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Statistical bulletin: Index of Services, July 2011 This product is designated as National Statistics

Released: 06 October 2011 Download PDF

Key points

  • The seasonally adjusted index of services increased by 1.3 per cent in July 2011 compared with July 2010.
  • All services sector components increased in the most recent month compared with the same month a year ago.
  • Business services and finance rose by 1.6 per cent, the largest contribution to the increase.
  • Between June 2011 and July 2011, the services sector output increased by 0.2 per cent.
  • See supplementary analysis and background notes for further information on Blue Book 2011 and the new standard industrial classification

Key figures

Index of Services Key figures, July 2011

        (Percentage change)
Index number 2008=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 100.0 1.3 1.3 0.2 0.9

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Supplementary analysis

This is the first publication of the Index of Services based on the new Standard Industrial Classification (SIC 2007).

The seasonally adjusted index of services increased by 1.3 per cent in July 2011, compared with July 2010. This increase is mainly due to growth in business services and finance, which increased by 1.6 per cent and government and other services, which increased by 1.4 per cent. Transport, storage and communication also contributed significantly. Other contributions, from distribution and hotels and restaurants were less significant.

Compared to June 2011, the index of services increased by 0.2 per cent in July 2011. The growth in July is mainly due to strength in business services and finance, which increased by 0.4 per cent, and government and other services, which increased by 0.3 per cent. These growths more than offset the decline in distribution, hotels and restaurants, which fell by 0.1 per cent. Transport storage and communication was unchanged.

More detail on the particular divisions driving these changes can be found in the IOSCOMP tables found in the data section of this bulletin. The tables also provide information on the growth for the three months ending in July 2011; compared to the previous three months; and compared to the three months ending July 2010.

Services in detail

The Index of Services measures the chained volume index movements of the UK services sector. With the move to SIC 2007, 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 2008=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.

Growth rates and contributions to the Index of Services

Description % of Services Month on a year earlier Volume (SA)  % Contribution to services (% points) Volume (SA) Month on month growth (%) Contribution to services (% points)
Total Service Industries 100 0.9 0.9 0.3 0.3
Distribution, hotels and restaurants 18 1.1 0.2 0.0 0.0
Transport, storage and communication 15 3.4 0.5 2.2 0.3
Business services and finance 38 0.3 0.1 -0.2 -0.1
Government and other services 29 0.2 0.1 0.2 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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Sector analysis

Distribution, hotels and restaurants

Under SIC 2007, Section G (distribution) and Section I (hotels and restaurants) have been combined to be consistent with the aggregations published in the Gross Domestic Product Quarterly National Accounts. For further information see background note 1.

The seasonally adjusted index of distribution, hotels and restaurants in July 2011 rose by 0.4 per cent compared with July 2010. In particular:

  1. Accommodation rose by 8.9 per cent,

  2. Accommodation contributed approximately 0.4 percentage points to the 0.4 per cent increase, but was partially offset by weakness in wholesale trade and food and beverage service activities.

Transport, storage and communication

Under SIC 2007, Section H (transportation and storage) and Section J (information and communication) have been combined to be consistent with the aggregations published in the Gross Domestic Product Quarterly National Accounts. For further information see background note 1.

The seasonally adjusted index of transport, storage and communication in July 2011 increased by 1.8 per cent compared with July 2010.

  1. Output increased in six of the eight published components;

  2. The main movements were in land transport and telecommunications which both rose by 3.1 per cent;

  3. Land transport and telecommunications both contributed approximately 0.5 percentage points to the 1.8 per cent increase.

Business services and finance

Under SIC 2007, Section K (financial and insurance activities), Section L (real estate activities), Section M (professional, scientific and technical activities) and Section N (administrative and support service activities) have been combined to be consistent with the aggregations published in the Gross Domestic Product Quarterly National Accounts. For further information see background note 1.

The seasonally adjusted index of business services and finance in July 2011 increased by 1.6 per cent compared with July 2010.

  1. The main movement was in other professional service activities, which rose by 6.9 per cent;

  2. Other professional service activities contributed 1.2 percentage points to the 1.6 per cent increase.  

Government and other services

Under SIC 2007, Section O (public administration and defence, compulsory social security), Section P (education), Section Q (human health and social work activities), Section R (arts, entertainment and recreation), Section S (other service activities), Section T (activities for households as employers),  have been combined to be consistent with the aggregations published in the Gross Domestic Product Quarterly National Accounts. For further information see background note 1.

