website.

  5. SPPI Development

    A development project to increase the industrial coverage of the SPPI has been in place since 2009 and 2012. This was carried out in two phases. The first phase included the development of price indices for the following industries:

    • Accountancy services.

    • Legal services.

    • Architecture and engineering services.

    • Cargo handling services.

    The experimental price indices for these industries were first published on Friday 3 June 2011 and quarterly updates have been published since then. The latter phase saw the development of three more industries, namely: 

    • Advertising Creation and Placement.

    • Business and Management.

    • Storage and Warehousing.

    An Advertising Placement price index is currently being published as part of the existing SPPI industries; however the scope of the index has increased to include Advertising Creation and this index was thus reviewed and developed in tandem with the other experimental indices. As noted earlier in the statistical bulletin, the existing Advertising Placement SPPI is not available from the Q1 2013 release. The next SPPI development article is due to be published on 23 August 2013. This article, and other previous articles, is available in the Services Producer Price Index publications area of the ONS website.

  6. Results of the 2010 Services Turnover Survey

    The Services Turnover Survey (STS) is a survey of business-to-business turnover by service product, conducted every five years to support the rebasing of the Services Producer Price Index (SPPI).

    Total estimates of business-to-business turnover at industry level and as a proportion of overall turnover are collected, broken down into individual services referred to as products. These products match those collected by the SPPI, which are themselves obtained by arranging the activities of a service industry into a hierarchal structure of product groups, sub-products and items. Each item is assigned an index number and these indices are given a percentage weight calculated from information obtained by the STS. The latest STS, covering 2010, was despatched in July 2011, with an article summarising the STS results published on the ONS website on 15 June 2012.

  7. Quality and Methodology Information  

    A Quality and Methodology Information (QMI) paper for the SPPI describes, in detail, the intended uses of the statistics presented in this Statistical Bulletin, their general quality and the methods used to produce them.

  8. Implementation of SIC 2007 in ONS: Update on SPPI

    Services Producer Prices has implemented the change to the Standard Industrial Classification 2007 (SIC 2007). The most significant change to SPPI involved the reclassification of ‘recovered secondary raw materials’ and ‘publishing’. These are no longer classified in the manufacturing sector, but are now classified under services. For further information on the changes and impact of the SIC 2007 on the SPPI please see the Economic and Labour Market Review for December 2010.

    Any comments about this work and its impact on the SPPI please email Business Prices.

  9. Sorted Materials Recovery Services

    The SPPI for sorted recovered materials services (38.32) uses the measurement of price change for recovered material ‘products’ as a proxy. Under the SIC2007 project these recovered material products, along with publishing services, were reclassified out of the manufacturing industry and into SPPI.

  10. Relevance to users

    On 10 May 2010, the UK Statistics Authority Assessment team accredited the Services Producer Price Indices (SPPI) as a new National Statistic. Further information regarding the UK Statistics Authority assessment can be found on the Monitoring & Assessment area of the UK Statistics Authority website (Assessment Report 25).

    Index numbers shown in this Statistical Bulletin are on a net sector basis. These relate only to transactions between the corporate services sector and other sectors. Detailed tables also contain gross sector indices which include transactions within the corporate services sector.

    Indices relate to average prices per quarter. The full effect of a price change occurring within a quarter will only be reflected in the index for the following quarter. All index numbers exclude VAT and are not seasonally adjusted. Since SPPIs exclude VAT, they are not affected by the increase in the standard rate of VAT to 20% from 4 January 2011. SPPI inflation is the percentage change in the net sector index for the latest quarter compared with the corresponding quarter in the previous year. 

    A number of external data sources are currently used in the compilation of the SPPI. Details of these follow:

    • Property rental payments – Investment Property Databank (IPD)

    • Business telecommunications – Office of Communications (Ofcom)

    • Financial Intermediation (Banks) – Bank of England (BoE)

    • Sewerage services – Office of Water Services (Ofwat)

    • Business rail fares – Office of Rail Regulation (ORR)

    • National post parcels - Parcelforce 

    Following a quality review by ONS in January 2007 a decision was made to withdraw the Banking SPPI from publication. As a result the index has been re-developed and was re-introduced in Q3 2008. Under the re-development, the quality of the data collection and processing has been improved and the number of products included in the index has increased. However, the new index is not regarded as proxy for all Financial Intermediation services within the Standard Industrial Classification (SIC) 64. It has not therefore been included in the aggregate SPPI. The services measured are classified to SIC 64.19/1 and are published as a separate index known as the “SPPI for Financial Intermediation (Banks)”.

     

    ONS does not produce an SPPI for every industry in the services sector and so the SPPI aggregates are partial, best estimates, of the overall inflation to UK businesses from the services sector. As resources allow, ONS will continue to review the existing SPPIs and expand coverage through developing SPPIs for new industries. As such, the SPPI aggregates will change composition from time to time but will always remain our best estimate of overall inflation to UK businesses from the services sector. The fact that coverage may change over time should be considered by users when deciding which indices best meet their needs.

     

    As noted in the Q3 2012 SPPI Statistical Bulletin, the two external sources used in the compilation of the advertising placement SPPI will no longer be available in the format ONS requires. ONS considered whether it was feasible to maintain this index but given that a new experimental index for advertising placement and creation services has been developed, published quarterly since Q1 2011, it concluded that it would not be an efficient use of resource to invest in redeveloping the current advertising placement index. Therefore, from Q1 2013, ONS no longer publish the advertising placement index and the partial net and gross service sector aggregates are calculated excluding this industry. The aggregates remain the best estimate of inflation from the services sector.

  11. Accuracy

    SPPI policy is to show significant revisions but to suppress minor changes to avoid unnecessary inconvenience to users. Indices for the most recent two quarters are regarded as provisional and can be changed as later data become available. The National Statistics website contains information on the SPPI revisions policy.  

    Every five years, services producer price indices are rebased, and their weights updated to reflect changes in the industry. The article referred to in background note 1, informs users about work underway to rebase SPPIs from a 2005=100 basis to a 2010=100 basis, and update the weights. SPPIs will move to a 2010=100 basis from autumn 2013. More information about the impact of rebasing will be published as the project progresses and will be drawn to users' attention in the regular statistical bulletin.

  12. Publication Policy

    The complete run of data in the tables of this bulletin are also available to view and download in other electronic formats free of charge using the Office for National Statistics Datasets and Reference Table service (if you want the data associated with this bulletin click into Download data in this release option). Users can download the complete release in a choice of zipped formats or view and download their own selections of individual series. 

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