Change in GDP is the main indicator of economic growth. Further information on GDP can be found at paragraph 2 in the background notes. Unless otherwise stated, all data in this bulletin are seasonally adjusted estimates and have had the effect of price changes removed (in other words, the data are deflated). Further information on some of the key concepts (including seasonal adjustment and deflation) underlying the estimates can be found at paragraph 4 in the background notes.
Users are reminded that GDP and all of its components are currently referenced to 2010, making the average index in 2010 equal to 100. It is for this reason that figure 1 shows all components converging in 2010.
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 over the same period. Construction activity grew strongly in the early part of the decade and although there was a temporary decline in the mid-2000s, this was reversed by the end of 2007. 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.
Economic growth resumed towards the end of 2009, but at a slower rate than the period prior to 2008, as demand was subdued by inflation outstripping nominal wage growth, leading to a fall in the real income of households. The services industries grew steadily, if slowly, during this period; activity in these industries is now approximately at the level previously seen in early 2008. By contrast, production and construction activity grew in 2010 but did not sustain this growth, with continued long-term economic uncertainty – exacerbated by the euro area sovereign debt crisis – particularly affecting construction in 2012. Activity in both the construction and production industries is now close to the trough recorded in 2009, meaning that GDP growth since then is entirely attributable to services (Table 1).
|Percentage change on previous quarter|
|GDP Index (2010=100)||Weights||1000||152||63||778|
The preliminary estimate of GDP focuses on the growth in output between two consecutive quarters (in this release Q1 2013 and Q2 2013). GDP increased by 0.6% in the second quarter of 2013, with all four main industry groupings (agriculture, production, construction and services) showing an increase.
The largest contribution to Q2 2013 GDP growth came from services; these industries increased by 0.6% contributing 0.48 percentage points to the 0.6% increase in GDP (as seen in Figure 3). This followed an increase of 0.5% in Q1 2013. In the latest quarter there was widespread growth, with increases in each of the four main services aggregates (Distribution, hotels & restaurants; transport, storage & communication; business services & finance and government & other services).
There was also an upward contribution (0.08 percentage points) from production; these industries rose by 0.6%, with manufacturing increasing by 0.4% following negative growth of 0.2% in Q1 2013. Mining and quarrying increased by 1.5% and water supply, sewerage, waste management and remediation activities increased by 2.8%.
In Q2 2013, output in the construction industry was estimated to have increased by 0.9% compared with Q1 2013. In Q1 2013 construction output was at its lowest level since Q1 2001. Looking at published seasonally adjusted constant price data, April 2013 increased by 4.6% when compared with March 2013 with both new work and repair & maintenance increasing. May 2013 was flat when compared with April 2013, with a rise in new work offsetting a fall in repair & maintenance. Comparing the three months to May 2013 with the previous three months, construction output was flat with a small rise in repair & maintenance being offset by a small fall in new work.
Agriculture output increased by 1.1% in Q2 2013, following a decrease of 6.3% in the previous quarter. Between Q2 2012 and Q2 2013 agriculture output decreased by 5.6%.
The index of production increased by 0.6% in Q2 2013, following an increase of 0.3% in the previous quarter. Manufacturing contributed the most to the increase, followed by water supply. Between Q2 2012 and Q2 2013 production output decreased by 0.9%.
Construction output increased by 0.9% in Q2 2013, following a decrease of 1.8% in the previous quarter. Between Q2 2012 and Q2 2013 construction output decreased by 1.0%.
The index for distribution, hotels & restaurants increased by 1.5% in Q2 2013, following an increase of 1.2% in the previous quarter. The largest contributions to the increase were from wholesale trade and motor trades. Between Q2 2012 and Q2 2013 distribution, hotels & restaurants output increased by 4.0%.
