Skip to content

Statistical bulletin: Index of Services, January 2013 This product is designated as National Statistics

Released: 28 March 2013 Download PDF

Index of Services, January 2013

  • Users are reminded that the figures within this release are estimates and are on a seasonally adjusted basis.
  • The Index of Services increased by 0.8% in January 2013 compared with January 2012. All of the components of the services sector increased in the most recent month compared with the same month a year ago.
  • The largest contributions came from business services & finance, which increased by 0.8% and government & other services, which increased by 0.9%.
  • These estimates for the services industries mean that, subject to revision, all the main components for the output measure of GDP (construction, production and services) are published for January 2013, the first month of quarter 1 2013. Between December 2012 and January 2013, the output of the services industries (77% of the output measure of GDP) were estimated to have increased by 0.3%, this compares to a fall of 1.2% in production and 6.3% (non-seasonally adjusted) in construction. The February estimates for production and construction output will be published on the 9 April 2013 and 12 April 2013 respectively with the February estimate for services published on the 25 April 2013 alongside the Gross Domestic Product Preliminary Estimate for quarter 1 2013.
  • The earliest period open for revision in this release is January 2011.

Key Figures

Table 1: Index of Services key figures: January 2013

Percentage change
  Index number Most recent month on a year earlier Most recent 3 months on a year earlier Most recent month on previous month Most recent 3 months on previous 3 months
    2009=100        
Index of Services 104.1 0.8 0.9 0.3 -0.2
             

Table source: Office for National Statistics

Download table

Economic background

Figure 1: Index of Services

Figure 1: Index of Services
Source: Office for National Statistics

Download chart

The latest Index of Services (IoS) estimates show that the sector increased by 0.3% between December 2012 and January 2013, following a decrease of 0.4% between November 2012 and December 2012.

Service sector growth for quarter 4 of 2012 was revised up slightly to zero growth on the quarter. This followed strong growth of 1.2% during quarter 3, which can be partly attributed to factors such as the bounce back from the additional Diamond Jubilee bank holiday in quarter 2  and the boost from the 2012 Olympic and Paralympic Games (see back ground note 1). Despite the upward revision to Services, Gross Domestic Product (GDP) remained unrevised for quarter 4.

The Index of Services has not followed the same path as GDP. Following the decline in 2008/2009, total services has grown steadily and surpassed its pre-recession peak, with the latest monthly estimates showing output strengthening in January 2013. The weakness seen in the output measure of GDP can be largely contributed to weakness in the production and construction industries. GDP (output, income and expenditure) is still around 3% below its pre-recession peak.

The effects felt by the 2008/2009 recession have differed between the main industrial sectors of the services sector. Quarterly data shows the business, services & finance sector is only slightly under its pre-recession peak. However, the distribution, hotels & restaurants and transport, storage & communication sectors are still some way below their pre-recession peaks. The latter has witnessed stagnation in its recovery over the past two years.

The government & other services sector has proved to be the most resilient. After a decline in 2008 it has grown and is now above its pre-recession peak. This is to be expected during a recession as automatic fiscal stabilisers come into effect, such as increasing demand for government services related to unemployment, careers and skills. The financial crisis caused a large increase in the unemployment rate; it now sits just under 8%, higher than the 5% rate witnessed pre-financial crisis.

The financial crisis would have been expected to negatively impact trade in services. However, the UK has maintained a positive trade balance in services of between £15bn and £20bn per quarter. This has helped offset large deficits in trade in goods. The devaluation of the pound will have also helped service exporters remain competitive in the global market.

Supplementary analysis

Figure 2: IoS contributions to the month on a year ago percentage change (January 2013)

Figure 2: IoS contributions to the month on a year ago percentage change (January 2013)
Source: Office for National Statistics

Download chart

The Index of Services increased by 0.8% in January 2013 compared with January 2012. In order of their contribution to growth: business services & finance increased by 0.8%; government & other services increased by 0.9%; distribution, hotels & restaurants increased by 1.3% and transport, storage & communication increased by 0.2%.

Figure 3: IoS contributions to the month on month percentage change (January 2013)

Figure 3: IoS contributions to the month on month percentage change (January 2013)
Source: Office for National Statistics

Download chart

Between December 2012 and January 2013 the Index of Services increased by 0.3%. In order of their contribution to the rise in the latest month: transport, storage & communication increased by 1.3%; government & other services increased by 0.3%; business services & finance increased by 0.2% and distribution, hotels & restaurants output was flat.

