Archive:Services statistics - short-term indicators
- Data from September 2009, most recent data: Further Eurostat information, Main tables and Database.
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Non-financial services are the largest sector in the European Union. This article examines recent statistics on the performance of non-financial services in the EU. The contribution of services to the European economy grows almost every year, and it is important that official statistics are able to provide information on this growing area. The knowledge-based economy and the demand for intangibles, either for consumption or investment purposes, as well as international outsourcing, has led to a major restructuring of many European economies, with a shift away from industrial activities towards services activities. This weightlessness that is inherent to many sectors of the economy provides new opportunities and with it competition both nationally and internationally. Traditionally, business statistics were concentrated on industrial and construction activities, and to a lesser extent distributive trades and services. Since the early 1990s major developments in official statistics within the EU have seen data collection efforts focus more on services.
Main statistical findings
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The contribution of services to the European economy grows almost every year, and it is important that official statistics are able to provide information on this growing area. The knowledge-based economy and the demand for intangibles, either for consumption or investment purposes, as well as international outsourcing, has led to a major restructuring of many European economies, with a shift away from industrial activities towards services activities. This weightlessness that is inherent to many sectors of the economy provides new opportunities and with it competition both nationally and internationally. Traditionally, business statistics were concentrated on industrial and construction activities, and to a lesser extent distributive trades and services. Since the early 1990s major developments in official statistics within the EU have seen data collection efforts focus more on services.
Business services have a particularly important role in the services economy. Business activities in this economic sector include:
- computer services;
- real estate;
- research and development;
- other business activities, such as:
- legal services;
- accounting;
- market research;
- advertising;
- industrial cleaning;
- security services.
Many of them have taken advantage of the outsourcing phenomenon, which may explain their rapid growth.
In 2006, in the EU-27, within non-financial services, other business activities (as defined by NACE Rev. 1.1 Division 74) contributed more than one fifth (22.7 %) of the value added generated. In comparison, wholesale trade (16.5 %) and retail trade and repair (13.3 %) contributed smaller shares. In terms of employment, however, retail trade activities were of a similar size to other business activities (22.1 % and 24.6 % respectively of the EU-27 workforce in the non-financial services in 2006), which in part reflects the high incidence of part-time employment in retail trade and repair activities.
The structure of EU-27 non-financial services activities varied considerably, in part reflecting differences in start-up costs and differences in market reach. Small and medium-sized enterprises (SMEs) in real estate activities generated the overwhelming majority (88.1 %) of value added in 2006 whereas they contributed a little less than one tenth (8.3 %) of the value added of post and telecommunications enterprises and a little less than one fifth (18.8 %) of the value added of air transport.
Among service activities (at the NACE Rev. 2 division level), the fastest rate of turnover growth in the five-year period between 2003 and 2008 was for employment activities (an average 9.4 % per annum), followed by legal, accounting and management consultancy activities (an average 9.0 % per annum). By contrast, growth was slowest for cinema, video and TV production activities (an average 1.3 % per annum). It should be noted, however, that the relatively steady growth in turnover came to an abrupt end in mid-2008, albeit to a less dramatic degree than the downturn for industry. In terms of the volume of sales, there was relative stability for retail trade as a whole in the year through to July 2009, with continued growth recorded for the retailing of textiles, clothing, footwear and leather in specialised stores.
Data sources and availability
For SBS, turnover comprises the totals invoiced by the observation unit during the reference period, which corresponds to the market sales of goods or services, supplied to third parties. Turnover also includes all other charges (transport and packaging, etc.) passed on to the customer, even if these charges are listed separately on the invoice. Turnover excludes VAT and other similar deductible taxes that are directly linked to turnover, as well as all duties and taxes on the goods or services invoiced by the unit. Price reductions, rebates and discounts, plus the value of returned packing, must be deducted from the turnover. However, price reductions, rebates and bonuses are not considered if they are conceded to clients later, for example, at the year's end.
Retailing covers the resale without transformation of new and used goods to the general public for personal or household use and consumption. Retail trade has a particular importance because of its role as an interface between producers and final customers, allowing retail sales turnover and volume of sales indices to be used as a short-term indicator for final domestic demand by households.
The turnover indices of the retail trade are business cycle indicators that show the monthly activity of the retail sector, both in value and volume terms. The volume measure of the turnover index is more commonly referred to as the index of the volume of (retail) sales. These turnover indices are short-term indicators for final domestic demand. To eliminate the price effect on turnover in the retail trade, a sales deflator is used. This deflator is an index with a similar methodology to that of an output price index, but it is adapted specifically for the retail trade. It reflects price changes in the goods sold rather than those in the sales service provided. These indices may be split between food and non-food products. Food products are sold either in non-specialized stores (hypermarkets and supermarkets) or in specialized stores (e.g. fruit and vegetable shops, and grocers). A greater sales proportion in such specialized stores shows a more traditional pattern of retail trade.
The index of turnover for other services shows the evolution 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.
Context
The internal market is one of the EU’s most important and continuing priorities. The central principles governing the internal market for services are those set out in the EC Treaty. This guarantees EU companies the freedom to establish themselves in other Member States. It also guarantees them the freedom to provide services on another Member States' territory, other than the one in which they are established.
The objective of the 'Services' Directive 2006/123/EC of 12 December 2006, on services in the internal market, is to eliminate obstacles to trade in services, thus allowing the development of cross-border operations. It is intended to improve competitiveness, not just of service enterprises but also of all European industry. In December 2006, the Directive was adopted by the European Parliament and the Council and, by the end of 2009, it will have to be transposed by the Member States. It is hoped that the directive will help achieve potential economic growth and job creation. For this reason it is seen as a central element of the renewed Lisbon Strategy for growth and jobs. Moreover, by providing for administrative simplification, it also supports the better regulation agenda.
Further Eurostat information
Publications
- European business – facts and figures – 2007 edition
- Quarterly panorama of European business statistics
- Business services – an analysis of structural, foreign affiliates and business demography statistics
- Key figures on European business – with a special feature section on SMEs
Main tables
- Trade and services - Services
- Trade and services - Retail
Database
- Trade and services
Other information
- Structural business statistics – national methodologies
- Glossary of business statistics
- Methodology of short-term business statistics – associated documents
- Methodology of short-term business statistics – interpretation and guidelines
- Methodological guide for developing producer price indices for services
- Evolution of service statistics – proceedings of the seminar on service statistics within short-term business statistics