1. Main points
The Index of Services is estimated to have increased by 2.8% in January 2016 compared with January 2015. All of the 4 main components of the services industries increased in the most recent month compared with the same month a year ago.
The largest contribution to total growth came from: distribution, hotels and restaurants, which contributed 1.0 percentage points to total growth.
The latest Index of Services estimates show that output increased by 0.2% between December 2015 and January 2016. This follows growth of 0.3% between November 2015 and December 2015, which is revised up 0.1% from the previous estimate.
The Index of Services increased by 0.8% in Quarter 4 (Oct to Dec) 2015 compared with Quarter 3 (July to Sept) 2015. This figure was revised up 0.1% from the estimate used in the Second Estimate of GDP, published on 25 February 2016 and is consistent with the Quarterly National Accounts, published on 31 March 2016.
The figures within this release are estimates and are on a seasonally adjusted basis. The earliest period open for revision in this release is January 2015.Nôl i'r tabl cynnwys
2. Understanding the Index of Services (IoS)
About the IoS
The monthly IoS provides a timely indicator of growth in the output of the services industries. The IoS is an important economic indicator and shares exactly the same industry coverage as the corresponding quarterly series within UK gross domestic product (GDP). The primary purpose of the IoS is to produce a short-term measure of the output of the services industries within the UK economy and show the monthly movements in the gross value added (GVA) of the services industries (2007 Standard Industrial Classification (SIC 2007) sections G to T).
The 4 main components of the services industries are:
- distribution, hotels and restaurants
- transport, storage and communications
- business services and finance
- government and other services
The IoS is the largest contributor to the output approach to the measurement of GDP, accounting for 78.6% of UK GDP in 2012.
All data in this bulletin are seasonally adjusted estimates and have had the effect of price changes removed (in other words, the data are deflated). Further information on some of the main concepts (including seasonal adjustment and deflation) underlying the estimates can be found in background note 12.
The quality of the IoS
The IoS is published around 8 weeks after the end of the reference month. There is no simple way of measuring the accuracy of the IoS, that is, the extent to which the estimate measures the underlying “true” value of the output growth (of the services industries) in the UK for a particular period. All estimates, by definition, are subject to statistical uncertainty and for many well-established statistics the Office for National Statistics (ONS) measures and publishes the sampling error associated with the estimate, using this as an indicator of accuracy. However, as IoS is constructed from a wide variety of data sources, some of which are not based on random samples, we don’t publish a measure of the sampling error associated with the IoS.
Reliability is one dimension of measuring accuracy, using evidence from analyses of revisions to assess the closeness of early estimates to subsequent estimated values. Revisions are an inevitable consequence of the trade-off between timeliness and accuracy. Figures for the most recent months are provisional and subject to revision in light of:
- 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
Revisions to the IoS are typically small (around 0.1 to 0.2 percentage points), with the frequency of upward and downward revisions broadly equal. More information on the most recent revisions analysis can be found in the component analysis section and in background note 18.
It should be noted that care should be taken when using the month-on-month growth rates, due to their volatility (background note 11).
Further information on the quality of the IoS is available in the Quality of the IoS report on the Index of Services Methods page on our website. It should be noted that as part of the IoS industry review process, we are continually working on methodological changes to improve the accuracy of the IoS.Nôl i'r tabl cynnwys
3. Main information
Table 1: Index of Services main information, January 2016
|Index number (2012=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||110.8||2.8||2.7||0.2||0.9|
|Source: Office for National Statistics|
Download this table Table 1: Index of Services main information, January 2016.xls (26.1 kB)
The Index of Services (IoS) measures the quantity of output from all UK services industries, which account for more than three-quarters of the output approach to the measurement of GDP. Index values are currently referenced to 2012 so that the average for 2012 is equal to 100. Therefore, an index value of 110 would indicate that output is 10% higher than the average for 2012.
As seen in Figure 1, the IoS increased by 2.8% in January 2016 compared with January 2015. In order of their contribution to growth (listed in table IOS1 in the Index of Services publication tables dataset):
- distribution, hotels and restaurants increased by 5.7%
- business services and finance increased by 1.8%
- transport, storage and communications increased by 5.1%
- government and other services increased by 1.3%
Further detail on these movements can be found in the component analysis section.
