GDP is an estimate of total economic activity in the UK. It is constructed by balancing the estimates from the output, income and expenditure approaches to measuring GDP which in theory are all equal. For more information on how GDP is balanced see ‘Balancing GDP’ in the background notes section of this release.
Data in this release, unless otherwise stated, have been seasonally adjusted with seasonal effects removed to allow comparisons over time. Estimates are given in chained volume measures (CVM), sometimes known as real terms, with the effects of inflation removed or current prices (CP), sometimes known as nominal terms, without any adjustment for inflation.
Growth for GDP and its components is given between different periods. Latest quarter on previous quarter growth gives growth between one quarter and the quarter immediately before it. Latest quarter on corresponding quarter of previous year shows the growth between one quarter and the same quarter a year ago.
This bulletin contains information on the second estimate of GDP for the first quarter of 2013. It includes initial estimates on the expenditure and income approaches to GDP along with revisions to and more detail on the output approach. In line with national accounts revisions policy, the only period open for revision in this release is the first quarter of 2013.
|Current Market Prices||Chained volume measures|
|Gross domestic product||Compensation of employees||Gross domestic product||Household expenditure||Gross fixed capital formation|
Percentage change on previous quarter.
GDP grew by 0.3% in the first quarter of 2013, unrevised from the preliminary estimate. This increase represents the first quarter-on-quarter growth figure for any quarter not affected by a special event since 2011 quarter three when GDP increased by 0.6% compared with the previous quarter and is above the 0.3% fall shown in the final quarter of 2012. When comparing the first quarter of 2013 with the corresponding quarter of 2012, GDP increased by 0.6%, compared with an increase of 0.2% in the previous quarter.
Figure 1 shows the quarterly levels of GDP over the past twenty five years and shows how GDP in the UK grew steadily from 2000 until early-2008 when a financial market shock affected UK and global economic growth. Up until that point, services in the UK had continued to grow steadily, while production output had been broadly flat across the same period. UK construction activity grew strongly at the start of the period before a slight fall in 2005 and 2006. Construction activity then recovered so that it was around 20% higher at the end of 2007 compared with the start of 2001. The deterioration in economic conditions during 2008 had a large effect on the construction and production industries, but the effect on the services industries was less pronounced.
Coming out of the economic downturn in 2008-09, the rate of GDP growth has been slower compared with the early-2000s, due to weaknesses in the domestic and global markets. Services have continued to grow steadily from 2009 and ended 2012 above pre-downturn levels seen at the start of 2008. Production began to decrease from the start of 2011 following a mild recovery in 2010, as increased inflation and slower wage growth began to reduce households’ real income. Compounding this subdued demand was the development of the euro area sovereign debt crisis, which affected business sentiment in the EU, a key export market for the UK. Construction activity saw a more marked increase than that of production in 2010. Despite the positive signs during 2010, construction has trended downwards from late 2011.
Figure 2 shows growths for the chained volume measure of GDP between 1988 quarter one and 2013 quarter one.
Annex A (28.5 Kb Excel sheet) contains growth rates back to Q1 2012.
Output of the agriculture, forestry & fishing industries fell by 3.7% in the first quarter of 2013 following a decrease of 0.5% in the fourth quarter of 2012.
In the first quarter of 2013, production output increased by 0.2% following a fall of 2.1% in the fourth quarter of 2012.
In the fourth quarter of 2012, an extended and later than usual period of maintenance on North Sea oil rigs led to a negative impact on production, which fell by 2.1%. This contraction was seen within the mining & quarrying (including oil and gas extraction) industry, which fell by 10.7% compared with the previous quarter, resulting in a gross value added figure 0.2 percentage points lower (-0.3%) than if oil and gas were excluded.
The bounce back in the first quarter of 2013 is evident. An increase of 4.0% in mining & quarrying, revised up from the previously estimated 3.2% increase, made a positive quarter-on-quarter contribution to growth .The downward trend in mining and quarrying remains, however, with the first quarter of 2013 8.5% lower than the first quarter of 2012.
Manufacturing output fell by 0.3% in the first quarter of 2013. In 2012 quarter four, manufacturing output fell by 1.4% (see Figure 4).
Electricity, gas, steam & air conditioning supply increased by 0.6% in the first quarter of 2013 following an increase of 2.2% in the fourth quarter of 2012.
