An error has been found in table L of the Second estimate of GDP, Q3 2013 publication - Gross value added at basic prices: individual measures. This affects series YBFR (Output Based Estimate, Chained Volume Index , seasonally adjusted) for the period 2013 Q3.
An incorrect value of 101.5 was published for this series for 2013 Q3 - this has now been updated with the correct value of 103.2.
There is no impact on the growth rates associated with series YBFR and there is also no impact on GDP.
ONS apologises for any inconvenience this may cause. For further information please contact email@example.com.
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, will have been seasonally adjusted (SA) 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 year on previous year gives the annual growth between one calendar year and the previous. 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 Q3 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 is Q3 2013.
|Current market prices||Chained volume measures|
|Gross domestic product||Compensation of employees||Gross domestic product||Household expenditure||Gross fixed capital formation|
Figure 1 shows the quarterly level of GDP over the past 25 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 sectors, but the effect on the service sector 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, owing to weaknesses in the domestic and global markets. Services have continued to grow steadily from 2009, and activity in these industries is now approximately at the level previously seen in early 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 domestic 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 quarterly GDP chained volume measure growth between Q1 1988 and Q3 2013.
Annex A (38 Kb Excel sheet) contains growth rates back to Q1 2012.
The 0.8% increase in output between Q2 2013 and Q3 2013 was broad based, with all three major industry groups – services, production and construction - making positive contributions.
Output of the agriculture, forestry & fishing industries fell by 1.4% in Q3 2013, revised down from the previously estimated 1.4% increase. This follows an increase of 2.0% in Q2 2013.
In Q3 2013, production output increased by 0.6%, revised up from the previously estimated 0.5% increase, and follows a 0.8% increase in Q2 2013. Manufacturing output increased by 0.9% between Q2 2013 and Q3 2013 unrevised from the previous estimate (see Figure 3). Between Q1 2013 and Q2 2013 manufacturing output also rose by 0.9%. Electricity, gas, steam & air conditioning supply was the only production industry to contract in Q3 2013, falling by 5.7% compared with a decrease of 2.1% in Q2 2013.
Construction output rose by 1.7% in Q3 2013, revised down from a 2.5% increase, following an increase of 1.9% in the previous quarter. When compared with Q3 2012, construction output increased by 4.1%.
The service industries grew by 0.7% in Q3 2013, unrevised from the previous estimate (see Figure 4) following increases of 0.6% in both Q2 2013 and Q1 2013. None of the main services industries experienced negative growth in the quarter, although transport, storage & communications output was unchanged over this period. Service industries output has increased in every quarter compared with the same quarter a year ago since Q2 2010, whereas production output has been contracting on the same basis in each quarter since Q2 2011. However, production output increased by 0.6% in Q3 2013 compared with Q2 2013. Electricity, gas, steam & air was the only production industry to contract (by 5.7%) between Q2 2013 and Q3 2013.
Output of the distribution, hotels & restaurants industries rose by 1.1% in Q3 2013, largely due to increases in retail trade, except of motor vehicles and motorcycles and wholesale & retail trade & repair of motor vehicles & motorcycles. Growth in Q3 2013 was revised down from the previously estimated 1.3% increase and follows an increase of 1.8% in Q2 2013.
Output of the transport, storage & communication industries was unchanged in Q3 2013. The largest upward contribution to growth was motion picture, video & TV programme production, sound recording and music publishing activities. The largest downward contribution to growth came from telecommunications. The flat estimate for Q3 2013 follows an increase of 0.2% in Q2 2013.
Business services & finance industries output rose by 1.1% in Q3 2013, revised up from the previously estimated 1.0% increase. In Q2 2013 business services & finance output rose by 0.7%. The increase in Q3 2013 was mainly due to architectural & engineering activities, technical testing & analysis.
Output of government & other services rose by 0.4% in Q3 2013, revised up from the previously estimated 0.3% increase, following no change in Q2 2013. The positive growth in Q3 2013 was mainly due to human health activities.
Further detail on the service industries lower level components can be found in the Index of Services statistical bulletin published on the same day as this release.
Gross value added excluding oil & gas extraction rose by 0.8% in Q3 2013, unrevised from the previous estimate. In Q2 2013 gross value added excluding oil & gas extraction rose by 0.6%.
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 1.7% in Q3 2013, following a 0.6% increase in Q2 2013.
Household final consumption expenditure rose by 0.8% in Q3 2013, an eighth consecutive quarter on quarter increase (see Figure 5) following the longer-term trend. This follows increases of 0.3% in Q2 2013 and 0.6% in Q1 2013. The level of household expenditure is now 2.4% higher than in Q3 2012. The growth in household consumption may reflect improving economic conditions over the year to date that would be supportive of this growth.
General government final consumption expenditure increased by 0.5% in both Q3 2013 and Q2 2013.
Non-profit institutions serving households (NPISH) final consumption expenditure rose by 1.2% in Q3 2013 following an increase of 0.7% in Q2 2013.
Gross fixed capital formation (the purchase and disposal of fixed assets used in the production process for more than a year) increased by 1.4% in Q3 2013 (see Figure 6) and follows an increase of 0.8% in Q2 2013. Within gross fixed capital formation, business investment increased by 1.4% in Q3 2013 following a decrease of 2.7% in Q2 2013. Between Q2 2013 and Q3 2013, general government investment rose slightly, by 0.9%. More detail on gross fixed capital formation is available in the Business Investment statistical bulletin published on the same day as this release.
