|Percentage change: latest quarter on previous quarter|
|Chained Volume Measure||GDP||Total Production||Construction||Total Services|
Gross Domestic Product (GDP) decreased by 0.2 per cent in the first quarter of 2012, driven by weakness in the construction sector and the production sector.
Seasonal adjustment removes repeatable seasonal variation in a time series, enabling the underlying movement to be identified. As 2012 is a leap year, February 2012 contained an additional day. Our standard approach to February is to adjust its value to represent an average length February (that is, 28 1/4 days). This is in accordance with international best practice. This procedure requires us to assess the impact of this additional day for each of the main sectors. Any significant leap year effect is then spread across the Februaries as part of the standard seasonal adjustment process.
As part of the compilation of GDP:
approximately two-thirds of total production by weight were identified as having a significant leap year effect, with appropriate adjustments made.
approximately one third of total services by weight were identified as having a significant leap year effect, with appropriate adjustments made.
analysis of the quarterly construction series identified no significant leap year effect, with no adjustment made.
A test of the seasonally adjusted GDP series after these procedures showed no remaining significant leap year effect.
As standard practice the construction output estimate in the preliminary estimate of GDP is based on published month one and month two construction data with an estimation for month three. For this release the relevant published construction data are for January and February in the 'Output in the Construction Industry' release; published on 13 April.
The month three estimation (that is, March) requires us to take a view on the data for the third month as responses to the construction output survey are low at this stage; but do help to provide some sort of guide for the month. The table provides an overview of different scenarios for possible construction growth rates in Q1, based on what might happen in March and the extent of future revisions.
|March 10% higher than February||March 15% higher than February||March 19% higher than February||March 40% higher than February|
|January and February unrevised||-7.2||-5.9||-4.9||-0.1|
|January revised up by 1%, February up 1.5%||-6.3||-4.9||-3.8|
|January revised up by 1.5%, February up 2.0%||-6||-4.6||-3.5|
Improved imputation methods were introduced in September 2011 but there is still a tendency for upward revisions to construction of between 1 and 2 per cent (prior to the improved approach revisions tended to be much larger). These occur from the receipt of later information (whether late returns, updated deflation or improved seasonal adjustment).
Based on the growth scenarios and the past performance of revisions, a number of points emerge:
March would need to be exceptionally strong (40 per cent higher than February - see final column) to produce growth for the quarter,
if March grows much the same as in previous years (19 per cent higher than February - see column 4) and we make some allowance for revisions we arrive at an estimate of around -4.0 per cent growth,
if March is weaker (columns 2 and 3) growth in the quarter could be as low as -5 or -6 per cent.
Given these scenarios the assumptions in the second bullet point above produce an estimate of -4 per cent construction growth for Q1. This estimate has, however, been further adjusted (up to -3 per cent) to allow for a seasonal break in one of the component series at the time of the introduction of the monthly survey at the start of 2010. This seasonal break impacts on the seasonal adjustment in the current quarter and has only recently become apparent with the addition of the data for the current quarter to the series.
Gross Domestic Product measures the chained volume index movements of the UK economy. The service sector accounts for more than three quarters of total gross domestic product. Figures are adjusted for seasonal variations unless otherwise stated and the reference year is 2008=100. For an explanation of the terms used in this bulletin, please see the Background Notes section. An assessment of the quality of the services statistics is available in the background notes.
The seasonally adjusted index of production decreased by 0.4 per cent in Q1 2012, following a decrease of 1.3 per cent in the previous quarter:
output decreased in two of the four sub-sectors,
mining and quarrying contributed the most to the decline, followed by manufacturing.
Production output decreased by 3.0 per cent between Q1 2011 and Q1 2012.
The seasonally adjusted index of construction output decreased by 3.0 per cent in Q1 2012, following a decrease of 0.2 per cent in the previous quarter (see the supplementary analysis for further details). Construction output decreased by 0.5 per cent between Q1 2011 and Q1 2012.
The seasonally adjusted index for distribution, hotels & restaurants increased by 0.1 per cent in Q1 2012, following a 0.4 per cent decrease in the previous quarter:
output increased in three of the five components,
retail and food & beverage services made the largest contributions to the increase.
Distribution, hotels & restaurants increased by 0.3 per cent between Q1 2011 and Q1 2012.
The seasonally adjusted index for transport, storage & communication increased by 0.4 per cent in Q1 2012, following a 0.5 per cent decrease in the previous quarter:
output increased in six of the twelve components,
computer programming, consultancy & related activities and motion picture, video & television programme production made the largest contributions to the increase.
Transport, storage & communication increased by 1.4 per cent between Q1 2011 and Q1 2012.
The seasonally adjusted index for business, services & finance decreased by 0.1 per cent in Q1 2012, following a similar decrease in the previous quarter:
output decreased in eleven of the twenty-one components,
financial services made the largest negative contribution and office administration made the largest positive contribution.