Figure 1: IoS contributions 1 to the month-on-month a year ago percentage change, January 2016
Source: Office for National Statistics
- Individual contributions may not sum to the total due to rounding
- Percentage change
Download this chart Figure 1: IoS contributions ^1^ to the month-on-month a year ago percentage change, January 2016Image .csv .xls
Between December 2015 and January 2016, as seen in Figure 2, IoS output increased by 0.2%.
Out of the 4 main components of the services industries, 2 increased in the most recent month compared with the previous month. In order of their contribution to growth (listed in table IOS1 in the Index of Services publication tables dataset):
- distribution, hotels and restaurants increased by 1.4%
- transport, storage and communication increased by 0.7%
In contrast, business services and finance decreased by 0.2%, while government and other services decreased by 0.3% 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 2016 compared with the previous 3 months and compared with the 3 months ending January 2015.
Figure 2: IoS contributions 1 to the month-on-month percentage change, January 2016
Source: Office for National Statistics
- Individual contributions may not sum to the total due to rounding
- Percentage change
Download this chart Figure 2: IoS contributions ^1^ to the month-on-month percentage change, January 2016Image .csv .xls
4. Economic Background
Total services grew by 2.5% between Quarter 4 (Oct to Dec) 2014 and Quarter 4 (Oct to Dec) 2015 and by 0.8% between Quarter 3 (July to Sept) 2015 and Quarter 4 (Oct to Dec) 2015. This compares with growth rates of 2.1% and 0.6% respectively for the economy as a whole.
Since 1997, the services industries, as a whole, have grown at a faster rate than all other headline industries. While GDP has grown at a compound average (further information on compound average growth can be found in background note 12) growth rate of 2.0% per year between 1998 and 2015, services have grown at a compound average growth rate of 2.8% per year (more information can be found in Quarterly National Accounts: Quarter 4 (Oct to Dec) 2015). This has led to a continuing re-orientation of the economy towards services, despite productivity in the services industries as a whole rising more slowly than in the production industries (and manufacturing in particular) since 1997 (more information can be found in Labour Productivity, Quarter 3 (July to Sep) 2015). The higher output growth, therefore, reflects the increasing share of the labour force employed in services, which grew from 73% to 80% between 1997 and 2015 (Labour Market Statistics, March 2016).
In addition to strong long-run growth, the services industries, as a whole were also less affected by the downturn (between 2007 and 2009) than other headline industries, such as production and construction and subsequently recovered more quickly. Relatively strong growth in the services industries has provided the largest contribution to the recovery in the whole economy and has been the only headline industry grouping to have surpassed its pre-downturn peak levels (more information can be found in Quarterly National Accounts: Quarter 4 (Oct to Dec) 2015).
Even though the services industries as a whole have been performing better than all other headline industries, the growth within the services’ sub-components has been quite varied. Figure 3 shows that between 1998 and 2015, transport, storage and communications and business services and finance grew faster than the services industries as a whole, both at compound average growth rates of 3.7% per year, while services grew at a compound average growth rate of 2.8% per year over the same period. However, government and other services, and distribution, hotels and restaurants grew at slower rates than the services industries as a whole (at compound average growth rates of 1.6% and 1.9% per year respectively) between 1998 and 2015.
The economy’s downturn, Quarter 1 (Jan to Mar) 2008 to Quarter 2 (Apr to June) 2009, affected the 4 sub-components of the services industries to different degrees. Distribution, hotels and restaurants, and transport, storage and communications were affected the most, with their output falling by 9.1% and 7.5% respectively, while the output of the services industries as a whole contracted by 4.1% over the same period. Business services and finance, and government and other services were impacted less severely, with their output contracting by 3.5% and 0.1% respectively.
Business services and finance experienced a strong recovery following the economy’s downturn and in Quarter 4 (Oct to Dec) 2015, output was 15.1% above pre-downturn levels. The recovery of transport, storage and communications, and distribution, hotels and restaurants were also quite strong and in Quarter 4 (Oct to Dec) 2015, they were 12.1% and 11.5% above their respective values in Quarter 1 (Jan to Mar) 2008. However, the recovery of the government and other services industries was more modest and in Quarter 4 (Oct to Dec) 2015, output was 8.0% above its Quarter 1 (Jan to Mar) 2008 value.
