In Q1 2014 the UK economy grew by 0.8% on the quarter and by 3.1% when compared with 2013 Q1. GDP has now increased for five consecutive quarters, the longest period of continuous growth since the downturn and is 0.6% below its pre-downturn peak in Q1 2008.
While the agricultural and construction industries had a marginal impact on GDP growth, production contributed 0.1 percentage points to GDP in Q1 2014. However, the main contributor to growth was the services industry, which grew by 0.9% on the quarter and contributed 0.7 percentage points to quarterly GDP growth. Growth within the services industries was broadly-based, with all four sub-industries experiencing growth, although more than half of the output growth in services was attributed to the business services & finance industry.
At the same time, the labour market continues to perform well. While figures are not yet available for the first quarter of 2014, Q4 2013 showed an increase in employment, contributing to an employment rate of 72.1%, 0.3 percentage points higher than the previous quarter. Over the same quarter, the unemployment rate fell by 0.4 percentage points to 7.2%, and total weekly hours worked rose by 0.4% to 966.8 million hours.
Figure 2 focuses on the UK production industries since the downturn. Output for each industry has been indexed to the pre-downturn peak in Q1 2008, so for any industry that is now above 100, output is now higher than it was pre-downturn. The four main sub-industries that make up the production industries are shown alongside total production.
Total production output declined throughout 2008 and 2009 as the UK economy contracted. It reached its trough in Q3 2009, at around 12.5% below what it was at the start of 2008. Since then, despite some periods of positive growth, total production output has remained at a similar level. Manufacturing is the largest sub-industry of production, accounting for around two-thirds of total production output. It has followed a broadly similar path to total production output since the downturn, although growth has been slightly stronger in the most recent year.
Over the same period, two of the sub-industries, utilities (accounting for around 9% of total production) and water supply (accounting for about 8%) have followed similar paths to each other. However, in the latest quarters, the water supply industry has experienced relatively strong growth, while utilities has suffered a renewed contraction.
By contrast, mining and quarrying – the second largest sub-industry of production – has been on a downwards trend during the same period and in Q1 2014 was 35.4% below its pre-downturn peak. This however is not a singular feature of the recent economic downturn; mining and quarrying output has been falling overall since the end of 1999. As a result, it has applied downwards pressure on both production output and total GDP. Excluding oil and gas output, UK GVA (Gross Value Added) exceeded its pre-downturn peak by 0.4% in Q1 2014.
Source: Office for National Statistics
GDP: chained volume measures, seasonally adjusted, Office for National Statistics (YBEZ)
Employment level: All aged 16 and over, seasonally adjusted, Labour Force Survey, Office for National Statistics (MGRZ)
Total weekly hours (millions), seasonally adjusted, Labour Force Survey, Office for National Statistics (YBUS)
GDP data is from the "Gross Domestic Product: Preliminary Estimate - Q1 2014" published on 29th April 2014.
Labour Market data is from the "Labour Market Statistics - February 2014" published on 19th February 2014.
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