Index of Services, UK: January 2017

Monthly movements in output for the services industries: distribution, hotels and restaurants; transport, storage and communication; business services and finance; and government and other services.

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This is an accredited national statistic.

Contact:
Email Mark Stephens

Release date:
31 March 2017

Next release:
28 April 2017

1. Main points

  • In the 3 months to January 2017, services output increased by 0.6% compared with the 3 months ending October 2016. This is in line with the average 3-month on 3-month growth since January 2015.

  • However, this shows a slowing in 3-month on 3-month services growth since October 2016, mainly driven by a slowdown in the distribution, hotels and restaurants component.

  • Services output decreased by 0.1% between December 2016 and January 2017. The decrease reported this month is the fourth period showing negative services growth since January 2015.

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2. Things you need to know about this release

The monthly Index of Services (IoS) provides a timely indicator of growth in the output of the services industries and is the largest contributor to the output approach to the measurement of gross domestic product (GDP), accounting for 78.8% of UK GDP in 2013.

The IoS measures the UK output in: distribution, hotels and restaurants; transport, storage and communication; business services and finance; and government and other services. These data are used to produce seasonally adjusted estimates of output at chained volume measures (removing the effect of inflation). Unless otherwise stated, all estimates included in this release are based on seasonally adjusted data.

Data relating to the retail industry are broadly comparable with Retail sales in Great Britain: January 2017, published on 17 February 2017.

This January 2017 release contains revisions from January 2016. This means that we have incorporated additional data since this period.

Revisions can be made for a variety of reasons, the most common include:

  • late responses to surveys and administrative sources
  • forecasts being replaced by actual data
  • revisions to seasonal adjustment factors, which are re-estimated every month and reviewed annually

This revisions period is consistent with the National Accounts revisions policy.

The UK Index of Services have been designated by the UK Statistics Authority as National Statistics, in accordance with the Statistics and Registration Service Act 2007 and signifying compliance with the Code of Practice for Official Statistics.

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3. Index of Services (IoS) main figures and the longer-term trend

Table 1 shows data for Index of Services (IoS) and each of the main components for January 2017.

Figure 1 shows the seasonally adjusted index time series for the IoS over the past decade; this shows continued services growth following the economic downturn. The monthly IoS series can be volatile and therefore we recommend that monthly growths are viewed in the context of the longer-term trend and 3-month on 3-month growth rates.

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4. 3-month on 3-month growth in line with recent average

Figure 2 shows services output increased by 0.6% during the most recent 3 months to January 2017 compared with the previous 3 months to October 2016. This is in line with the average 3-month on 3-month growth since January 2015, but shows a slowdown since October 2016, driven by a weakening in the distribution, hotels and restaurants sector.

All 4 main components increased. In order of their contribution to growth:

  • business services and finance increased by 0.6%
  • distribution, hotels and restaurants increased by 0.7%
  • government and other services increased by 0.4%
  • transport, storage and communication increased by 0.7%

Within the distribution, hotels and restaurants sector, all components showed a slowdown. This was particularly evident in retail trade, which fell by 0.5%, contributing negative 0.04 percentage points. Evidence suggests that increased prices in fuel and food were significant factors in the slowdown.

More detail on individual components can be found in the Index of Services publication tables dataset. The tables also provide information on the growth for the 3 months ending in January 2017 compared with the 3 months ending January 2016.

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5. Month-on-month services growth decreased in January 2017

During January 2017, services output decreased by 0.1% following a rise of 0.2% during December 2016. Figure 3 shows the pattern of Index of Services (IoS) headline growth rates since January 2015. The decrease seen this month is the fourth period we have seen negative services growth over this time period.

Figure 4 shows the month-on-month contributions of each of the main IoS components.

Of the 4 main components of the services industries, 2 decreased in the most recent month compared with the previous month. In order of their contribution to growth (shown in Figure 4):

  • transport, storage and communication decreased by 1.2%
  • distribution, hotels and restaurants decreased by 0.7%

Within the transport, storage and communication component, motion picture activities recorded a month-on-month fall in growth of 8.3%, contributing negative 0.09 percentage points. Considerable strength was seen in December where the 2 highest grossing films of 2016 were screened so a fall back was expected. Further information can be found on the BFI website.

Within the distribution, hotels and restaurants component, the notable falls were in wholesale, retail and repair of motor vehicles, where growth fell by 1.7% contributing negative 0.05 percentage points, accommodation services, which fell by 3.6% contributing negative 0.04 percentage points and retail trade, which fell by 0.3% contributing negative 0.02 percentage points.

In contrast, business services and finance increased by 0.5% and government and other services increased by 0.2% contributing 0.19 and 0.06 percentage points respectively.

Within business services and finance, accounting, bookkeeping and auditing services increased by 10.0%, after a weak December, contributing 0.12 percentage points.

Within government and other services, other personal services increased by 4.7%, similarly after a weak December, contributing 0.06 percentage points.

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6. Services grew by 2.4% between January 2016 and January 2017

Figure 5 shows services output increased by 2.4% in January 2017 compared with January 2016. This shows slightly slower growth than the 2.6% increase in December 2016 compared with December 2015.

All 4 of the main components of the services industries increased in the most recent month compared with the same month last year. In order of their contribution to growth:

  • business services and finance increased by 2.6%
  • distribution, hotels and restaurants increased by 3.3%
  • transport, storage and communication increased by 3.4%
  • government and other services increased by 1.1%

At a more detailed level, the story behind the slowdown is similar to the slowdown in the 3-month on 3-month growth. Retail trade slowed to growth of 1.5% in January 2017 compared with January 2016, from growth of 4.1% in December 2016 compared with December 2015.

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7. What is the contribution of services to GDP?

With a weight of 78.8% in 2013, the services industries are the largest industrial grouping in the output approach to measuring gross domestic product (GDP).

Also published today (31 March 2017) is the UK Quarterly national accounts: Oct to Dec 2016 reporting that GDP in Quarter 4 (Oct to Dec) 2016, was estimated to have increased by 0.7% compared with the previous quarter. The services aggregate was the dominant contributor to the quarter-on-quarter percentage change in GDP, contributing 0.60 percentage points. Construction, production and agriculture contributed 0.07, 0.05 and 0.01 percentage points respectively to the headline figure.

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9. What’s changed in this release

This is the third Index of Services (IoS) bulletin released as part of the new economic theme days. As such this bulletin now follows a more streamlined format and some tables such as response rates and revisions, previously found in the background notes, can now be found in the main datasets.

In response to feedback from our users a new table has been added to the main datasets. This table displays monthly chained volume indices for services and its main components to 4 decimal places.

Monthly economic commentary was published alongside this release, presenting new analysis on the latest economic data.

We welcome your feedback on this new style bulletin via our short survey.

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10. Quality and methodology

The monthly Index of Services (IoS) was developed to provide a timely indicator of growth in the output of services industries, at constant prices for the UK. The IoS is an important component of monthly output (GDP(O)), representing about 78.8% of UK gross domestic product (GDP) as of 2013. The IoS shares the exact same industry coverage as the corresponding quarterly series within GDP(O).

The Index of Services datasets contain additional material, including:

  • Monthly Business Survey response rates
  • publication tables
  • revisions triangles
  • lower level time series data

The Index of Services Quality and Methodology Information document contains important information on:

  • the strengths and limitations of the data
  • the quality of the output: including the accuracy of the data and how it compares with related data
  • uses and users
  • how the output was created
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