Services producer price indices for Technical testing and analysis

Transcription

1 Services producer price indices for Technical esing and analysis Indusry descripion for SNI group 74.3 SPPI repor no 26 Siv Grimsvik Laskaridis Pera Jansson Services producer price indices, Price Saisics Uni, Saisics Sweden November 2007

2 Foreword Privae services producion has made up a large share of Sweden's gross domesic produc (GDP) for a long ime, bu relevan price indices were no developed o any grea exen before he year This can in par be explained hisorically; commodiies have previously made up a dominan par of he economy. Economic saisics have also been focused on commodiies. Anoher reason is he fairly complicaed naure of measuring price rends in services. As par of he process o improve economic saisics, producer price indices for services, Services producer price indices (SPPIs), were developed a few years ago. SPPIs are developed for he mos common services in indusries where eiher he Swedish Naional Accouns or he EU require hem o be. This repor is one of a series of SPPI repors ha discuss he rend in services producer price indices in differen indusries. The aim of hese repors is boh o give a descripion of he saisics for exernal users and o provide a basis for producing new services producer price indices. I also gives a general descripion of how services producer price indices can be calculaed. Acknowledgemen Thanks o our daa providers - privae individuals, companies, auhoriies and organisaions - Saisics Sweden is able o provide reliable and up-o-dae saisics ha saisfy sociey's need for informaion. 2

3 Conens Foreword Summary Background Condiions for saisical work in he SPPI field Requiremen for price indices in he naional accouns Descripion of he indusry Furher developmen Sampling Price measuremen mehods Assumpions, weighs and index calculaions Non-response managemen and qualiy adjusmen Final commens...13 Saisics Sweden 3

4 1 Summary Services producer price index for Technical esing and analysis Technical esing and analysis is a heerogeneous indusry; i includes e.g. waer analysis, lif inspecion, ype-approval of vehicles and elecrical appliances. Pricing in he indusry varies depending on he company and he service. Prices can be se per conrac, per hour or by means of specificaion price measuremen. Specificaion price measuremen is when he price is obained from a price lis ha specifies each service he company performs. The sample has been limied o en companies, parly because of dispariies among he companies and parly in order o cover a large secion of he indusry. The idea is o visi each company in he sample in order o, in consulaion, devise a form and price measuremen mehod ha are cusomised for each company in urn. A oal index for 74.3 will be calculaed in which sub-indices for differen aciviies are weighed ogeher. 4

5 2 Background The Swedish service indusry's value added amouns o abou 62 percen of he business secor's oal value added. Calculaed as a share of GDP, he business secor's service producion consiues abou 50 percen. For mos of he 1990s, his share was jus under 40 percen of GDP and rose gradually owards he end of he cenury. As service producion's share of GDP has grown, he need for correc volume calculaions of service producion has also increased. To calculae rends in individual indusries, value added mus be purged from inflaion. Price rends for differen producs and services mus be measured and indices calculaed before he curren prices can be convered ino fixed prices. In order o cover mos of he groups of services in Sweden's naional accouns and o fulfil inernaional requiremens, new indices for he service indusries are coninuously developed. The services producer price index (SPPI) is a producer price index for services ha aims o measure price rends in indusries ha produce business services. There are currenly SPPIs for jus over 40 percen of he business secor's services producion. The majoriy of he SPPIs produced oday have been developed since SPPIs for rens (for business premises), hoel services and domesic air ravel began o be developed during he 1990s. A join Eurosa-OECD working group was esablished in 2002 in order o develop a common mehod for European services price indices and o provide pracical help o counries in he process of developing hem. A manual wih, among oher hings, pracical descripions of SPPI for differen indusries was developed. 1. The manual refers o he exising SPPI manual for index heory and pracice 2. SPPI developmen and producion work is currenly regulaed by Council Regulaion (EC) 3. 1 Mehodological guide for developing producer price indices for services. Websie:hp:// 2 Producer Price Index Manual: Theory and pracice. Websie:hp:// /98 concerning shor erm saisics. Saisics Sweden 5

