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

Released: 20 December 2013 Download PDF

Index of Services, October 2013

  • The Index of Services increased by 2.1% in October 2013 compared with October 2012. All of the four main components of the services industries increased in the most recent month compared with the same month a year ago.
  • The largest contributions came from business services & finance, which contributed 1.0 percentage points to total growth and distribution, hotels & restaurants, which contributed 0.7 percentage points to total growth.
  • The latest Index of Services estimates show that output increased by 0.1% between September 2013 and October 2013, following an increase of 0.2% between August 2013 and September 2013.
  • The Index of Services increased by 0.8% in Q3 2013 compared with Q2 2013. This figure has been revised up 0.1% from that included in the Second Estimate of Gross Domestic Product (GDP) and is consistent with the estimate used in the Quarterly National Accounts published on 20 December 2013.
  • In Q3 2013, the Index of Services surpassed its pre-downturn peak, which was recorded in Q1 2008.
  • The figures within this release are estimates and are on a seasonally adjusted basis. The earliest period open for revision in this release is January 2012.

Key information

 

Table 1: Index of Services key information, October 2013

United Kingdom

(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 105.5 2.1 1.9 0.1 0.8

Table source: Office for National Statistics

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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.

Figure 1: IoS contributions to the month on a year ago percentage change, October 2013

Figure 1: IoS contributions to the month on a year ago percentage change, October 2013
Source: Office for National Statistics

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As seen in Figure 1, the Index of Services increased by 2.1% in October 2013 compared with October 2012, September 2013 saw similar growth compared with September 2012. In order of their contribution to growth (see reference table IOS1): business services & finance increased by 2.5%; distribution, hotels & restaurants increased by 3.8%; government & other services increased by 1.3% and transport, storage & communication increased by 0.4%. Further detail on these movements can be found in the component analysis section.

Figure 2: IoS contributions to the month on month percentage change, October 2013

Figure 2: IoS contributions to the month on month percentage change, October 2013
Source: Office for National Statistics

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Between September 2013 and October 2013, as seen in Figure 2, the Index of Services increased by 0.1%. The largest upward contribution to growth (see reference table IOS1) came from business services & finance, which increased by 0.3%. Government & other services increased by 0.4%. In contrast, distribution, hotels & restaurants decreased by 0.6% and transport, storage & communication industries decreased by 0.1%.
Industries reporting growth between September 2013 and October 2013, in order of their contribution to growth, included: administrative & support services activities, which increased by 1.0%; other service activities, which increased by 3.5%; publishing & broadcasting activities, which increased by 1.4%; and arts, entertainment & recreation, which increased by 1.5%. In contrast, industries reporting contraction included: retail trade, except of motor vehicles & motorcycles, which decreased by 0.7%; postal & courier activities, which decreased by 5.4%; and wholesale trade, except of motor vehicles & motocycles, which decreased by 0.7%.
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 October 2013 compared with the previous three months and compared with the three months ending October 2012.  
   
 

 

Economic background

Figure 3: Index of Services, October 2013

Figure 3: Index of Services, October 2013
Source: Office for National Statistics

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The latest Index of Services estimates show that output increased by 0.1% between September 2013 and October 2013, following an increase of 0.2% between August 2013 and September 2013.

In recent years, services have followed a slightly different path from gross domestic product (GDP) overall. Growth in the Index of Services since 2010 has reversed the decline seen in 2008 and 2009. In August 2013, the Index of Services surpassed its previous peak level recorded in February 2008. By contrast, GDP remains 2.0% below the previous peak; the difference is primarily due to weakness in the construction and production industries during 2011 and 2012.

The effects felt from the 2008/2009 economic downturn 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, remained comparatively resilient, with output effectively constant; growth in human health activities offset decreases in other industries.

Since 2009, all four of the industry groupings have experienced growth, but with different patterns. The distribution, hotels & restaurants industries experienced particularly slow growth prior to Q3 2012, but rapid growth between then and Q3 2013 has recovered more than half of the fall in output since its peak in September 2007. Conversely, the transport, storage & communication industries grew strongly in 2010 and the first half of 2013, but output was stagnant for most of 2011 and 2012. Output in the business services & finance industries has grown more steadily and has now exceeded its previous peak in February 2008. The government & other services industries, meanwhile, showed slow but largely steady growth.

GDP Impact and Components

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

The October estimates for production and construction output were published on 10 December 2013 and 13 December 2013 respectively. The Quarterly National Accounts for Q3 2013 was published on 20 December 2013 alongside this bulletin.

 

Table 2: GDP output component tables, Q3 2013

Chained volume measures seasonally adjusted

Percentage change
Publication % of GDP Release date Month of GDP Most recent quarter on a year earlier Most recent quarter on a quarter earlier Most recent month on the same month a year ago Most recent month on the previous month
Index of Production 15.2 10 Dec Oct .. .. 3.2 0.4
      Q3 -0.1 0.6 .. ..
      Q2 -0.5 0.8   ..  ..
 