Including the alignment adjustment, the level of inventories increased by £5.1 billion in Q3 2013, following an increase of £1.8 billion in Q2 2013. Excluding the alignment adjustment, the level of inventories rose by £4.2 billion in Q3 2013, following an increase of £1.2 billion in Q2 2013.
The deficit in net trade was £8.9 billion in Q3 2013 with exports falling by 2.4% between Q2 2013 and Q3 2013 and imports growing by 0.4% over the same period. This follows a net trade deficit of £5.5 billion in Q2 2013 (see Figure 7).
Annex D (35.5 Kb Excel sheet) contains growth rates back to Q1 2012.
The gross domestic product implied deflator at market prices for Q3 2013 is 2.3% above the same quarter of 2012 (see Figure 8). Positive growth in the implied deflator in Q2 2013 is due to increases in the household and non-profit institutions serving households final consumption expenditure implied deflators. 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; the deflators for expenditure components, which are the basis for the implied GDP deflator, are used to calculate nominal GDP not real GDP.
Annex C (29 Kb Excel sheet) contains growth rates back to Q1 2012.
GDP at current market prices rose by 1.7% in Q3 2013. In Q2 2013 (see Figure 9), GDP at current market prices rose by 0.4%.
Compensation of employees – which includes both wages & salaries and pension contributions - increased by 0.4% in Q3 2013, after an increase of 2.9% in Q2 2013. The large increase in Q2 2013 partly reflects unusually high bonus payments in April 2013.
The gross operating surplus of corporations – effectively the profits of companies operating within the UK – including the alignment adjustment, rose by 5.2% in Q3 2013 compared with the previous quarter. This follows a decrease of 6.3% in Q2 2013 (see Figure 10).
Taxes on products and production less subsidies rose by 2.7% in Q3 2013, following a decrease of 0.3% in Q2 2013.
In Q3 2013, GDP grew by 0.1% quarter on quarter in the euro area, while the European Union (EU 28) (see Figure 11) grew by 0.2%.
When comparing GDP growth between Q3 2013 and Q3 2012, GDP in the euro area decreased by 0.4%, while it increased by 0.1% in the EU28. In Q2 2013, there was a 0.6% contraction for the euro area and a 0.2% contraction for the EU28. These are based upon flash estimates of GDP for Q3 2013 published by Eurostat the statistical office of the European Union.
GDP for the United States of America increased by 0.7% in Q3 2013. This follows an increase of 0.6% in Q2 2013. GDP for Japan grew by 0.5% in Q3 2013, decelerating after the 0.9% increase in Q2 2013. When compared with the same quarter a year ago, GDP for the United States of America rose by 1.6% and GDP for Japan rose by 2.6%.
More detailed information on the European 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 Anaylsis 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 Q3 2013.
Output revisions are shown in Annex E (38 Kb Excel sheet) of this release.
This release includes data available up to 15 November 2013. Data are consistent with the current price trade in goods data within the UK Trade statistical bulletin published on 8 November 2013 and the Index of Production statistical bulletin on 6 November 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.
To allow sufficient time to prepare for the major changes in Blue Book 2014, ONS has decided to change the approach to quarterly national accounts for Q2 2014. A preliminary estimate, based only on output data, will be published as normal in July. Then in August, this output-based estimate will be updated. This will supplement the July Preliminary GDP estimate by replacing the third month of forecast data for the Index of Production (IoP), the Index of Services (IoS) and the monthly construction output survey with actual data. The publication date for this output based estimate has also moved from the previously announced date to 15 August 2014.
There will be no published information on the income or expenditure components in the second quarter until the Quarterly National Accounts (QNA) release on 30 September 2014.
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.
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 movements in the economy.
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 classifications decisions
The UK National Accounts 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 Debt and Deficit (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 4 December 2013.
Basic quality information for the GDP statistical bulletin
A Quality and Methodology Information report (197.4 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. Tables 2 and 3 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 (preliminary) and month 2 (second) estimates of GDP. The analysis of revisions between month 1 and month 2 uses month 2 estimates published from November 2008 (Q3 2008) to August 2013 (Q2 2013). The analysis of revisions between month 2 and month 3 (third estimate of GDP) uses month 3 estimates published from December 2008 (Q3 2008) to September 2013 (Q2 2013).
|Estimate in 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||0.8||0.04||0.06|
|Between M2 and M3||0.8||-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 December 2005 (Q3 2005) to September 2010 (Q2 2010) for GDP.
|Estimate in 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)||0.8||-0.09||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: Why is GDP revised?' (300.9 Kb Pdf) published on 13 June 2013, 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.
For all periods, the expenditure and income estimates are aligned to the headline GDP figure. Although annual data is aligned for balanced years there will still be quarterly differences for balanced and post balanced years, due to timing and data content issues. These are dealt with by means of explicit alignment adjustments which are applied to specific components (gross operating surplus of private non-financial corporations in the income approach and changes in inventories in expenditure) to align the three approaches. As these are purely quarterly discrepancies, the alignments sum to zero over the year and are published explicitly in the GDP statistical bulletins. They are also published as "of which" items within the specific components, to enable users to ascertain the underlying picture.
The size and direction of the quarterly alignment adjustments in Q3 2013 indicate that in this quarter the levels of expenditure and income were lower than that of output.
Alignment adjustments typically have a tolerance of +/-£1,500 million on any quarter. However, in periods where the data sources are particularly difficult to balance, like Q1 2013 for instance, a slightly larger alignment adjustment is sometimes needed.
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 (105.5 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 names of those given pre-publication access to the contents of this bulletin.
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