Water supply, sewerage & waste management decreased by 1.0% in the first quarter of 2013 following a decrease of 1.2% in the fourth quarter of 2012.
Construction output fell by 2.4% in the first quarter of 2013, following an increase of 0.8% in the previous quarter. When compared with the first quarter of 2012, construction output decreased by 5.7% and is now at its lowest quarterly level since quarter three 2000.
Positive growth in the services industries resumed in the first quarter of 2013 with output increasing by 0.6% after being unchanged in the final quarter of 2012 (see Figure 5). Most service industries experienced positive growth in the quarter with the exception of accommodation & food services, down 1.7%, scientific, admin & support, down 0.5% and education, down 0.3%. When looking at quarter on same quarter a year ago growth rates, the growth in overall services industries output has been positive in every quarter since the final quarter of 2009, whereas production output has been contracting each quarter since 2011 quarter two. Therefore the overall downward trend in the production industries and the overall upward trend in the services industries continued in quarter one 2013.
Output of the distribution, hotels & restaurants industries increased by 1.0% in the first quarter of 2013 following a decrease of 0.6% in the fourth quarter of 2012. The increase in quarter one 2013 was mainly due to wholesale activities.
Output of the transport, storage & communication industries rose by 1.5% in quarter one 2013. The increase was mainly due to programming & broadcasting activities and land transport services. In the fourth quarter of 2012 transport, storage & communication industries output increased by 0.9%.
Output of the business services & finance industries rose by 0.2% in the first quarter of 2013. In the fourth quarter of 2012 output of the business services & finance industries rose by 0.5%. The increase in 2013 quarter one was mainly due to legal activities and activities of head offices.
Output of government & other services increased by 0.4% in the first quarter of 2013 following a decrease of 0.9% in the fourth quarter of 2012. The increase in 2013 quarter one was mainly due to residential care activities and human health activities.
Annex B (31.5 Kb Excel sheet) contains growth rates back to Q1 2012.
Gross domestic expenditure (the sum of all expenditure by UK residents on goods and services which are not used up or transformed in a productive process) rose by 0.4% in the first quarter of 2013 following a decrease of 0.1% in 2012 quarter four.
Household final consumption expenditure grew by 0.1% in the first quarter of 2013. Household expenditure has now increased for six successive quarters (see Figure 6). The level of household expenditure is now 1.3% higher than in quarter one 2012.
Government final consumption expenditure was unchanged in the first quarter of 2013, following an increase of 0.6% in 2012 quarter four.
Gross fixed capital formation (the purchase and disposal of fixed assets used in the production process for more than a year) continued to impact negatively on expenditure growth, falling by 0.8%, the third fall in a row (see Figure 7). Business investment, a component of gross fixed capital formation, fell by 0.4% between the fourth quarter of 2012 and the first quarter of 2013.
Including the alignment adjustment, the level of inventories increased by £2.5 billion in the first quarter of 2013. Excluding the alignment adjustment, the level of inventories increased by £1.2 billion.
The deficit in net trade was £6.3 billion in the first quarter of 2013, compared with a deficit in net trade of £6.0 billion in 2012 quarter four (see Figure 8).
Annex D (27 Kb Excel sheet) contains growth rates back to Q1 2012.
The gross domestic product implied deflator at market prices for the first quarter of 2013 is 2.8% above the same quarter of 2012 (see Figure 9). The stronger growth in the implied deflator in the first quarter of 2013 is due to increases in the implied deflators for household final consumption expenditure and non-profit institutions serving households. Between quarter four 2012 and quarter one 2013 the implied deflator increased by 1.2% following no change in quarter four 2012. The increase into quarter one 2013 was due to a rise in the gross fixed capital formation deflator.
The GDP implied deflator is calculated by dividing current price (nominal) GDP by chained volume (real) GDP and multiplying by one hundred to convert to an index. It is not used in the calculation of GDP, rather it is generated after the calculation of GDP.
Annex C (21 Kb Excel sheet) contains growth rates back to Q1 2012.
GDP at current market prices rose by 1.6% in 2013 quarter one. In 2012 quarter four, GDP at current market prices fell by 0.3%.
Compensation of employees – which includes both wages & salaries and pension contributions - grew by 1.2% in the first quarter of 2013 (see Figure 10). This is the highest quarterly increase since the final quarter of 2011 when it grew by 1.3%. Compensation of employees has not shown negative growth since the third quarter of 2010.
