Index of Services in United Kingdom

The Index of Services (IoS) measures movements in the volume of output for UK services industries: distribution, hotels and restaurants, transport, storage and communication, business services and finance, and government and other services. It is the largest component of UK GDP (services represent over 80% of the UK economy) and therefore one of the best leading indicators of quarterly GDP performance.

ONS calculates the index from monthly business surveys across the different services sectors (Monthly Business Survey), weighting each sector by its share of gross value added (GVA). The headline published rate is the 3-month on 3-month (3m/3m) growth rate, which smooths monthly noise.

A stronger-than-expected reading suggests a services economy (and therefore GDP) stronger than anticipated, which can reinforce expectations of higher interest rates or fewer rate cuts from the Bank of England. A weak reading points to economic slowdown.

Being a 3-month moving average, it reacts with a lag to sharp trend changes; individual monthly figures are more volatile and subject to later revisions due to survey collection lags.