Index of Services, UK: January 2020

• There was no growth in services in the three months to January 2020 compared with the previous three months.

• Administrative and support services, and education were the largest positive contributors (0.07 and 0.06 percentage points respectively), and wholesale, retail, and motor trade was the largest negative contributor (negative 0.1 percentage points).

• The Index of Services increased by 0.1% between December 2019 and January 2020.

• Wholesale, retail and motor trade was the largest driver of the monthly growth, contributing 0.12 percentage points.

• Services output increased by 1.1% between the three months to January 2019 and the three months to January 2020.

In the three months to January 2020 (Nov to Jan), services output was flat compared with the three months to October 2019 (Aug to Oct). Notably the sectors that have recently been providing the largest contributions to growth: wholesale, retail and motor trade, information and communication, and professional, scientific and technical are providing negative contributions to the three-monthly growth (Figure 2).

Of the 14 sectors, seven sectors contributed positively and five provided negative contributions, two sectors were flat. Sectors with positive growth and negative growth wholly offset each other.

Administrative and support services, and education were the largest positive contributors and wholesale, retail and motor trade, and information and communication were the largest negative contributors.

All industries in administrative and support services saw growth in January 2020 except travel agency and tour operators, which declined 5.3%.

In wholesale, retail and motor trade, wholesale trade except for motor vehicles, and retail both declined by 1.0% and 0.9% respectively; for more information please seeRetail sales, Great Britain: January 2020.

In the three months to January 2020, public sector-dominated industries (public administration and defence, education, and human health and social work activities) grew by 0.4%, whereas non-public sector-dominated industries declined by 0.1%.

Services output grew 0.1% in January 2020, continuing a period of subdued growth through 2019 (Figure 3). Care should be taken when using the month-on-month growth rates as data can be volatile.

The growth in 2019 will be explored in an upcoming article, Analysis of Services Growth in 2019. This article will provide an overview of the growth in the services sector in 2019, focusing on the industries that have grown or shrunk the most in the latest year.

The largest contributor to the monthly growth was wholesale, retail and motor trade, which reversed a weak position in December 2019. All three industries in wholesale, retail and motor trade showed positive growth, the largest contributor being retail trade; see Retail sales, Great Britain: January 2020.

Of the 14 sectors, eight contributed positively and three negatively to growth, while three were flat.

The largest negative contributor was motion picture, video and TV production, which fell 7.4% after growing 8.2% in December 2019.

In the three months (Nov to Jan) to January 2020, compared with the three months to January 2019, services output increased by 1.1%. This is the lowest growth since April 2010 when it was 0.6%. This is a continuation of the weakness throughout 2019 (Figure 4). More information around the slowdown in three-monthly growth compared with the previous year is given in Index of Services, UK: November 2019.

Of the 14 sectors, 10 have grown since the three months to January 2019 and arts, entertainment and recreation has remained flat. Three sectors declined: financial and insurance activities, activities of households as employers, and accommodation and food services. The single-largest negative contributing industry was architectural and engineering activities, which fell by 5.2%. Positive contribution to growth was widespread among the 10 sectors, with human health as the largest positively contributing industry.

Index number

The index number is a measure of the average level of prices, quantities or other measurable characteristics relative to their level for a defined time period or location.

Industrial classification or breakdown

The industrial classification or breakdown is the internationally standardised method for classifying the wide range of industrial sectors in an economy. We use the Standard Industrial Classification 2007: SIC 2007 for industrial breakdowns.

Monthly Business Survey

The Monthly Business Survey (MBS) collects information on the monthly turnover of UK businesses within the production and services sectors from various industrial sectors and regions in the UK.

Services

Services refers to the output produced by the services industries within the UK economy. There are four main components of the services industries: distribution, hotels and restaurants; transport, storage and communication; business services and finance; and government and other services. Overall, services industries account for 79.6% of gross domestic product (GDP).

Turnover

The turnover of a company is the value of the goods or services sold during a particular time period. It includes total takings or invoiced sales and receipts. Interest and similar income, "other operating income", and extra ordinary income is excluded. Value Added Tax (VAT) invoiced to the customer is excluded.

Data sources and collection

The Index of Services (IoS) is compiled using data from several different sources:

• ONS: Monthly Business Survey (43.3%)
• ONS: Retail Sales Inquiry (6.6%)
• ONS: Government Expenditure (20.7%)
• ONS: Households Expenditure (15.5%)
• ONS: Finance Expenditure (9.1%)
• Other (4.8%)

The Monthly Business Survey (MBS) data are published alongside this release in MBS turnover in services industries.

Data relating to the retail industry are broadly comparable with Retail sales, Great Britain: January 2020, published on 20 February 2020.

For further information on what is included within Other, please see the GDP(o) data sources catalogue.

Percentage of each data source is based on their gross value added weight. The GDP(o) methods and sources pages provide more information on the data that underpin these statistics; of particular note is the GDP(o) data sources catalogue.

From January 2018, Value Added Tax (VAT) data have also been included across 64 production industries for small- and medium-sized businesses. For more information, see VAT turnover data in National Accounts: background and methodology.

Quality and methodology

More quality and methodology information on strengths, limitations, appropriate uses, and how the data were created is available in the Index of Services QMI.

Leaving the EU

As the UK leaves the EU, it is important that our statistics continue to be of high quality and are internationally comparable. During the transition period, those UK statistics that align with EU practice and rules will continue to do so in the same way as before 31 January 2020.

After the transition period, we will continue to produce our national accounts statistics in line with the UK Statistics Authority's Code of Practice for Statistics and in accordance with internationally agreed statistical guidance and standards.

The Withdrawal Agreement outlines a need for UK gross national income (a fundamental component of the national accounts, which includes gross domestic product (GDP)) statistics to remain in line with those of other EU countries until the EU budgets are finalised for the years in which we were a member. To ensure comparability during this cycle, the national accounts will continue to be produced according to European System of Accounts (ESA) 2010 definitions and standards.

Seasonal adjustment

The data published in the Index of Services (IoS) release are all seasonally adjusted. This aids interpretation by removing annually recurring fluctuations, for example, those caused by holidays or other seasonal patterns.

Data volatility

Care should be taken when using the month-on-month growth rates as data can be volatile. Longer-term growth rates and examination of the time series allow for better interpretation of the statistics.

International comparisons

International comparison with the IoS is difficult, as most comparable economies do not 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 three-monthly. The US Bureau of Economic Analysis also produces services output estimates, but only on a three-monthly basis, with a four-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 three-monthly estimates from Sweden and three-monthly estimates from Ireland.