Figure 3: Index of services and sub-components, Quarter 1 (Jan to Mar) 1997 to Quarter 4 (Oct to Dec) 2015
Source: Office for National Statistics
- Q1 refers to Quarter 1 (Jan to Mar); Q2 refers to Quarter 2 (Apr to June); Q3 refers to Quarter 3 (July to Sept); and Q4 refers to Quarter 4 (Oct to Dec)
Download this chart Figure 3: Index of services and sub-components, Quarter 1 (Jan to Mar) 1997 to Quarter 4 (Oct to Dec) 2015Image .csv .xls
Figure 4 shows the share of nominal (unadjusted for the effect of price changes) gross value added accounted for by services in the UK and a selection of other major economies (more information on data for France, Germany, Italy, Japan and the USA can be found on the Organisation for Economic Co-operation and Development (OECD) website). In 1997, the share of nominal gross value added (GVA) accounted for by services in the UK was just under 70%, around the middle of the range relative to the other economies shown. By 2013, the UK had become relatively more reliant on services, as its share rose to 78% of nominal GVA.
Figure 4: Services as a percentage of nominal GVA in comparable economies 1 to the UK
1997 to 2013
Source: Office for National Statistics, Organisation for Economic Co-operation and Development (OECD)
- OECD data correct at 18 March 2016
Download this chart Figure 4: Services as a percentage of nominal GVA in comparable economies ^1^ to the UKImage .csv .xls
5. GDP impact and components
With a weight of 78.6%, the services industries are the largest industrial grouping in the output approach to measuring GDP. The releases for the short-term economic indicators that feed directly into the output approach to measuring GDP include a table detailing growth in the 4 main industrial groupings (Table 2). This will aid understanding of the relationship between the individual short-term releases and GDP output.
In Quarter 4 (Oct to Dec) 2015, GDP was estimated to have increased by 0.6% compared with the previous quarter. The contribution an industry grouping makes to the GDP quarterly growth is dependent on the quarterly change in that industry grouping and its weight within the output approach to measuring GDP.
Figure 5: GDP contribution 1 to the quarter-on-quarter percentage change, Quarter 4 (Oct to Dec) 2015
Source: Office for National Statistics
- Contributions are to output gross value added and therefore may not sum to the percentage change in GDP. More information on the difference between the 2 measures can be found in the Short Guide to National Accounts
- Percentage change to 1 decimal place
Download this chart Figure 5: GDP contribution ^1^ to the quarter-on-quarter percentage change, Quarter 4 (Oct to Dec) 2015Image .csv .xls
Monthly estimates are produced for each industrial grouping except agriculture. The January 2016 estimates for production and construction were published on 9 March 2016 and 11 March 2016 respectively. The Quarterly National Accounts for Quarter 4 (Oct to Dec) 2015 was published on 31 March 2016 alongside this bulletin.
Table 2: GDP output component tables, Quarter 4 (Oct to Dec) 2015, chained volume measure, seasonally adjusted
|Publication||% of GDP||Release date||Period of GDP||Most recent quarter on a year earlier||Most recent quarter on previous quarter||Most recent month on the same month a year ago||Most recent month on the previous month|
|Index of Production||14.9||09 Mar||Jan||..||..||0.2||0.3|
|Construction output||5.9||11 Mar||Jan||..||..||-0.8||-0.2|
|Index of Services||78.6||31 Mar||Jan||..||..||2.8||0.2|
|Retail Sales3||19 Feb||Jan||..||..||5.2||2.3|
|Source: Office for National Statistics|
|1. Q4 is Quarter 4 (Oct to Dec)|
|2. Q3 is Quarter 3 (July to Sept)|
|3. Data are presented as at 19 February 2016 due to timing of the availability of data|
|4. No data represented by ..|
|5. Individual weights may not sum to the total due to rounding|
Download this table Table 2: GDP output component tables, Quarter 4 (Oct to Dec) 2015, chained volume measure, seasonally adjusted.xls (31.2 kB)
6. Component analysis
Table 3: Growth rates and contributions 1 to the Index of Services, January 2016
|Description||% of Services||Month on a year earlier (%)||Contribution to services (% points)||Month on month growth (%)||Contribution to services (% points)|
|Total services industries||100||2.8||2.8||0.2||0.2|
|Distribution, hotels and restaurants||17||5.7||1.0||1.4||0.3|
|Transport, storage and communication||13||5.1||0.7||0.7||0.1|
|Business services and finance||40||1.8||0.7||-0.2||-0.1|
|Government and other services||30||1.3||0.4||-0.3||-0.1|
|Source: Office for National Statistics|
|1. Individual contributions may not sum to the total due to rounding|
Download this table Table 3: Growth rates and contributions ^1^ to the Index of Services, January 2016.xls (27.6 kB)
Distribution, hotels and restaurants
The index of distribution, hotels and restaurants increased by 5.7% in January 2016 compared with January 2015; this follows an increase of 3.9% in December 2015 compared with the same month a year earlier. The main contributors to the increase were: retail trade, except of motor vehicles and motorcycles, which increased by 5.2% and wholesale and retail trade and repair of motor vehicles and motorcycles, which increased by 12.0%.