Construction output 6.3 13 Dec Oct .. .. 5.3 2.2
      Q3 6.3 2.6 .. ..
       Q2 1.5 2.6 .. ..
             
Index of Services 77.8 20 Dec Oct .. .. 2.1 0.1
      Q3 1.8 0.8 .. ..
    Q2 2.0 0.6 .. ..
             
Retail Sales2   14 Nov Oct .. .. 1.8 -0.7
      Q3 2.1 1.3 .. ..
      Q2 1.4 1.0 .. ..
       
Agriculture 0.7   Q3 -6.4 -3.2 .. ..
               

Table source: Office for National Statistics

Table notes:

  1. No data is represented by ..
  2. Data are presented as at 14 November 2013, due to early release of the Quarterly National Accounts

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Component analysis

Table 3: Growth rates and contributions to the Index of Services, October 2013

United Kingdom

Description % of Services Month on a year earlier Volume (SA2) (%) Contribution to services (% points) Month on month growth Volume (SA) (%) Contribution to services (% points)
Total service industries 100 2.1 2.1 0.1 0.1
           
Distribution, hotels & restaurants 18 3.8 0.7 -0.6 -0.1
           
Transport, storage & communication 14 0.4 0.1 -0.1 0.0
           
Business services & finance 39 2.5 1.0 0.3 0.1
           
Government & other services 29 1.3 0.4 0.4 0.1

Table source: Office for National Statistics

Table notes:

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

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Distribution, hotels & restaurants

The index of distribution, hotels & restaurants increased by 3.8% in October 2013 compared with October 2012. The main contributors to the increase were wholesale, retail trade & repair of motor vehicles & motorcycles, which rose by 14.3%; and wholesale trade, except of motor vehicles & motorcycles, which rose by 7.1%.

Transport, storage & communication

The index of transport, storage & communication increased by 0.4% in October 2013 compared with October 2012. The main contributors to the increase were publishing & broadcasting activities, which rose by 4.3%; computer programming, consultancy & related activities, which rose by 1.6%; and air transport, which rose by 5.5%.

Business services & finance

The index of business services & finance increased by 2.5% in October 2013 compared with October 2012. The main contributors to the increase were other professional service activities, which rose by 8.3%; administrative & support services activities, which rose by 5.6%, and real estate activities, which rose by 2.0%.

Government & other services

The index of government & other services increased by 1.3% in October 2013 compared with October 2012. The main contributor to the increase was human health & social work activities, which rose by 2.4%; there was also a contribution from other service activities, which rose by 5.2%.

 Revisions

This release conforms to the standard revisions policy for National Accounts. The earliest period open for revision in this release is January  2012.

Background notes

  1. What’s new?

    A Quality and Methodology Information (QMI) (127 Kb Pdf) report for the Index of Services (IoS) was published on 20 December 2013 alongside this release. The report pulls together qualitative information on the five Eurostat criteria of quality (relevance, accuracy, timeliness & punctuality, accessibility & clarity, and comparability & coherence) and provides a summary of the methods used to compile the IoS output, describing the strengths and limitations of the estimates produced.

    Special Events in 2012

    There were a number of special events in 2012. The commentary available 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.

  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). These industries account 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, & restaurant industries (SIC 2007 sections G and I); transport, storage, & communication (sections H and J), business services and finance (sections K to N); and government & other services (sections O to T).

  3. 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 (that is 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.

  4. 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. Due to the Christmas holidays, however, the statistical bulletins for the Index of Services, October 2013 and the Quarterly National Accounts for Q3 2013 are being published on the same day.

    The data for the Index of Services in this statistical bulletin are consistent with the Quarterly National Accounts published on 20 December 2013. Due to the early release of the Quarterly National Accounts this month, data for the retail industry are broadly comparable with the Retail Sales Index published on 14 November 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).

  5. 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 of consumption of fixed capital (or depreciation). 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.

  6. Methods

    Index of Services methodology can be found on the ONS website.

  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 data from the Monthly Business Survey (MBS): an ONS short-term survey on different parts 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 also used. This is the case 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 X-12-ARIMA forecasting method and interpolating a monthly path using a cubic spline.

    An X-12-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 caused by differing 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 working days in a month or the date of Easter may have a significant effect. 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 chain volume measures at basic prices. Deflators adjust the value series to take out the effect of price changes to give the volume series.

  11. 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 in November 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.

  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.

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

    Table 4: 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 0.8 -0.07 0.24
    Index of Services 1 month on 1 month growth rate 0.1 -0.06 0.23

    Table source: Office for National Statistics

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  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 Revisions information in ONS 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.

    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. 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 +1633 (0)845 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
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