Review of country Review of country practice on Index of practice on Index of Service ProductionService Production

26 June 200326 June 2003

Eun-Pyo HONGEun-Pyo HONGOECDOECD

ContentsContents

• Comparison of national practices for three OECD MSs and three broad issues: - Canada, Korea and UK; - in terms of index as a whole, variables used to measure service production activities and their deflators.

• Conclusions and questions

Index: compilationIndex: compilation

ISP should measure net output or the value added of various service sectors

• Canada: monthly value added from deflated SA gross output

- output indicators are benchmarked to the output values of deflated I/O tables.

• Korea and UK: in general, use gross output directly - changes in gross output are frequently used as

approximate indicators of change in net output: - deflated turnover weighted by those compiled from VA of

service sectors.

Index: titlesIndex: titles

Service Industry Activity Index (SAI)

Korea

Index of Services (IoS) United Kingdom

Index of Tertiary Industry Activity (ITIA)

Japan

No specific name but published for a service sector in monthly GDP

Canada, Finland

Index: typesIndex: types

• Canada publishes indices for more than 50 groups.

• UK also publishes indices at division levels in five aggregated groups in addition to one for total: - Distribution, Hotel and restaurants, Transport and communications, Business services and finance, Government and other services.

• Korea publishes indices for total service and for: - non-financial services and indices for each Category; - as well as indices for knowledge based service, etc.

Index: timelinessIndex: timeliness

The overall index is available:• Canada and UK: about 2 months after the end

of the reference month;

• Korea: about 40 days after the end of the reference month.

Index: coverageIndex: coverage

Service sector normally defined as activities covered in categories G to P in ISIC Rev.3

- G: Wholesale and retail trade, repair of motor vehicles, motorcycles and personal and households goods - H: Hotels and Restaurants - I: Transportation, storage and communication - J: Financial intermediation - K: Real estate, renting and business activities - L: Public administration and defence, compulsory social security - M: Education - N: Health and social work - O: Other community, social and personal activities - P: Private households with employed persons

Coverage comparisonCoverage comparison (cont.)(cont.)

H L M N P50 51 52 55 60 61 62 63 64 65 66 67 70 71 72 73 74 75 80 85 90 91 92 93 95

Korea

UK

Canada

ISIC SECTORS FULLY COVERED BY INDICATORS SECTORS COVERED BUT NOT CORRESPONDING EXACTLY TO ISIC

ISIC SECTORS PARTIALLY COVERED SECTORS NOT COVERED

0G I J K

Index: coverageIndex: coverage (main issues)(main issues)

• Due to the inclusion of a wide range of activities in the services sector, it is hard to compare: - differences of coverage across sectors; - differences of coverage within a sector.

• Differences in coverage due to: - interests of each country; - statistical environment; - user needs; - etc.

Variables: sourcesVariables: sources• Canada: more than 30 sources, but 4 main surveys: - Survey of Employment, Payrolls and Hours; Monthly Survey

of Manufacturing; Retail Trade Survey; Wholesale Trade Survey.

• Korea: 2 main surveys and a few other sources: - Current Service Industry Survey; Current Wholesale and

Retail Trade Survey; and Data from other organisations (such as financial, insurance and health institutions).

• UK: a number of surveys and administrative information, e.g.:

- Monthly Inquiry into the Distribution and Service Sector; Retail Sales Inquiry; Expenditure and Food Survey; etc.

Variables: typesVariables: types

• 2 types: volume and/or (deflated) value

• Korea: use no volume data but value only: - Gross turnover and gross operating revenues

for all activities.

• Canada and UK: use of both volume and deflated value data.

Variables: typesVariables: types (cont.)(cont.)

Examples of variables used

Value Volume

Canada

Sales, Shipments, Personal expenditure, Net revenues on managed assets, Operating expenses, Cash rent paid, …

Employment, Revenue freight in tonne, Volume of grains, Number of hotel and motel rooms, Number of passengers transported, …

Korea Gross turnover, Gross operating revenue, Loan outstanding, Credit card settlement, Insurance premium income,…

None

UK Turnover, Insurance premium income, Household expenditure, Total liabilities, Total outstanding interest, Non-trading capital consumption, …

Ticket holders, Freight moved, Volume of letters and parcels delivered, Number of stock broking transactions, Number of employees, …

Variables: level of InformationVariables: level of Information (x-digit level of ISIC Rev. 3)(x-digit level of ISIC Rev. 3)

ISIC Rev. 3 Canada Korea UK

G- 50- 51- 52

3/4/5 3 3/4/53

3/4/53/4

H 3 5 3/4

I 3/4/5 5 3/4

J 2/3/4/5 5 3/4

K 4/5 5 3/4

L 3/4 NI 4

M 4 5 4

N 3/4/5 5 3

O 3/4/5/6 5 3/4

P 3 NI 2

Variables: coverageVariables: coverage

Korea UKG 50 Covers all activities Covers all activities

51 Excludes wholesale on fee and contract basis

Covers all activities

… … … …

I 60 Excludes transport via pipelines

Excludes self-drive car hire, which is covered by ‘renting goods’.