There was some feedback from businesses in the distribution, hotel & restaurants sector, which said that heavy snow fall in the period reduced growth in January 2013.
 
More detail on individual divisions can be found in the IOSCOMP tables in the data section of this bulletin. The tables also provide information on the growth for the three months ending in January 2013 compared with the previous three months and compared with the three months ending January 2012.

Services in detail

The Index of Services measures the chained volume index movements of the UK service sector. The service sector now accounts for more than three quarters of the output measure of gross domestic product. Figures are adjusted for seasonal variations unless otherwise stated and the reference year is 2009=100. For an explanation of the terms used in this bulletin, please see the background notes section. Care should be taken when using the month on month growth rates, due to their volatility. An assessment of the quality of the services statistics is available in the background notes.

Table 2: Growth rates and contributions to the Index of Services: January 2013

Description % of Services Month on a year earlier Volume (SA) (%) Contribution to services (% points) Month on month growth Volume (SA) (%) Contribution to services (% points)
Total Service Industries 100 0.8 0.8 0.3 0.3
Distribution, hotels & restaurants 18 1.3 0.2 0.0 0.0
Transport, storage & communication 14 0.2 0.0 1.3 0.2
Business services & finance 38 0.8 0.3 0.2 0.1
Government & other services 30 0.9 0.3 0.3 0.1

Table source: Office for National Statistics

Table notes:

  1. Individual contributions may not sum the total due to rounding
  2. SA = seasonally adjusted

Download table

Sector analysis

Distribution, hotels & restaurants

The index of distribution, hotels & restaurants increased by 1.3% in January 2013 compared with January 2012. The main upward movements were in motor trades, which rose by 9.3% and wholesale, which rose by 3.7%.

Transport, storage & communication

The index of transport, storage & communication increased by 0.2% in January 2013 compared with January 2012. The main upward movements were in publishing, audiovisual & broadcasting activities, which rose by 5.9%, warehousing & support activities for transportation, which rose by 4.0% and postal and courier activities, which rose by 7.9%.

Business services & finance

The index of business services & finance increased by 0.8% in January 2013 compared with January 2012. The main upward movements were in other professional service activities, which rose by 3.2%, administrative & support service activities, which rose by 2.9% and real estate activities, which rose by 0.9%.

Government & other services

The index of government & other services increased by 0.9% in January 2013 compared with January 2012. The main upward movements were in human health & social work activities, which rose by 2.1%, and other service activities, which rose by 4.1%.

Revisions

This release conforms to the standard revisions policy for National Accounts. The earliest period open for revision in this release is January 2011.

Background notes

  1. What's New?

    Special Events in 2012

    There have been a number of special events in 2012. This commentary is intended to help users to interpret the statistics in the light of these events. As explained in ONS’s Special Events policy, it is not possible to separate the effects of special events from other changes in the series.

    The Olympics took place from 27 July to 12 August 2012 (with a few events starting on 25 July) and the Paralympics from 29 August to 9 September. The effects of the Olympics and Paralympics were reflected in the estimates for the months of quarter 3 of 2012. More details of how certain series were expected to be affected were given in an Information Note. Detailed articles describing possible effects on GDP and comparing with earlier Olympic Games was published by ONS on 25 October 2012 (229 Kb Pdf) and 25 January 2013 (197.9 Kb Pdf) . Wider effects, for example the presence of the Olympics influencing the number of non-Olympics tourist visits, may of course have affected any of the summer months.

  2. Understanding the data

    Short guide to the Index of Services

    The Index of Services shows the monthly movements in the gross value added of the service industries (2007 Standard Industrial Classification (SIC 2007) sections G to T). This sector accounts for around 77% of gross domestic product (GDP) in 2009. The index is estimated using the same data sources and national accounts methodology as the quarterly estimate of service industries’ gross value added within the output measure of GDP (GDP (O)). These consist of the distribution, hotels and restaurant industries (SIC 2007 sections G and I), transport storage and communication (sections H and J), business services and finance (sections K to N) and government and other services (sections O to T).