The index for transport, storage & communication increased by 0.6% in Q2 2013, following an increase of 1.4% in the previous quarter. Computer programming and telecommunications made the largest contributions to the increase. Between Q2 2012 and Q2 2013 transport, storage & communications output increased by 2.0%.
The index for business services & finance increased by 0.5% in Q2 2013, following a decrease of 0.1% in the previous quarter. Architectural and engineering activities made the largest positive contribution to the increase. Between Q2 2012 and Q2 2013 business services & finance output increased by 1.5%.
The index for government & other services increased by 0.1% in Q2 2013, following an increase of 0.4% in the previous quarter. Human health activities made the largest positive contribution to the increase. Between Q2 2012 and Q2 2013 government & other services output increased by 1.6%.
|Component||2012 Q2||2012 Q3||2012 Q4||2013 Q1||2013 Q2|
|Agriculture, forestry & fishing||-2.3||-0.5||0.3||-6.3||1.1|
|Mining & quarrying (Extraction)||-3.8||1.8||-10.3||3.2||1.5|
|Electricity, gas, steam & air (Utilities)||4.7||-3.4||3.7||1.4||-1.4|
|Water supply, sewerage etc.||-1.1||0.6||0.1||-0.4||2.8|
|Distribution, hotels & restaurants||0.1||1.8||-0.5||1.2||1.5|
|Transport, storage & communication||-1.3||-0.5||0.6||1.4||0.6|
|Business services & finance||-0.1||0.7||0.4||-0.1||0.5|
|Government & other services||0.3||1.7||-0.6||0.4||0.1|
|Component||2012 Q2||2012 Q3||2012 Q4||2013 Q1||2013 Q2|
|Agriculture, forestry & fishing||0.0||0.0||0.0||0.0||0.0|
|Mining & quarrying (Extraction)||-0.1||0.0||-0.2||0.1||0.0|
|Electricity, gas, steam & air (Utilities)||0.1||0.0||0.0||0.0||0.0|
|Water supply, sewerage etc.||0.0||0.0||0.0||0.0||0.0|
|Distribution, hotels & restaurants||0.0||0.2||-0.1||0.2||0.2|
|Transport, storage & communication||-0.1||-0.1||0.1||0.1||0.1|
|Business services & finance||0.0||0.2||0.1||0.0||0.2|
|Government & other services||0.1||0.4||-0.1||0.1||0.0|
Components may not sum to totals due to rounding
|Agriculture, forestry & fishing||9.7||-6.9||-0.7||10.6||-3.3|
|Mining & quarrying (Extraction)||-6.1||-9.7||-2.4||-14.8||-9.6|
|Electricity, gas, steam & air (Utilities)||0.5||-4.8||3.9||-5.9||-0.3|
|Water supply, sewerage etc.||-2.0||-8.3||-1.3||4.1||-0.1|
|Distribution, hotels & restaurants||-2.8||-5.8||1.0||0.7||0.9|
|Transport, storage & communication||-0.4||-7.2||3.0||1.6||0.2|
|Business services & finance||0.9||-4.8||0.4||2.5||1.7|
|Government & other services||0.9||0.4||0.3||0.5||1.6|
|Agriculture, forestry & fishing||0.1||0.0||0.0||0.1||0.0|
|Mining & quarrying (Extraction)||-0.2||-0.3||0.0||-0.3||-0.2|
|Electricity, gas, steam & air (Utilities)||0.0||-0.1||0.1||-0.1||0.0|
|Water supply, sewerage etc.||0.0||-0.1||0.0||0.0||0.0|
|Distribution, hotels & restaurants||-0.4||-0.8||0.1||0.1||0.1|
|Transport, storage & communication||0.0||-0.8||0.3||0.2||0.0|
|Business services & finance||0.3||-1.5||0.1||0.8||0.5|
|Government & other services||0.2||0.1||0.1||0.1||0.4|
The methods for producing the preliminary GDP estimate use monthly data for the first two months in the quarter and forecasts for estimating the third month. The forecasts are reinforced by early responses to the ONS Monthly Business Survey (MBS) but the monthly response rate is generally lower at this stage (which typically has a response rate of between 30-50% at this point in time).
