GDP contracted by 0.7 per cent in 2012 Q2.
The fall of 0.7 per cent in the second quarter of 2012 is the third consecutive quarterly contraction in UK GDP. Total output has now declined by 1.4 per cent over the last three quarters. All four of the main sectors of the economy contracted between the first and second quarters, with construction providing the largest negative contribution to growth.
For the second consecutive quarter, the fall in GDP is mainly due to weakness in construction output, which made a negative contribution to GDP growth of 0.4 percentage points in the second quarter.
The output of the production industries also fell between the first and second quarters of 2012, reflecting the subdued performance of the manufacturing sector, as well as continuing declines in output of the mining and quarrying sector. Output of the services sector, which accounts for around three-quarters of whole economy output, contracted by 0.1 per cent in the second quarter.
The preliminary estimate of GDP for the second quarter of 2012 has been estimated on the basis of a substantial drop in output in June, largely founded on the experiences in 1977 and 2002 when the Silver and Golden Jubilee celebrations respectively caused identical changes to the pattern of bank holidays. In addition, the unseasonably wet weather in both April and June may have had a detrimental effect on economic activity in these months. These factors mean that the preliminary estimate of GDP for the second quarter of 2012 may be subject to greater uncertainty than usual.
In contrast the headline indicators for the labour market in the three months to May show some further resilience. Employment increased, unemployment fell and hours increased in the latest three month period. Employment increases were broadly based with the largest in full time workers (133,000) and in particular full time employees (76,000). The percentage of part-time workers who could not find a full-time job decreased slightly in the three months to May. Total weekly hours increased by 9 million between the two latest three month periods.
To the extent that the weakness in GDP growth in the second quarter may have been caused by the changed timing of bank holidays or the bad weather this summer, such short term influences would not be expected to have a significant impact on headline labour market indicators such as the levels of employment or unemployment.
Over the past year, the economy has seen output fall by 0.8 per cent, while the employment rate has remained flat at 70.7 per cent. However, the structure of the labour market has changed during the course of the year, with an increase in self-employed workers counteracted by a fall in the number of employees. The continuing rise in the number of part-time workers has more recently been followed by a return to growth in the number of full-time workers.
Source: Office for National Statistics
GDP: chained volume measures, seasonally adjusted, Office for National Statistics (ABMI).
Employment level: aged 16 years and over, seasonally adjusted, Labour Force Survey, Office for National Statistics (MGRZ).
Total weekly hours: seasonally adjusted, Labour Force Survey, Office for National Statistics (YBUS).
GDP data is from the latest release, which is the preliminary estimate of the first quarter of 2012, published on the 25th July 2012.
The labour market data is from the latest “Labour Market Statistical Bulletin” published on the 18th July 2012.
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