Archive:Services statistics - short-term indicators

Data from September 2012. Most recent data: Further Eurostat information, Main tables and Database.

This article examines recent statistics in relation to developments for service activities in the European Union (EU). Short-term business statistics (STS) are provided in the form of indices that allow the rapid assessment of the economic climate within services, providing a first evaluation of recent developments for a range of activities. Traditionally, short-term business statistics were concentrated on industrial and construction activities, and to a lesser extent retail trade. Since the middle of the 1990s, major developments in official statistics within the EU have seen short-term data collection efforts focus increasingly on services.

Main statistical findings

Services turnover fell by 8.4 % in the EU-27 in 2009 compared with the year before but rebounded in 2010 and 2011 increasing by 5.0 % and 5.3 % respectively. Among service activities (at the NACE Rev. 2 section level), the fastest rates of turnover growth in 2011 were recorded for transportation and storage activities (7.5 %), professional, scientific and technical activities (6.2 %) and administrative and support services (5.9 %).

As can be seen from Figure 1, by the second quarter of 2012 the level of sales for most services activities had returned to close to their respective levels recorded prior to the financial and economic crisis and in some cases had exceeded these previous peaks. However, the rate of turnover growth generally subsided in the first half of 2012 and a majority of services activities recorded a slight decline in turnover.

Having peaked at various stages of 2008, turnover for all six of the services shown in Figure 1 reached a low point in the second or third quarter of 2009 in the EU-27. From these lows, the strongest growth in turnover through to the second quarter of 2012 was recorded for transportation and storage services (16.8 %), which brought its turnover to a level that was some 2.8 % above its pre-crisis peak. Administrative and support services as well as professional, scientific and technical activities also recorded double-digit growth between their mid-crisis low and their latest levels (second quarter 2012) which in both cases were also above their pre-crisis highs. Despite more modest turnover growth (5.6 %) since its mid-crisis low, turnover for EU-27 information and communication services was still 1.0 % higher in the second quarter of 2012 than it had been at its pre-crisis peak. In the second quarter of 2012 turnover for the two remaining service activities shown in Figure 1 remained slightly below their pre-crisis peaks: 2.4 % lower for accommodation and food services (despite growth of 12.3 % since the mid-crisis low); and 1.5 % lower for distributive trades (after growth of 5.6 % since its mid-crisis low).

While turnover shows sales in current prices, the volume of sales indicates the situation once price changes have been removed. The decline in the volume of sales in retail trade in 2009 reached -1.6 % in the EU-27, but this activity rebounded with growth of 0.9 % in 2010 before remaining stable (-0.1 %) in 2011. A monthly series (see Figure 2) shows the volume of retail sales peaked in the EU-27 in February 2008 and fell a total of 2.7 % through to October 2009; positive rates of change returned with an increase of 1.3 % by September 2010, after which the volume of sales index remained stable. Some parts of retail trade were still experiencing a decline in their respective volume of sales in the first half of 2012, notably the large activity of retailing of food, beverages and tobacco. In contrast, the specialised retail sale of information and telecommunications equipment as well as medical, cosmetic and toilet articles recorded increases in turnover throughout 2010, 2011 and the first half of 2012, after relatively mild contractions in their respective volumes of sales during the financial and economic crisis. The specialised retail sale of textiles, clothing, footwear and leather articles had seen a similar development until the end of 2010 when growth slowed and the volume of sales started to decrease gently.

Among the services for which an EU-27 price index is shown in Figures 3a and 3b two stand out as having atypical developments – telecommunications and sea and coastal water transport. Since 2006 (the beginning of the series) EU-27 output prices for telecommunications have been on a steady downward path and in just over six years they fell by a total of 20.7 %. Output prices for sea and coastal water transport are remarkable for their relatively high volatility, in particular the fall and subsequent rise in prices related to the financial and economic crisis. The net impact of these movements was that prices in the first quarter of 2012 were within 2.4 % of their level at the beginning of the series. Most of the other services recorded overall price increases in a range of 7 % to 13 % during the six years shown, with air transport output prices increasing at a faster pace, rising by an amount close to 22 %.

The developments for services turnover observed for the EU-27 as a whole for the period 2009 to 2011 were common across many of the individual EU Member States. Every Member State (Italy, not available) recorded a fall in services turnover in 2009; all except Greece recorded an increase in 2010; all except Greece, Portugal, Hungary and Spain recorded an increase in 2011, with growth exceeding 10 % in Poland and Luxembourg and exceeding 15 % in the Baltic Member States.

Table 1 provides an analysis of the two latest rates of change for turnover for each of the services sections covered by short-term business statistics. Growth rates in excess of 20 % were recorded in 2011 for two or more activities in each of the Baltic Member States, as well as for administrative and supporting activities in Ireland and Slovakia. In contrast, turnover fell by nearly 20 % in 2011 for professional, scientific and technical activities in Hungary, and by just over 30 % for transportation and storage in Cyprus. In 2011 Greece recorded falling turnover in each of the six services shown in Table 1, while 11 EU Member States recorded growth for each of these services.

The fluctuating development in the volume of sales index in retail trade observed for the EU-27 between 2009 and 2011 was not regularly reproduced across the EU Member States. Instead, Luxembourg, Sweden and the United Kingdom recorded an increase for the volume of sales in retail trade in all three years. In contrast, nine Member States recorded decreases in 2009, 2010 and 2011, with this downward sequence extending to four years (with the inclusion of 2008) for Denmark, Ireland, Spain and the Netherlands. Despite being a relatively modest increase, the 0.3 % growth in Hungary in 2011 was notable as it marked the first annual increase in the Hungarian volume of sales index since 2006.

Data sources and availability

Short-term business statistics (STS) on services are compiled within the same methodological framework as short-term statistics on industry and construction. The article on short-term developments in industry and construction provides additional information on: the STS Regulation; the different forms of presentation of indices, namely gross, working-day adjusted, seasonally adjusted, and trend; the implementation of NACE Rev. 2; and the five-yearly exercise to rebase STS indices to a new base year.

The turnover index and the employment index are compiled for retail trade and for other services. For retail trade one additional indicator is provided, namely the volume index of retail sales, which is effectively a deflated turnover index. Furthermore, service output price indices have been developed for a selection of services in recent years and work is ongoing to produce a services production index.

The index of turnover shows the development of sales in value terms. Note that prices for some services have actually been falling, perhaps due to market liberalisation and increased competition (for example, telecommunications and other technology-related activities). In such cases, the rapid growth rates observed for turnover value indices for some activities would be even greater in volume terms.

Retail trade indices have particular importance because of the role of retail trade as an interface between producers and final customers, allowing retail sales turnover and volume of sales indices to be used as short-term indicators for final domestic demand by households. The volume measure of the retail trade turnover index is more commonly referred to as the index of the volume of (retail) sales. To eliminate the price effect on turnover in retail trade, a deflator of sales is used. This deflator is an index with a similar methodology to that of an output price index, but it is adapted specifically for retail trade; it reflects price changes in the goods sold rather than those in the retail sales service provided.

Context

Some of the most important STS indicators are a set of principal European economic indicators (PEEIs) that are essential to the European Central Bank (ECB) for conducting monetary policy within the euro area. Three PEEIs concern services short-term business statistics, namely indices covering: the volume of sales in retail trade, turnover in other services, and output prices of other services.