Each of the first two months includes monthly data from the MBS of 44,000 businesses, covering the production, manufacturing, services, retail, and construction industries.
The forecasts for June used the standard ONS method of fitting an autoregressive integrated moving average (ARIMA) model with adjustments made for Easter, Trading Days and outliers. The forecasts are calculated for each individual industry level series (for example, food & beverage services).
This section provides details of the assumptions made for June 2013 for each of the main components of the output approach to measuring GDP: services, production and construction.
It was estimated that there was a 0.1% fall in the output of the services industries between May and June 2013.
At the more detailed level, it was estimated that transport, storage & communication fell by 1.1% and government & other services by 0.1% between May and June. This was largely offset by business services & finance and distribution, hotels & restaurants rising by 0.2% and 0.1% respectively.
The services data for April and May 2013 used in the calculation of the quarter two 2013 gross domestic product preliminary estimate are consistent with the data contained in the May 2013 Index of Services release published on 25 July 2013.
Following a period of large month on month growths and declines, production growth has been fairly flat since March 2013.
It was estimated that there was an increase of 0.9% in output of the production industries between May and June.
At the more detailed level, it was estimated that there were increases of 1.2% in manufacturing, 2.4% in mining & quarrying and 2.5% in water & waste management. These increases were only partially offset by a fall of 4.1% in energy supply.
Small revisions (following revised seasonal factors allowing for the addition of June data) to the April and May 2013 estimates, published in the last Index of Production (IoP) release on 9 July 2013, have been used in the calculation of the quarter two 2013 gross domestic product preliminary estimate. To retain coherence between the published monthly and quarterly indices for quarter two 2013, small adjustments have been made to the monthly growth rates for June 2013 for total production, mining & quarrying, energy supply, and water & waste management. This ensures that if the monthly growth rates for June are applied to the published May 2013 indices for total production and the main components (and then an average taken of the April, May and June 2013 indices) the results are consistent with the published quarterly indices.
Monthly data for the construction industries are only available from January 2010 and only on a constant price seasonally adjusted basis. The quarterly figure used in the output approach to measuring GDP is a chained volume measure (CVM). Despite the difference, the constant price seasonally adjusted monthly series should give users a guide on how quarterly growth has developed over the months concerned and the forecast made for June 2013.
The forecast for construction is calculated slightly differently to production and services due to the shorter time span of monthly turnover data. More weight is placed on early responses to the MBS for June. Responses from businesses were the starting point to inform the forecasts; this was then adjusted (using information collected in previous months) in recognition that these early responses from businesses tend to be lower than later responses. This approach led to an estimated 2.3% fall between May and June 2013 (in terms of constant price seasonally adjusted). This estimate was a smaller decrease than that between the same two months in 2012 but lower than those in 2010 and 2011. It is worth noting that the growth in 2012 may have been affected by the addition of an extra bank holiday in June and the moving of the spring bank holiday (see background note).
The construction data for April and May 2013 used in the calculation of the quarter two 2013 gross domestic product preliminary estimate are consistent with the data contained in the May 2013 Output in the Construction Industry release published on 12 July 2013.
Blue Book 2013
This release of data is consistent with the data used for Blue Book 2013, due for release on 31 July 2013.
The last year of chain linked weights has been updated from 2009 to 2010. A reference table giving the full breakdown of weights changes for the output measure of GDP between Blue Book 2012 and Blue Book 2013 can be found in the data section of this release.
Continuous Improvement of GDP: sources, methods and communication
An article providing an overview of current and planned continuous improvement work in relation to producing estimates of quarterly and annual GDP can be found in the Guidance and Methodology area
Special Events in 2012
There were a number of special events in 2012. This commentary is intended to help users to interpret the statistics in the light of these events. As explained in ONS’s Special Events policy, it is not possible to separate the effects of special events from other changes in the series.