6 . 2.1 Condiions for saisical work in he SPPI field SPPI is a producer price index ha aims o show he average price rend in he producer chain for services supplied by domesic producers. The index figure is for one quarer and he price daa is o be an average per quarer. The measuremen should refer o ransacion prices, i.e. he prices he purchaser acually pays afer discouns. When developing a services price index for a new indusry, specific indusry-relaed price measuremen problems mus be solved. For example, i is no always obvious how o define he service. Anoher problem is ha he services supplied are ofen ailor-made for a specific cusomer and are only supplied once. This makes i difficul o find comparable services o follow over ime. These problems are some of he hings discussed in his repor for he indusry in quesion: For which services are he prices o be measured? Wha does he indusry's price formaion look like? And in wha way can we include he prices in a way ha reflecs he price rend wihou placing oo much of a burden on daa providers? 2.2 Requiremen for price indices in he naional accouns As a resul of he Sabiliy Pac in Maasrich, he EU esablished crieria for he reporing principles for Member Sae naional accouns in fixed prices. For fixed price calculaions, i is recommended ha producion and inpu consumpion be deflaed separaely using approved, qualiy-adjused price indices. This means ha he indices are only o reflec changes ha can be assigned o price changes whils changes regarding quaniy, qualiy or composiion of he produc/service should no influence he indices. As long as hese recommendaions are followed, he 6

7 index will be considered an A-mehod for fixed price calculaion. All EU Member Saes have ranked heir mehods, under he supervision of Eurosa, as A, B or C mehods. As from 2006, no C- mehods may be used in Member Sae naional accouns unless dispensaion has been graned. For a more deailed descripion, please refer o he European Sysem of Naional Accouns, ENS 1995, Chaper 10. Saisics Sweden 7

8 3 Descripion of he indusry The daa in his chaper have been gahered from he Business Regiser (BR), he Srucural Business Saisics (SBS) a he Uni for Business Srucure (NA/NS) a Saisics Sweden and from visis o companies. According o Swedish Sandard for Indusry Classificaion (SNI 2002), his is classified under SNI 74, Oher business aciviies. Indusry SNI is responsible for abou wo percen of he oal urnover in SNI 74. SNI is divided ino six sub-groups. The classificaion of he sub-groups allies wih he classificaion in SPIN apar from SPIN A which in SNI is divided ino he groups "Oher echnical inspecions" and "Oher echnical esing and analysis". The urnover daa in Table 3 has been colleced from NA/NS where Oher echnical inspecion, esing and analysis and Type-approval and inspecion of moor vehicles make up he larges par. Taken ogeher, hese are responsible for 66 percen of oal urnover in he indusry. See Table 1 below. Table 1: Sub-groups in SPIN 74.3 Technical esing and analysis wih values (SEK millions). SPIN Descripion TURNOVER Sampling and analysis of composiion and degree of puriy Sampling and analysis of physical properies Tesing and analysis of inegraed mechanical and elecrical sysems Type-approval and inspecion of moor vehicles A Oher echnical inspecion, esing and analysis Toal Source: SBS, NA/NS Sandard for Swedish Produc Classificaion (SPIN 2002) is a sandard linking producs o aciviies (indusries) in SNI SPIN 2002 is he Swedish equivalen of he EU's Classificaion of Producs by Aciviy (CPA). 8

9 The able below is based on daa from he Saisics Sweden Business Regiser (BR) from Table 2: srucure by size caegory broken down by number of employees in SNI Technical esing and analysis Turnover in SEK millions Number of employe es Numbe r of compa nies % Number of employe es % Ne urnover Toal Source: Saisics Sweden Business Regiser 2005 A oal of 470 companies have specified Technical esing and analysis as heir indusry (consiuing more han 70 percen of heir aciviies). The majoriy, 385 of hem, have 0-4 employees. This group of 385 companies is responsible for 6 percen of ne urnover and 3 percen of he oal number of employees in he indusry. As many as 240 companies (73 percen) in he 0-4 employees group are sole proprieorships. Five companies wih more han 200 employees are responsible for he clearly dominan share of boh ne urnover (55 percen) and number of employees (66 percen). The companies in he indusry es everyhing from kichen appliances o shipping vessels and aircraf. They also work wih he ype-approval of pressure chambers, moor vehicles, nuclear power saions, ec. The companies in his indusry operae in widely differing areas wih enirely differen pricing mechanisms. In cerain cases, consulans are hired and he prices are se based on he price per consuling hour, in oher cases, he companies perform % Saisics Sweden 9

