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Statistical bulletin: Index of Services, September 2012 This product is designated as National Statistics

Released: 27 November 2012 Download PDF

Key points

  • The seasonally adjusted Index of Services was estimated to have increased by 1.1 per cent in September 2012 compared with September 2011.
  • Three of the four service sector components were estimated to have increased in the most recent month compared with the same month a year ago.
  • Government & other services was estimated to have increased by 2.0 per cent and distribution, hotels & restaurants was estimated to have increased by 2.3 per cent. These were the largest contributions to the increase.
  • Between August 2012 and September 2012, service sector output was estimated to have decreased by 0.5 per cent.
  • The earliest period open for revision in this release is July 2012.

Key figures

Table 1: Key Figures

Index of Services - September 2012

      (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 104.2 1.1 1.3 -0.5 1.3
             

Table source: Office for National Statistics

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Supplementary analysis

The seasonally adjusted index of services was estimated to have increased by 1.1 per cent in September 2012 compared with September 2011. In order of their contribution to growth: government & other services increased by 2.0 per cent; distribution, hotels & restaurants increased by 2.3 per cent; business services & finance increased by 0.6 per cent. In contrast transport, storage & communication decreased by 1.3 per cent.

The index of services increased by 1.3 per cent in the third quarter of 2012 compared with the second quarter of 2012, following a fall of 0.1 per cent between quarter one and quarter two. In order of their contribution to growth in the latest quarter: government & other services increased by 1.6 per cent; business services & finance increased by 1.0 per cent; distribution, hotels & restaurants increased by 2.0 per cent and transport, storage & communication increased by 0.6 per cent.

The latest index of services estimate was affected by the Olympics and Paralympics events in the third quarter. The Olympics took place from 27 July to 12 August 2012 (with a few events starting on 25 July). The Paralympics took place from 29 August to 9 September. Tickets for the Olympics and Paralympics were sold in tranches through 2011 and 2012 but, in accordance with national accounts principles, these were allocated to July, August and September as that was when the output actually occurred.

The impact of the ticket sales was evident in the arts, entertainment & recreation aggregate. Between quarter two and quarter three 2012 arts, entertainment & recreation rose by 16.1 per cent, contributing 0.3 percentage points to the index of services quarterly growth of 1.3 per cent.

When interpreting the quarter on quarter growth users should be aware that quarter two 2012 was affected by the changes made to the Bank Holidays in May and June 2012 as part of the celebrations for the Queen’s Diamond Jubilee. The end of May bank holiday moved to June and there was an additional day's holiday in June. Over the second quarter, this resulted in one fewer working days. The change to the bank holidays was not a regular event so no adjustment was made to account for it as part of the seasonal adjustment process.

Between August and September 2012 the index of services was estimated to have decreased by 0.5 per cent. Government & other services decreased by 1.1 per cent; business services & finance decreased by 0.3 per cent; transport, storage & communication decreased by 0.7 per cent and distribution, hotel & restaurants increased by 0.4 per cent.

The largest downwards contribution to the month on month fall in the index of services came from arts, entertainment & recreation, which fell by 13.1 per cent between August and September, contributing 0.4 percentage points to the fall of 0.5 per cent. This fall reflects that, although the output from the ticket sales for the Olympics and Paralympics was allocated to July, August and September, by far the most significant proportion was allocated to August.

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 September 2012 compared with the previous three months and compared with the three months ending September 2011.

Services in detail

The Index of Services measures the chained volume index movements of the UK service sector. The services sector now accounts for more than three quarters of total 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: September 2012

 
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 1.1 1.1 -0.5 -0.5
Distribution, hotels & restaurants 18 2.3 0.4 0.4 0.1
Transport, storage & communication 14 -1.3 -0.2 -0.7 -0.1
Business services & finance 38 0.6 0.2 -0.3 -0.1
Government & other services 30 2.0 0.6 -1.1 -0.3

Table notes:

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

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Sector analysis

Distribution, hotels & restaurants

The seasonally adjusted index of distribution, hotels & restaurants in September 2012 was estimated to have increased by 2.3 per cent compared with September 2011. In particular:

  • Output increased in three of the five components.

  • The main upward movements were in motor trades, which increased by 10.9 per cent, food & beverage services, which rose by 6.7 per cent, and retail, which rose by 2.3 per cent.

Transport, storage & communication

The seasonally adjusted index of transport, storage & communication in September 2012 was estimated to have decreased by 1.3 per cent compared with September 2011. In particular:

  • Output decreased in four of the eight published components.

  • The main downward movements were in air transport, which fell by 15.0 per cent, land transport, which fell by 2.6 per cent, and postal & courier activities, which fell by 7.3 per cent.

Business services & finance

The seasonally adjusted index of business services & finance in September 2012 was estimated to have increased by 0.6 per cent compared with September 2011. In particular:

  • Output increased in two of the five published components.

  • The upward movements were in administrative & support service activities, which rose by 8.1 per cent, and real estate activities, which rose by 1.2 per cent.

Government & other services

The seasonally adjusted index of government & other services in September 2012 was estimated to have increased by 2.0 per cent compared with September 2011. In particular:

  • Output increased in four of the six published components.

  • The main upward movement was in arts, entertainment & recreation, which rose by 15.0 per cent, mainly due to the inclusion of Olympic and Paralympic ticket receipts during quarter three 2012.

Revisions

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

Background notes

  1. What's New?

    Economic Analysis

    Additional supporting economic analysis relating to the Index of Services release can be found at Economic Review.

    Special Events

    An article outlining the ONS policy on special events can be found at ONS's policy on Special Events.

    Olympics and Paralympics

    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. For most economic statistics, any direct effect of the Olympics was mainly reflected in the August estimate, although some of the Paralympics-associated activity took place in September. Wider effects, for example if the presence of the Olympics had influenced the number of non-Olympics tourist visits, may of course have affected any of the summer months.

    This commentary is intended to help users to interpret the statistics in the light of events. As explained in ONS’s Special Events policy, it is not possible to make an estimate of the effect of the Olympics and Paralympics on particular series, only on the basis of information collected in those series. More details of how certain series are affected are in an Information Note, and an article explaining how various elements are reflected in the National Accounts was published in July 2012.

  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 per cent 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 section G and I), transport storage and communication (section 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. Due to the Christmas holidays, however, the statistical bulletins for the Index of Services October 2012 and the Quarterly National Accounts 2012 Q3 will be published on the same day.

    The data for the Index of Services in this statistical bulletin are consistent with the Second Estimate of GDP published on 27 November 2012. Data for the retail sector are broadly comparable with the Retail Sales Index published on 15 November 2012, 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 September 2006 and August 2011 and the estimates published 12 months later.

    Table 3: 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 1.3 -0.02 0.23
    Index of Services 1 month on 1 month growth rate -0.5 -0.06 0.25

    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 (25.8 Kb Pdf)   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) .

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  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 United Kingdom 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.

    • 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

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