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GDP and the Labour Market - 2013 Q2, August GDP Update

Released: 23 August 2013 Download PDF

Index of output, employment and hours since Q1 2008, seasonally adjusted, 2008 Q1 = 100

Index of output, employment and hours since Q1 2008, seasonally adjusted, 2008 Q1 = 100

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Gross Domestic Product (GDP) grew by 0.7% in Q2 2013, an upward revision of 0.1 percentage points from the previous estimate, and following growth of 0.3% in Q1 2013.

The service sector continued to support growth in Q2 2013, growing by 0.6% and contributing 0.5 percentage points to GDP growth. There were also upward contributions of 0.1 percentage points from the construction and production sectors. GDP remains 3.2% below its pre-downturn peak. In contrast, the labour market has been more resilient throughout the economic downturn and subsequent recovery, with the level of employment and total weekly hours both above their pre-downturn peaks.

The Second Estimate provides data on expenditure and income in the second quarter for the first time. According to the expenditure measure, household final consumption expenditure increased for the seventh consecutive quarter, growing by 0.4%. Consequently the level of household expenditure is now 1.6% higher than it was in Q2 2012. Net trade also contributed positively to GDP growth, as exports grew at a faster rate than imports during the quarter. There were also positive contributions from gross fixed capital formation and general government final consumption expenditure, which grew by 1.7% and 0.9% respectively.

Growth in the income measure was primarily driven by compensation of employees, which includes wages, salaries and pension contributions. This grew by 2.4% on the quarter and by 2.7% on the year, and follows a fall of 0.1% in Q1 2013. The growth on the quarter is the largest increase since Q3 2000 and partly reflects unusually high bonus payments in April 2013.

Quarterly percentage change of compensation of employees and total average weekly earnings, current prices

Quarterly percentage change of compensation of employees and total average weekly earnings, current prices

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The labour market also showed further resilience in Q2 2013. The number of people in employment aged 16 or over reached a record high of 29.8 million, increasing by 69,000 on the quarter and 301,000 on the year.

The UK employment rate continued to rise, increasing by 0.1 percentage points to 71.5%, although this is still 1.5 percentage points below its rate in Q1 2008. While the number of people in employment aged 16 and over has surpassed its level at the start of the 2008/09 downturn, the employment rate has not. This is because the size of the population increased at a faster rate than the number of people in employment over the period.

The unemployment rate remained unchanged at 7.8% for the fourth consecutive quarter in Q2 2013, while total weekly hours increased for the eighth successive quarter to reach 953.1 million hours.

Source: Office for National Statistics

Background notes

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Content from the Office for National Statistics.
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