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Overseas trade in services price index weights

This article summarises changes in weights for the index from 2009 to 2010.

Background

The overseas trade price indexes consist of the:

  • overseas merchandise trade price and terms of trade indexes, which measure price changes for exports and imports of goods
  • overseas trade in services price index, which measures price changes for exports and imports of services.

The overseas trade in services price index is reweighted annually to reflect the changing relative importance of the different types of services that are exported and imported.

The weights are calculated to determine the importance of each sub-index.

Methodology

Every year, new weights are implemented for the overseas trade in services price indexes. The weights (which reflect revenue or expenditure for the year to June) are linked on the June quarter and are implemented in the September quarter.

The weights are calculated from Statistics NZ’s balance of payments services data, where information comes from various surveys, including the:

  • quarterly survey of international trade in services and royalties
  • quarterly insurance surveys
  • quarterly transportation surveys.

The overseas trade in services price indexes are calculated using the new weights. Pricing information is taken from postal surveys of businesses, and from international price indexes.

Current weights

The overseas trade in services price indexes include five levels. The top two levels are published. The top two levels include total imports and exports, and four sub-indexes for imports and four for exports.

The published sub-indexes in the trade in services price index for both imports and exports are:

  • transportation, which covers sea and air transportation
  • travel, which includes personal and business travel
  • other services, which includes all services other than travel, transportation, and government services (eg insurance services, financial services)
  • government services, which includes services such as expenditure on New Zealand’s embassies overseas and expenditure by foreign embassies in New Zealand.

More information on the types of prices in these sub-indexes is discussed in later sections.

The current weights, which will be used from the September 2010 to June 2011 quarters, are:

Overseas trade in services price index weights
September 2010 to June 2011 quarters
Sub-index 
 
 Weight (percent)
Imports Exports
Transportation   30.0  18.6
Travel  34.3  58.4
Other services  34.4  21.6
Government services          1.2 1.5

Compared with the imports index, the exports index has:

  • a higher weight for travel (58.4 percent compared with 34.3 percent for imports)
  • a lower weight for transportation (18.6 percent compared with 30.0 percent)
  • a lower weight for other services (21.6 percent compared with 34.4 percent for imports).

Changes in weights from 2009 to 2010

From the year to June 2009 to the year to June 2010, the weights within the sub-indexes have changed as a proportion of the total index. In particular, within the imports index the sub-index weight for:

  • transportation has fallen
  • travel has risen
  • other services has fallen slightly.

From 2009 to 2010, within the exports index, the sub-index weight for:

  • transportation has fallen
  • travel has risen
  • other services has fallen slightly.

Import services

Import services capture the expenditure of New Zealanders using overseas services.

Changes in sub-index weights, as a proportion of the total index, depend on the relative changes in New Zealand expenditure for these services, as a proportion of total expenditure.

Figure 1

Graph, Overseas trade in services price index – imports.

Transportation

The transportation services sub-index within import services measures overseas air and sea transportation services used by New Zealand consumers and businesses. For example, this sub-index measures prices changes for shipping goods from Sydney to Auckland using a foreign shipping company, and an economy class airfare purchased by a New Zealand-resident from a foreign airline.

From the year to June 2009 to the year to June 2010, transportation as a proportion of total import services fell from 32.4 percent to 30.0 percent, reflecting lower expenditure on sea freight.

Travel

The travel sub-index measures overseas travel services used by New Zealand consumers and businesses. For example, this sub-index includes overseas food and accommodation costs.

From the year to June 2009 to the year to June 2010, the travel imports index weight increased from 31.6 percent to 34.3 percent. This reflects a much smaller decrease in travel expenditure compared with expenditure on transportation and other services.

Other services

The other services sub-index measures services other than transportation, travel, and government services. For example, other services include:

  • computer and information services (eg computer processing charges)
  • financial services such as bank fees
  • insurance (eg overseas insurance for businesses).

The weight for other services has fallen slightly, from 34.7 percent to 34.4 percent, from the year to June 2009 to the year to June 2010, reflecting lower expenditure on agriculture, mining, onsite processing, and operational leasing services.

Government services

Government services has a small weight in the overseas trade in services imports index. The government services sub-index includes the operational expenses of New Zealand’s embassies overseas, and the costs of the New Zealand defence forces stationed overseas.

From the year to June 2009 to the year to June 2010, the weight for the government services sub-index remained unchanged (1.2 percent).

Export services

Export services covers foreign consumer and business spending on New Zealand services.

Figure 2
Graph, Overseas trade in services price index – exports.

Transportation

The transportation services sub-index within export services measures New Zealand air and sea transportation services used by foreigners. For example, this sub-index measures sea freight charges to transport goods from New Zealand to Samoa.

From the year to June 2009 to the year to June 2010, transportation as a proportion of total export services fell from 19.8 percent to 18.6 percent, reflecting lower revenue from New Zealand airline sales to overseas customers.

Travel

The travel sub-index measures prices changes for New Zealand travel services used by foreigners. For example, this sub-index covers a package holiday from Christchurch to Auckland for a family from Australia.

From the year to June 2009 to the year to June 2010, the travel exports index weight increased from 56.9 percent to 58.4 percent. This reflects a smaller decrease in travel expenditure compared with expenditure on transportation and other services.

Other services

The other services sub-index measures services other than transportation, travel, and government services. For example, other services includes:

  • business services (eg a New Zealand lawyer providing advice to an overseas client)
  • computer and information services (eg contract computer servicing by a New Zealand company to a foreign company).

The weight for other services fell slightly, from 21.9 percent to 21.6 percent, from the year ending June 2009 to June 2010, reflecting lower revenue from management fees and engineering consultancy services.

Government services

Government services has a small weight in the overseas trade in services exports index. The government services sub-index includes:

  • the sale of capital assets excluding land
  • estimated expenditure of foreign embassies in New Zealand
  • the portion of the government’s international aid spent in New Zealand
  • government receipts from immigration fees.

From the year to June 2009 to the year to June 2010, the weight for the government services sub-index rose slightly, from 1.4 percent to 1.5 percent.

 

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