The Diamond Jubilee celebrations saw changes to the normal pattern of bank holidays in May and June, and an additional day's holiday in June; all of these changes affected estimates for Quarter 2 of 2012, and an article gave more information on how the estimates were compiled over this period. The Olympics took place from 27 July to 12 August 2012 (with a few events starting on 25 July), and the Paralympics from 29 August to 9 September. The effect of the Olympics and Paralympics were reflected in the estimates for the months of Quarter 3 of 2012. More details of how certain series were expected to be affected were given in an Information Note. A detailed article describing possible effects on GDP and comparing with earlier Olympic Games was published by ONS on 25 October. Wider effects, for example the presence of the Olympics influencing the number of non-Olympics tourist visits, may of course have affected any of the summer months.
The result of these special events in 2012 has been to introduce additional uncertainty in the interpretation of movements between Q2 and Q3 and between Q3 and Q4. Users should therefore consider all the information available when interpreting the statistics.
Understanding the data
Short guide to GDP
Gross domestic product (GDP) is an integral part of the UK national accounts and provides a measure of the total economic activity in the UK. GDP is often referred to as one of the main 'summary indicators' of economic activity and references to 'growth in the economy' invariably refer to the growth in GDP during the latest quarter.
In the UK three different but equivalent approaches are used in the estimation of GDP:
GDP from the output or production approach - GDP(O) measures the sum of the value added created through the production of goods and services within the economy (our production or output as an economy). This approach provides the first estimate of GDP and can be used to show how much different industries (for example, agriculture) contribute within the economy.
GDP from the income approach - GDP(I) measures the total income generated by the production of goods and services within the economy. The figures breakdown this income into, for example, income earned by companies (corporations), employees and the self employed.
GDP from the expenditure approach - GDP(E) measures the total expenditures on all finished goods and services produced within the economy.
Interpreting the data
Figures for the most recent quarter are provisional and subject to revision in light of (a) late responses to surveys and administrative sources, (b) forecasts being replaced by actual data and (c) revisions to seasonal adjustment factors which are re-estimated every quarter and reviewed annually.
Definitions and explanations
Definitions found within the main statistical bulletin:
An index number is a number which indicates the change in magnitude relative to the magnitude at a specified point, the latter usually taken as 100. For example, the level of GDP for Q2 2013 is given in Table 1 as 102.2. This means that GDP is 2.2% higher than the reference point, which in the case of GDP is 2010.
The index numbers in this statistical bulletin are all seasonally adjusted. This aids interpretation by removing annually recurring fluctuations, for example, due to holidays or other regular seasonal patterns. Unadjusted data are also available.
Seasonal adjustment removes regular variation from a time series. Regular variation includes effects due to month lengths, different activity near particular events such as shopping activity before Christmas, and regular holidays such as the May bank holiday.
Some features of the calendar are not regular each year, but are predictable if we have enough data - for example the number of certain days of the week in a month may have an effect, or the impact of the timing of Easter. As Easter changes between March and April we can estimate its effect on time series and allocate it between March and April depending on where Easter falls. Estimates of the effect of the day of the week and Easter are used respectively to make trading day and Easter adjustments prior to seasonal adjustment.
It is standard practice to present many economic statistics in terms of ‘constant prices’. This means that changes or growth are not affected by changes in price. The process of removing price changes is known as deflation and the resulting series is often described as volume (as opposed to value). The index numbers in this bulletin are volumes.
The indices in this bulletin are ‘chained volume’. This means that successive volume estimates are linked (or chained) together. The process of annual chain-linking was introduced in 2003. More information on chain-linking can be found in the Tuke and Reed (2001) (92.8 Kb Pdf) article.
