1. INDEX OF SERVICE PRODUCTION
Presentation
Daniel Lennartsson
Statistics Sweden

2. Share of GDP

3. Strong correlation (0.84) with 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, similar indicators to those in the industry. Production (volume) index, new orders, prices, turnover and capacity)
The department of Economic statistics was given about 600 thousand Euro / year to produce new indicators. Most of this amount are used to produce a index of service production (ISP) and turnover statistics on a monthly basis.

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

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 consumption
a is price of quantity for consumption
i is one of the produced quantities
j is one of the quantities for consumption
0 is the base period
t is the present period

7. The main components to construct a short term index
Output (Turnover)
Deflators
Weights
Trading Day effects
Seasonal adjustment

8. OECD:s priorities A. Best method
Deflated turnover for one activity. For this a good SPPI is needed.
Volume indicators. Example a) Number of passengers b) Number of flights. No deflation is needed. No qualityadjustment.
B. Alternative method
Deflated turnover with a less good deflator. (CPI, faktorpriceindicies, PPI, wages)
C. Other method
Indicators which is measuring input –hours worked, number of person employed

9. Turnover Sampled based survey on a monthly basis
Coverage NACE excl 64-66
Low cut off threshold (> Euro / year)
The sampling frame is stratified by activity and size (128 *6)
Total sample size is enterprises on monthly basis and on quarterly basis

10. 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 (IPPI), import price index (IMPI)
– all indices are produced on monthly basis

11. SPPI – forcasting and extrapolation
Problem – SPPI only on a quarterly basis
In April we only have the price development for the first quarter. A regression model called exponential smoothing makes an estimate of the 2:nd quarters pricefigure.
This forecasted value is used for all months during the second quarter.
The forecasted SPPI is replaced with the actual SPPI when data for the 2nd quarter is produced.

12. Deflators– Exp smoothing
Activity Def Prel Diff (%) Priceindex Periodicit
, , , CPI M
, , , PPI M
, , , CPI M
, , , SPPI Q
, , , SPPI, CPI, FPI,WI Q, M
, , , SPPI Q
, , , SPPI Q
, , , SPPI, CPI, FPI,WI Q, M
, , , SPPI Q
, , , SPPI, CPI Q, M
, , , SPPI, PPI Q, M
, , , SPPI Q
, , , WI M
, , , SPPI, WI Q, M
, , , SPPI, WI M
, , , CPI, WI M
, , , CPI, WI M
, , , WI M
, , , CPI, WI M
, , , CPI, WI M
Totalt , , ,2

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

14. Results, ISP compared too IIP
Index present month compared to same month previous year (index=100)

15. Results, ISP compared too Privat services within GDP
Index present quarter compared to same quarter previous year (index=100)