Skip to content

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

Released: 23 August 2013 Download PDF

Key points

  • Users are reminded that the figures within this release are estimates and are on a seasonally adjusted basis.
  • The Index of Services increased by 0.6% in Q2 2013 compared with Q1 2013. This figure is unchanged from the estimate used in the Preliminary Estimate of Gross Domestic Product (GDP) on 25 July 2013.
  • The Index of Services increased by 2.8% in June 2013 compared with June 2012. All of the components of the services industries increased in the most recent month compared with the same month a year ago. Users should be cautious when interpreting the annual change to June 2013, due to the change in the timing of bank holidays during 2012 and the addition of an extra bank holiday for the Queen's Diamond Jubilee.
  • The largest contributions came from business services & finance, which contributed 1.1 percentage points to total growth, and distribution, hotels & restaurants, which contributed 0.9 percentage points to total growth.
  • In Q2 2013, the Index of Services was 0.2% below its peak level in Q1 2008, demonstrating that almost all of the lost output in services during 2008 and 2009 has now been recovered.
  • The latest Index of Services estimates show that output was flat between May 2013 and June 2013, following a 0.2% increase between April 2013 and May 2013.
  • The earliest period open for revision in this release is April 2013.

Key figures

Table 1: Index of Services key figures, June 2013

(Percentage change)
    Index number 2010=100 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
Index of Services 104.5 2.8 2.1 0.0 0.6
             

Table source: Office for National Statistics

Download table

Economic background

Figure 1: Index of Services, June 2013

Figure 1: Index of Services, June 2013
Source: Office for National Statistics

Download chart

The latest Index of Services estimates show that output was flat between May 2013 and June 2013, following a 0.2% increase between April 2013 and May 2013.

In recent years, services have followed a different path from gross domestic product (GDP) overall. Growth in the Index of Services since 2010 has reversed most of the decline seen in 2008 and 2009, so that services output is now only 0.2% below its pre-contraction peak. By contrast, weaker growth in other industries means that GDP remains some 3.0% below the previous peak.

The effects felt from the 2008/2009 economic contraction have differed between the main components of the services industries. The largest effects were in the distribution, hotels & restaurants industries and the transport, storage & communication industries, both of which experienced contractions of more than 10% between 2007 and 2009. A smaller contraction was reported in the business services & finance industries. Government & other services, by contrast, grew slowly throughout the period reflecting the effect of automatic fiscal stabilisers (such as increasing demand for government services related to unemployment, careers, and skills).

Since 2009, all four of the industry groupings have grown at a broadly similar rate, but with different patterns of growth. The distribution, hotels & restaurants industries experienced particularly slow recovery prior to the second half of 2012, but growth has accelerated significantly since then, although only around half of the lost output since its peak in September 2007 has been recovered. Output in the transport, storage & communication industries also remained substantially below its September 2007 peak, as strong growth in 2010 was followed by stagnation in 2011 and 2012. By contrast, growth has been steadier in the business services & finance industries where output is very close to pre-contraction peak levels. The government & other services industries have also grown steadily, but at a slower rate than the other three industry groupings; it is important to note that a similar pattern of slow and steady growth was evident in these industries before the economic contraction, as well as during and after it.

Supplementary analysis

Figure 2: IoS contributions to the month on a year ago percentage change, June 2013

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

Download chart

As seen in Figure 2, the Index of Services increased by 2.8% in June 2013 compared with June 2012, following growth of 1.4% in May 2013 compared with May 2012. In order of their contribution to growth: business services & finance increased by 2.7%; distribution, hotels & restaurants increased by 5.2%; transport, storage & communication increased by 3.4%; and government & other services increased by 1.1%. Further detail on these movements can be found in the component analysis section.

Figure 3: IoS contributions to the month on month percentage change, June 2013

Figure 3: IoS contributions to the month on month percentage change, June 2013
Source: Office for National Statistics

Download chart

Between May 2013 and June 2013, as seen in Figure 3, the Index of Services remained flat. The largest upward contribution to growth came from business services & finance, which increased by 0.2%, while government & other services increased by 0.1%. In contrast, the largest downward contributions to growth came from transport, storage & communication, which decreased by 0.7% and distribution, hotels & restaurants, which decreased by 0.1%.

