4. Three-month on three-month services growth slows in October 2017
Figure 1 shows the three-month on three-month Index of Services (IoS) growth rates from January 2012.
Figure 1: Three-month on three-month growth between January 2012 and October 2017
UK
Source: Office for National Statistics
Download this chart Figure 1: Three-month on three-month growth between January 2012 and October 2017
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The three-month on three-month growth reached a 2017 high of 0.5% in July and August 2017; this growth has now slowed in the following months. Services output increased by 0.3% in the three months ending October 2017 when compared with the three months ending July 2017. Figure 2 shows the contributions to growth from the four main IoS components.
Figure 2: Contributions1 to growth in services during the three months to October 2017 compared with the three months ending July 2017
UK
Source: Office for National Statistics
Notes:
- Individual contributions may not sum to the total due to rounding.
- Percentage change.
Download this chart Figure 2: Contributions^1^ to growth in services during the three months to October 2017 compared with the three months ending July 2017
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The business services and finance sector is responsible for the majority of growth in the three months to October 2017. This component increased by 0.6% contributing 0.27 percentage points. The industry with the largest contribution to growth in this sector was financial service activities increasing by 1.0%, contributing 0.05 percentage points. Additionally, employment activities and activities of head offices both contributed 0.04 percentage points. They increased by 3.3% and 2.1% respectively.
Two of the other three main IoS sectors also increased. Government and other services increased by 0.2%, contributing 0.06 percentage points. The industries with the largest contribution to positive growth in this sector were education and human health activities. They both increased by 0.5% and contributed 0.04 percentage points.
Distribution, hotels and restaurants increased by 0.1%, contributing 0.01 percentage points. Within this sector, retail trade was the industry with the largest contribution to the positive growth, increasing by 0.9% and contributing 0.06 percentage points. Please see the Retail sales, Great Britain: October 2017 release for more information. Offsetting this growth were food and beverage services and accommodation. They decreased by 1.1% and 1.8% respectively, contributing negative 0.03 and 0.02 percentage points respectively.
While the other three main components increased, the transport, storage and communications sector fell by 0.1%, contributing negative 0.01 percentage points. Publishing activities was the industry contributing most to this fall, decreasing by 4.6% and contributing negative 0.04 percentage points. This industry has seen a general decline in 2017, which is reflected in the industry’s largest businesses. The largest positive contribution for this sector came from computer programming, which increased by 0.8%, contributing 0.03 percentage points.
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5. Month-on-month services growth increased in October 2017
Services output increased by 0.2% in October 2017 following flat growth in September 2017.
Figure 3 shows the Index of Services (IoS) month-on-month growth rates since January 2015 and Figure 4 shows the month-on-month contributions of each of the main IoS components for October 2017.
Figure 3: Index of Services headline growth rates from January 2015 to October 2017
UK
Source: Office for National Statistics
Download this chart Figure 3: Index of Services headline growth rates from January 2015 to October 2017
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Figure 4: Contributions1 to growth in services between September 2017 and October 2017
UK
Source: UK Office for National Statistics
Notes:
- Individual contributions may not sum to the total due to rounding.
- Percentage change.
Download this chart Figure 4: Contributions^1^ to growth in services between September 2017 and October 2017
Image .csv .xls
Three of the four main components of the services industries increased during October 2017. In order of their contribution to growth:
business services and finance increased by 0.2%, contributing 0.08 percentage points
government and other services increased by 0.2%, contributing 0.06 percentage points
distribution, hotels and restaurants increased by 0.2%, contributing 0.03 percentage points
transport, storage and communication decreased by 0.1%, contributing negative 0.01 percentage points
The industries with the largest contributions to the 0.2% rise in October 2017 were employment activities, wholesale trade and owned or leased real estate. They each contributed 0.04 percentage points and increased by 3.2%, 1.0% and 0.9% respectively.
With an IoS weight of 1.3%, employment activities has three main components:
employment placement agencies
temporary employment agencies
human resources provision
Figure 5 shows the total returned turnover in pounds thousands for employment activities and large businesses for the same industry. Returned turnover for this industry is based on the Monthly Business Survey and is non-seasonally adjusted current price data that hasn’t been deflated. Large businesses for employment activities are defined as businesses with 100 or more employees.