61 Excludes inland water transport

Excludes hire of pleasure boats, which is covered ‘recreation’.

… … … …

K 70 Excludes subdividing of real estate

Excludes renting of short-stay holiday accommodation, which is included in ‘Hotels and restaurants’

… … … …

Examples of activities included or excluded within Examples of activities included or excluded within categoriescategories

Variable: frequencyVariable: frequencyInputInput data data Overall Overall

IndexIndex

Monthly Monthly (Canada, Korea, UK)(Canada, Korea, UK)

Monthly Monthly (Canada, Korea, UK)(Canada, Korea, UK)QuarterlyQuarterly, ,

AnnualAnnual (Canada, UK)(Canada, UK)

Benchmarking, Benchmarking, InterpolationInterpolation

Untimely Untimely MonthlyMonthly (Korea, UK)(Korea, UK)

Estimates, ForecastsEstimates, Forecasts

Deflators: list of deflatorsDeflators: list of deflators

Types Names Used by

Producer Producer price index /Industrial price index

Korea, UK / Canada

Corporate service price index UK

Average earnings index UK

Consumer Consumer price index / Retail price index

Canada, Korea / UK

Household expenditure imply deflator UK

External trade

Import price index Canada, UK

Export price index Canada

Combination of different types of price indices UK

GDP deflator UK

Activity specific deflators UK

Deflators: comparisonDeflators: comparison

• Korea uses the simplest deflation system with PPI and CPI; - no combined deflators are used.

• Canada and UK use a wide range of deflators, which cover consumer, producer, trade, overall economy as well as combined deflators. - UK deflating system is the most complex.

• No common practices across the 3 countries except for ‘Hotel and Restaurant’ (H) and ‘Recreational, cultural and sporting activities’ (92).

Conclusions: similaritiesConclusions: similarities Canada &UK Canada & Korea UK & Korea Three countries Value added None None gross output None Frequency M M M Monthly Timeliness 2 M Within 2 M Within 2 M Within 2 M Coverage - Across - Within

- G – P - NA

- G – O w/o L - NA

- G – O w/o L - 50; H; 74; 90, 93

- G – O w/o L - NA

Variable source Survey and administrative

Survey and administrative

Survey and administrative

Survey and administrative

Variable types

- Value and volume: 63, 64; 65; 70; 92 - Value: 66, 67, P

- Value: 66

- Value: G,H,72,93

- Value: 66

Level at which input data are collected

Various levels are used

None None None

Deflators - Overall

- Consumer - Producer - Consumer and

producer - Producer and

other deflators

- CPI, PPI and other deflators - H; 66, 67, 92 - None - None - 51

- CPI and PPI - 52, H, 92 - None - 60 - None

- CPI and PPI - H; 92, 93 - 90 - 60 - None

- CPI and PPI - H, 92 - None - None - None

Conclusions and questions Conclusions and questions (for (for STESEG)STESEG)

Similarities• Types of sources• Coverage across sectors• Timeliness & frequency

Significant differences• Compilation methodology• Coverage within sectors• Types of variable used• Types of deflator used• Title of the index

Question: whether STISTF should attempt to harmonise the differences?

- If it should, then to what extent?

Outcomes from TF meeting on 25 Outcomes from TF meeting on 25 June June

• It will be an advantage if the title reveals the nature of It will be an advantage if the title reveals the nature of indices,indices,

- in particular, ISP. - in particular, ISP. • Preference is for timely monthly ISP with linkage to QNA.Preference is for timely monthly ISP with linkage to QNA.• Differences in the national practices may have to be Differences in the national practices may have to be kept as there exists many limitations, e.g. resources, kept as there exists many limitations, e.g. resources, priorities, statistical environment, etc. In particular, priorities, statistical environment, etc. In particular,

- National classifications are difficult to harmonise in - National classifications are difficult to harmonise in short-term.short-term.• Input from three task force activities would be used in Input from three task force activities would be used in the preparation of a final document/manual outlining the preparation of a final document/manual outlining options in preferred order appropriate to each service options in preferred order appropriate to each service activity.activity.• Eurostat manual on industrial production could be used Eurostat manual on industrial production could be used as a starting point for services.as a starting point for services.