Index of Services, UK: January 2019

• In the three months to January 2019, services output increased by 0.5% compared with the three months ending October 2018.

• The wholesale, retail and motor trade sector made the largest contribution to this growth, contributing 0.15 percentage points.

• The Index of Services increased by 0.3% between December 2018 and January 2019, following a fall of 0.2% between November 2018 and December 2018.

• The wholesale, retail and motor trade sector was also the main contributor to the month-on-month increase, contributing 0.19 percentage points.

• In the three months to January 2019, services output increased by 1.8% compared with the three months ending January 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 (12 March 2019) is the GDP monthly estimate, UK: January 2019.

This January 2019 release contains no revisions and is consistent with the National Accounts Revisions Policy. Further to this release, the Quarterly national accounts published on 29 March 2019 will include revised services data from January 2018 to December 2018. These revised data will also include Value Added Tax (VAT) data for the first time in Quarter 3 (July to Sept) 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 VAT returns, which have been included in the IoS.

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 January 2019, services output increased by 0.5% compared with the three months ending October 2018.

The wholesale, retail and motor trade sector was the largest contributor to growth in the latest three months. It increased by 1.1% and contributed 0.15 percentage points.

Growth in this sector outperformed total Index of Services (IoS) for much of the period since the three months to January 2015. The sector growth slowed from the start of 2017, however, from the three months to May 2018 it saw large increases over the summer, due largely to retail trade. In the latest three months, wholesale trade was the largest contributor to growth in the sector.

Figure 1 shows the three-month on three-month IoS and the wholesale, retail and motor trade seasonally adjusted index from January 2015 to January 2019.

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 January 2019.

There was growth in all three of the industries in the wholesale, retail and motor trade sector. Wholesale trade saw widespread growth in the latest three months and increased by 1.7%, contributing 0.08 percentage points.

There was an increase of 1.9% in the motor trade industry, which contributed 0.04 percentage points. The impact of the worldwide harmonised light vehicle test procedure (WLTP) displacing some activity from the previous three months was the main factor for the rise in the three months to January 2019; please see Section 5 in the Index of Services, UK: November 2018 bulletin for more details.

Retail trade also increased, with growth of 0.5%, contributing 0.03 percentage points.

Across the rest of the sectors, the other notable industry increases contributing to the 0.5% services growth were:

• computer programming, which increased by 1.8%, contributing 0.06 percentage points

• human health activities, which increased by 1.0%, contributing 0.06 percentage points

• head offices and management consultancy, which increased by 3.0%, contributing 0.05 percentage points

• imputed rent, which increased by 0.4%, contributing 0.05 percentage points

Figure 3 shows the sectors that have contributed the most to three-month on three-month growth since January 2018. These were the wholesale, retail and motor trade sector along with the professional, scientific and technical activities, and information and communication sectors.

The wholesale, retail and motor trade sector saw large contributions from May 2018 to September 2018, due mainly to the retail trade industry. Whereas the wholesale trade industry has been the largest contributor in the latest periods. The professional, scientific and technical activities sector has seen consistent strong contributions to positive Index of Services growth since January 2018. However, there has been some weakening in the three months to January 2019. The information and communication sector has also seen strong contributions over this period but saw its lowest contribution since the three months to March 2017 in December 2018.

The three months to December 2018 and January 2019 have seen larger contributions from the other services sectors. The sectors responsible for this are:

• real estate activities

• human health activities

• transportation and storage

Services output increased by 0.3% in January 2019, following a fall of 0.2% in December 2018.

Figure 4 shows the Index of Services (IoS) month-on-month growth rates since January 2016 and Figure 5 shows the month-on-month contributions of each of the IoS sectors for January 2019.

The IoS has not seen monthly growth larger than 0.3% since December 2016 (Figure 4), while the month-on-month decreases in 2018 are the most seen in a calendar year since 2013. Care should be taken when using the month-on-month growth rates as data can often be volatile.

The wholesale, retail and motor trade sector contributed the most to the monthly increase, following a fall in the previous month. It grew by 1.4% and contributed 0.19 percentage points. All three industries saw growth within this sector:

• wholesale trade increased by 2.1% and contributed 0.09 percentage points

• retail trade increased by 1.0% and contributed 0.06 percentage points

• motor trade increased by 1.5% and contributed 0.03 percentage points

There were rises in several of the wholesale components in January 2019, the largest of which were in:

• wholesale of other machinery, equipment and supplies

• wholesale of wood and construction materials

• wholesale on a fee or contract basis

Retail trade saw widespread growth, with all sectors except fuel stores increasing on the month; for more information please see Retail sales, Great Britain: January 2019.

The other sectors making notable contributions to the 0.3% rise in January 2019 were:

• information and communication, which increased by 1.7%, contributing 0.14 percentage points

• accommodation and food services, which increased by 1.8%, contributing 0.07 percentage points

• administrative and support services, which increased by 1.0%, contributing 0.06 percentage points

The computer programming industry was predominantly behind the rise in the information and communication sector. This industry increased by 3.1% and contributed 0.11 percentage points. An increase in the computer consultancy component of the industry was the main factor for this industry rise.

Food and beverage services was the main driver behind the growth in the accommodation and food services sector. There was widespread growth in this industry, with businesses reporting higher turnover when compared with January 2018. The industry grew by 2.3% and contributed 0.06 percentage points.

The administrative and support services sector saw widespread growth, with all six of the industries showing positive growth.

Offsetting some of this growth was the professional, scientific and technical activities sector, which decreased by 1.3% and contributed negative 0.13 percentage points. This is the first time this sector has fallen since May 2018. Fall backs in both legal activities, and advertising and market research were behind this fall, while both of which saw growth in December 2018.

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

In the three months to January 2019, services output increased by 1.8% compared with the three months ending January 2018. This was slightly weaker than the 1.9% increase in the three months to December 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 (12 March 2019).

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.

We will now be publishing the article, Services sector performance, UK: 2008 to 2018, on 26 March 2019.

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 79.6% 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 June 2018. Further information on the use of VAT data was published in the VAT turnover data in National Accounts: background and methodology update.

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 in services industries dataset.

2. Data relating to the retail industry are broadly comparable with Retail sales, Great Britain: January 2019, published on 15 February 2019.

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

This January 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