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Improvements to timely measures of service sector output
This article accompanies the introduction of the new Index of Services First Release and the upgrading of more components of monthly Index of Services (IoS) from experimental to National Statistics status.
This article accompanies the introduction of the new Index of Services First Release and the upgrading of more components of monthly Index of Services (IoS) from experimental to National Statistics status. It covers the background to the growth of the service sector, examines methodological challenges and sets out the present approach used to measure service sector output. Much of the discussion focuses on the monthly index of services and the associated survey sources. Recent improvements and the consequent impact on the quality of the timely measure of gross domestic product are addressed. The closing section looks to developments into the future. Key points are as follows:
· since 1970 the service sector has grown from 53 per cent of the UK economy to 73 per cent today. This compares with the manufacturing sector which has declined from 33 per cent to 16 per cent.
· the statistical system has responded to this change in the structure of the economy. Recent assessments of the statistical agenda in the UK, most notably the Allsopp and Atkinson Reviews, have reinforced the need for ONS to continue to develop service sector statistics;
· this has been a significant challenge, as the service sector is recognised as being more difficult to measure than manufacturing;
· the development of the IoS is an important and key step in meeting this challenge; the UK is still the only country in the world to develop a monthly indicator for the whole of the service sector based on internationally accepted methodologies.
· From March 2006, 12 out of 27 component series of the IoS have achieved National Statistics status, accounting for 60 per cent of the measure, up from 30 per cent.
· Improvements to the IoS have in turn impacted on improvements to the quality of early estimates of gross domestic product.
· however, significant further improvements in the quality of estimates of service sector prices and volumes are required:
- in the short-term the priority is to achieve National Statistics status for the IoS as a whole in 2007; - in the medium term, the Corporate Service Price Indices need to be extended to industries not yet covered; and - in the longer-term, more detailed product information for the service sector should be collected.
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