In Q4 2013 the UK economy grew by 0.7%, following growth of 0.8% in the previous quarter. However, GDP still remains 1.3% below its pre-downturn peak in Q1 2008.
While the agriculture and construction industries had a marginal contribution to GDP, production increased GDP up by 0.1 percentage points in Q4 2013.
However, the main contributor to growth was the services industries, which grew by 0.8% on the quarter and contributed 0.6 percentage points to quarterly GDP growth. Growth within the services industries was wide spread, with all four sub-sectors showing increases, though more than half of the growth was attributed to the business services & finance sector.
At the same time, the labour market continues to perform well; while figures are not yet available for the fourth quarter as a whole; in the three months to November, employment levels and total hours worked increased by 0.9% and 1.1% respectively, and the unemployment level fell by 6.7% (167,000). The claimant count shows a decrease of 24,000 claimants between November and December and a fall of 307,000 on the year.
Figure 2 shows a comparison of growth in output following the onset of the 1973/76, 1979/83, 1990/92 and 2008/09 downturns. The series are indexed to the quarter prior to contraction, for example the 2008/09 downturn is indexed to Q1 2008. This is referred to as the pre-downturn peak.
While output fell to varying degrees at the onset of the 1973/76, 1979/83 and 1990/92 downturns, growth appeared to return within about two years. As a result, output exceeded its pre-downturn level within 10 to 13 quarters. After this, the UK economy returned to upwards trending growth.
In contrast, the UK economy experienced its largest contraction in output during the most recent downturn, with the subsequent recovery also being the most subdued. As a consequence, 23 quarters on, output has not exceeded its pre-downturn level and remains 1.3% below what it was in Q1 2008.
However, the most recent quarters have seen relatively strong and consistent positive growth. Comparing Q4 2013 to Q4 2012, GDP output increased by 2.8% and points towards an upwards trend.
Source: Office for National Statistics
GDP: chained volume measures, seasonally adjusted, Office for National Statistics (ABMI)
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)
Unemployment level: All aged 16 and over, seasonally adjusted, Labour Force Survey, Office for National Statistics (MGSC)
UK Whole Economy: Output per hour worked, seasonally adjusted, Labour Force Survey, Office for National Statistics (LZVB)
GDP data is from the "Gross Domestic Product: Preliminary Estimate - Q4 2013" published on the 28 January 2014.
Labour Market data is from the "Labour Market Statistics - January 2014" published on the 22 January 2014.
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