Industries reporting growth between May 2013 and June 2013 included: publishing audiovisual & broadcasting activities, which increased by 2.0%; other professional scientific & technical activities, which increased by 2.2%; and financial service activities, except insurance and pension funding, which increased by 0.4%. In contrast, there were decreases in industries including: computer programming, consultancy & related activities, which decreased by 2.9%; telecommunications, which decreased by 3.3%; and food & beverage service activities, which decreased by 3.1%.

More detail on individual components 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 June 2013 compared with the previous three months and compared with the three months ending June 2012.

GDP Impact and Components

Table 2 shows the main industrial groupings that make up the output approach to GDP. In the output approach to GDP, IoS is the key component with a weight of 77.8%.

These estimates for the services industries mean that, subject to revision, all the main components for the output approach to the measurement of GDP (construction, production, and services) have been published for April, May, and June 2013, completing the picture for Q2 2013. The June estimates for production and construction output were published on 6 August 2013 and 9 August 2013 respectively. The Second Estimate of GDP Q2 2013 is published on 23 August 2013 alongside this statistical bulletin.

The preliminary estimate of GDP contained a forecasted 0.1% fall in June 2013 services growth when compared with May 2013. This release estimates that the services industries were flat between May and June 2013. Despite this difference the quarterly growth for services remains consistent with that published in the preliminary estimate at 0.6%. There were no revisions to month on month growth rates for services in April or May.

Table 2: GDP output component tables, Quarter 2 2013

Chained volume measures seasonally adjusted

Percentage change
Publication % of GDP Release date Quarter Most recent 3 months on a year earlier  Most recent 3 months on 3 months earlier 
Index of Production 15.2 6 Aug Q2 -0.8 0.6
      Q1 -2.6 0.3
               
Construction output 6.3 9 Aug Q2 -0.5 1.4
    Q1 -6.3 -1.8
               
Index of Services 77.8 23 Aug Q2 2.1 0.6
    Q1 1.3 0.5
               
Retail Sales 15 Aug Q2 1.6 1.1
    Q1 0.1 0.4
               
Agriculture 0.7 23 Aug Q2 -4.9 1.7
       Q1  -8.7  -6.3    

Table source: Office for National Statistics

Download table

Services in detail

The Index of Services measures the chained volume index movements of the UK services industries. The services industries now account for more than three quarters of the output approach to the measurement of gross domestic product. Figures are adjusted for seasonal variations unless otherwise stated and the reference year is 2010=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 3: Growth rates and contributions to the Index of Services, June 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 2.8 2.8 0.0 0.0
Distribution, hotels & restaurants 18 5.2 0.9 -0.1 0.0
 
Transport, storage & communication 14 3.4 0.5 -0.7 -0.1
Business services & finance 39 2.7 1.1 0.2 0.1
Government & other services 29 1.1 0.3 0.1 0.0
           

Table source: Office for National Statistics

Table notes:

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

Download table

Component analysis

Distribution, hotels & restaurants

The index of distribution, hotels & restaurants increased by 5.2% in June 2013 compared with June 2012. The main contributors to the increase were wholesale trade, which rose by 12.9% and wholesale, retail & repair of motor vehicles & motorcycles which rose by 13.5%.

Transport, storage & communication

The index of transport, storage & communication increased by 3.4% in June 2013 compared with June 2012. The main contributors to the increase were in computer programming, consultancy & related activities, which rose by 6.3%; publishing audiovisual & broadcasting activities, which rose by 6.8% and land transport, which also rose by 6.3%.

Business services & finance

The index of business services & finance increased by 2.7% in June 2013 compared with June 2012. This increase was predominantly from other professional service activities, which rose by 11.6%; there were also contributions from administrative & support services activities, which rose by 5.2% and real estate activities, which rose by 1.5%.

Government & other services

The index of government & other services increased by 1.1% in June 2013 compared with June 2012. The main contributor to the increase was human health & social work activities, which rose by 4.0%.

