Index of Services, UK: August 2017

• In the three months to August 2017, services output increased by 0.4% compared with the three months ending May 2017.
• Computer programming and retail trade made the largest contributions to the three-month on three-month growth; contributing 0.10 and 0.08 respectively.
• The Index of Services increased by 0.2% between July and August 2017.
• The largest contribution to the month-on-month increase came from the business services and finance sector, which contributed 0.12 percentage points.
• Retail trade and motion pictures made the largest contributions at industry level to the month-on-month increase, with both contributing 0.06 percentage points.
• In the three months to August 2017, services output increased by 1.7% compared with the three months ending August 2016.

The monthly Index of Services (IoS) provides a timely indicator of growth in the output of the services industries and is the largest contributor to the output approach to the measurement of gross domestic product (GDP), accounting for 79.3% of UK GDP in 2015.

The IoS measures the UK output in: distribution, hotels and restaurants; transport, storage and communication; business services and finance; and government and other services. These data are used to produce seasonally adjusted estimates of output at chained volume measures (removing the effect of inflation). Unless otherwise stated, all estimates included in this release are based on seasonally adjusted data.

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.

Data relating to the retail industry are broadly comparable with Retail sales, Great Britain: September 2017, published on 19 October 2017.

This August 2017 release contains revisions from July 2017. This means that we have incorporated additional data since this period.

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.

This revisions period is consistent with the National Accounts Revisions Policy.

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 Official Statistics.

Table 1 shows data for the Index of Services (IoS) and each of the main components for August 2017.

Figure 1 shows the seasonally adjusted index time series for the IoS over the past decade; this shows continued services growth following the economic downturn. The monthly IoS series can be volatile and therefore we recommend that monthly growths are viewed in the context of the longer-term trend and three-month on three-month growth rates.

Figure 2 shows that services output increased by 0.4% in the three months ending August 2017 when compared with the three months ending May 2017.

All of the four main components of the services industries increased in the three months ending August 2017. In order of their contribution to growth:

• business services and finance increased by 0.5%, contributing 0.22 percentage points
• distribution, hotels and restaurants increased by 0.7%, contributing 0.13 percentage points
• transport, storage and communication increased by 0.6%, contributing 0.08 percentage points
• government and other services increased by 0.1%, contributing 0.02 percentage points

The main sector driving Index of Services (IoS) growth is business services and finance, with accounting activities, advertising activities and employment activities each contributing 0.03 percentage points, increasing by 2.3%, 3.3% and 2.1% respectively.

Retail trade was the largest industry contributing to the positive growth in the distribution, hotels and restaurants sector, increasing by 1.2% and contributing 0.08 percentage points. In addition, wholesale trade contributed 0.05 percentage points to growth, increasing by 1.1%.

In the transport, storage and communications sector, computer programming was the largest industry contributing to the positive growth, increasing by 3.3% and contributing 0.10 percentage points. Also within this sector, telecommunications contributed 0.04 percentage points, increasing by 1.9%.

Human health activities and education had the largest contributions to the positive growth in the government and other services sector. They both increased by 0.4% and contributed 0.03 percentage points. Creative, arts and entertainment activities offset some of this, decreasing 10.0% and contributing negative 0.04 percentage points. This industry saw a fall in each of the three months ending August 2017 with the largest decrease in July 2017.

During August 2017, services output increased by 0.2% following a fall of 0.1% in July 2017.

Figure 3 shows the pattern of Index of Services (IoS) headline growth rates since January 2015 and Figure 4 shows the month-on-month contributions of each of the main IoS components.

The main sector driving the month-on-month growth was business services and finance, increasing by 0.3%, contributing 0.12 percentage points. There was widespread growth across this sector with nine industries contributing towards this growth.

The other three main components of the services industries were flat over the same period.