Transport, storage and communications
The index of transport, storage and communications increased by 5.1% in January 2016 compared with January 2015; this follows an increase of 4.6% in December 2015 compared with the same month a year earlier. The main contributors to the increase were: computer programming, consultancy and related activities, which increased by 9.5% and publishing audiovisual and broadcasting activities, which increased by 11.9%.
Business services and finance
The index of business services and finance increased by 1.8% in January 2016 compared with January 2015; this follows an increase of 1.8% in December 2015 compared with the same month a year earlier. The main contributors to the increase were: real estate activities, which increased by 2.1%, administration and support service activities, which increased by 3.4% and other professional service activities, which increased by 3.0%.
Government and other services
The index of government and other services increased by 1.3% in January 2016 compared with January 2015; this follows an increase of 1.5% in December 2015 compared with the same month a year earlier. The main contributors to the increase were: human health and social work activities, which increased by 2.4% and education, which increased by 2.0%.
The Index of Services (IoS) follows the National Accounts Revisions policy. Revisions are caused by a number of factors including, but not limited to:
- revisions to source data due to late responses
- actual data replacing forecast data
- revisions to seasonal factors that are re-estimated every period
More information on IoS revisions is available on the Index of Services Methods page.
We produce revisions triangles of services growth to provide users with one indication of the reliability of this main indicator. Statistical tests are performed on the average revision to test if it is statistically significantly different to 0. Further information can be found in background note 17.
In this release of data, the earliest period open to revision is January 2015. Across this open period, there are minimal revisions to month-on-month growth rates. In absolute terms revisions to growth are no bigger than 0.1 percentage points. Slightly larger revisions are present in month-on-a-year ago growths in the more recent periods, these are driven by real data replacing forecasts / imputations.
The growth rate for December 2015 compared with December 2014 was revised up by 0.4 percentage points from the previous estimate of 2.1%, this was the biggest month-on-a-year ago revision in the open period. The month-on-month growth rate for December 2015 compared with November 2015 was revised up by 0.1 percentage points from the previous estimate of 0.2%.
Further details on the revisions to the IoS components can be found in the RIOS1 tables in the Index of Services publication tables dataset.Nôl i'r tabl cynnwys
7. Industry spotlight: Sports activities and amusement and recreation activities
According to the UK Standard Industrial Classification 2007 (SIC 2007), sports activities and amusement and recreation activities (industry 93) includes the provision of recreational, amusement and sports activities (except museum activities, preservation of historical sites, botanical and zoological gardens and nature reserve activities; and gambling and betting activities). Moreover, this industry excludes dramatic arts, music and other arts and entertainment such as the production of live theatrical presentations, concerts and opera or dance productions and other stage productions.
In 2015, sports activities and amusement and recreation activities generated £4.8 billion of output gross value added (GVA), which represented 18.5% of the GVA in the arts, entertainment and recreation section (section R). The share of total output attributed to this industry increased between 1997 and 2015 from 0.2% to 0.3%, suggesting that the industry grew faster than the rest of the economy (Quarterly National Accounts: Quarter 4 (Oct to Dec) 2015).
Figure 6 compares sports activities and amusement and recreation activities with services as a whole, and shows that the 2 series were more closely aligned prior to the downturn, after which their paths diverged considerably. Between Quarter 2 (Apr to June) 1997 and Quarter 1 (Jan to Mar) 2008, sports activities and recreation activities, and services as a whole grew at compound average growth rates of 0.7% and 0.9% per quarter, respectively, with the services growth being relatively more stable (further information on compound average growth can be found in background note 12).
During the economy’s downturn between Quarter 1 (Jan to Mar) 2008 and Quarter 2 (Apr to June) 2009, the output of sports activities and amusement and recreation activities contracted by 13.2% while the services industries contracted by 4.1%. Following this, services returned to strong and consistent growth, surpassing its pre-downturn peak in Quarter 1 (Jan to Mar) 2012. In contrast, sports activities and amusement and recreation activities exceeded its pre-downturn peak in Quarter 3 (July to Sept) 2012 when output grew by 28.4% which coincided with the London Olympics. However, this was the only quarter in which the industry exceeded its Quarter 1 (Jan to Mar) 2008 value. By Quarter 4 (Oct to Dec) 2015, the services industries as a whole was 11.9% above its value in Quarter 1 (Jan to Mar) 2008, while sports activities and amusement and recreation activities was 11.9% below its value in Quarter 1 (Jan to Mar) 2008.
