Index of Services, UK: June 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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Contact:
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Release date:
24 August 2017

Next release:
29 September 2017

1. Main points

  • Services output increased by 0.5% in Quarter 2 (Apr to June) 2017 compared with Quarter 1 (Jan to Mar) 2017; following growth of 0.1% between Quarter 4 (Oct to Dec) 2016 and Quarter 1 2017.
  • The largest contribution to quarterly growth came from the transport, storage and communication sector, which contributed 0.17 percentage points; the largest industry contribution came from retail sales, which contributed 0.11 percentage points.
  • The Index of Services increased by 0.4% between May and June 2017.
  • The largest contribution to the month-on-month growth came from the transport, storage and communication sector, which contributed 0.18 percentage points of which motion pictures contributed 0.11 percentage points.
  • Services output increased by 2.5% in June 2017 compared with June 2016, following growth of 2.5% in May 2017 compared with May 2016.
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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: July 2017, published on 17 August 2017.

This June 2017 release contains revisions from April 2017. 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 has 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 the Index of Services (IoS) and each of the main components for June 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. Quarter-on-quarter services growth increases

During Quarter 2 (Apr to June) 2017, services output increased by 0.5% following a rise of 0.1% during Quarter 1 (Jan to Mar) 2017.This is unrevised from the estimates used in the Gross domestic product, preliminary estimate: Apr to June 2017.

All of the four main components of the services industries increased in the most recent quarter compared with the previous quarter. In order of their contribution to growth:

  • transport, storage and communication increased by 1.2%, contributing 0.17 percentage points
  • distribution, hotels and restaurants increased by 0.9%, contributing 0.16 percentage points
  • business services and finance increased by 0.3%, contributing 0.12 percentage points
  • government and other services increased by 0.4%, contributing 0.10 percentage points

The main sector driving Index of Services (IoS) growth is transport, storage and communication, with motion pictures increasing by 6.7%, contributing 0.07 percentage points. Further information on the high-grossing films in June 2017 can be found on the British Film Institute (BFI) website. In addition, computer programming grew by 1.1%, contributing 0.04 percentage points, air transport grew by 4.8%, contributing 0.03 percentage points, and telecommunications grew by 1.4%, contributing 0.03 percentage points to headline growth.

Retail trade was the largest industry contributing to the positive growth in the distribution, hotels and restaurants sector and headline IoS, increasing by 1.5%, contributing 0.11 percentage points. Please see the Retail sales in Great Britain: July 2017 release for more information. In contrast, motor trades partially offset this and decreased by 1.0%, contributing negative 0.03 percentage points. Further information on car registrations can be found on the Society of Motor Manufacturers and Traders (SMMT) website.

Office administration was the largest contributor to growth in the business services and finance sector, increasing by 4.1%, contributing 0.07 percentage points. In addition, imputed rent increased by 0.3%, contributing 0.04 percentage points.

The largest positive contributions to the government and other services sector came from human health activities and education. Human health activities grew by 0.7% and education by 0.5%, contributing 0.05 and 0.04 percentage points respectively. However, this growth was partially offset by other personal services activities, which fell by 3.7%, contributing negative 0.05 percentage points.

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5. Services grew by 2.3% between Quarter 2 (Apr to June) 2016 and Quarter 2 2017

Figure 3 shows services output increased by 2.3% in Quarter 2 (Apr to June) 2017 compared with Quarter 2 2016.

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

  • business services and finance increased by 1.9%, contributing 0.79 percentage points
  • distribution, hotels and restaurants increased by 3.5%, contributing 0.63 percentage points
  • transport, storage and communication increased by 3.9%, contributing 0.53 percentage points
  • government and other services increased by 1.4%, contributing 0.39 percentage points

Industries contributing to the 2.3% rise were:

  • food and beverage activities (restaurants and public houses), which increased by 8.2%, contributing 0.22 percentage points
  • retail trade, which increased by 3.0%, contributing 0.22 percentage points
  • motion pictures, which increased by 23.3%, contributing 0.22 percentage points
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6. Month-on-month services growth increased in June 2017

During June 2017, services output increased by 0.4% following a rise of 0.3% during May 2017. This is the strongest month-on-month growth since August 2016.

Figure 4 shows the pattern of Index of Services (IoS) headline growth rates since January 2015 and Figure 5 shows the month-on-month contributions of each of the main IoS components.