Revisions

This release conforms to the standard revisions policy for National Accounts. The earliest period open for revision in this release is April 2013.

Background notes

  1. What's New?

    Gross Value Added industry weights dataset

    An update to the annual weights used within the output approach of GDP has been included in our dataset. These weights have been used in the Index of Services since the Quarterly National Accounts, published on 27 June 2013 and are consistent with the data used in the Blue Book 2013 dataset, published on 31 July 2013. All weights are given in parts per thousand.

    Article on the UK Economy: 1948 to 2012

    An article has been published alongside the Index of Services statistical bulletin on the Industries in the UK Economy: 1948 to 2012.

    Continuous Improvement of GDP: sources, methods and communication

    An article providing an overview of current and planned continuous improvement work in relation to producing estimates of quarterly and annual GDP can be found in the Guidance and Methodology area.

    The GDP Output Improvement Report, published on 27 June 2013, provides a detailed update of the work on industry reviews and wider improvements to IoP, IoS, and GDP(O), and outlines the greater scope of the project as part of the GDP Continuous Improvement Programme.

    ONS will be hosting an event in London on  2 October 2013, which will allow it to consult and engage with users. The 'GDP Improvement seminar: Output approach' featured in the latest GDP Output Improvement Report (June 2013) and will commence at 1pm at a venue to be confirmed. The agenda will be confirmed shortly. If you or another member of your organisation would be interested in attending please contact IoS.quality@ons.gov.uk to register your interest. 

  2. Special Events in 2012

    There were 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 Q3 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 were 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.

    As part of the celebrations for the Queen's Diamond Jubilee there were changes to bank holidays in May and June 2012. The change to the holidays count as a statistical special event in line with ONS's policy on special events. In 2012, there was only one bank holiday in May in 2012 instead of the usual two. This event is not regular, so no adjustment has been made to account for it as part of the seasonal adjustment process. Users are therefore likely to see an effect related to an additional working day in May 2012 in the estimate of the annual change (and there will be a similar effect on the annual change in June associated with two fewer working days in June 2012). More information on the movements in series in 2012 can be found on the ONS website .

  3. 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 78% of gross domestic product (GDP) in 2010. The index is estimated using the same data sources and national accounts methodology as the quarterly estimate of services industries’ gross value added within the output approach to measuring 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).

  4. Short guide to National Accounts

    The national accounts provide an integrated description of all economic activity within the economic territory of the UK, including activity involving both domestic units (i.e. individuals and institutions resident in the UK) and external units (those resident in other countries). In addition to being comprehensive, the accounts are fully integrated and internally consistent. More information can be found in UK national accounts: a short guide.

  5. 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) forecasts being 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 Gross Domestic Product statistical bulletin respectively. 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 Second Estimate of GDP published on 23 August alongside this statistical bulletin. Data for the retail sector are broadly comparable with the Retail Sales Index published on 15 August 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 approaches to measuring GDP (there can also be timing differences in the updating of the two series).

  6. 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 production activity 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 accounts at market (or purchasers’) prices. A further distinction is that it can be at current prices or chained volume measures.

    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.

  7. Methods

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

  8. 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.

  9. 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.

  10. 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.

  11. 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 chain volume measures at basic prices. Deflators adjust the value series to take out the effect of price changes to give the volume series.

  12. Summary quality report

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

  13. National Accounts revisions policy

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

  14. 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.

    Table 4 presents a summary of the differences published between June 2007 and June 2012 and the estimates published 12 months later.

    Table 4: Revisions between first publication and estimates twelve months later

      Value in latest period Revisions between first publication and estimates twelve months later
    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 0.6 -0.06 0.24
    Index of Services 1 month on 1 month growth rate 0.0 -0.06 0.23

    Table source: Office for National Statistics

    Download table

  15. 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.

  16. 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 Revisions information in ONS First Releases (244.6 Kb Pdf) .

  17. Following ONS

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

  18. 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.

    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.

  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
Contact Us +44 (0)845 6013034 Office for National Statistics info@ons.gsi.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.