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The Development of Price Indices for Professional Business Services and Cargo Handling, Quarter 2 2011 Update

Part of The Development of Price Indices for Professional Business Services and Cargo Handling, Quarter 2 2011, Release
Released: 26 August 2011 Download PDF

Abstract

The Office for National Statistics has developed experimental price indices for legal, accountancy, architecture, engineering and cargo handling services. This article provides an update of these experimental price indices for the second quarter of 2011.

Introduction

The quarterly Services Producer Price Indices (SPPI) 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 businesses and government.  The Office for National Statistics (ONS) has recently undertaken a development programme to expand the industrial coverage of the SPPI, in particular to cover the professional business services such as legal services, accountancy, architecture and engineering. The ONS published experimental price indices for these new industries (also including cargo handling services) on Friday 3rd June 2011 (Jenkins and Papa, 2011).  This article provides an updated series for each of the new experimental indices for the second quarter of 2011 (April to June).

Experimental Services Producer Price Indices - April to June 2011

As already mentioned, the purpose of this article is to publish quarter two 2011 data (April to June) for each of the new experimental SPPIs. These are:

  • accountancy services

  • legal services

  • architecture and engineering services

  • cargo handling services

Further details on the background to the development and the methodology implemented for each new industry can be found via the developmental article published in June 2011 (Jenkins and Papa, 2011).  Please note that these new price indices are currently classified as experimental and therefore could be subject to revision.  Table one below shows the index value history for each new experimental price index from quarter one of 2010 through to quarter two of 2011 (the latest period for which data is available).  Note that a full time series for each new industry is available back to quarter one of 2005 if required.

Table 1: Experimental Services Producer Price Indices - Quarter 2 2011 update

Not seasonally adjusted

2005=100 (SIC2007)
Accountancy services Legal services Architecture services Engineering services Cargo handling services
    69.2 69.1 71.11 71.12 52.24
Quarterly results (not seasonally adjusted)
2010 Q1 116.8 116.8 116.8 116.8 111.3
Q2 115.3 117.8 116.6 117.1 111.6
Q3 116.3 117.9 117.3 116.8 111.8
Q4 117.0 118.4 117.0 117.2 112.0
2011 Q1 119.7 118.7(r) 117.4 118.4 114.2
Q2 117.8 119.5 117.1 118.0 114.6
             
           

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

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Looking in more detail at the quarterly movements in each series, table two below provides a summary of the current quarter on previous quarter percentage movement:

Table 2 - Experimental Services Producer Price Indices

Not seasonally adjusted

2005=100 (SIC2007)
Accountancy services Legal services Architecture services Engineering services Cargo handling services
    69.2 69.1 71.11 71.12 52.24
Percentage change, latest quarter on previous quarter
2010 Q1 1.4 1.4 1.4 1.4 0.2
Q2 -1.3 0.9 -0.2 0.3 0.3
Q3 0.9 0.1 0.6 -0.3 0.2
Q4 0.6 0.4 -0.3 0.3 0.2
2011 Q1 2.3 0.3(r) 0.3 1.0 2.0
Q2 -1.6 0.7 -0.3 -0.3 0.4
             
  

Table source: Office for National Statistics

Table notes:

  1. All data are on a net basis
  2. Coverage = UK
  3. All data are provisional and subject to revision

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Comparing quarter two 2011 price indices with quarter one 2011 the key points to note are:

  • accountancy services fell 1.6 per cent on the quarter largely due to the increase of 2.3 per cent experienced in quarter one 2011.  The three month period January to March traditionally represents the busiest period in the accountancy calendar (financial year end) and typically prices can increase to reflect this.  This price effect is not evident in quarter two.

  • quarterly movements in the remaining industries were largely subdued in the second quarter of 2011.  There were small decreases in both the architecture and engineering industries. Moving on to look at the annual percentage change for each new industry, table three below shows the current quarter on the same quarter a year earlier percentage movement:

Table 3: Experimental Services Producer Price Indices - 12 month percentage change

Not seasonally adjusted

2005=100 (SIC2007)
Accountancy services Legal services Architecture services Engineering services Cargo handling services
69.2 69.1 71.11 71.12 52.24
Percentage change, latest quarter on corresponding quarter of previous year
2010 Q1 2.0 2.0 2.0 2.0 0.8
Q2 0.4 2.6 1.6 2.0 1.2
Q3 1.6 3.0 2.4 2.0 1.1
Q4 1.6 2.8 1.6 1.7 0.8
2011 Q1 2.5 1.6(r) 0.5 1.4 2.6
Q2 2.2 1.4 0.4 0.8 2.7

Table source: Office for National Statistics

Table notes:

  1. All data on a net basis
  2. Coverage = UK
  3. All data are provisional and subject to revision

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As can be seen from the table, each new industry shows a positive year on year growth when comparing quarter two of 2011 with the same quarter in 2010. The growth in both architecture and engineering industries is close to flat mainly due to competitive market conditions.  

The effect of new industries on the current aggregate SPPI

The price indices for each new industry are currently classed as experimental as they are still being quality assured and may be subject to revision over the coming quarters following consultation and feedback on the results.  Therefore these new industries will continue to be published separately from the main quarterly SPPI Statistical Bulletin and will not be weighted into the aggregate SPPI until the quality of data has been assured.

However, for analytical purposes an assessment is included in this article on the potential impact these new industries would have if weighted in the aggregate SPPI (net basis only).  Industry level weights (net) have been calculated for each of the new industries and the aggregate SPPI (net basis) recalculated 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 inclusive of the new industries:

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

All data on net basis

A comparison of index values for the current published aggregate SPPI and the aggregate SPPI including the new industries
Source: Services Producer Price Index (SPPI) - Office for National Statistics

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Looking in more detail at the effect these new industries have on the aggregate SPPI 12 month growth, figure two below shows that the introduction of the new industries currently has a minimal impact on the current aggregate SPPI 12 month growth:

Fig 2:Comparison of 12 month growth in aggregate SPPI and aggregate SPPI including new industries

All data on net basis

A comparison of the current published 12 month growth for the aggregate SPPI (net) against the 12 month growth in the reworked SPPI that includes the new industries
Source: Services Producer Price Index (SPPI) - Office for National Statistics

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The introduction of the new industries to the aggregate SPPI (net basis) has a downward effect, with 12 month growth in quarter two of 2011 being 0.1 percentage point lower with the new industries included.  Table four below shows the comparison of 12 month growth figures (current published v recalculated SPPI including new industries) from quarter one of 2010 onwards:

Table 4: Experimental Services Producer Price Indices - comparison of 12 month percentage growth

Not seasonally adjusted

2005=100
12 month Percentage change
           
Aggregate published SPPI Aggregate SPPI with new industries Difference
2010 Q1 1.6 1.7 0.1
Q2 2.4 2.4 0
Q3 2.4 2.4 0
Q4 2.7 2.5 -0.2
2011 Q1 2.7 2.6 -0.1
Q2 2.4 2.3 -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

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Next results and further information

The next set of results for these experimental SPPIs will be published on Friday 25th November 2011 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 contact Christopher Jenkins:

Christopher.jenkins@ons.gov.uk or 01633 455474

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, available at: http://www.statistics.gov.uk/CCI/article.asp?ID=2695  

Content from the Office for National Statistics.
© Crown Copyright applies unless otherwise stated.

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