Index of Services, UK: April 2019

• In the three months to April 2019, services output increased by 0.2% compared with the three months ending January 2019; the lowest since the three months to April 2018.

• The wholesale, retail and motor trade sector made the largest contribution to this growth, contributing 0.12 percentage points, with the retail trade industry the main driver behind this.

• The Index of Services was flat between March 2019 and April 2019.

• Month-on-month growth of 1.2% in the information and communication sector was offset by a fall of 0.8% in the professional, scientific and technical activities sector.

• In the three months to April 2019, services output increased by 2.0% compared with the three months ending April 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 to the measurement of gross domestic product (GDP), accounting for 79.6% of UK GDP in 2016. Also published today (10 June 2019) is the GDP monthly estimate, UK: April 2019.

This April 2019 release contains no revisions and is consistent with the National Accounts Revisions Policy. In a change to our published revisions policy, the June Quarterly National Accounts (QNA) release will be open for services revisions in Quarter 1 (January to March) 2019 only.

Please take the time to complete our survey on the new GDP publication model, which was introduced in July 2018.

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 Value Added Tax (VAT) returns, which have been included in the IoS.

On 11 April 2019, we published a Quality assurance of administrative data (QAAD) report for Value Added Tax turnover. This looks at how we compile and use VAT data in the short-term economic output indicators.

Care should be taken when using the month-on-month growth rates as data can often 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 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 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 Statistics.

In the three months to April 2019, services output increased by 0.2% compared with the three months ending January 2019. This is the lowest growth since the three months to April 2018 when it grew by 0.1%.

Wholesale, retail and motor trade was the largest contributing sector to growth in the latest three months. It increased by 0.9% and contributed 0.12 percentage points. Figure 1 shows the three-month on three-month Index of Services (IoS) and the wholesale, retail and motor trade sector seasonally adjusted index from January 2015 to April 2019.

Growth in this sector has outperformed total IoS from January 2015 but slowed from the start of 2017 until the three months to May 2018; from that point it saw large increases over the summer months, due mainly to retail and wholesale trade. In the latest three months, the retail trade industry was behind nearly all the growth within the sector.

Figure 2 shows the three-month on three-month contribution of the wholesale, retail and motor trade sector along with the other IoS sectors for the three months to April 2019.

The retail trade industry was behind all the growth in wholesale, retail and motor trade, increasing by 1.7% and contributing 0.11 percentage points (of the 0.12 percentage point sector increase). Online retailers selling clothing items was the driver to this growth, for more information please see Retail sales, Great Britain: April 2019.

The information and communication sector also saw a large rise in the latest three months. The sector increased by 1.0% and contributed 0.08 percentage points. There was widespread growth within the sector, with the information services activities, motion pictures and computer programming industries all contributing to the rise.

Services growth has weakened in each month since the three months to January 2019. The sector largely responsible for this weakening is the professional, scientific and technical activities sector (Figure 3). After consistent large contributions to services growth throughout 2018, the sector weakened in January 2019 and fell in February 2019, the first time since the three months to April 2017. Several industries within the sector saw strong growth at the end of 2018 and are now seeing a fall back at the start of 2019, with growth from fewer industries offsetting these falls.

Professional, scientific and technical activities was the largest decreasing sector in the latest three months. It decreased by 0.4% and contributed negative 0.04 percentage points. The industry mainly responsible for this fall was head offices and management consultancy, which decreased by 3.1%, contributing negative 0.05 percentage points.

There has also been weakening in the other services sectors from the start of 2019. The sectors mainly responsible for this are:

• human health activities, after a large rise in Quarter 4 (Oct to Dec) 2018

• real estate activities, which saw stronger growth between December 2018 and February 2019

• transport and storage activities, which has seen consecutive three-month on three-month falls

The financial and insurance activities sector fell again in the latest three months; it decreased by 0.2% and contributed negative 0.02 percentage points. This sector has not seen positive growth since the three months to April 2017; the longest period on record without a rise.

Services output showed no growth to one decimal place in April 2019, following a fall of 0.1% in March 2019.

Figure 4 shows the month-on-month Index of Services (IoS) growth rates since January 2012 and Figure 5 shows the month-on-month contributions of each of the IoS sectors for April 2019.

The IoS has not seen monthly growth larger than 0.3% since December 2016 (Figure 4), while the month-on-month decreases since January 2018 are the most seen over a similar period since 2013. IoS has also not seen two consecutive periods of no positive growth since October 2017. Care should be taken when using the month-on-month growth rates as data can often be volatile.

Sector movement in April 2019 was generally downward, with falls in 9 out of 14 sectors, while there were increases in three sectors and two sectors showed no growth.

The information and communication sector was the only notable sector rise on the month, following a fall in March 2019. It increased by 1.2% and contributed 0.11 percentage points. The industries responsible for this rise were:

• computer programming, which increased by 2.4%, contributing 0.09 percentage points

• motion pictures, which increased by 4.7%, contributing 0.05 percentage points

Large computer programming businesses were predominantly behind this rise following a low March 2019. In the motion pictures industry, large film distributors were behind the increase.

Offsetting most of this growth was the professional, scientific and technical activities sector, which decreased by 0.8%, contributing negative 0.08 percentage points. Two industries were largely responsible for this fall and they were:

• architectural and engineering activities, which decreased by 3.3%, contributing negative 0.07 percentage points

• accounting and auditing activities, which decreased by 2.5%, contributing negative 0.04 percentage points

Large businesses from the engineering side of the industry were the main factor for the fall in the latest month, with businesses seeing weaker turnover in April 2019 than usual. Accounting and auditing activities saw a fall back after a strong March 2019.

Figure 6 shows the three-month on a year ago Index of Services (IoS) growth rates since January 2015.

In the three months to April 2019, services output increased by 2.0% compared with the three months ending April 2018. The three-month on a year growth rate has seen little change recently after weakening from 2.5% in the three months to July 2017.

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 (10 June 2019).

On 26 March 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 Index of Services (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 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) source 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 September 2018. 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) source catalogue.

Notes:

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

2. Data relating to the retail industry are broadly comparable with Retail sales, Great Britain: April 2019, published on 24 May 2019.

3. For further information on what is included within Other, please see the GDP(O) source catalogue.

This April 2019 release contains no revisions and is consistent with the National Accounts Revisions Policy. 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 Index of Services datasets contain additional material, including:

• MBS response rates (current and historic)

• 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

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