After growth of 0.9 per cent in third quarter, the economy contracted by 0.3 per cent in the fourth quarter of 2012. This contraction can partly be attributed to the special events in the second and third quarters. Output in the second quarter was subdued by a reduction in working days due to the additional bank holiday for the Queen’s Diamond Jubilee, and provided a lower base for growth in the third quarter. In addition, hosting the London 2012 Olympic and Paralympics games may have had a positive impact on growth in the third quarter. For instance, sales of Olympic and Paralympic tickets added 0.2 percentage points to GDP growth in the third quarter, and reduced fourth quarter growth by a similar amount.
Production was the main source of the fourth quarter decline; the sector contracted by 1.8 per cent and contributed the whole of the 0.3 percentage points fall in GDP. The services sector was flat on the quarter and construction grew by 0.3 per cent, both making no overall contribution to GDP growth.
With the exception of Q3 2012, the production sector has declined in each quarter of 2011 and 2012 and is now 5.1 per cent lower than in Q4 2010.
Manufacturing is the largest sector in the productive industries, and accounts for 10.5 per cent of the economy. A fall of 2.4 per cent over the last two years contributed -0.3 percentage points to GDP. In the most recent quarter the manufacturing sector contracted by 1.5 per cent.
During the last two years mining and quarrying, which accounts for just over 15 per cent of the production sector, fell by 26.3 per cent and contributed a fall of 0.6 percentage points to growth. In the latest quarter, mining and quarrying fell by 10.2 per cent and contributed negative 0.2 percentage points to the 0.3 per cent contraction in GDP.
Labour market figures are not yet available for the fourth quarter as a whole. The latest headline indicators for the labour market in the three months to November continue to show resilience, in contrast to the weakness in GDP.
Employment increased (90,000), unemployment fell (37,000) and hours increased (7.8 million) compared to the previous three month period. Unemployment fell by 185,000 compared to the same three month period in 2011, the largest fall since the three months to May 2001, while over the past year employment rose by 1.9 per cent. The claimant count is available for all three months of the quarter and shows a decrease of 12,100 claimants between November and December.
Source: Office for National Statistics
GDP: chained volume measures, seasonally adjusted, Office for National Statistics (ABMI)
Employment level: aged 16 years and over, seasonally adjusted, Labour Force Survey, Office for National Statistics (MGRZ)
Total weekly hours: hours worked by people aged 16 years and over, seasonally adjusted, Labour Force Survey, Office for National Statistics (YBUS)
GVA, Mining & quarrying inc oil & gas extraction: chained volume measures, seasonally adjusted, Office for National Statistics (L2KR)
GVA, Manufacturing: chained volume measures, seasonally adjusted, Office for National Statistics (L2KX)
GVA, Electric, gas, steam & air: chained volume measures, seasonally adjusted, Office for National Statistics (L2MW)
GVA, Water supply, sewerage: chained volume measures, seasonally adjusted, Office for National Statistics (L2N2)
GVA, Total Production: chained volume measures, seasonally adjusted, Office for National Statistics (L2KQ)
GDP data is from "Preliminary estimate for Gross Domestic Product" published on the 25 January 2013.
Labour Market data is from the latest "Labour Market Statistical Bulletin" published on the 23 January 2013.
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