In order of their contribution to growth, the industries contributing to the increase of 0.2% in August 2017 were:

• retail trade, which increased by 0.9%, contributing 0.06 percentage points; please see the Retail sales, Great Britain: September 2017 release for more information
• motion pictures, which increased by 7.1%, contributing 0.06 percentage points; this growth follows a large fall in the industry in July 2017 and further information on the films in August 2017 can be found on the British Film Institute (BFI) website
• programming and broadcasting, which increased by 7.1%, contributing 0.03 percentage points

Telecommunications, which contributed negative 0.04 percentage points, and accommodation, which contributed negative 0.03 percentage points, partially offset some of the growth. They decreased by 1.9% and 2.7% respectively.

In the three months to August 2017, services output increased by 1.7% compared with the three months ending August 2016.

All four of the main components of the services industries increased in the most recent three months compared with the same three months a year ago. In order of their contribution to growth:

• business services and finance increased by 1.6%, contributing 0.64 percentage points
• distribution, hotels and restaurants increased by 2.9%, contributing 0.51 percentage points
• transport, storage and communication increased by 2.2%, contributing 0.29 percentage points
• government and other services increased by 0.8%, contributing 0.21 percentage points

Industries contributing to the 1.7% growth in August 2017 were:

• computer programming, which increased by 5.1%, contributing 0.16 percentage points
• food and beverage activities, which increased by 5.4%, contributing 0.15 percentage points
• accounting activities, which increased by 11.8%, contributing 0.15 percentage points; this follows a decrease for the industry in the three months ending August 2016
• retail trade, which increased by 2.1%, contributing 0.15 percentage points

With a weight of 79.3% in 2015, the services industries are the largest industrial grouping in the output approach to measuring gross domestic product (GDP).

Also published today (25 October 2017) is the Gross domestic product, preliminary estimate: July to September 2017 statistical bulletin, reporting that GDP in Quarter 3 (July to Sept) 2017 increased by 0.4% compared with the previous quarter. The services aggregate was the dominant contributor to the quarter-on-quarter percentage change in GDP, contributing 0.29 percentage points. Production also had a large contribution of 0.13 percentage points and agriculture contributed 0.01 percentage points. Construction contributed negative 0.05 percentage points to the headline figure.

The response rates and revisions tables can be found in the main datasets.

Monthly economic commentary was published alongside this release, presenting new analysis on the latest economic data.

Methods and sources

The gross domestic product output approach (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.

International comparisons

International comparison with the Index of Services (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 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.

We will begin using Value Added Tax (VAT) data, alongside the Monthly Business Survey data, in the production of gross domestic product (GDP) statistics from December 2017. The first use of VAT in the national accounts will be in the Quarterly National Accounts: July to September 2017 and the Index of Services: October 2017 bulletins, which are both due for publication on 22 December 2017. An article will be published in November 2017, which will review the methodological improvements and provide further detail on implementation plans.

This change means that the Monthly Business Survey will no longer be the sole turnover data source. We are therefore planning to stop the publication of Turnover in Production and Services Industries (TOPSI), which is based on the Monthly Business Survey, in its current form. The final release will be on 10 November 2017. Instead, additional information drawn from our new data sources will be provided in the relevant Index of Production or Index of Services release from December 2017.

We published a response to the consultation on proposed changes to the GDP release schedule on 19 October 2017. Further details on this response are available on our Consultation Hub. In summary, an estimate of monthly GDP will be published from July 2018 (for the reference period of May) and there will be two quarterly estimates of GDP a quarter rather than the current three; the preliminary estimate of GDP will be deferred by around two weeks and the second estimate of GDP will be brought forward by two weeks to form the new first estimate, meaning the income and expenditure approaches to GDP will be made available earlier than presently. The first estimate of quarterly GDP (for Quarter 2 (Apr to June) 2018) under this new model will be published in August 2018.

We welcome your feedback on this bulletin via our short survey.

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 79.3% of UK gross domestic product (GDP) as of 2013. The IoS shares the exact same industry coverage as the corresponding quarterly series within GDP(O).

The Index of Services datasets contain additional material, including:

• Monthly Business Survey (MBS) response rates (current and historic)
• IoS and main component indices to four decimal places
• publication tables
• revisions triangles
• lower-level time series data

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