1. SHORT TERM INDICATORS IN THE SERVICE SECTOR
Presentation
Jonas Färnstrand
Statistics Sweden

2. Growth of service sector
Servicesektorn har ökat kraftigt vilket gör att det krävs mer statistik

3. Service sector and GDP -4 -2 2 4 6 8 10 12 14 16 1993K1 1994K1 1995K12 4 6 8 10 12 14 16
1993K1
1994K1
1995K1
1996K1
1997K1
1998K1
1999K1
2000K1
2001K1
2002K1
2003K1
2004K1
2005K1
2006K1
2007K1
GDP
01-45
50-95
Servicesektorn följer GDP nästan exakt, varför ett ISP borde vara en bra indikator för att prognosticera GDP

4. Swedish investigation about the economic statistics 2002
The users of statistics want statistics for the growing private service sector
The users want short term indicators, similiar indicators to those in the industry. Production (volume) index, new orders, prices, turnover and capacity
The department of Business and Labour Market was given about 600 thousand Euro / year to produce new indicators. Most of this amonth are used to produce a index of service production (ISP) and turnover statistics on a monthly basis.
Detta gällde 2002 – nu finns det produktion, index, prices och turnover

5. Starting points and Conditions
Project plan with purpose to develop a production (volume) index for the service sector on a monthly basis
Starting points and Conditions
-OECD manual / Eurostat manual
-Great Britain’s production volume index
-National Accounts
-Discussions with producers and users of economic statistics
Goals
-Set a design to produce a production index
-Publish the first result spring 2008.
-Timeliness 35 days after the end of the reference month
Första resultaten släpptes januari 2008 med siffror för 2005 och framåt

6. Production index in the service sector
The theoritical form of the production index is a
volume index of Laspeyres type
Where q is produced quantity
p is price of produced quantity
δ is quantity for intermediate consumption
a is price of quantity for intermediate consumption
i is one of the produced quantities
j is one of the quantities for intermediate consumption
0 is the base period
t is the present period
Teoretiskt index

7. Production index in the service sector
Qt is just a theoretical index and can not be calculated in
practice. Instead consider it as a value added index.
According to the theory of value added index the index
should be calculated as deflated production value minus
deflated intermediate consumption value.
To calculate (deflated) value added on monthly basis is
very difficult. Instead use some other output as a proxy
for value added.
We use deflated turnover for each activity as a proxy.
To produce production index we also need to weight the activities together up to aggregates.

8. How to calculate the production index in practice
Weight (wb) is
When applicate base years weights, the production index by time t can then be given by
Praktiskt ISP – Omsättning från urval, prisindex från Priser, vikter från SBS

9. The main components to construct a short term index
Output (Turnover)
Deflators
Weights
Trading Day effects
Seasonal adjustment
Säsongrensning är på gång, för korta serier hittills

10. Turnover Sampled based survey on a monthly basis
Coverage NACES 50-64, 70-90, 92-93
Low cut off threshold (> Euro / year)
The sampling frame is stratified by activity and size (127 *6)
Total sample size is enterprises on monthly basis and on quarterly basis
7000 för preliminärt index, ytterligare 6000 för ett mer definitivt index

11. Deflators Best deflator: Producers price index in the service sector
(SPPI)
Only produced on quarterly basis
Forecasting of SPPI is done for the present month by a forecasting model, exponential smoothing
Other deflators:
Consumer price index (CPI), wage index (WI), producers
price index in industry (PPI), import price index (IMPI)
– all indices are produced on monthly basis

12. List of deflators – per NACES
Service production index for quarter compared to 20061, constant prices in 20061
Nace Def Prel Diff (%) Priceindex Periodicity
, , , CPI Month
, , , PPI Month
, , , CPI Month
, , , SPPI, CPI Qrt, Month
, , , SPPI, CPI Qrt, Month
, , , SPPI Qrt
, , , SPPI Qrt
, , , SPPI, CPI Qrt, Month
, , , SPPI Qrt
, , , SPPI, CPI Qrt, Month
, , , SPPI, PPI Qrt, Month
, , , SPPI Qrt
, , , SPPI, IMPI Month
, , , SPPI Qrt, Month
, , , CPI, WI Month
, , , CPI, WI Month
, , , SPPI Qrt
, , , WI Month
, , , CPI, WI Month
, , , CPI Month
Total , , ,2
PPI för domestic supply

13. Weights Value added weights (from SBS survey) Yearly weights
The weights are updated every year (small changes though)

14. Trading day effects and seasonal adjustment
Estimation of trading day effects
- Regression model, based on time series data (Major part of activities)
- Expert group estimating trading day effects (Retail Trade)
- It’s very difficult to adjust for trading day effects in an accurate way!!
Seasonal adjustment of the index serie
- No seasonal adjustment, because of too short serie (2005- )
Trading day effects – experter från branschorganisationer (trade associatons)

15. First results, total SPI
Index present month compared to same month previous year (index=100)

16. First results, SPI by activity group
Index, first quarter 2008 compared to first quarter 2007 (index=100) 95
100
105
110
115
120
50-52
60-64
70-74
80-85
90-93
50-93
TOTAL
Activity group by NACE
Index
In current
prices
In volumes,
trading day
adjusted

17. Wholesale price index First publishing - Press release
- Press conference
Monthly publishing
- Timeliness, 50 (35) days after reference month
- Press release (web page)
- Statistical databases
50 dagar än så länge, men troligtvis 35 dagar inom kort

18. Wholesale price index PPI data for 76 products (CPA)
PPI with 1990 = 100
These products are weighted together to 15 product groups (Statistics Sweden product groups)
Weigthing in this step is done by weights from PPI (which is based on yearly Prodcom data)

19. Wholesale price product groups
Agricultural and chemicals
Paper, skins and leather materials
Iron, steal, metal and scrap
Building and hardware materials
Machine and equipment related goods
Food
Alcoholic beverages
Other everyday commodities
Clothes, shoes and suitcases
Home equipment and electronics
Sportswear, toys, motorbikes
Pharmaceptical products
Cars and trucks
Parts and accessories of motor vehicles
Gas and motor fuel

20. Deflators for activities
ISP results for 15 activities within NACE 51
(511, 512, 513, , , , 5151, 5152, 5153, 5154, 5155, 5156, 5157, 518 and 519)
Turnover by products calculated within SBS (earlier presentation)
Wholesale product group price indices weighted together by the turnover shares from SBS within each activity
Deflators with 1990 = 100
Calculated with average of last year as base

21. Wholesale trade deflators

22. Wholesale trade deflators

23. Price changes
Större prisförändringar inom partihandeln än övriga tjänstesektorn

24. Wholesale price index
Stora prisförändringar för livsmedel och bränslen

25. Thank you!
Questions?