Business services & finance increased by 1.2 per cent between Q1 2011 and Q1 2012.
The seasonally adjusted index of government & other services increased by 0.2 per cent in Q1 2012, following an increase of 0.4 per cent in the previous quarter:
output increased in eight of the thirteen components,
health and sports activities, amusement and recreation made the largest positive contributions to the increase.
Government & other services increased by 1.1 per cent between Q1 2011 and Q1 2012.
|Quarter-on-quarter percentage growth|
|Component||2011 Q1||2011 Q2||2011 Q3||2011 Q4||2012 Q1|
|Agriculture, forestry & fishing||8.0||-0.8||-0.5||-1.5||-1.9|
|Mining & quarrying (Extraction)||-4.5||-8.0||-0.4||-2.6||-3.6|
|Electricity, gas, steam & air (Utilities)||-5.6||-2.0||1.6||-5.3||1.3|
|Water supply, sewerage, etc.||5.8||-2.2||0.1||1.4||0.5|
|Distribution, hotels & restaurants||0.9||0.2||0.4||-0.4||0.1|
|Transport, storage & communication||-0.2||0.4||1.1||-0.5||0.4|
|Business services & finance||1.0||0.1||1.3||-0.1||-0.1|
|Government & other services||1.3||0.1||0.4||0.4||0.2|
|Quarter-on-quarter contribution to growth|
|Component||2011 Q1||2011 Q2||2011 Q3||2011 Q4||2012 Q1|
|Agriculture, forestry & fishing||0.0||0.0||0.0||0.0||0.0|
|Mining & quarrying (Extraction)||-0.1||-0.2||0.0||0.0||-0.1|
|Electricity, gas, steam & air (Utilities)||-0.1||0.0||0.0||-0.1||0.0|
|Water supply, sewerage, etc.||0.1||0.0||0.0||0.0||0.0|
|Distribution, hotels & restaurants||0.1||0.0||0.1||-0.1||0.0|
|Transport, storage & communication||0.0||0.0||0.1||-0.1||0.0|
|Business services & finance||0.3||0.0||0.4||0.0||0.0|
|Government & other services||0.3||0.0||0.1||0.1||0.0|
|Agriculture, forestry & fishing||-3.7||16.2||-15.2||-1.5||-2.0|
|Mining & quarrying (Extraction)||-2.5||-6.5||-9.0||-4.9||-15.2|
|Electricity, gas, steam & air (Utilities)||0.8||0.5||-4.8||3.5||-5.6|
|Water supply, sewerage, etc.||3.0||-1.8||-8.1||-1.6||4.6|
|Distribution, hotels & restaurants||4.8||-2.8||-4.6||1.5||0.7|
|Transport, storage & communication||5.8||-0.2||-5.7||3.0||1.3|
|Business services & finance||6.4||-0.2||-4.3||1.3||2.1|
|Government & other services||1.0||0.4||2.3||0.7||1.5|
|Year-on-year contribution to growth|
|Agriculture, forestry & fishing||0.0||0.1||-0.1||0.0||0.0|
|Mining & quarrying (Extraction)||-0.1||-0.2||-0.2||-0.1||-0.3|
|Electricity, gas, steam & air (Utilities)||0.0||0.0||-0.1||0.1||-0.1|
|Water supply, sewerage, etc.||0.0||0.0||-0.1||0.0||0.1|
|Distribution, hotels & restaurants||0.7||-0.4||-0.6||0.2||0.1|
|Transport, storage & communication||0.6||0.0||-0.6||0.3||0.1|
|Business services & finance||1.7||-0.1||-1.3||0.4||0.6|
|Government & other services||0.2||0.1||0.5||0.2||0.4|
Additional supporting economic analysis relating to the Preliminary Estimate of GDP can be found in the Economic Review.
An article outlining the ONS policy on Special Events can also be found on the ONS website.
Gross Domestic Product (GDP) is an integral part of the UK national accounts and provides a measure of the total economic activity in the UK. GDP is often referred to as one of the main 'summary indicators' of economic activity and references to 'growth in the economy' invariably refer to the growth in GDP during the latest quarter.
In the UK three different but equivalent approaches are used in the estimation of GDP:
GDP from the output or production approach - GDP(O) measures the sum of the value added created through the production of goods and services within the economy (our production or output as an economy). This approach provides the first estimate of GDP and can be used to show how much different industries (for example, agriculture) contribute within the economy.
GDP from the income approach - GDP(I) measures the total income generated by the production of goods and services within the economy. The figures provided breakdown this income into, for example, income earned by companies (corporations), employees and the self employed.
GDP from the expenditure approach - GDP(E) measures the total expenditures on all finished goods and services produced within the economy.
Figures for the most recent quarter are provisional and subject to revision in light of (a) late responses to surveys and administrative sources, (b) forecasts being replaced by actual data and (c) revisions to seasonal adjustment factors which are re-estimated every quarter and reviewed annually.
