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

Released: 25 July 2012 Download PDF

Key points

  • The seasonally adjusted Index of Services increased by 1.3 per cent in May 2012 compared with May 2011.
  • Three of the four service sector components increased in the most recent month compared with the same month a year ago.
  • Business services & finance rose by 1.7 per cent and government & other services rose by 1.5 per cent. These were the largest contributions to the increase.
  • Between April 2012 and May 2012, service sector output increased by 0.9 per cent.
  • The only period open for revision in this release is April 2012.
  • In 2012, the end of May bank holiday was moved to June resulting in an additional working day in May, which may have been a contributing factor to the relatively strong month on month and month on a year ago growths for May.

Key figures

Index of Services, May 2012 key figures

  (Percentage change)
Index number (2009=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 103.8 1.3 1.3 0.9 0.5

Table source: Office for National Statistics

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Supplementary analysis

The seasonally adjusted Index of Services increased by 1.3 per cent in May 2012 compared with May 2011. Business services & finance increased by 1.7 per cent; government & other services increased by 1.5 per cent; distribution, hotels & restaurants increased by 1.4 per cent and transport, storage & communication decreased by 0.5 per cent.

In 2012, the end of May bank holiday was moved to June resulting in an additional working day in May, which may have been a contributing factor to the relatively strong month on month and month on a year ago growth rates for May. The moving bank holiday is not a regular seasonal effect or calendar event and therefore no adjustment is made for it as part of the seasonal adjustment process.

It is not possible to quantify the impact of the changes to the bank holiday at this stage; retrospective analysis will be carried out, in line with the ONS special events policy, when data for later periods are available.

The Index of Services increased by 0.9 per cent  in May 2012 compared with April 2012. Business services & finance increased by 1.4 per cent; distribution, hotels & restaurants increased by 1.4 per cent; government & other services increased by 0.2 per cent and transport, storage & communication increased by 0.4 per cent.

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 May 2012 compared with the previous three months and compared with the three months ending May 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.

Growth rates and contributions to the Index of Services: May 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 1.3 1.3 0.9 0.9
Distribution, hotels & restaurants 18 1.4 0.3 1.4 0.3
Transport, storage & communication 14 -0.5 -0.1 0.4 0.1
Business services & finance 38 1.7 0.7 1.4 0.5
Government & other services 30 1.5 0.4 0.2 0.1

Table source: Office for National Statistics

Table notes:

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

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Sector analysis

Distribution, hotels & restaurants

The seasonally adjusted index of distribution, hotels & restaurants in May 2012 increased by 1.4 per cent compared with May 2011. In particular:

  • Output increased in three of the five components.

  • The upward movements were in food & beverage service activities, retail and wholesale, which increased by 6.5 per cent, 2.1 per cent and 0.7 per cent respectively.

Transport, storage & communication

The seasonally adjusted index of transport, storage & communication in May 2012 decreased by 0.5 per cent compared with May 2011. In particular:

  • Output decreased in four of the eight published components.

  • The main downward movements were in postal & courier activities, which fell by 17.5 per cent, and information service activities, which fell by 16.6 per cent.

Business services & finance

The seasonally adjusted index of business services & finance in May 2012 increased by 1.7 per cent compared with May 2011. In particular:

  • Output increased in three of the five published components.

  • The main upward movements were in other professional service activities, which rose by 5.8 per cent, and administrative & support service activities, which rose by 5.2 per cent.

Government & other services

The seasonally adjusted index of government & other services in May 2012 increased by 1.5 per cent compared with May 2011. In particular:

  • Output increased in four of the six published components.

  • The main upward movement was in human health & social work activities, which rose by 3.0 per cent. 

Revisions

This release conforms to the standard revisions policy for National Accounts. The only period open for revision is April 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

    Changes to bank holidays in May and June 2012

    As part of the celebrations for the Queen's Diamond Jubilee there were changes to bank holidays in May and June 2012. The late May bank holiday moved into June, and there was an additional day's holiday. The change to the holidays count as a statistical special event in line with ONS's policy on Special Events. The event is not regular, so there will not be an adjustment 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 in the seasonally adjusted series (and there will an effect associated with two fewer days in June). Caution should be taken when interpreting the movements involving May and June 2012.

    Treatment of Olympic ticket sales

    An article titled 'Treatment of the Sale of Olympic Tickets' (11.1 Kb Pdf) in the National Accounts is available on the ONS website.

    Industry Reviews

    An article 'Index of Services - Industry Reviews August 2012' will be published on 1st August 2012 following up on the IoS Industry Review article March 2012.  This article will detail the plans to be carried out by the ONS on the IoS Industry Review process.

  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) section 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.

    As previously stated, data for the Index of Services in this statistical bulletin are consistent with the Gross Domestic Product Preliminary Estimate published on 25 July 2012. Data for the retail sector are broadly comparable with the Retail Sales Index published on 19 July 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. For details see: Work Programme Consultation (64.6 Kb Pdf) .

  6. Methods

    A link to the Index of Services methodology can be found at: 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 IoS output is designated as a national statistic, although a number of components are experimental. The change to SIC 2007 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 activities,

    • 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.

  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 for this statistical bulletin (127 Kb Pdf) can be found on the National Statistics 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.

  12. National Accounts revisions policy

    National Accounts revision policy is available at National Accounts: Revisions statement (41.7 Kb Pdf) .

  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 May 2006 and April 2011 and the estimates published 12 months later.

    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 0.5 0.00 0.22
    Index of Services 1 month on 1 month growth rate 0.9 -0.05 0.24

    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 list of those given pre-publication access (25.8 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 0207 5335675 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. Details can be found 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.

  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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