Figure 6: Index of Services and sports activities and amusement and recreation activities UK, 1997 to 2015
Source: Office for National Statistics
Download this chart Figure 6: Index of Services and sports activities and amusement and recreation activities UK, 1997 to 2015Image .csv .xls
Figure 7, which compares the number of employees in sports activities and amusement and recreation activities between 2009 and 2014, shows that the number of part-time employees in the industry is higher than the number of full-time employees in both years. This differs from the economy as a whole where the number of full-time employees is typically more than 2 and a half times higher than the number of part time employees over the same period (Labour market statistics: March 2016). Between 2009 and 2014, the number of employees in sports activities and amusement and recreation activities increased by 4.9% driven by a rise in part-time employees, which offset the decrease in full-time employees over the period (Business Register and Employment Survey (BRES) provisional results: 2014).
Figure 7: Comparison of full time, part time and total number of employees in sport activities and amusement and recreation activities between 2009 and 2014
Source: Office for National Statistics
Download this chart Figure 7: Comparison of full time, part time and total number of employees in sport activities and amusement and recreation activities between 2009 and 2014Image .csv .xls
8 .Background notes
Coverage of Standard Business Survey Population extended
The coverage of our Standard Business Survey Population has been extended to include a population of solely PAYE based businesses as described in Improving the Coverage of the Standard Business Survey Population published on 21 December 2015. This change will make our business survey universe more representative.
This is the first IoS release to contain Monthly Business Survey data based on the extended population of solely PAYE based businesses. Across National Accounts outputs adjustments are made to account for survey under-coverage, meaning that theoretically any increase to GDP caused as a result of improved survey coverage should be offset by a reduction in the under-coverage adjustment. However, it is only possible to reassess the under-coverage adjustment when all surveys used in the National Accounts are based on the new register population, this is not currently the case due to the periodicity and lag of some ONS business survey sources.
In order to mitigate the effect of any potential step change in short term economic indicators as a result of the increased universe, the impact of this improvement was investigated by running turnover results both including and excluding these units at a sub-industry level. This work has shown that the impact was negligible (less than 0.01 effect on the current price index) in the majority of sub-industries. However, larger impacts were seen in 15 sub-industries (equating to 11 IoS industries). In these sub-industries a link factor was applied to remove the step effect. Therefore, the impact on the published Index of Services estimates for January 2016 and future estimates will be negligible.
The December IoS publication noted work to revise the back series as part of the Blue Book 2016 round, this work will now be taken forward at a later date, once data for the new universe has been taken on across all National Accounts survey sources and the survey under-coverage adjustment can be reassessed.
IDBR annual update
The Inter-Departmental Business Register (IDBR) is the sampling frame used by the Monthly Business Survey, which is one of the main data sources for the IoS. The IDBR is updated on a large scale annually, as a result of businesses responses to the Business Register Employment Survey (BRES). BRES collects data to update local unit information and business structures on the IDBR, for each site that they operate.
The annual update of the register coincides with every January publication of IoS, therefore included in this release and this results in a larger effect of sample rotation, reclassifications and other changes when compared with other months during the year.
Leap year adjustments
A methodological note on leap year adjustments was published on 29 February 2016, explaining how leap years might affect ONS time series and the methods used to adjust for them as part of seasonal adjustment. Economic Review March 2016 was published on 2 March 2016, providing further commentary on the economy, GDP and leap year effects.
Continuous improvement of GDP
The GDP Output Improvement Report, published on 30 September 2015, provided a detailed update of the implementation of improvements for Blue Book 2015, progress on industry reviews and wider cross-cutting improvements, a comprehensive timetable for the industry review project, and progress on experimental statistics.
To reflect these improvements along with updated weights the GDP(O) source catalogue, was updated alongside the Blue Book publication on 30 October 2015.
The industry review programme reviews the concepts, methods and data sources underpinning the short-term indicators that support the IoS bulletin. The 2 latest reviews were published on 23 March 2016 and covered the Water transport industry and the Postal and courier activities industry. Further reviews will be published later this year after publication of the GDP(O) improvement report on 30 June 2016.
