Index of Services, UK: April 2015

What’s new

To improve availability of monthly services data, additional lower level series will be published at 9:30am alongside the IoS release. Data will be available at approximately the 2 digit level of the UK Standard Industrial Classification on a seasonally adjusted chained volume measure basis.

Following the recent assessment by the UK Statistics Authority covering short-term economic output indicators, the Index of Services (IoS) has been re-designated as a National Statistic. A letter of confirmation was published on 26 March 2015 and is available on the assessment reports web page on our website (report number 278).

Continuous improvement of GDP: sources, methods and communication

The GDP Output Improvement Report, published on 30 September 2014, provides a detailed update of the implementation of improvements for Blue Book 2014, progress on industry reviews and wider cross-cutting improvements, a comprehensive timetable for the industry review project, an update of industry quality ratings and progress on experimental statistics. It also features sections on deflation and annual coherence adjustments to improve the understanding and transparency of the methods involved in producing Index of Production (IoP), IoS, and GDP(O).

Assessment reports by the UK Statistics Authority are available on our website for the output approach to measuring GDP and the short-term indicators that feed into it. Furthermore, the priorities for national accounts production and development over a 5 year period (financial year ending 2014 to financial year ending 2018) are highlighted in the National Accounts and Related Statistics Work Plan and an independent review of the UK's national accounts and balance of payments has been produced as part of our programme of National Statistics Quality Reviews (NSQRs).

In September 2014, the industry review timetable was published as part of the GDP(O) Improvement Report stating that during July 2015, 4 industry reviews would be published. However, the publication of these reviews will now be delayed. The 4 industry reviews are:

• professional services

• water transport

• social care

• post and courier services

The national accounts (NA) work plan will be published early summer, outlining future priorities for NA and this project. An update to users will follow the agreement of the NA work plan and will provide further information of the progress of industry reviews. Should you have any queries please contact us at STOI.Development@ons.gov.uk.

In light of the Index of Services retaining the National Statistics branding in March 2015, progress can now be made on removing the "experimental statistics" label for the remaining 17 industries that still carry it. A list of the industries with "experimental statistic" label can be found in the Index of Services - Industry Reviews report published August 2012.

The Code of Practice for Official Statistics defines experimental statistics as "new official statistics undergoing evaluation".

Details on the reasons why the 17 industries have an experimental label can found in the August 2012 and September 2014 IoS and GDP(O) Improvement reports. It is proposed that in September 2015, we will remove the “experimental statistics” label on the 17 industries and move them to “official statistics” status. Details on the process can be found in the guide to experimental statistics - frequently asked questions.

These industries will be subject to review by the UK Statistics Authority during the next assessment of the IoS to decide if they should be given “National Statistic” status.

Should users have any comments regarding these industries moving from experiment to official statistic status they should contact the Short-term Output Indicators Development branch at STOI.Development@ons.gov.uk by 31 July 2015.

What do you think?

As a user of our statistics we would welcome your feedback on this publication. If you would like to get in touch please contact us via email: ios.enquiries@ons.gov.uk.

Special events

We maintain a list of candidate special events in the Special Events Calendar. As explained in our Special Events policy, it is not possible to separate the effects of special events from other changes in the series.

Understanding the data

Short guide to the Index of Services

The Index of Services shows the monthly movements in the gross value added (GVA) of the service industries (2007 Standard Industrial Classification (SIC 2007) sections G to T). These industries account for around 78% of gross domestic product (GDP) in 2011. The index is estimated using the same data sources and national accounts methodology as the quarterly estimate of services industries’ gross value added within the output approach to measuring GDP (GDP (O)). These consist of the distribution, hotels and restaurant industries (SIC 2007 sections G and I); transport, storage and communication (sections H and J); business services and finance (sections K to N); and government and other services (sections O to T).

