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The Development of Price Indices for Professional Business Services - Cargo Handling and Storage and Warehousing, Quarter 2 2013

Released: 23 August 2013 Download PDF

Abstract

The Office for National Statistics has developed experimental price indices for professional services, cargo handling and storage & warehousing. This article provides an update of these experimental price indices for Quarter 2 of 2013.

Introduction

The quarterly Services Producer Price Indices (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 UK businesses to other UK businesses and government. The Office for National Statistics (ONS) has recently undertaken a development programme to expand the industrial coverage of the SPPI. 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 (147.7 Kb Pdf) and quarterly updates have been published since then (please see Reference 1). The latter phase saw the development of three more industries, namely:

  • Advertising creation & placement,

  • Business & management,

  • Storage & warehousing.

The existing Advertising Placement price index is now no longer published in the main SPPI statistical bulletin. The experimental Advertising Placement SPPI has increased to include Advertising Creation and this index was developed in tandem with the other experimental indices.

The experimental price indices for the latter phase along with the methodology applied in developing the indices were first published in June 2012 (1.07 Mb Pdf) . It should be highlighted that the price indices for both phases are classified as experimental and may be subject to revision. As such, they will continue to be published separately from the main SPPI Statistical Bulletin.

A project aiming to rebase the PPIs and SPPIs onto 2010=100 is currently taking place, with price indices on a 2010=100 basis towards the end of 2013. Subject to sufficient quality assurance of the SPPIs, and their documented compliance with the Code of Practice for Official Statistics, ONS intends to include these new industries in the main SPPI bulletin following the rebasing project, at some point in 2014. At this point they will be weighted into the SPPI aggregate estimates, improving their coverage of the services sector.

This article provides an updated series for each of the new experimental indices developed in both phases for Quarter 2 of 2013 (April - June). For ease of illustration, Phase 1 and Phase 2 results will be presented separately. For indicative purposes, an assessment to illustrate the potential impact of these new industries in the net aggregate SPPI is also included.

 

Experimental Services Producer Price Indices, Quarter 2 2013

Table 1 below shows the index value history for each Phase 1 experimental price index from Quarter 1 of 2010 through to Quarter 2 of 2013 (the latest period for which data are available). A full time series for each new industry is available back to Q1 2005 if required, however, the data prior to 2010 have been constructed.

Table 1: Phase 1 Industries - Experimental Services Producer Price Indices, Quarter 2 2013

Not seasonally adjusted

2005=100 (SIC2007)
Accountancy services Legal services Architecture services Engineering services Cargo handling services
   
Quarterly results (not seasonally adjusted)
2010 Q1 113.5 113.5 113.5 113.5 111.3
Q2 112.1 114.4 113.3 113.8 111.6
Q3 113.0 114.6 114.0 113.5 111.8
Q4 113.7 115.1 113.6 113.9 112.0
2011 Q1 116.3 115.3 114.0 115.0 112.8
Q2 114.5 116.0 113.8 114.6 113.2
Q3 115.4 117.5 113.5 114.3 113.0
Q4 116.6 117.6 115.5 114.5 114.7
             
2012 Q1 117.7 118.0 115.9 116.7 117.9
  Q2 116.1 118.0 113.9 117.8 118.2
  Q3 117.3 119.8 113.7 116.9 118.3
  Q4 118.2r 120.1 116.2 117.2 118.5
             
2013 Q1 120.5r 120.3r 116.5 118.0r 123.8r
  Q2 119.8 121.2 117.6 119.6 123.6

Table source: Office for National Statistics

Table notes:

  1. Data on a net basis
  2. Coverage = UK
  3. All data provisional and subject to revision
  4. r = data revised compared to last article

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Similarly, Table 2 below shows the index value history for each Phase 2 experimental price index from Quarter 1 of 2011 through to Quarter 2 of 2013. The collection of Phase 2 industries commenced in Quarter 1 2011, however appropriate back series for each industry were constructed back to Quarter 1 2005 and are available upon request.

Table 2: Phase 2 Industries - Experimental Services Producer Price Indices, Quarter 2 2013

Not seasonally adjusted

2005=100 (SIC2007)
Advertising Creation & Placement Business & Management Services Storage & Warehousing
   
Quarterly results (not seasonally adjusted)
2011 Q1 114.7 116.5 115.1
Q2 118.2 117.6 124.3
Q3 117.1 118.7 123.9
Q4 119.8 121.8 124.6
2012 Q1 112.0 121.9 121.3
Q2 112.3 121.8 121.9
  Q3 113.6r  121.5  122.0
  Q4 116.5r 120.7 123.3
         
2013 Q1 110.6r 121.3r 122.3
  Q2 113.1 120.8 123.2

Table source: Office for National Statistics

Table notes:

  1. Data on a net basis
  2. Coverage = UK
  3. All data provisional and subject to revision
  4. r = data revised compared to last article

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Quarterly percentage changes

Table 3 below provides a summary of the current quarter on previous quarter percentage movement for Phase 1 industries.

