SERVICES PRODUCER PRICE INDEX - a new European economic indicator. Andreja Intihar, SORS

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1 SERVICES PRODUCER PRICE INDEX - a new European economic indicator Andreja Intihar, SORS

2 General information Services producer price indices (SPPIs) measure price changes in the service markets. The survey is carried out on the basis of Regulation 1158/05 of the European Parliament and of the Council amending Council Regulation 1165/98 concerning short-term statistics. According to the Standard Classification of Activities 2008, seventeen service activities are covered; those identified as being the most related to the business cycle and for which users felt the greatest need. SORS also covers one additional activity, i.e. publishing. Selected services are mainly delivered to customers that are enterprises or persons representing enterprises business-to-business approach. 2

3 General information (continued) The output price variable is the actual transaction price (including possible subsidies received by the producer and excluding taxes, any discounts and rebates given). The base period for the quarterly indices is The first observation period is the first quarter of

4 Data access Release Calendar; on SORS's website ( First Release - quarterly electronic release within 3 months after the end of the reference period. SI-STAT Data Portal (field: Economy, subject area: Prices); for more detailed data and time series from the first quarter of 2006 on. 4

5 Total annual services producer price index, Slovenia Index change compared to the corresponding quarter of the previous year SPPI total Q2 2007Q3 2007Q4 2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 Source: Statistical Office of the Republic of Slovenia 5

6 Producer prices in selected service activities, Slovenia Percentage change compared to the previous quarter Telecommunications Legal, accounting and management consultancy activities Computer programming, consultancy and related activities Air transport Architectural and engineering activities; technical testing and analysis Q2 2007Q3 2007Q4 2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 Source: Statistical Office of the Republic of Slovenia 6

7 Shares of service activities in total SPPI for 2009, Slovenia Computer programming, consultancy and related activities - 9,40% Advertising and market research - 4,98% Publishing activities - 4,54% Legal, accounting and management consultancy activities - 12,00% Postal activities under universal service obligation - 2,77% Air transport - 2,58% Cargo handling - 2,14% Cleaning activities - 2,10% Security and investigation activities - 1,80% Sea and coastal water transport - 0,91% Employment activities - 1,67% Telecommunications - 13,34% Other activities - 4,31% Data processing, hosting and related activities; web portals - 0,84% Other postal and courier activities - 0,44% Warehousing and storage - 0,36% Other information service activities - 0,09% Freight transport by road and SORS removal services -20,86% Architectural and engineering activities; technical testing and analysis - 19,18% Legend derives from the Standard Classification of Activities

8 Producer prices in freight transport by road and removal services Percentage change compared to the previous quarter Bulgaria 2 European Union 27 Slovenia 0 Ireland -2 Euro area Q2 2007Q3 2007Q4 2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 Source: Eurostat (sts_sepp_q) 8

9 Future work For activities (such as Sea and coastal water transport, Passenger air transport, Postal and courier activities, Telecommunications, Legal activities) in which sales to households are significant, an additional price index on the basis of the business-to-all approach should also be provided. The need for quality adjustment is encountered continuously in the SPPI compilation; therefore, suitable methods shall be developed / improved in the coming years. It is expected that the list of mandatory service activities for which we currently calculate the SPPI will be extended to include activities like Wholesale and retail trade, Rail transport, Monetary intermediation, Real estate activities, Scientific research and development, Rental and leasing activities, Human health activities. As a consequence of increasing off-shoring and outsourcing of services, we ought to consider measuring export and import prices for services. 9