International comparison

International comparison with the IoS is difficult, as most comparable economies don’t produce equivalent estimates. Eurostat turnover in services estimates are not comparable with the IoS, as they exclude the wholesale and retail trade; furthermore, most of the estimates are only available quarterly. The USA also produces services output estimates, but only on a quarterly basis, with a 4 month lag time. Japan has a direct equivalent of the IoS, but the estimates are not seasonally adjusted. The closest equivalent estimates are from Canada, which produces a monthly output estimate of GDP with a breakdown by industry (including an aggregate for services). There are also comparable quarterly estimates from Sweden and Ireland.

Short guide to national accounts

The national accounts provide an integrated description of all economic activity within the economic territory of the UK, including activity involving both domestic units (that is, individuals and institutions resident in the UK) and external units (those resident in other countries). In addition to being comprehensive, the accounts are fully integrated and internally consistent. More information can be found in UK national accounts: a short guide (105.5 Kb Pdf) .

How our statistics explain the economy

The IoS is mentioned in a video summary which highlights 14 ways ONS statistics help you understand the economy. The video summary, along with an interactive version of the video, was released on our website on 27 June 2014, alongside Quarterly National Accounts for Quarter 1 (Jan to Mar) 2014.

Interpreting the data

Some monthly data are volatile. When looking at growth rates, the headline IoS figures focus on the percentage change between the most recent month-on-a-year earlier and the most recent 3 months-on-a-year earlier.

The monthly Index of Services statistical bulletin is usually published on the same days as the Gross Domestic Product Preliminary Estimate statistical bulletin, the Second Estimate of Gross Domestic Product statistical bulletin or the Quarterly National Accounts statistical bulletin.

The data for the IoS in this statistical bulletin are generally consistent with Quarterly National Accounts for Quarter 1 (Jan to Mar) 2015, published on 30 June 2015. However, rounding can sometimes cause differences between the 3-monthly growth rates presented in this release, compared with the quarterly growth rates presented in Quarterly National Accounts. Data for the retail industry are broadly comparable with the Retail Sales release, published on 18 June 2015, but as the 2 series operate under different revisions policies, there can be timing differences in the updating of the 2 series. Also, adjustments to the data within the IoS release are sometimes made at the time of the Blue Book to improve the coherence of the 3 approaches to measuring GDP. Therefore, inconsistencies between the 2 series are not unusual but tend to be small. There are also conceptual and coverage differences between retail sales and retail output which can lead to apparent inconsistencies.

Definitions and explanations

Definitions found within the main statistical bulletin are listed:

Index number

An index number is a number which indicates the change in magnitude relative to the magnitude at a specified point, the latter usually taken as 100. For example, the level of services for April 2015 is given in Table 1 as 109.4. This means that services output was 9.4% higher than the average in the reference period, which is currently 2011.

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 effect of the day of the week and Easter are used respectively to make trading day and Easter adjustments prior to seasonal adjustment. X-13-ARIMA-SEATS is the current seasonal adjustment software used for the IoS.

Value (current price)

Economic transactions involve the production of goods and the sale of goods and services (commodities). The monetary value (or current price) of these transactions is a product of the quantity produced or sold and the unit price. In a particular period, the total (aggregate) value of all transactions taking place in the economy is simply the sum of the individual transaction values in that period. The current price is sometimes referred to as the “nominal” price.

Volume (constant price)

When it comes to comparing the difference in aggregate values between 2 time periods, the observed movement is generally a combination of changes in quantity and changes in price. In a lot of cases, the interest of users of economic data lies in understanding the degree to which economic growth is being driven by changes in quantities (that is, physical volumes of production and consumption). It is standard practice to present many economic statistics as volume series (showing changes in the level of the series that have not been affected by changes in price) and such series are referred to as “at constant prices” or “real” prices.

Deflation

The process of removing price changes from a value series and converting to a volume series is known as deflation. All index numbers presented in this bulletin are volume measures and have had the effect of price changes removed.