Definitions found within the main statistical bulletin are listed here:
Chained volume measure is an index number from a chain index of quantity. The index number for the reference period of the index may be set equal to 100 or to the estimated monetary value of the item in the reference period.
An index number is a measure of the average level of prices, quantities or other measured characteristics relative to their level for a defined base reference period or location. It is usually expressed as a percentage above or below, but relative to, the base index of 100.
A link to the GDP methodology and a guide to UK National Accounts can be found in the Guide to National Accounts on the ONS website.
In the coming months ONS will be reviewing and updating existing guidance and methodology documents to reflect the move to SIC 2007.
The index numbers in this statistical bulletin are all seasonally adjusted. This aids interpretation by removing annually recurring fluctuations, for example, due to holidays or other regular seasonal patterns. Unadjusted data are also available.
Seasonal adjustment removes regular variation from a time series. Regular variation includes effects due to month lengths, different activity near particular events such as shopping activity before Christmas, and regular holidays such as the May bank holiday.
Some features of the calendar are not regular each year, but are predictable if we have enough data - for example the number of certain days of the week in a month may have an effect, or the impact of the timing of Easter. As Easter changes between March and April we can estimate its effect on time series and allocate it between March and April depending on where Easter falls. Estimates of the effects of day of the week and Easter are used respectively to make trading day and Easter adjustments prior to seasonal adjustment.
It is common for the value of a group of financial transactions to be measured in several time periods. The values measured will include both the change in the volume sold and the effect of the change of prices over that year. Deflation is the process whereby the effect of price change is removed from a set of values to derive the volume. Within GDP, all series, unless otherwise quoted, are chained volume series.
Basic quality information
All estimates, by definition, are subject to statistical ‘error’ but in this context the word refers to the uncertainty inherent in any process or calculation that uses sampling, estimation or modelling. Most revisions reflect either the adoption of new statistical techniques, or the incorporation of new information, which allows the statistical error of previous statements to be reduced. Only rarely are there avoidable ‘errors’ such as human or system failures, and such mistakes are made quite clear when they do occur.
Expectations of accuracy and reliability in early estimates are oftern too high. Revisions are an inevitable consequence of the trade off between timeliness and accuracy. Early estimates are based on incomplete data.
A Summary Quality Report for the GDP statistical bulletin (195.1 Kb Pdf) can be found on the ONS website.
This report describes in detail the intended uses of the statistics presented in this publication, their general quality and the methods used to produce them.
In accordance with the National Accounts revision policy, there are no periods open for revision in this release.
This release includes information available up to 20 April 2012.
The National Accounts: Revisions statement (67.8 Kb Pdf) is available on the ONS website.
Spreadsheets giving revisions triangles (real time databases) of estimates from 1992 to date are available to download from the data section of this release.
The revisions triangles for the components of GDP have been temporarily removed following the recent move to the new SIC. They will be reinstated shortly. The revisions triangles for total GDP are still available and the service sector analysis is still separately available on a monthly basis via the Index of Services dataset.
Revisions to data provide one indication of the reliability of key indicators. Tables 1 and 2 show summary information on the size and direction of the revisions which have been made to data covering a five year period. A statistical test has been applied to the average revision to find out if it is statistically significantly different from zero. The result of the test is that the average revision is not statistically different from zero.
The data used are consistent with that used in more detailed analysis that have been published in Economic Trends. The most recent article was published in Economic Trends no. 637 (130.4 Kb Pdf) on the ONS website in December 2006.
Table 1 below shows the revisions between the early estimates of GVA. The analysis of revisions between month 1 and month 2 uses month 2 estimates published from May 2007 (Q1 2007) to February 2012 (Q4 2011). The analysis of revisions between month 2 and month 3 uses month 3 estimates published from June 2007 (Q1 2007) to March 2012 (Q4 2011).
|Revisions between early estimates of GVA growth (quarterly, CVM)|
|GVA Growth in the latest period (per cent)||Average over the last five years||Average over the last five years without regard to sign (average absolute revision)|
|Between M1 and M2||-0.2||0.01||0.05|
|Between M2 and M3||-0.2||-0.04||0.08|
Table 2 below shows the revisions to GVA growth between the estimate published three months after the end of the quarter and the equivalent estimate three years later. The analysis uses month 3 estimates first published from June 2004 (Q1 2004) to March 2009 (Q4 2008).
|Revisions between early estimates of GVA growth (quarterly, CVM)|
|GVA growth in the latest period (per cent)||Average over the last five years||Average over the last five years without regard to sign (average absolute revision)|
|GVA growth (quarterly CVM)||-0.2||-0.15||0.28|
An article titled Understanding the quality of early estimates of Gross Domestic Product, which was first published in December 2009, is available on the ONS website. This article presents an analysis of revisions to the early estimates of GDP based on a long period database of real time GDP back to 1955. This database is regularly updated and is available on the ONS website.
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