Further positive news on the income side can be found within gross operating surplus of corporations – effectively the profits of companies operating within the UK - which returned to growth in the first quarter of 2013, increasing by 4.1% and regaining much of the ground lost from the 4.3% decline in 2012 Q4 (see Figure 11).
Taxes on products and production less subsidies decreased by 0.2% in 2013 quarter one following an increase of 3.2% in 2012 quarter four.
In 2013 quarter one, GDP fell by 0.2% in the euro area and by 0.1% in the European Union (EU 27), (see Figure 12). These are based upon flash estimates of GDP for the first quarter of 2013 published by Eurostat, the statistical office of the European Union. In the fourth quarter of 2012, GDP decreased by 0.6% in the euro area and by 0.5% in the EU 27.
Compared with the first quarter of 2012, seasonally adjusted GDP in the euro area fell by 1.0%. In the EU 27, GDP was 0.7% lower than in the first quarter of 2012.
GDP for the United States of America increased by 0.6% in the first quarter of 2013, following an increase of 0.1% in the final quarter of 2012. GDP for Japan increased by 0.9% in the first quarter of 2013, following a 0.3% rise in 2012 Q4. When compared with the same quarter a year ago, GDP for the United States of America rose by 1.8% and GDP for Japan was unchanged.
More detailed information on these estimates can be found on the Eurostat website. Information on the estimates for the United States of America can be found on the Bureau of Economic Analysis website while information on the estimates for Japan can be found on the Japanese Cabinet Office website.
The only period open for revision in this release is Q1 2013 (see Figure 13).
Output revisions are shown in Annex E (29 Kb Excel sheet) of this release.
This release includes data available up to 16 May 2013. Data are consistent with the Index of Production statistical bulletin published on 9 May 2013 and the current price trade in goods data within the UK Trade statistical bulletin published on 10 May 2013.
A full set of quarterly national accounts for the first quarter of 2013 will be published on 27 June 2013 consistent with ONS’ annual Blue Book publication. Blue Book 2013 will be published on 31 July 2013. A preliminary estimate of GDP for the second quarter of 2013 will be published on 25 July 2013. The second estimate of GDP for the second quarter of 2013 will be published on 23 August 2013.
Release content and context
This release includes the second estimate of GDP. Data content for each successive release of GDP varies according to availability.
The preliminary estimate of GDP is based on output data alone. These are based on survey estimates for the first two months of the quarter with estimates for the third month of the quarter based on forecasts using early returns from businesses. Other (non-survey based) data used in the compilation of the output approach are also based on forecasts.
For the second estimate of GDP output estimates based on survey data are available for all three months of the quarter, in addition to other significant data sources. Estimates of the expenditure and income approaches to measuring GDP are also available in this release based on a combination of limited survey data, other data sources and forecasts.
For the quarterly national accounts release, output survey data are available for all three months of the quarter, along with most other data sources. For the expenditure and income approaches to measuring GDP, more extensive survey data are available, in addition to other data sources and a more limited use of forecasts.
After this release, the current quarter will be subject to revision in accordance with National Accounts revisions policy as further data, annual benchmarks and methodological improvements are implemented.
For more information on the different estimates of GDP, ONS has released a video explaining these differences.
Special Events in 2012
The Diamond Jubilee and the London 2012 Olympic and Paralympic Games made 2012 an unusual and difficult year for policymakers and anybody interested in understanding the behaviour of the UK economy. ONS designated both events as ‘special events’ under the ONS Special Events policy as they had a potentially significant effect on many key economic statistics. An article published by ONS on 17 May 2013 took a retrospective look at each event and considered the impact on a range of published economic indicators, including GDP.
National accounts methodology and articles
ONS regularly publishes methodological information and articles to give users more detailed information on developments within the National Accounts; supplementary analyses of data to help users with the interpretation of statistics and guidance on the methodology used to produce the National Accounts.
Historic experience shows that the output approach provides the best short term estimate of GDP growth given the availability of data in the UK. GDP growth according to the expenditure and income approaches is therefore brought into line with that recorded by output.
ONS has produced an article 'Interpreting the Recent Behaviour of the Economy' available on the ONS website to aid interpretation of the recent improvements in the economy.