Chained volume measures

The indices in this bulletin are presented as “chained volume” measures, meaning that successive volume estimates have been linked (or chained) together. Annual chain-linking was introduced in 2003 and is considered preferable to producing standard volume series, as chained volume measures more accurately reflect volume changes over time. More information on chain-linking can be found in the Tuke and Reed (2001) (92.8 Kb Pdf) article, and a paper on chain-linking weights in the output approach to measuring GDP can be found on the Methods and Sources page.

Gross domestic product (GDP)

The total value of production activity 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 of consumption of fixed capital (or depreciation). It is presented in the accounts at market (or purchasers’) prices. A further distinction is that it can be at current prices or chained volume measures.

Methods

Index of Services methodology can be found on our website.

Composition of the data

The IoS 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 data from the monthly business survey (MBS): an ONS short-term survey on different parts of the economy. It is one of the main data sources used in the compilation of the IoS.

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 don’t need to be deflated, such as Civil Aviation Authority data for air transport. Other proxies, such as employment numbers, are also used. This is the case with Public Sector Employment and Workforce 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 X-13-ARIMA-SEATS forecasting method and interpolating a monthly path using a cubic spline.

An X-13-ARIMA-SEATS forecast is also used where actual data at industry level 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 adheres to the Government Statistical Service Disclosure Control Policy (337 Kb Word document) . More information can be found in the Quality and Methodology Information (QMI) (207.3 Kb Pdf) report.

Response rates

Approximately 42% of the IoS estimates are based on data collected via our Monthly Business Survey (MBS). In addition, approximately 7% of the IoS estimates are collected via our Retail Sales Inquiry (RSI). The remainder is based on data received from other ONS sources and external data sources. The MBS and RSI response rates for data included in this publication are presented for the current months and the 3 months prior in Table 4. The response rates for the previous periods are updated to reflect the current level of response, incorporating data from late returns. There are 2 response rates included; the first is a percentage of the sampled turnover returned and the other is a percentage of the amount of questionnaire forms returned.

Historical MBS response rates for the services industries as at the time of the relevant publication are also available back to 2010.

Basic quality information

Some general information on the quality of the Index of Services (IoS) can be found in the “Understanding the Index of Services” section in the main part of this statistical bulletin.

Additionally, a Quality and Methodology Information (QMI) report for the IoS was published on 11 February 2015. The report pulls together qualitative information on the 5 Eurostat criteria of quality: relevance, accuracy, timeliness and punctuality, accessibility and clarity, and comparability and coherence, and provides a summary of the methods used to compile the IoS output, describing the strengths and limitations of the estimates produced.

Further quality information, including details of the quality adjustments process for IoS, was published on 31 October 2014 and can be found on the Index of Services Methods page on our website.

National accounts revisions policy

Main documentation explaining the national accounts revisions policy (43.3 Kb Pdf) is available.

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 main indicators. A statistical test has been applied to the average revision to find out if it is statistically significantly different from 0. An average revision close to 0 is desirable as it suggests that revisions are not predictable in any one direction. The result of the test is that the average revision is not statistically significantly different from 0.

Table 5 presents a summary of the differences published between April 2009 and April 2014 and the estimates published 12 months later.

Publication policy

Details of the policy governing the release of new data are available from our media relations office. There is also a Pre Release Access List of those given pre-publication access to the contents of this release.

Accessing data

The data presented in the tables of this statistical bulletin are also available to download from the data section of this publication. A complete run of data is available as a time series dataset on our website.

We provide an analysis of past revisions in the IoS and other statistical bulletins; more information can be found in Revisions information in ONS First Releases (244.6 Kb Pdf) .

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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.

The UK Statistics Authority has designated these statistics as National Statistics, in accordance with the Statistics and Registration Service Act 2007 and signifying compliance with the Code of Practice for Official Statistics.

Designation can be broadly interpreted to mean that the statistics:

• meet identified user needs

• are well explained and readily accessible

• are produced according to sound methods

• are managed impartially and objectively in the public interest

Once statistics have been designated as National Statistics it is a statutory requirement that the Code of Practice shall continue to be observed.

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.gov.uk

Next publication: Tuesday 28 July 2015

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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.gov.uk