10 analyses of food or well-waer. I may also relae o he inspecion of car garages, nuclear power saions, lifs or moor vehicles. Wihin he indusry, here is considerable downward pressure on prices on he marke for public-secor cusomers. 10

11 4 Furher developmen I has come o ligh during he company visis ha i is difficul o find a common price measuremen mehod for all he companies. As a resul, all he companies ha are o paricipae in he survey will be visied during he spring, so ha we ogeher can design individual price measuremens mehods. The size of he sample will be kep o a minimum. Insead, considerable effor will be pu ino meeing he daa providers and, in consulaion wih hem, designing a suiable form. 4.1 Sampling A probabiliy sample of en companies from hose classified in SNI 74.3 in he Business Regiser has been drawn, aking size of urnover ino accoun. A cu-off poin of en employees has been used. Of he en companies in he sample, five have been drawn wih "cerainy", which means ha hey represen hemselves in he index calculaion whereas he oher five share he remaining weigh equally. The sample covers 62 percen of he oal urnover in he indusry. The able below shows how he sample is broken down. Table 3. Shows he sample for SNI Number of employees Number of companies Ne urnover SEK millions Percenage of he indusry's oal urnover Toal Price measuremen mehods The en companies included in he sample will be visied so ha we, in consulaion wih hem, can develop a suiable form and devise a suiable price measuremen mehod for each individual company. In he ideal scenario, he companies will hen repor acual ransacion prices for hree o five services wihin he public and privae cusomer caegories every quarer. Based on wha happens on he company visi, i will be a quesion of conrac price Saisics Sweden 11

12 measuremen, specificaion price measuremen and in some cases hourly price measuremen. 4.3 Assumpions, weighs and index calculaions A descripion of how SPPIs are calculaed follows below. This is also how indices for he indusry Technical esing and analysis will be calculaed. A geomeric mean value for he price change wihin he company will be calculaed for all companies. Indices for each company are calculaed according o: I m 0, a = i= 1 p p a, i 0 a, i 1/ m Where ime I 0,a = index wih base ime 0 for company a, a p, = price of service i, company a a ime a i 0 p a,i = price for service i, company a, a base ime m = number of services in company a The nex sep is o geomerically weigh he differen company indices ogeher o give a oal index for he indusry. The larges companies are weighed based on heir urnover and he smaller companies share he remaining weigh. he oal index for he indusry is given by: I 0, T = n ( I 0, a ) a= 1 wa 12

13 Where I 0,T = oal index wih base ime 0 for he indusry a ime I 0,a = index wih base ime 0 for company a, a ime w a = weigh for company a n = number of companies in he survey for he indusry 4.4 Non-response managemen and qualiy adjusmen In he even of non-response, impuing is carried ou using a suiable mehod. Should qualiy adjusmen be necessary, his is done in close consulaion wih he company. 5 Final commens In he indusry Technical esing and analysis, here are a number of differen aciviies, for which weighs are available from NA/NS. Unforunaely, he Business Regiser, from which he sample is drawn, is no divided up in he same way. I is herefore no possible o assume ha he sample drawn represens all aciviies. Neiher is i possible o presume ha he price rends in he various aciviies do no differ. During he firs year, which is a rial year for he survey, an evaluaion of he sample size and he index calculaion mehod will be performed. A feasible alernaive for index calculaion is o weigh he company services beween he public and privae secor and o ake he aciviy wihin which he company operaes ino consideraion. Saisics Sweden 13