  3. Interpreting the data

    Some monthly data are volatile. When looking at growth rates, the headline Index of Services figures focus on the percentage change between the most recent month on a year earlier and the most recent three months on a year earlier.

    Figures for the most recent months are provisional and subject to revision in light of (a) late responses to surveys and administrative sources, (b) where forecasts are replaced by actual data and (c) revisions to seasonal adjustment factors, which are re-estimated every month and reviewed annually (changes from the latest review are included in this release).

    In the first and second months of each quarter the Index of Services statistical bulletin is published on the same days as the Gross Domestic Product Preliminary Estimate statistical bulletin and the Second Estimate of GDP (formerly UK Output, Income and Expenditure) statistical bulletin.

    In the third month of each quarter the Index of Services statistical bulletin is published on the first working day after the Quarterly National Accounts statistical bulletin.

    The data for the Index of Services in this statistical bulletin are consistent with the Quarterly National Accounts published on 27 March 2013. Data for the retail sector are broadly comparable with the Retail Sales Index published on 21 March 2013, although adjustments to the data within the IoS release are sometimes made at the time of the Blue Book to improve the coherence of the three measures of GDP (there can also be timing differences in the updating of the two series).

  4. Definitions and explanations

    Definitions found within the main statistical bulletin are listed here:

    Chained volume measure

    An index number from a chain index of quantity. The index number for the reference period of the index may be set equal to 100 or to the estimated monetary value of the item in the reference period.

    Gross Domestic Product

    The total value of output in the economic territory. It is the balancing item on the production account for the whole economy. Domestic product can be measured gross or net. It is presented in the new accounts at market (or purchaser's) prices. A further distinction is that it can be at current or constant prices.

    Index number

    A measure of the average level of prices, quantities or other measured characteristics relative to their level for a defined base reference period or location. It is usually expressed as a percentage above or below, but relative to, the base index of 100.

  5. Use of the data

    The ONS work programme consultation which ended in December 2010 looked at customers views on how ONS could address customers’ needs within a reducing budget.

  6. Methods

    A link is available to view the Index of Services methodology.

  7. Composition of the data

    The Index of Services uses a wide variety of different data, from many sources, which are produced on either an annual, quarterly or monthly basis.

    Some of the indicators are derived using current price turnover deflated by a suitable price index. This includes the Monthly Business Survey (MBS) data; an ONS short-term survey on different sectors of the economy. It is one of the main data sources used in the compilation of the Index of Services.

    More information on Monthly Business Survey data can be found within the Economic and Labour Market Review release (2.65 Mb Pdf) .

    Other sources use direct volume measures that do not need to be deflated, such as Royal Mail Group data regarding postal services and Civil Aviation Authority data for air transport. Other proxies, such as employment numbers, are used also. This occurs with Public Sector Employment and Work Force Jobs data.

    Where monthly data are not available (for example when data are delivered quarterly or annually), monthly estimates are derived by forecasting data. This is done using the X12 Arima forecasting method and interpolating a monthly path using a cubic spline.

    An X12 Arima forecast is also used where actual data are not available for the latest period (a lower proportion of actual data are available for the latest month). When the forecast is replaced by actual data, this may lead to revisions to the published data.

    The Index of Services has been designated as National Statistics by the United Kingdom Statistics Authority, although a number of components are experimental. In August 2012 the article Index of Services - Industry Reviews (446.3 Kb Pdf) was published, highlighting the industries that are classed as experimental and the work that is ongoing to remove the experimental label.

  8. Seasonal adjustment

    The index numbers in this statistical bulletin are all seasonally adjusted. This aids interpretation by removing annually recurring fluctuations, for example, due to holidays or other regular seasonal patterns. Unadjusted data are also available.

    Seasonal adjustment removes regular variation from a time series. Regular variation includes effects due to month lengths, different activity near particular events such as shopping activity before Christmas, and regular holidays such as the May bank holiday. Some features of the calendar are not regular each year, but are predictable if we have enough data - for example the number of certain days of the week in a month may have an effect, or the impact of the timing of Easter. As Easter changes between March and April we can estimate its effect on time series and allocate it between March and April depending on where Easter falls. Estimates of the effects of day of the week and Easter are used respectively to make trading day and Easter adjustments prior to seasonal adjustment.

