Statistical agencies are responding to the rapid growth of the service sector by expanding their price surveying activities to address this. The degree of expansion into services will vary, but agencies face similar conceptual challenges. So called New Economy industries are among the most difficult to measure. The rapid rate of service line and input changes present seemingly insurmountable hurdles for the PPI practitioner.

The paper focuses on four service sector industries: 1. Prepackaged software services, 2. Data processing services, 3. Telecommunications services, and 4. Banking and security dealers. These industries are either heavy users and/or producers of information technology that enable increased productivity and the rapid introduction of new services or quality improvements in existing services.

Several countries are publishing producer price indexes in the data processing sector and the telecommunications services sector. The United States, Australia, and the United Kingdom are currently involved in surveying activities in the financial services area. The discussion of prepackaged software is unique to the United States. The major challenge that has not been successfully addressed involves the ability to quality adjust when services are affected by changes to inputs. PPI practitioners are currently focusing on defining proper measures of output and dealing with sampling strategies and pricing methodology. Problems identified in the paper commonly found in New Economy industries include: 1. Changes in whether services are bundled or unbundled, 2. Product line convergence, 3. Frequent introduction of new services or new service features, and 4. Output expansion without proportional increases in labor inputs.