This is a short video looking at the preliminary GDP estimate for the second quarter of 2013.
The preliminary estimate of GDP is based on the output approach that is the value of all final goods and services produced within the UK.
We will show the change in the latest estimates in Q2 2013, and look at the quarterly and the annual change.
Gross domestic product increased by 0.6% in Q2 2013 compared with the previous quarter. When compared with the same quarter a year previous, GDP was 1.4% higher.
However, it's worth remembering that data for Q2 2012 may have been affected by the changes made to the bank holidays due to the Diamond Jubilee. These changes resulted in one fewer working day in the quarter.
We can look in more detail at the GDP estimates by showing the change in the four main industrial groupings of the economy.
Firstly, the services industry saw an increase of 0.6% on the quarter, while the annual change showed an increase of 2.1%.
The production industries increased by 0.6% compared with Q1 2013, but fell by 0.9% on the year.
The construction industry saw an increase of 0.9% this quarter, but comparing Q2 2013 with Q2 2012 construction output fell by 1.0%.
Finally, the agriculture industry increased by 1.1% this quarter and also saw a fall on the year of 5.6%.
We can now look at the contributions to the latest quarterly change in GDP from the four main industrial groupings. Contributions of each industry are not based solely on their quarterly growth, but also their size relative to the whole UK economy.
Bringing up the pie chart; in 2010 the services industries accounted for 77.8% of the UK economy; the construction industry, 6.3%; production, 15.2% and agriculture accounting for around 0.7%.
So, if the services and the construction industries, for example, increased by the same number of percentage points in a quarter, the services industries would contribute a greater percentage of the total growth in GDP due to the relative size of the services industries.
We will now use this chart to see the contributions of the four main industrial groupings to GDP. Here is the 0.6% increase in GDP on the quarter and bringing on these bars, we can see that the agriculture industry had a marginal positive contribution of 0.01 percentage points to GDP, while production had a stronger contribution of 0.08 percentage points to GDP. Similarly, the construction industry pushed GDP up by 0.05 percentage points, but the main contributor to growth in Q2 2013 was the services industries, with a positive contribution of 0.48 percentage points. Putting all these together, you arrive at the total increase of 0.6 percentage points.
This is the first time, since Q3 2010 where all major categories of output have had a positive contribution to quarterly GDP.
Now if we look at changes in the sectors since the first quarter of 2008, the quarter before the start of the 2008/2009 downturn.
The black line shows an index of 100 with the quarter we are comparing with: Q1 2008, referred to as the pre-contraction peak. So when the line is below the hundred mark, the industry was lower than in Q1 2008 and when it is above, the industry was higher.
Bringing on the line for overall GDP we can see that the output was declining throughout 2008 as the economy contracted. Total output then began to increase, though still remains below its pre-contraction peak.
As well as this, the line also shows the slight zigzag movements as a result of a number of special events, such as the Diamond Jubilee, as well as Olympic & Paralympic Games.
If we fade out GDP, we can look at growth in the four main industry groupings which make up total output.
Throughout the period the services industries line has been above the line for GDP, suffering a weaker contraction during the downturn and performing better than the economy as a whole, it nears its pre-contraction peak in the latest quarter. The fact that the lines for services and the whole economy are so close reflects how services accounts for over three quarters of the economy’s output.
On the other hand, the production and construction industries have not performed as well. Experiencing a much larger drop in output, both industries are still some way off their pre-downturn peak and continue to pull down the UK’s overall output levels.
Agriculture, as an industry, has experienced a very different path. Recovering beyond its pre-contraction peak in Q1 2011, output began to contract once again later that year and is now around 9% below what it was in Q1 2008. However, due to its size relative to the whole economy, such volatility has had little impact on overall GDP.