All four main components of the services industries increased in the most recent month compared with the previous month. In order of their contribution to growth:

  • transport, storage and communication increased by 1.3%, contributing 0.18 percentage points
  • business services and finance increased by 0.3%, contributing 0.13 percentage points
  • distribution, hotels and restaurants increased by 0.3%, contributing 0.05 percentage points
  • government and other services increased by 0.2%, contributing 0.05 percentage points

The largest industries contributing to the 0.4% rise in June 2017 were:

  • motion pictures, which increased by 9.6%, contributing 0.11 percentage points
  • computer programming, which increased by 2.0%, contributing 0.07 percentage points
  • wholesale trade, which increased by 1.4%, contributing 0.06 percentage points
  • scientific research and development, which increased by 6.4%, contributing 0.05 percentage points
  • telecommunications, which increased by 1.9%, contributing 0.04 percentage points

Further to the motion pictures detail provided in section 5 of the UK index of services: May 2017 bulletin, more information can be provided on the breakdown of film industry turnover. This is displayed in the UK Non-Financial Business Economy (Annual Business Survey) Section A-S dataset within the Annual Business Survey, UK non-financial business economy: 2015 revised results bulletin.

Here, motion picture, video and television production, and post-production (UK Standard Industrial Classification (SIC) 2007 59.11 and 59.12 respectively) in 2015 accounted for 62.3% of the total turnover of motion picture, video and television activities (UK SIC 2007 59.1); distribution (UK SIC 2007 59.13) accounted for 29.4% and projection (UK SIC 2007 59.14) made up the remaining 8.3%.

Based on approximate gross value added at basic prices (aGVA), motion picture, video and television production, and post-production in 2015 accounted for 47.8% of motion picture, video and television activities; distribution accounted for 41.2% and projection 10.9%. For clarity, sound recording and music publishing activities (UK SIC 2007 59.2) are not included in these calculations.

Furthermore, it should be noted that, although comparisons can be made to the British Film Industry (BFI) Statistical Yearbook, it’s likely that Annual Business Survey data will have revised previous periods and the BFI statistical yearbook data does not include television production and distribution in its turnover. While the ABS estimates give an indication of the weight of each industry within motion pictures as at 2015, information for the most recent period is not available from this data source. Therefore it should be noted that the composition of these industries may have changed over time.

More detail on individual components can be found in the Index of Services publication tables dataset.

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7. Services grew by 2.5% between June 2016 and June 2017

Figure 6 shows services output increased by 2.5% in June 2017 compared with June 2016, following growth of 2.5% in May 2017 compared with May 2016.

All four 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 2.1%, contributing 0.85 percentage points
  • transport, storage and communication increased by 4.5%, contributing 0.61 percentage points
  • distribution, hotels and restaurants increased by 3.3%, contributing 0.61 percentage points
  • government and other services increased by 1.4%, contributing 0.40 percentage points

Industries contributing to the 2.5% rise in June 2017 were:

  • motion pictures, which increased by 25.6%, contributing 0.25 percentage points
  • retail trade, which increased by 3.2%, contributing 0.23 percentage points
  • computer programming, which increased by 5.2%, contributing 0.19 percentage points
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8. What is the contribution of services to gross domestic product?

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 (24 August 2017) is the UK GDP, second estimate: April to June 2017, reporting that GDP in Quarter 2 (Apr to June) 2017 increased by 0.3% compared with the previous quarter. The services aggregate was the dominant contributor to the quarter-on-quarter percentage change in GDP, contributing 0.43 percentage points. Production and construction contributed negative percentage points of 0.05 and 0.08 respectively. Agriculture contributed 0.00 percentage points to the headline figure.

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10. Upcoming changes

In the next release of Index of Services (IoS), the Monthly Business Survey, which underpins the current prices data feeding into this release, will contain new imputation methodology for survey non-response back to January 2016. For respondents that do not return data in a month, the value is imputed using a ratio imputation method called the mean of ratios.

The new method, referred to as the ratio of means, is more stable and reduces imputation bias. An article will be published next month on 8 September 2017 detailing the impact.

We launched a public consultation, which closes on 14 September 2017, to seek views on an alternative model for our publications of gross domestic product (GDP) estimates. In summary, this model would give two balanced estimates of quarterly GDP using data from the output, income and expenditure approaches around 6 and 13 weeks after the end of the preceding quarter. The Index of Services publication date would be moved 2 weeks earlier and become part of the short-term economic indicator theme day, enabling a monthly GDP estimate.

VAT turnover implementation into National Accounts: June Update was published on 1 June 2017. This update explains that the first use of VAT in the national accounts will be in the Quarterly National Accounts (July to September) 2017 and the Index of Services: October 2017 bulletins, which are both due for publication on 22 December 2017.

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11. Feedback on this bulletin

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

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12. 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 (gross domestic product (output approach) (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 (MBS) response rates
  • publication tables
  • revisions triangles
  • lower-level time series data

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

  • the strengths and limitations of the data and how it compares with related data
  • uses and users of the data
  • how the output was created
  • the quality of the output including the accuracy of the data
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Contact details for this Statistical bulletin

Mark Stephens
ios.enquiries@ons.gov.uk
Telephone: +44 (0)1633 456387