Sample sizes and data content
This is the first estimate of GDP, based on preliminary information for the quarter. Although based on a significant number of returns from businesses, there is still a lot of information to come in, particularly for March.
The amount of data available at this stage is about 45% of the total data that will be available in one years’ time. The estimates in this release are, however, based on a large amount of information returned by businesses across the whole of the economy. Information on activity (more specifically, turnover or sales) is available from about 44,000 businesses for each of the first two months of the quarter and from about 20,000 businesses for the third month. In addition, the ONS collects price information on nearly 200,000 individual products each month from around 30,000 businesses. This information is used to remove the effect of price changes from the estimates.
Basic Quality Information
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 statements 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.
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.
Quality and methodology report
A quality and methodology report for the Gross Domestic Product Preliminary Estimate release is provided on the National Statistics website.
This report describes, in detail the intended uses of the statistics presented in this publication, their general quality and the methods used to produce them.
National Accounts revisions policy
In accordance with the National Accounts revision policy, there are no periods open for revision in this release.
This release includes information available up to 18 July 2013.
The National Accounts revision policy (43.3 Kb Pdf) is available.
Spreadsheets giving revisions triangles (real time databases) of estimates from 1992 to date are available to download. They can be found under the section Revisions triangles for gross value added at basic prices, chained volume measure.
The revisions triangles for the components of GDP have been temporarily removed following the move to the new Standard Industrial Classification (SIC2007) in October 2011. They will be reinstated shortly. The revisions triangles for total GDP are still available and the services industry analysis is separately available on a monthly basis via the Index of Services dataset.
Revisions to data provide one indication of the reliability of key indicators. Tables 9 and 10 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. The result of the test is that the average revision is not statistically different from zero.
|GVA Growth in the latest period %||Revisions between early estimates of GVA growth (quarterly, CVM)|
|Revisions to GVA 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||0.03||0.07|
|Between M2 and M3||0.3||-0.05||0.09|
Table 9 shows the revisions between the early estimates of Gross Value Added (GVA). The analysis of revisions between month 1 and month 2 uses month 2 estimates published from August 2008 (2008 Q2) to May 2013 (2013 Q1). The analysis of revisions between month 2 and month 3 uses month 3 estimates published from September 2008 (2008 Q2) to June 2013 (2013 Q1).
|GVA growth in the latest period %||Revisions between early estimates of GVA growth (quarterly, CVM)|
|Revisions to GVA growth||Average over the last five years||Average over the last five years without regard to sign (average absolute revision)|
|GVA growth (quarterly CVM)||0.3||-0.02||0.37|
Table 10 shows the revisions to GVA 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 September 2005 (2005 Q2) to June 2010 (2010 Q1).
An article titled 'Understanding the quality of early estimates of Gross Domestic Product' (122.9 Kb Pdf) , which was first published in December 2009, is available on the National Statistics website.
This article presents an analysis of revisions to the early estimates of GDP based on a long period database of real time GDP back to 1955. This database is regularly updated and is available on the ONS website.
Details of the policy governing the release of new data are available from the press office. Also available is a Pre release Access List of those given pre-publication access to the contents of this release:
A complete set of series in the statistical bulletin are available to download within the data section of this publication
Code of Practice for Official Statistics
National Statistics are produced to high professional standards set out in the Code of Practice for Official Statistics. They undergo regular quality assurance reviews to ensure that they meet customer needs. They are produced free from any political interference.
The UK Statistics Authority has designated these statistics as National Statistics, in accordance with the Statistics and Registration Service Act 2007 and signifying compliance with the Code of Practice for Official Statistics.
Designation can be broadly interpreted to mean that the statistics:
meet identified user needs;
are well explained and readily accessible;
are produced according to sound methods, and
are managed impartially and objectively in the public interest.
Once statistics have been designated as National Statistics it is a statutory requirement that the Code of Practice shall continue to be observed.
Next publication: Friday 23 August 2013 (Second Estimate of GDP)
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