  9. Basic quality information

    All estimates, by definition, are subject to statistical ‘error’ but in this context the word refers to the uncertainty inherent in any process or calculation that uses sampling, estimation or modelling. Most revisions reflect either the adoption of new statistical techniques, or the incorporation of new information, which allows the statistical error of previous statements to be reduced. Only rarely are there avoidable ‘errors’ such as human or system failures, and such mistakes are made quite clear when they do occur.

    Expectations of accuracy and reliability in early estimates are often too high. Revisions are an inevitable consequence of the trade off between timeliness and accuracy. Early estimates are based on incomplete data.

  10. Deflation

    It is common for the value of a group of financial transactions to be measured in several time periods. The values measured will include both the change in the volume sold and the effect of the change of prices over that year. Deflation is the process whereby the effect of price change is removed from a set of values to derive the volume. These volumes are described as ‘at constant prices’.

    Within the Index of Services, all series, unless otherwise quoted, are measured at constant market prices. Deflators adjust the value series to take out the effect of price changes to give the volume series.

  11. Summary quality report

    A Summary quality report (127 Kb Pdf) for the Index of Services release is provided on the National Statistics website.

  12. National Accounts revisions policy

    Key documentation explaining the National Accounts revision policy (27.8 Kb Pdf) is available.

  13. Revisions triangles

    SIC 2007 revisions triangles are contained in a zip folder. This folder can be found within the data section of this bulletin.

    Revisions to data provide one indication of the reliability of key indicators. A statistical test has been applied to the average revision to find out if it is statistically significantly different from zero. The result of the test is that the average revision is not statistically significantly different from zero.

    The table below presents a summary of the differences published between February 2007 and January 2012 and the estimates published 12 months later.

    Table 3: Revisions between first publication and estimates twelve months later

      Revisions between first publication and estimates twelve months later
      Value in latest period Average over the last 60 months Average over the last 60 months without regard to sign (average absolute revision)
    Index of Services 3 month on 3 month growth rate -0.2 -0.04 0.24
    Index of Services 1 month on 1 month growth rate 0.3 -0.06 0.23

    Table source: Office for National Statistics

    Download table

  14. Publication policy

    Details of the policy governing the release of new data are available from the press office. Also available is a Pre release Access List  of those given pre-publication access to the contents of this release.

    A complete set of series in the statistical bulletin are available to download within the data section of this publication.

  15. Accessing data

    The complete run of data in the tables of this statistical bulletin is also available to download from the data section of this publication.

    ONS provides an analysis of past revisions in the IoS and other statistical bulletins which present time series at ONS Policy on Standards for presenting revisions in time series First Releases (244.6 Kb Pdf) .

  16. Following ONS

    You can follow ONS on Twitter, Facebook  or view the latest podcasts on YouTube.

  17. Code of Practice for Official Statistics

    National Statistics are produced to high professional standards set out in the Code of Practice for Official Statistics. They undergo regular quality assurance reviews to ensure that they meet customer needs. They are produced free from any political interference.

    Code of Practice

    The UK Statistics Authority has designated these statistics as National Statistics, in accordance with the Statistics and Registration Service Act 2007 and signifying compliance with the Code of Practice for Official Statistics.

    Designation can be broadly interpreted to mean that the statistics:

    • meet identified user needs;

    • are well explained and readily accessible;

    • are produced according to sound methods, and

    • are managed impartially and objectively in the public interest.

    Once statistics have been designated as National Statistics it is a statutory requirement that the Code of Practice shall continue to be observed.

  18. Copyright

    © Crown copyright 2013

    You may use or re-use this information (not including logos) free of charge in any format or medium, under the terms of the Open Government Licence, or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU.

    This document is also available on our website.

  19. Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: media.relations@ons.gsi.gov.uk

Statistical contacts

Name Phone Department Email
Robert Doody +44 (0)1633 455803 Office for National Statistics ios.enquiries@ons.gsi.gov.uk
Luke Croydon +44 (0)845 6041858 Media Relations media.relations@ons.gsi.gov.uk
Luke Croydon +44 (0)7867 906553 Media Relations media.relations@ons.gsi.gov.uk
Contact Us +44 (0)845 6013034 Office for National Statistics info@ons.gov.uk
Get all the tables for this publication in the data section of this publication .
Content from the Office for National Statistics.
© Crown Copyright applies unless otherwise stated.