The Development of Price Indices for Professional Business Services - Cargo Handling and Storage and Warehousing, Quarter 2 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 the second quarter 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 GB 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 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 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.

The experimental price indices for the latter phase along with the methodology applied in developing the indices were first published in June 2012. It should be noted 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 at the end of 2013 is currently taking place. The completion of the rebasing project allows for sufficient quality assurance to be carried out on SPPI development industries and provides a suitable milestone for these new industries to be incorporated in the main bulletin.

This article provides an updated series for each of the new experimental indices developed in both phases for the second quarter of 2012 (April to 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 2012

Table one shows the index value history for each Phase 1 experimental price index from quarter one of 2010 through to quarter two 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 prior to 2010 data have been constructed using appropriate backseries methodology.

More specifically, for Phase 1 professional services, the derived backseries weights together the Average Weekly Earnings (AWE) index for section M (professional business services) and the Consumer Price Indices excluding indirect taxes (CPIY) whereas the published SPPI for road freight transport was used to allocate a backhistory for the cargo handling industry.

Table 1: Phase 1 Industries - Experimental Services Producer Price Indices, Quarter 2 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 shows the index value history for each Phase 2 experimental price index from quarter one of 2011 through to quarter two of 2012. The collection of Phase 2 industries commenced in quarter 1 2011, however appropriate back series for each industry were also constructed back to quarter one 2005 and are available upon request.

Namely, advertising placement was used to construct series for the expanded advertising index whereas the freight transport by road back series was applied to the storage and warehousing index. For the business and management services, the same derived back series as constructed for Phase 1 professional services SPPIs has been allocated, i.e. the derived series weighing together the AWE index for section M and the CPIY.

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

Comparing quarter two 2012 with quarter one 2012 the key points to note are:

• Price indices for accountancy services and architecture services have decreased. Between quarter 1 2012 and quarter 2 2012 the indices fell 0.8 and 1.7 respectively.

• Price indices for the all the remaining Phase 1 industries have increased. The quarterly percentage increase for engineering, legal and cargo handling services is 1.1, 0.6 and 0.2 per cent correspondingly.

Table four 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

As can be seen from Table 4, storage and warehousing showed the largest increase of 0.7 per cent compared to the previous quarter. Between quarter 1 and quarter 2 2012 the index for advertising rose 0.4 per cent compared with a fall of 6.3 per cent between quarter 4 2011 and quarter 1 2012. The 3 month inflation for business and management fell 0.3 per cent.

Annual percentage change

Table 5 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

Table 5 shows that annual growth continued to increase slightly across all Phase 1 industries. Cargo handling experienced the largest growth with the 12 month inflation rate increasing 4.5 per cent. The 12 month inflation rate for engineering, legal and accountancy services rose 3.0, 2.3 and 1.9 per cent respectively. Architecture services showed the lowest growth rising 0.1 per cent compared to quarter two of 2012.

Similarly, Table 6 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

The 12 month inflation rates for advertising creation and placement and storage and warehousing fell 4.6 and 1.8 per cent respectively. However, the 12 month percentage movement for business and management rose 3.3 per cent.

Aggregate SPPI

As indicated earlier in the article, the price indices for each new industry are currently classed as experimental as they 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 until the completion of the rebasing project in 2013.

However, for comparison purposes, a piece of analysis is included in this article to illustrate the potential impact of these new industries in the net aggregate SPPI. Net industry level weights have been calculated for each of the new industries and the net aggregate SPPI is 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 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

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Table 7 shows the comparison of 12 month growth figures including and excluding the new series from quarter one 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 Table 7, the largest difference between the two series is 0.5 points in quarter four of 2011. In quarter two of 2012, the 12 month growth was 0.1 percentage points lower for the SPPI with the new industries included.

Next results and further information

The next set of results for these experimental SPPIs will be published on Friday 23 November 2012 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 Aspasia Papa or telephone +44 (0)1633 455811 or +44 (0)1633 456921.

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-Quarter 1 2012

3. ONS (2012), Services Producer Price Indices Quarter 2 2012

4. Guide to Experimental Statistics