  1. The seasonally adjusted index of government and other services in July 2011 increased by 1.4 per cent compared with July 2010.

  2. The main movement was in human health and social work activities which rose by 3.3 per cent;

  3. Human health and social work activities contributed 1.1 percentage points to the 1.4 per cent increase. 

Revisions

This release conforms to the standard revisions policy for National Accounts. The earliest period open for revision is January 1997. Due to the move to SIC 2007, there is a risk that any revisions analysis for those sections heavily affected could prove inaccurate. The RIOS1 table has therefore been temporarily removed and will next appear in the August 2011 publication.

Background notes

  1. What's New?

    This is the first Index of Services publication to be released in accordance with the 2007 UK Standard Industrial Classification System (SIC 07). The reference year has also been moved forward by two years, so that the latest base year for the chained volume measure of IoS is 2008. Further information can be found on the website at Blue Book 2011: Improvements to GDP(O), IoS and IoP and Classifications.

    Revised publication date

    The next Index of Services release for August 2011 will be published on 1 November 2011.

  2. 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. © Crown copyright 2011.

  3. Understanding the data

    Guide to the Monthly Index of Services (10.9 Kb Pdf)

    The Index of Services shows the monthly movements in the gross value added of the service industries (2007 Standard Industrial Classification (SIC 2007) section G to T). This sector accounts for around 76 per cent of gross domestic product (GDP) in 2008. 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).

  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) 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). This release also includes changes to methodology associated with the move to SIC 07.

    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.

    Data for the Index of Services shown in this statistical bulletin are consistent with the Quarterly National Accounts published on 5 October 2011.

  5. Definitions and explanations

    Definitions found within the main statistical bulletin are listed:

    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.

  6. Use of the data

    The ONS Work Programme Consultation which ended in December looked at customers views on how ONS could address customers’ needs within a reducing budget.

  7. Methods

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

  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 Economic and Labour Market Review: No. 2, February 2011 (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 is 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 is available for the latest month). When the forecast is replaced by actual data, this may lead to revisions to the published data.

    The IoS output is designated as a national statistic, although a number of components are experimental. The move to SIC 2007 has moved some experimental components into national statistics components and vice versa. In the coming months a paper will be released providing an overview of these changes. The experimental components on a SIC 2003 basis were:

    • Water transport

    • Financial intermediation

    • Insurance and pension funding

    • Activities auxiliary to financial intermediation

    • Real estate activites

    • Renting of machinery and equipment

    • Computer and related activities

    • Research and development

    • Health and social work: private sector

    • Activities of membership organisations not elsewhere classified

    • Recreational, cultural and sporting activities: radio and TV, and betting and gaming

    • Private households with employed persons 
  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. 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. 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 timelines and accuracy. Early estimates are based on incomplete data.

  12. Summary Quality Report

    A Summary Quality Report (127 Kb Pdf) for this statistical bulletin can be found on the ONS website. This report describes, in detail the intended uses of the statistics presented in this publication, their general quality and the methods used to produce them.

  13. National Accounts revisions policy

    National Accounts: Revisions statement (41.7 Kb Pdf)  is available on the ONS website.

    Revisions resulting from the incorporation of new data, replacement of forecasts, rebalancing of annual supply use tables and estimates based on earlier data have been taken back to the first month of 1997.

    Revisions Triangles

    While the data contained in the IoS tables relates to SIC 2007, the revision triangles found within the data section of the bulletin show the SIC 2003 month on month and three month on three month revisions for data up to and including June 2011. A project is underway to construct SIC 2007 revision triangles and further information will be announced in the next bulletin.

    SIC 2003 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.

  14. Publication policy

    Details of the policy governing the release of new data are available from the press office. Also available is a list of those given pre-publication access (26.9 Kb Pdf) 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.

    Alternatively, for low-cost tailored data, call Online Services on 0845 601 3034 or email tailored@statistics.gov.uk

  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 (244.6 Kb Pdf) . Details can be found on the ONS website.

    ONS now publishes revisions triangles (65.8 Kb Pdf)  for all the main published key indicators on the ONS website.

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  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

    These National Statistics are produced to high professional standards and released according to the arrangements approved by the UK Statistics Authority.

Statistical contacts

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Harry Duff +44 (0)1633 456771 Economic, Labour and Social Analysis ios.enquiries@ons.gsi.gov.uk
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