The Development of Price Indices for Professional Business Services - Cargo Handling and Storage and Warehousing, Quarter 4 2012

Abstract

The Office for National Statistics has developed experimental price indices for professional services, cargo handling and storage and warehousing. This article provides an update of these experimental price indices for quarter 4 of 2012.

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 3rd 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 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 as noted in the Q4 2012 SPPI statistical bulletin the existing advertising placement SPPI will no longer be published from Q1 2013. 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 4 of 2012 (October - December). 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 4 2012

Table one below shows the index value history for each Phase 1 experimental price index from quarter 1 of 2010 through to quarter 4 of 2012 (the latest period for which data are available). A full time series for each new industry is available back to quarter 1 2005 if required, however, the data prior to 2010 have been constructed.

Table 1: Phase 1 Industries - Experimental Services Producer Price Indices, Quarter 4 2012

Not seasonally adjusted

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

Similarly, Table two below shows the index value history for each Phase 2 experimental price index from quarter 1 of 2011 through to quarter 4 of 2012. 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 4 2012

Not seasonally adjusted

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

Quarterly percentage changes

Table three 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

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

Looking at the price movements between quarter 3 2012 and quarter 4 2012 the key points to note are:

• Price indices for architecture services and accountancy services have seen modest increases, of 2.2 per cent and 0.8 per cent respectively.

• Price indices for engineering services, cargo handling services and legal services have all seen small increases of 0.3 per cent, 0.2 per cent and 0.1 per cent respectively.
  

Table four 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

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

Looking at the price movements between quarter 3 2012 and quarter 4 2012 the key points to note are:

• Price indices for advertising creation and placement services and storage and warehousing services have seen reasonably large increases of 2.7 per cent and 1.1 per cent respectively.

• There was a fall in the price index for business and management services of 0.8 per cent.

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

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

As can be seen from the above table, there is modest year on year growth across all Phase 1 industries, apart from architecture services, which showed a more subdued annual growth of 0.6 per cent. As with previous quarters, cargo handling experienced the largest growth with prices in the 12 months to quarter 4 rising by 3.3 per cent. Engineering services, legal services and accountancy services experienced growths of 2.4 per cent, 2.0 per cent and 1.4 per cent respectively.

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

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

Not seasonally adjusted

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

As can be seen from the above table, price indices for advertising creation and placement services, business and management services and storage and warehousing services all fell in the 12 months to quarter 4 2012 by 3.4 per cent, 1.1 per cent and 1.0 per cent respectively.

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 one 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

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

Download chart

• XLS format
  (30.5 Kb)

Figure two 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

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

Download chart

• XLS format
  (30.5 Kb)

Table seven 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

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

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 24 May 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 Liam Murray or Alexandra Wojewodka-Dunn  or telephone +44(0)1633 45 5811 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. Jenkins, C. and Papa, A. (2011) The development of price indices for professional business services and cargo handling, Office for National Statistics:

   Quarter 2 2011

   Quarter 3 2011

   Quarter 4 2011

2. Murray, L. and Papa, A. ONS (2012), Services Producer Price Indices - The Development Of Price Indices For Professional Business Services and Cargo Handling,Office for National Statistics:

   Quarter 1 2012 (1.07 Mb Pdf)

   Quarter 2 2012

   Quarter 3 2012

3. ONS (2012), Services Producer Price Indices Quarter 4 2012

4. Guide to Experimental Statistics