Index of Services, UK: July 2019

• In the three months to July 2019, services output increased by 0.2% compared with the three months ending April 2019.

• The information and communication sector made the largest contribution to this growth, contributing 0.13 percentage points.

• The Index of Services (IoS) increased by 0.3% between June 2019 and July 2019.

• The administrative and support services sector made the largest contribution to this growth, contributing 0.09 percentage points.

• In the three months to July 2019, services output increased by 1.4% compared with the three months ending July 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 9 September 2019 is the GDP monthly estimate, UK: July 2019.

This July 2019 release contains no revisions and is consistent with the National Accounts Revisions Policy. The quarterly national accounts published on 30 September 2019 includes the annual updates from the Blue Book and Pink Book 2019 (published 31 October 2019). This contains revised services data from January 1997 to June 2019. These revised data also include Value Added Tax (VAT) data for the first time in Quarter 4 (Oct to Dec) 2018 and Quarter 1 (Jan to Mar) 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 July 2019, services output increased by 0.2% compared with the three months ending April 2019. The three months to June 2019 grew by 0.1% so the latest three-month estimate continues the long term picture of subdued growth for services. Most services sectors are contributing less than they did in the second half of 2018.

Information and communication was the largest contributing sector to growth in the latest three months. It increased by 1.5% and contributed 0.13 percentage points.

The information and communication sector has seen consistent growth between January 2015 and July 2019, recording only one three-month on three-month decrease (March 2017 where it fell by 0.1%). The sector is also the best performing services sector over this period, with the computer programming industry the main driver behind this.

Figure 1 shows the three-month on three-month Index of Services (IoS) and the information and communication sector seasonally adjusted index from January 2015 to July 2019.

Figure 2 shows the three-month on three-month contribution of the information and communication sector along with the other IoS sectors for the three months to July 2019.

The two industries contributing to the rise in the information and communication sector were:

• computer programming, which increased by 1.7%, contributing 0.07 percentage points

• motion pictures, which increased by 4.6%, contributing 0.05 percentage points

The real estate sector also contributed to the rise in the three months to July 2019; it grew by 0.3% and contributed 0.05 percentage points. Owned and leased real estate was the largest contributing industry within the sector. The industry grew by 0.7% and contributed 0.03 percentage points. Growth in letting of commercial property was the main reason for this.

Services saw three-month on three-month growth of 0.8% in both July 2018 and August 2018 but has since weakened. Figure 3 shows the IoS growth from the three months to April 2018 to July 2019 and the services sector contributions to growth.

The wholesale, retail and motor trade sector has weakened in the last two estimates of the three-month on three-month growth. This is largely because of a weakening in retail trade which saw a strong start to 2019; for more information please see Retail sales, Great Britain: July 2019.

The professional, scientific and technical activities sector grew by 0.4% in the latest three months, and was the third largest contributing sector (0.04 percentage points). This has strengthened since the start of 2019 where it saw its first negative growths since the three months to April 2017. However, the sector is still weaker compared to 2018.

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

• administrative and support services, and other service activities which both weakened in the three months to June 2019

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

• education and real estate, both of which saw stronger growth between December 2018 and February 2019

• transportation and storage, which saw strong growth through much of 2018

Services output increased by 0.3% in July 2019.

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

IoS growth has been subdued more recently and has not seen monthly growth larger than 0.3% since December 2016 (Figure 4). It had previously seen four consecutive months of flat growth (March 2019 to June 2019).

There were widespread increases in services in July 2019, with 11 out of 14 sectors increasing, while there were decreases in only one sector and two sectors showed no growth.

The administrative and support services sector was the largest positive contributing sector. It increased by 1.6% and contributed 0.09 percentage points. The industries responsible for this rise were:

• rental and leasing activities, which increased by 3.3%, contributing 0.04 percentage points

• services to buildings and landscape activities, which increased by 4.0%, contributing 0.03 percentage points

The transportation and storage sector also increased in July 2019. It grew by 1.1% and contributed 0.06 percentage points. The industries responsible for this rise were:

• land transport services, which increased by 1.4%, contributing 0.03 percentage points

• postal and courier activities, which increased by 2.3%, contributing 0.02 percentage points

• warehousing and support for transportation, which increased by 1.2%, contributing 0.02 percentage points

The other notable industry movements across services were:

• wholesale trade, which increased by 1.2%, contributing 0.05 percentage points

• computer programming, which increased by 1.3%, contributing 0.05 percentage points

There were very few negative industry contributions in the latest month. The largest of which was a fall in the motor trade industry. It decreased by 1.2% and contributed negative 0.03 percentage points.

Figure 6 shows the three-month on a year ago Index of Services (IoS) growth rates since January 2012.

In the three months to July 2019, services output increased by 1.4% compared with the three months ending July 2018. This continues a weakening from the three months to April 2019 (2.1%). The growth in the three months to July 2019 was last lower in the three months to October 2013 which grew by 1.3% (was equal in April 2018).

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 (9 September 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 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 Blue Book 2019

Each year we produce an annual update to the UK National Accounts in the Blue Book and Pink Book and the associated releases. The Blue Book and Pink Book 2019 consistent datasets will be published on 30 September 2019.

Details have already been provided on the scope in the article Latest developments and changes to be implemented in the Blue Book and Pink Book 2019. Indicative impacts on headline gross domestic product (GDP) components for the years 1997 to 2016 were published on 27 June 2019 in the article Blue Book 2019 Indicative impacts on GDP current price and chained volume measure estimates: 1997 to 2016.

This year, because of the very demanding set of changes being put through in the annual update, we are not going to fully reconcile 2017 annual data. Instead, we will produce an indicative balance to allow further time for final quality assurance of the data.

Consequently, the reference year and last base year for all chained volume measure series will remain as 2016.

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 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) data sources 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: July 2019, published on 15 August 2019.

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

This July 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 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

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