Table 3: Phase 1 Industries - Experimental Services Producer Price Indices, Quarterly Percentage Change

Not seasonally adjusted

2005=100 (SIC2007)
Accountancy services Legal services Architecture services Engineering services Cargo handling services
   
Percentage change, latest quarter on previous quarter
2010 Q1 -0.1 -0.1 -0.1 -0.1 0.2
Q2 -1.2 0.8 -0.2 0.3 0.3
Q3 0.8 0.2 0.6 -0.3 0.2
Q4 0.6 0.4 -0.4 0.4 0.2
2011 Q1 2.3 0.2 0.4 1.0 0.7
Q2 -1.5 0.6 -0.2 -0.3 0.4
Q3 0.8 1.3 -0.3 -0.3 -0.2
Q4 1.0 0.1 1.8 0.2 1.5
             
2012 Q1 0.9 0.3 0.3 1.9 2.8
  Q2 -1.4 0.0 -1.7 0.9 0.3
  Q3 1.0 1.5 -0.2 -0.8 0.1
  Q4 0.8r 0.3 2.2 0.3 0.2
             
2013 Q1 1.9r 0.2r 0.3 0.7r 4.5r
  Q2 -0.6 0.7 0.9 1.4 -0.2

Table source: Office for National Statistics

Table notes:

  1. Data on a net basis
  2. Coverage = UK
  3. All data provisional and subject to revision
  4. r = data revised compared to last article

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Looking at the price movements between Quarter 1 of 2013 and Quarter 2 of 2013, the key points to note are:

  • There was a fall in the price indices for accountancy services and cargo handling services of 0.6% and 0.2% respectively.

  • Price indices for engineering services, architecture services and legal services have all seen increases of 1.4%, 0.9% and 0.7% respectively.

Table 4 below shows the quarter percentage change for Phase 2 industries.

Table 4: Phase 2 Industries - Experimental Services Producer Price Indices, Quarterly Percentage Change

Not seasonally adjusted

2005=100 (SIC2007)
Advertising Creation & Placement Business & Management Services Storage & Warehousing
   
Percentage change, latest quarter on previous quarter
2011 Q1 -0.2 0.9 1.1
Q2 3.1 0.9 8.0
Q3 -0.9 0.9 -0.3
Q4 2.3 2.6 0.6
         
2012 Q1 -6.5 0.1 -2.6
Q2 0.3 -0.1 0.5
  Q3 1.2r -0.2  0.1
  Q4 2.6r -0.7 1.1
         
 2013 Q1 -5.1r 0.5r -0.8
  Q2 2.3 -0.4 0.7

Table source: Office for National Statistics

Table notes:

  1. Data on a net basis
  2. Coverage = UK
  3. All data provisional and subject to revision
  4. r = data revised compared to last article

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Looking at the price movements between Quarter 1 of 2013 and Quarter 2 of 2013 the key points to note are:

  • There was a fall in the price index for business and management services of 0.4%.

  • Price indices for advertising creation and placement services and storage and warehousing services have increased by 2.3% and 0.7% respectively.

Annual percentage change

Table 5 below shows the current quarter on the same quarter a year earlier percentage movement:

Table 5: Phase 1 Industries - Experimental Services Producer Price Indices - 12 Month Percentage Movement

Not seasonally adjusted

2005=100 (SIC2007)
Accountancy services Legal services Architecture services Engineering services Cargo handling services
Percentage change, latest quarter on corresponding quarter of previous year
2010 Q1 1.3 1.3 1.3 1.3 0.8
Q2 -0.7 1.3 0.4 0.8 1.2
Q3 -0.2 1.2 0.7 0.3 1.1
Q4 0.1 1.3 0.0 0.3 0.8
2011 Q1 2.5 1.6 0.4 1.3 1.3
Q2 2.1 1.4 0.4 0.7 1.4
Q3 2.1 2.5 -0.4 0.7 1.1
Q4 2.6 2.2 1.7 0.5 2.4
           
2012 Q1 1.2 2.3 1.7 1.5 4.5
  Q2 1.4 1.7 0.1 2.8 4.4
  Q3 1.6 2.0 0.2 2.3 4.7
  Q4 1.4r 2.1 0.6 2.4 3.3
             
2013 Q1 2.4r 1.9r 0.5 1.1r 5.0r
  Q2 3.2 2.7 3.2 1.5 4.6

Table source: Office for National Statistics

Table notes:

  1. Data on a net basis
  2. Coverage = UK
  3. All data provisional and subject to revision
  4. r = data revised compared to last article

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As can be seen from the above table, there is strong year on year growth across all Phase 1 industries. As with previous quarters, cargo handling experienced the largest growth with prices in the 12 months to Q2 rising by 4.6%. Accountancy services and architecture services both experienced growths of 3.2% while legal services and engineering services experienced growths of 2.7% and 1.5% respectively

Similarly, Table 6 below presents the 12 month inflation rate movement for Advertising Creation & Placement, Business & Management and Storage & Warehousing:

Table 6: Phase 2 Industries - Experimental Services Producer Price Indices, 12 Month Percentage Movement

Not seasonally adjusted

2005=100 (SIC2007)
Advertising Creation & Placement Business & Management Services Storage & Warehousing
   
