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

Released: 25 January 2012 Download PDF

Key Points

  • The seasonally adjusted Index of Services increased by 1.6 per cent in November 2011 compared with November 2010.
  • 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 2.0 per cent and government & other services rose by 2.5 per cent in the most recent month compared with the same month a year ago. These were the largest contributions to the increase.
  • Between October 2011 and November 2011, the service sector output increased by 0.6 per cent.

Key Figures

Index of Services: Key Figures

November 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 100.7 1.6 1.4 0.6 0.1

Table source: Office for National Statistics

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Supplementary Analysis

The seasonally adjusted Index of Services increased by 1.6 per cent in November 2011 compared with November 2010. This increase is mainly due to growth in business services & finance, which increased by 2.0 per cent, and government & other services, which increased by 2.5 per cent. Transport, storage & communication increased by 1.0 per cent. Distribution, hotels & restaurants decreased by 0.6 per cent.

Compared with October 2011, the Index of Services increased by 0.6 per cent in November 2011. The increase in November is mainly due to strength in transport, storage & communication which increased by 2.8 per cent and business services & finance, which increased by 0.8 per cent.

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 November 2011; compared with the previous three months and compared with the three months ending November 2010.

The public sector strike on 30 November

The public sector strike on 30 November is likely to have had some impact on the Index of Services in November. It is not possible to measure the effect directly. Information from the ONS's Labour Disputes Inquiry, which was published as part of the Labour Market release on 18 January, suggests that nearly one million working days were lost, representing about 0.6 per cent of the total number of working days for the public sector for the month. There are two aspects to consider when thinking about the possible impact on output:

  1. The lost output or production of those sectors directly affected by the strike (eg health, education, public administration)

  2. The lost output or production of those businesses indirectly affected by the strike (eg employees having to take a day off to provide child care).

The effect of the first category on the official estimates does depend to some extent on how the Index of Services is measured:

  • Health sector output is in part measured by the number of operations and there are reports of delays as a result of the strike, thus reducing the number of operations (and therefore output) in the month. The impact is likely to have been small, even if we assume that there was no catch-up. A loss of one days activity accounts for about 4.5 per cent of activity in the month and the extent of the disruption - looking at the number of operations which were postponed - was relatively small when considering the total number of operations in one day. In turn, this is quite a small part (about 16 per cent) of the health sector. 

  • Education output is measured by the number of pupils, adjusted for attendance. In practice strike days are often made up or partly made up (for example, by adjusting teacher training days) so that the overall needs of the curriculum are still met. There is no specific adjustment made for strike days in the official estimates so there is no impact on education output.

  • Public administration is measured by the number of staff (on a full-time equivalent basis). The strike has no measured impact on the data.

The overall impact of the first category is therefore likely to be small. The impact of the second category is difficult to assess but is likely to have resulted only in moving activity within the quarter.

Services in detail

The Index of Services measures the chained volume index movements of the UK service sector. With the move to SIC 2007, the service 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 1.6 1.6 0.6 0.6
Distribution, hotels and restaurants 18 -0.6 -0.1 -0.8 -0.1
Transport, storage and communication 15 1.0 0.2 2.8 0.4
Business services and finance 38 2.0 0.8 0.8 0.3
Government and other services 29 2.5 0.7 0.1 >0.0
           

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Sector analysis

Distribution, hotels & restaurants

Under SIC 2007, Section G (distribution) and Section I (hotels & restaurants) have been combined to be consistent with the aggregations published in the Gross Domestic Product Quarterly National Accounts.

The seasonally adjusted index of distribution, hotels & restaurants in November 2011 decreased by 0.6 per cent compared with November 2010. In particular:

  1. Output decreased in two of the five components

  2. Wholesale and motor trades declined by 2.8 per cent and 4.0 per cent respectively

Transport, storage & communication

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

The seasonally adjusted index of transport, storage & communication in November 2011 increased by 1.0 per cent compared with November 2010. In particular:

  1. Output increased in six of the eight published components

  2. The main upward movements were in publishing, audiovisual & broadcasting activities and warehousing & supporting activities for transportation which rose by 6.6 per cent and 5.2 per cent respectively

Business services & finance

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

The seasonally adjusted index of business services & finance in November 2011 increased by 2.0 per cent compared with November 2010. In particular:

  1. Output increased in four of the five published components

  2. The main upward movements were in other professional service activities, which rose by 4.8 per cent and other professional scientific & technical activities, which rose by 14.8 per cent

Government & other services

Under SIC 2007, Section O (public administration & defence, compulsory social security), Section P (education), Section Q (human health & social work activities), Section R (arts, entertainment & 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.

The seasonally adjusted index of government & other services in November 2011 increased by 2.5 per cent compared with November 2010. In particular:

  1. Output increased in all six published components

  2. The main contribution to growth was in human health & social work activities which rose by 3.9 per cent

Revisions

This release conforms to the standard revisions policy for National Accounts. The only period open for revision is October 2011.

Background notes

  1. What's New?

    Additional supporting economic analysis relating to the Index of Services release can be found in Economic Review - January 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) 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).

  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). 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 22 December 2012.

  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 looked at customers views on how ONS could address customers’ needs within a reducing budget.

  6. Methods

    The 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 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 in 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


  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 timelines 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 Index of Services releases (127 Kb Pdf)  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.

  12. National Accounts revisions policy

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

  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 November 2005 and October 2010 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 0.1 0.00 0.21
    Index of Services 1 month on 1 month growth rate 0.6 -0.04 0.23

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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 (30.6 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. Details can be found on the ONS Policy on Standards for presenting revisions in time series First Releases (244.6 Kb Pdf) page on the ONS website.

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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.

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