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The Development of Price Indices for Professional Business Services and Cargo Handling, Q4 2011 update This product is designated as National Statistics

Released: 24 February 2012 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 fourth 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 UK 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. ONS published experimental price indices for these new industries (also including cargo handling services) on Friday 3 June 2011 (Jenkins and Papa, 2011).  This article provides an updated series for each of the new experimental indices for the fourth quarter of 2011 (October to December).

Experimental Services Producer Price Indices - October to December 2011

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

  • accountancy services,

  • legal services,

  • architecture and engineering services,

  • cargo handling services.

Further details on 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) while last quarter's article can be accessed via the ONS website (Jenkins, 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 four of 2011 (the latest period for which data are available). Note that a full time series for each new industry is available back to quarter one of 2005 if required, however, the data prior to 2010 have been constructed.

Table 1: Experimental Services Producer Price Indices, Quarter 4 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 119.7 118.7 117.4 118.4 112.8
Q2 117.8 119.3 (r) 117.1 118.0(r) 113.2
Q3 118.7(r) 121.1 (r) 116.8 (r) 117.5 (r) 113.0
Q4 119.0 121.0 117.0 118.0 114.7

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

Table 2: Experimental Services Producer Price Indices - quarterly percentage change, Q4 2011

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 0.3 1.0 0.7
Q2 -1.6 0.5(r) -0.3 -0.3 0.4
Q3 0.8 1.5(r) -0.3 -0.4(r) -0.2
Q4 0.3 -0.1 0.2 0.4 1.5

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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Comparing quarter four 2011 price indices with quarter three 2011 the key points to note are:

  • The quarterly movements across each of the experimental industries are small.  The price index for legal services shows a small decrease when comparing against quarter three of 2011. All the other industries show small increases.

  • Both architecture and engineering services show small increases following consecutive decreases in previous quarters. Cargo handling services shows the largest increase on the quarter at 1.5 per cent.

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

Table 3: Experimental Services Producer Price Indices - 12 month percentage change, Q4 2011

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 0.5 1.4 1.3
Q2 2.2 1.3(r) 0.4 0.8(r) 1.4
Q3 2.1 2.7(r) -0.4(r) 0.6(r) 1.1
Q4 1.7 2.2 0.0 0.7 2.4

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 table three above, growth in the architecture and engineering industries continues to be subdued with architecture services remaining unchanged when compared with the same quarter of 2010.  Across the other industries, growth continues to increase slightly with accountancy services, legal services and cargo handling services increasing by 1.7 per cent, 2.2 per cent and 2.4 per cent respectively when compared to quarter four of 2010.

Notes for Experimental Services Producer Price Indices - October to December 2011

  1. Index numbers shown in the main text of this article are on a net sector basis.  The net index for any sector relates only to transactions between that sector and other sectors, sales and purchases within sectors are excluded.

The effect of the 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 shows the index values for the current aggregate SPPI against the recalculated aggregate SPPI inclusive of the new industries:

Figure 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 shows that the introduction of the new industries continues to have a minimal impact:

Figure 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 small downward effect on the annual growth rate, with 12 month growth in quarter four of 2011 being 0.1 percentage point lower for the SPPI with the new industries included.  Table four shows the comparison of 12 month growth rates (current published SPPI 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, Q4 2011

Not seasonally adjusted

2005=100 (SIC2007)
12 month Percentage change Difference
Aggregate published SPPI Aggregate SPPI with new industries
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 2.8 2.7 -0.1
Q2 2.5 2.3 -0.2
Q3 2.3(r) 2.2 -0.1(r)
  Q4 1.7 1.6 -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

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As can be seen from the table, annual growth in the aggregate SPPI which includes the new experimental industries has been lower than the published aggregate SPPI in each of the last four quarters. However, the difference between the two series is minimal with the largest difference being -0.2 percentage points in quarter two of 2011.

Services Producer Price Indices development

The development project aiming to increase the industrial coverage of the SPPI, which has been in place since 2009, has recently expanded in scope to include the following industries:

  • advertising,

  • business and management consultancy,

  • storage and warehousing services.

The next SPPI update on Friday 25 May 2012 will include new experimental indices for each of these additional industries along with a summary of the development work and methodology implemented for each new industry.

Next results and further information

The next update for these experimental SPPIs will be published on Friday 25 May 2012 on the ONS website. 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 Chris Jenkins or Aspasia Papa:

Christopher.jenkins@ons.gsi.gov.uk (+44 (0)1633 455474)

Aspasia.papa@ons.gsi.gov.uk (+44 (0)1633 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.ons.gov.uk/ons/guide-method/user-guidance/prices/sppi/development-of-price-indices-1.pdf
  2. Jenkins, C. (2011) The development of price indices for professional business services and cargo handling - quarter 2 2011 update, Office for National Statistics, available at: http://www.ons.gov.uk/ons/rel/ppi2/services-producer-price-indices/the-development-of-price-indices-for-professional-business-services-and-cargo-handling---quarter-3-2011/experimental-sppis-q32011-update.html
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