This is a short video looking at the preliminary GDP estimate for the third 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 Q3 2013, and look at the quarterly and the annual change.
Gross domestic product increased by 0.8% in Q3 2013 compared with the previous quarter. And when compared with the same quarter a year ago (Q3 2012), GDP was 1.5% higher.
It is worth remembering that for Q3 2012, data on the UK economy are likely to have been impacted in a number of ways by the Olympic and Paralympic Games. An example would be the positive contributions to GDP made by the event’s tickets sales. However it is not possible to quantify the overall effect. Further analysis on this can be found on the ONS website and/or via the links provided in the description below.
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 0.7% on the quarter, while the annual change showed an increase of 1.9%.
The production industries increased by 0.5% compared with Q2 2013, but fell by 0.3% on the year.
The construction industry saw an increase of 2.5% this quarter and comparing Q3 2013 with Q3 2012 construction output increased by 4.9%.
Finally, the agriculture industry increased by 1.4% this quarter but saw a fall on the year of 1.6%.
Now we can look at the contributions to the latest quarterly change in GDP from the four main industrial groupings. The 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 finally 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 given quarter, the services industries would contribute a greater percentage to total growth in GDP due to its size, relative to the construction industry.
We will now use this chart to see the contributions of the four main industrial groupings to GDP. Here is the 0.8% increase in GDP on the quarter and bringing on these bars, we can see that the agriculture industry had a marginal contribution to GDP, while production and construction pushed GDP up by 0.1 percentage points. However, the main contributor to growth in Q3 2013 was the services industries, with a positive contribution of 0.6 percentage points. Putting all these together, you arrive at the total increase of 0.8 percentage points.
Finally, we will look at changes in the production sectors since the first quarter of 2008, the quarter before the start of the 2008/2009 downturn.
The grey line shows an index of 100 with the quarter we are comparing with: Q1 2008, referred to as the pre-downturn peak. So when the line is below the hundred mark, the industry’s output was lower than in Q1 2008 and when it is above, the output was higher.
Bringing on the line for total production we can see that the output of the industry was declining throughout 2008 and 2009 as the UK economy contracted.
Since then, despite some periods of positive growth, total production output has remained at a fairly similar level.
If we fade out the total production line we can look at growth in the four main sub-industries which make up the total.
Two of the industries, manufacturing (accounting for around 68% of total production) and water supply (accounting for about 8%) have followed broadly similar paths to the industry as a whole. Although in the latest quarters, water supply industry has experienced strong successive growth.
In contrast, mining and quarrying – the second largest sub-industry of total production – has been on an overall downwards trend during the same period and in Q3 2013 was 35% below its pre-downturn peak. This however is not unique to the recent economic downturn, as mining and quarrying output has been falling overall since the end of 1999.
The final sub-industry – electricity, gas, steam & air conditioning – faired the best in the initial stages of the downturn. Output fell by just 7% and the industry returned to its pre-downturn peak in Q4 2010, however, since then output growth has remained sluggish or contracted further. With the latest quarterly contraction of 6.8% in Q3 2013, output is now 13% below what it was in Q1 2008.