Percentage change, latest quarter on corresponding quarter of previous quarter
2011 Q1 2.7 2.6 3.9
Q2 0.9 3.1 11.0
Q3 4.2 4.5 9.7
Q4 4.3 5.5 9.5
2012 Q1 -2.4 4.6 5.4
Q2 -5.0 3.6 -1.9
  Q3 -3.0r 2.4 -1.5
  Q4 -2.8r -0.9 -1.0
         
2013 Q1 -1.3r -0.5r 0.8
  Q2 0.7 -0.8 1.1

Table source: Office for National Statistics

Table notes:

  1. Data on a net basis
  2. Coverage = UK
  3. All data provisional and subject to revision
  4. r = data revised compared to last article

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As can be seen from the above table, price indices for storage and warehousing services  and advertising creation and placement services, all increased in the 12 months to Quarter 2 of 2013, by 1.1% and 0.7% respectively. The price index for business and management services fell by 0.8%.

Aggregate SPPI

As indicated above, the price indices for each new industry are currently classed as experimental and are undergoing quality assurance. Therefore the data for these indices may be subject to revision over the next quarters following feedback from users. As a result, the new industries will continue to be published separately from the main quarterly SPPI Statistical Bulletin. However, for comparison purposes, Figures 1 & 2 and Table 7 below, illustrate the potential impact of these new industries in the net aggregate SPPI were they to be included.

It’s worth highlighting that aggregate SPPI figures would still be a partial estimate of inflationary pressure to UK businesses from the service sector because ONS does not have complete coverage of the service sector within SPPIs. ONS aims to continue reviewing and, where possible expanding, the coverage of the SPPI. Each time a new industry is added, or one removed because of quality concerns, it will have an impact on the aggregate SPPIs.

The headline measure of SPPI is a net sector aggregate. By net sector, this means any inter-sector transactions are excluded in the calculation of the weights. Industry level weights on a Net Sector basis have been calculated for each of the new industries and a net aggregate SPPI has been calculated to include these new series. Please note that this analysis is for indicative purposes only and the data should not be used in place of the current published aggregate SPPI.

Figure 1 below shows the index values for the current aggregate SPPI against the recalculated aggregate SPPI including the new industries:

Figure 1: Comparison of current aggregate SPPI and aggregate SPPI including new industries

All data on net basis

Figure 1: Comparison of current aggregate SPPI and aggregate SPPI including new industries
Source: Services Producer Price Index (SPPI) - Office for National Statistics

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Figure 2 below shows the 12 month growth rates for the current aggregate SPPI against the recalculated aggregate SPPI including the new industries:

 

Figure 2: Comparison of 12 month growth in aggregate SPPI and aggregate SPPI including new industries (net basis)

12 Month percentage change

Figure 2: Comparison of 12 month growth in aggregate SPPI and aggregate SPPI including new industries (net basis)
Source: Services Producer Price Index (SPPI) - Office for National Statistics

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Table 7 below shows the comparison of the 12 month growth figures including and excluding the new series from Quarter 1 of 2010 onwards.

Table 7: Comparison of 12 month percentage growth (net sector)

Not seasonally adjusted

2005=100 (SIC2007)
12 month Percentage change
Aggregate published SPPI Aggregate SPPI with new industries Difference 
2010 Q1 1.6 2.0 0.4
Q2 2.4 2.7 0.3
Q3 2.4 2.5 0.1
Q4 2.7 2.5 -0.2
2011 Q1 2.4 2.4 0.0
Q2 2.3 2.5 0.2
Q3 2.3 2.6 0.3
  Q4 1.8 2.3 0.5
         
2012 Q1 1.5 1.5 0.0
  Q2 1.0r 0.8 -0.2r
  Q3 1.2 1.0 -0.2
  Q4 1.1 0.8 -0.3
         
2013 Q1 1.2r 1.0r -0.2r
  Q2 0.7 0.8 0.1

Table source: Office for National Statistics

Table notes:

  1. All data on a net basis
  2. Coverage = UK
  3. All data are provisional, subject to revision and should not be used in place of the current published SPPI
  4. r = data revised compared to last article
  5. SPPI aggregates exclude advertising placement from Quarter 1 2012. Link factors have been used to remove the effect of this weight change.

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As can be seen from the above table, the difference between the two series varies between -0.3 to 0.5 percentage points.

Next results and further information

The next set of results for these experimental SPPIs will be published on Friday 22 November 2013 on the National Statistics website. The ONS would welcome your views on the data published in this article.

If you wish to comment or would like any further information please email Chris Jenkins or Alexandra Wojewodka-Dunn  or telephone +44(0)1633 455474 or +44(0)1633 651575.

Background notes

  1. Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: media.relations@ons.gsi.gov.uk

References

  1. Previous quarterly updates for Phase 1 Industries:

    Quarter 2 2011

    Quarter 3 2011

    Quarter 4 2011

  2. Previous quarterly updates for Phase 1 and Phase 2 Industries:

    Quarter 2 2012

    Quarter 3 2012

    Quarter 4 2012

    Quarter 1 2013

  3. Guide to Experimental Statistics

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