An article describing the 'Content of Blue Book 2013' (62.7 Kb Pdf) was published by ONS on 30 November 2012. It includes forthcoming changes and outlines future plans for subsequent Blue and Pink Books. Further information will be published over the next three months on the changes to be introduced at Blue and Pink Books 2013.
An article summarising the upcoming improvements to the estimation of gross fixed capital formation and changes in inventories is now available on the ONS National Accounts methodology and articles web pages. These developments are part of the programme of continuous improvement to the UK National Accounts.
National accounts classification decisions
The UK National are produced under internationally agreed guidance and rules set out principally in the European System of Accounts 1995 (ESA 95) and the accompanying Manual on Government Deficit and Debt (MGDD).
In the UK the Office for National Statistics (ONS) is responsible for the application and interpretation of these rules. ONS therefore makes classification decisions based upon the agreed guidance and rules and these are published on the ONS website.
ONS publishes a monthly Economic Review discussing the economic background giving economic commentary on the latest GDP estimate and other ONS economic releases. The next article will be published on 5 June 2013.
Basic Quality Information for GDP Statistical Bulletin
A Quality and Methodology Information report (195.1 Kb Pdf) for this Statistical Bulletin can be found on the ONS website.
Key quality issues
Common pitfalls in interpreting series: Expectations of accuracy and reliability in early estimates are often too high. Revisions are an inevitable consequence of the trade-off between timeliness and accuracy. Early estimates are based on incomplete data.
Very few statistical revisions arise as a result of ‘errors’ in the popular sense of the word. 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 estimates 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.
Estimates for the most recent quarters are provisional and are subject to revision in the light of updated source information. ONS currently provides an analysis of past revisions (244.6 Kb Pdf) in the GDP and other Statistical Bulletins which present time series.
ONS has a webpage dedicated to revisions to economic statistics which brings together ONS work on revisions analysis, linking to articles, revisions policies and key documentation from the Statistics Commission's report on revisions.
Revisions to data provide one indication of the reliability of key indicators. The tables below 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. An asterisk (*) shows if the result of the test is significant.
Revisions to GDP estimates
Table 2 shows the revisions to month 1 and month 2 estimates of GDP. The analysis of revisions between month 1 and month 2 uses month 2 estimates published from May 2008 (2008 Q1) to February 2013 (2012 Q4). The analysis of revisions between month 2 and month 3 uses month 3 estimates published from June 2008 (2008 Q1) to March 2013 (2012 Q4).
|GDP Growth in the latest period||Revisions between early estimates of GDP growth (quarterly, CVM)|
|Revisions to GDP growth||%||Average over the last five years||Average over the last five years without regard to sign (average absolute revision)|
|Between M1 and M2||0.3||0.02||0.06|
|Between M2 and M3||0.3||-0.03||0.09|
Table 3 shows the revisions to GDP 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 2005 (2005 Q1) to March 2010 (2009 Q4) for GDP.
|GDP Growth in the latest period||Revisions between first publication and estimates three years later|
|(%)||Average over the last five years||Average over the last five years without regard to sign (average absolute revision)|
|GDP growth (quarterly, CVM)||0.3||-0.10||0.40|
Revisions triangles for the main components of GDP from expenditure, output and income approaches and spreadsheets containing revisions triangles (real-time) databases of estimates from 1992 to date and the calculations behind the averages in both tables are available on the ONS website.
An article titled 'Updated analysis of revisions to quarterly GDP' (206.7 Kb Pdf) , published in October 2012, is available on the ONS' website.
ONS has also recently published revisions triangles for current price GDP at market prices and for the GDP implied deflator which will be updated on an ongoing basis. Both are available on the ONS website and are the first to be released in an ongoing development programme to improve the coverage of the revisions triangles.
Information on the methods ONS uses for balancing the output, income and expenditure approaches to measuring GDP can be found on the ONS website.
The size and direction of the quarterly alignment adjustments in the first quarter of 2013 indicate that, for 2013 quarter one, the levels of both expenditure and income were lower than that of output.
Latest copies of this and other ONS releases are available under Publications on the ONS website. ONS has also produced a short guide to the UK National Accounts (93.6 Kb Pdf) .
Details of the policy governing the release of new data are available from the media relations office. Also available is a list of the names of those given pre-publication access to the contents of this bulletin.
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