Index of Services, UK: November 2019

• In the three months to November 2019, services output increased by 0.1% compared with the three months to August 2019.

• Real estate activities made the largest contribution to this growth, contributing 0.08 percentage points.

• The Index of Services decreased by 0.3% between October 2019 and November 2019 reversing the growth in October.

• Wholesale, retail and motor trade, and information and communication both contributed negative 0.13 percentage points to the month-on-month fall.

• In the three months to November 2019, services output increased by 1.2% compared with the three months to November 2018.

The monthly Index of Services (IoS) provides a timely indicator of growth in the output of the services industries. It is the largest contributor to the output approach in the measurement of gross domestic product (GDP), accounting for 79.6% of UK GDP in 2016. Also published on 13 January 2020 is the GDP monthly estimate, UK: November 2019.

This November 2019 release contains revisions from January 2018 and is consistent with the National Accounts Revisions Policy. The revisions up to September 2019 are consistent with those published in the Quarterly national accounts on 20 December 2019.

The current price non-seasonally adjusted estimates of industries collected by the Monthly Business Survey (MBS) can be found in the Monthly Business Survey turnover of services industries dataset, which was published alongside this release. Note that the MBS turnover of services industries dataset does not contain data from VAT returns, which have been included in the IoS.

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.

The IoS is an important economic indicator and one of the earliest short-term measures of economic activity. It is used in the compilation of the UK National Accounts and widely used by private and public sector institutions, particularly by the Bank of England and Her Majesty's Treasury to assist in informed decision- and policy-making.

The UK IoS 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 Statistics.

In the three months to November 2019, services output increased by 0.1% compared with the three months to August 2019. The 0.1% three-month on three-month growth is the smallest since July 2016 when the growth was also 0.1% (Figure 2).

Real estate activities was the largest contributing sector to growth in the latest three months. It increased by 0.5% and contributed 0.08 percentage points.

Accommodation and food services provided the largest downward contribution, with food and beverage services decreasing by 2% and contributing negative 0.05 percentage points (Figure 1).

Of the 14 sectors, eight saw growth in the three months to November 2019, with four showing a decrease, while two remained flat. Growth in the eight sectors was almost entirely offset by falls in transportation and storage, accommodation and food services, administrative and support services, and arts, entertainment and recreation.

Despite growth in the wholesale, retail and motor trade sector, retail trade contributed negatively (0.02 percentage points); this is the first decline in this industry since April 2018, for more information please see Retail sales, Great Britain: November 2019.

Services output decreased by 0.3% in November 2019, reversing the revised growth of 0.3% in October 2019.

Index of Services (IoS) growth has been subdued through 2019 and has not seen monthly growth larger than 0.3% since May 2018, and 0.4% since September 2016 (Figure 3). Care should be taken when using the month-on-month growth rates as data can be volatile.

The three largest contributors to the negative growth were: wholesale, retail and motor trade, information and communication, and professional, scientific and technical sectors (Figure 4). All three sectors have recently had large growths: in October 2019 wholesale, retail and motor trade grew 0.5%, and professional, scientific and technical grew 1.3%; and in September 2019 information and communication grew 1.3%.

Wholesale trade, except for motor vehicles, was the largest contributor to the negative growth in the wholesale and retail trade sector. Also contributing negatively was retail trade (0.04 percentage points), with only household goods stores reporting growth; for more information please see Retail sales, Great Britain: November 2019.

In the three months to November 2019, services output increased by 1.2% compared with the three months to November 2018. There has not been growth lower than the three months to November 2019 since the three months to December 2017, which also grew by 1.2% (Figure 5). The last time the growth in this indicator was lower was in April 2010 when it was 0.6%.

Services has been more subdued recently but also saw a strong summer in 2018, which will be a factor behind the current weakening in the three-month on three-month growth a year ago.

Public sector-dominated industries (public administration and defence, education, and human health and social work) continued to grow, contributing approximately one-third of the three-month on three-month a year ago growth in November 2019.

More detail on measuring public sector-dominated industries was covered in the Index of Services, UK: September 2019. All five of these industries increased in the latest three months.

Alongside this publication, we publish the Index of Production (IoP) and Construction output in Great Britain, allowing for an estimate of monthly gross domestic product (GDP), which is also published today (13 January 2020).

A comparison between official estimates of UK output and diffusion indices, looking at the level of correlation between Office for National Statistics data and IHS Markit and Chartered Institute of Procurement and Supply Purchasing Managers' Indices was published on 21 October 2019.

On 2 April 2019, we published Services sector performance, UK: 2008 to 2018. The article details the changes that have taken place in the UK services sector from 2008 to 2018. It also looks at the differences between public sector-dominated sectors and the rest of the Index of Services (IoS) and compares the growth of individual IoS sectors in more detail.

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 quarterly. The US Bureau of Economic Analysis also produces services output estimates, but only on a quarterly 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 quarterly estimates from Sweden and quarterly estimates from Ireland.

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 79.6% of UK gross domestic product (GDP) as of 2016. The IoS shares the exact same industry coverage as the corresponding quarterly series within GDP(o).

These data are used to produce seasonally adjusted estimates of output at chained volume measures (removing the effect of price changes). Unless otherwise stated, all estimates included in this release are based on seasonally adjusted data.

The IoS is compiled using data from several different sources (Table 1); this is detailed further in the GDP(o) data sources catalogue. In addition, we include Value Added Tax (VAT) data across 42 Standard Industrial Classifications (SICs) for small- and medium-sized businesses. These have been used to supplement data from the Monthly Business Survey (MBS) for the period January 2016 to March 2019.

Further information on the use of VAT data was published in the VAT turnover data in National Accounts: background and methodology.

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.

Notes

1. The Monthly Business Survey (MBS) data are published alongside this release in MBS turnover in services industries.
2. Data relating to the retail industry are broadly comparable with Retail sales, Great Britain: November 2019, published on 14 November 2019.
3. For further information on what is included within Other, please see the GDP(o) data sources catalogue.

This November 2019 release contains revisions from January 2018 and is consistent with the National Accounts Revisions Policy. The revisions up to September 2019 are consistent with those published in the Quarterly national accounts on 20 December 2019.

 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
• Her Majesty's Revenue and Customs (HMRC) VAT returns replacing MBS data for small- and medium-sized businesses when VAT estimates become available every quarter

Published alongside this release, the IoS datasets contain additional material, including:

• MBS response rates (current and historical)
• IoS and main component and sector indices to four decimal places
• publication tables
• revisions triangles
• lower-level time series data
• MBS turnover of services industries

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