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

Released: 23 December 2011 Download PDF

Key Points

  • The seasonally adjusted index of services increased by 1.1 per cent in October 2011 compared with October 2010.
  • Three of the four main service sector components increased in the most recent month compared with the same month a year ago.
  • Government and other services rose by 2.3 per cent in the most recent month compared with the same month a year ago. This was the largest contribution to the increase.
  • Between September 2011 and October 2011, service sector output decreased by 0.7 per cent.

Key Figures

Index of Services: Key Figures

October 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 1.1 1.3 -0.7 0.2

Table source: Office for National Statistics

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Supplementary Analysis

The seasonally adjusted index of services increased by 1.1 per cent in October 2011 compared with October 2010. This increase is mainly due to growth in government & other services, which increased by 2.3 per cent, and business services & finance, which increased by 1.5 per cent. Distribution, hotels & restaurants also contributed. Transport, storage & communication decreased by 1.4 per cent.

Compared with September 2011, the index of services decreased by 0.7 per cent in October 2011. The decline in October is mainly due to weakness in transport, storage and communication, which decreased by 2.5 per cent and business services and finance, which decreased by 0.7 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 October 2011; compared with the previous three months and compared with the three months ending October 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 1.1 1.1 -0.7 -0.7
Distribution, hotels and restaurants 18 0.2 0.0 -0.2 0.0
Transport, storage and communication 15 -1.4 -0.2 -2.5 -0.4
Business services and finance 38 1.5 0.6 -0.7 -0.3
Government and other services 29 2.3 0.7 -0.1 0.0

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 & 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 October 2011 increased by 0.2 per cent compared with October 2010. In particular:

  1. Output increased in two of the five published components

  2. The increases were in accommodation and retail trades except motor vehicles and motorcycles which rose by 11.3 per cent, and 0.8 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 October 2011 decreased by 1.4 per cent compared with October 2010. In particular:

  1. Output decreased in five of the eight published components

  2. The main downward movements were in computer programming, consultancy and related activities  and  telecommunications, which fell by 6.1 per cent and 3.4 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 October 2011 increased by 1.5 per cent compared with October 2010. In particular:

  1. Output increased in three of the five published components

  2. The main upward movements were in administrative & support service activities, which rose by 6.1 per cent and other professional service activities, which rose by 3.5 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 October 2011 increased by 2.3 per cent compared with October 2010. In particular:

  1. Output increased in five of the 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 earliest period open for revision is January 2010.

The revisions in this release are higher than usual due to the updating of four individual low-level series published at the time of the last Blue Book. These revisions have quite a strong effect on business services & finance and transport, storage & communications.

(See the revision tables (RIOS 1) later in this release).

Background notes

  1. What's New?

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

    The next publication of the Index of Services, to be released on 25 January 2012, will not contain the Indices spreadsheet which is currently released alongside the bulletin. This spreadsheet is being discontinued as the information will be available to download from the IoS Time Series Dataset page.

  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

    A link to 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 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.

  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 statement (27.8 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 presents a summary of the differences published between October 2005 and September 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 0.2 0.01 0.21
    Index of Services 1 month on 1 month growth rate -0.7 -0.04 0.23

    Download table

     

  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 at 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.

    © Crown copyright 2011

  18. Next publication: Wednesday 25 January 2012

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Statistical contacts

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