The Index of Services (IoS) achieved National Statistic status in 2007; this was due, at least in part, to a series of industry reviews which underpinned short-term estimates. However, a number of low-level industries remained experimental statistics when the programme of industry reviews paused in 2008 to focus on the transition to SIC2007, improved deflator methodology, and the implementation of a new IT platform.
In 2011, IoS moved to SIC2007 and a reappraisal of the experimental industries was made using detailed comments from methodologists who quality assured the progress of IoS towards the National Statistics label. This IOS industry review process was published in August 2012 and outlined the 17 industries which remained experimental. A review of the 17 industries has taken place by experts against the Code of Practice for Official Statistics and, in noting the original comments, we are clear that the issues and requirements have been addressed where appropriate; further details can be found in the latest GDP Output Improvement Report. Agreement has been given by the Director General for Economic Statistics to officially move these Experimental Statistics to Official Statistics.
VAT project update
An article entitled "HMRC VAT project update" was published on 21 December 2015, the third in a series of articles. It outlined plans to use HMRC VAT turnover data as a pilot to replace MBS in summer 2016 for parts of the Index of Services and the Output approach to measuring GDP.
The first article titled “Feasibility study into the use of HMRC turnover data within Short-term Output Indicators and National Accounts” was published on 14 August 2015. It explored ways in which HM Revenue and Customs (HMRC) administrative data could be used to quality assure, supplement or replace the current turnover-based ONS surveys.
A second article, "Exploitation of HMRC VAT data", was published on 7 October 2015. This article explored the international context of the work, described previous attempts to use these data in short-term economic output indicators and National Accounts, and gave a high level overview of the process undertaken to arrive at micro-level data each month.
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: email@example.com.
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 (IoS) 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 79% of gross domestic product (GDP) in 2012. 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 communications (sections H and J), business services and finance (sections K to N), and government and other services (sections O to T).
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.
How our statistics explain the economy
The IoS is mentioned in an interactive version of 14 ways ONS statistics help you understand the economy, which 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 the Quarterly National Accounts Quarter 4 (Oct to Dec) 2015, published on 31 March 2016. However, rounding can sometimes cause differences between the 3-monthly growth rates presented in this release, compared with the quarterly growth rates presented in the Quarterly National Accounts release. Data for the retail industry are broadly comparable with the Retail Sales release, published on 19 February 2016, 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:
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. The Index of Services (IoS) is currently referenced to 2012 so that the average for 2012 is equal to 100. Therefore, an index value of 110 would indicate that output is 10% higher than the average for 2012.
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.
The process of removing price changes from a value series and converting to a volume series is known as deflation. Where information on prices is not available, but value and volume data are, an implied deflator (or price) can be derived by dividing the first by the latter. All index numbers presented in this bulletin are volume measures and have had the effect of price changes removed unless otherwise stated.
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 effects of annual chain-linking on the output measure of GDP (Tuke and Reed, 2001) article, and a paper on chain-linking weights in the output approach to measuring GDP can be found on the Methods and Sources page.
Compound average growth
Compound average growth is the rate at which a series would have increased or decreased if it had grown or fallen at a steady rate over a number of periods. This allows the composition of growth in the recent economic recovery to be compared to the long run average.
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.
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 Quality and Methodology Information report.
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. More information can be found in the Quality and Methodology Information (QMI) report.
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.
Table 4: Survey response rates, January 2016
UK Response rates (%) Period Oct 2015 Nov 2015 Dec 2015 Jan 2016 Monthly Business Survey (Services) Turnover 95.7 94.0 93.6 86.3 Questionnaire 84.7 83.0 81.0 74.7 Retail Sales Inquiry Turnover 98.9 98.4 88.0 93.6 Questionnaire 77.2 76.9 73.8 60.4 Source: Office for National Statistics
Download this table Table 4: Survey response rates, January 2016.xls (27.6 kB)
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 is available.
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 February 2010 and January 2015 and the estimates published 12 months later.
Table 5: Revisions between first publication and estimates 12 months later
UK Percentage change 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 0.9 -0.07 0.16 Index of Services 1 month on 1 month growth rate 0.2 -0.02 0.16 Source: Office for National Statistics
Download this table Table 5: Revisions between first publication and estimates 12 months later.xls (26.1 kB)
The data presented in the tables of this statistical bulletin are also available to download from the dataset 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.
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.
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