Figure 5: Total turnover for employment activities and its large businesses from January 2015 to October 2017
UK
Source: Office for National Statistics
Download this chart Figure 5: Total turnover for employment activities and its large businesses from January 2015 to October 2017
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Employment activities has seen steady growth since April 2017, where Easter contributed to a fall. This industry has also seen higher levels in 2017 compared with previous years. Employment placement agencies and temporary employment agencies are the components that have contributed most to the growth since April 2017 and the industry movement is also reflected in the industry’s largest businesses.
Elsewhere, industries offsetting some of the October 2017 growth were motor trade and motion pictures, both contributing negative 0.05 percentage points. Motor trade decreased by 2.2%, a larger than normal fall following new car registrations in September 2017. Motion picture distribution was again the main component causing the movement in motion pictures; the industry fell this month by 5.2%. In light of recent data, we have now reviewed and updated the seasonal adjustment parameters for the motion pictures industry; this has smoothed the monthly profile from January 2016.
An ONS Visual article, Paddington, Star Wars and the rise of the UK film industry, was published on 14 December 2017, giving further insight into the film industry. More, information can also be found on the British Film Institute (BFI) website
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6. Three-month services growth on a year ago the lowest in four years
Figure 6 shows the three-month on a year ago growth rates since January 2012 and Figure 7 shows the three-month on a year ago contributions of each of the main Index of Services (IoS) components.
Figure 6: Three-month on a year ago growth between January 2012 and October 2017
UK
Source: Office for National Statistics
Download this chart Figure 6: Three-month on a year ago growth between January 2012 and October 2017
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In the three months to October 2017, services output increased by 1.3% compared with the three months ending October 2016. This is the third consecutive month where the three-month on a year ago growth increase has weakened. The three-month on a year ago growth is now at its lowest since the three months to October 2013.
Figure 7: Contributions1 to growth in services during the three months to October 2017 compared with the three months ending October 2016
UK
Source: Office for National Statistics
Notes:
- Individual contributions may not sum to the total due to rounding.
- Percentage change.
Download this chart Figure 7: Contributions^1^ to growth in services during the three months to October 2017 compared with the three months ending October 2016
Image .csv .xls
Two of the four main components of the services industries are contributing to the slowdown in the three-month on a year ago growth. In the three months to October 2017, the transport, storage and communication sector increased by 1.0% and contributed 0.14 percentage points compared with the three months ending October 2016. In comparison, this sector increased 6.1% and contributed 0.81 percentage points in the three months ending October 2016. Distribution, hotels and restaurants increased by 1.0% and contributed 0.18 percentage points in October 2017. This sector has also seen a slowdown in growth; it increased 5.6% in October 2016, contributing 0.97 percentage points.
Business services and finance’s three-month on a year ago growth has remained constant in 2017 and in October 2017 it increased by 1.7%, contributing 0.72 percentage points. There has been a slight slowdown since the three months to October 2016, where the sector increased 2.2%, contributing 0.93 percentage points.
In contrast with the other three components, government and other services has seen a rise in the three-month on a year ago growth since the start of the year. In October 2017, this sector increased by 0.8%, contributing 0.21 percentage points.
The industries with the largest contribution to the 1.3% three-month on a year ago services rise were:
education, which increased by 2.1%, contributing 0.15 percentage points
owned or leased real estate, which increased by 3.1%, contributing 0.14 percentage points
computer programming, which increased by 4.4%, contributing 0.14 percentage points
wholesale trade, which increased by 3.2%, contributing 0.14 percentage points
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8. What's changed in this release?
This is the first release, along with the Quarterly national accounts: July to September 2017, to use Value Added Tax (VAT) data. This has been used alongside the Monthly Business Survey data in the production of gross domestic product (GDP). Further information on the use of VAT data has been published today in an article, VAT turnover implementation into UK National Accounts: December update.
As a result of this change, we have stopped the publication of Turnover in production and services industries (TOPSI), which is based on the Monthly Business Survey (MBS). Instead, starting from this release, we now publish MBS Turnover in services industries as an additional table accompanying the Index of Services publication.
We have now reviewed and updated the seasonal adjustment parameters for the motion pictures industry. These changes have revised the series and revisions can be seen from January 2016.
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10. Quality and methodology
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 2015. 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
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