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Statistical bulletin: Gross Domestic Product Preliminary Estimate, Q3 2012 This product is designated as National Statistics

Released: 25 October 2012 Download PDF

Correction

22 November 2012

A minor mistake was found in reference table B1 of the Gross Domestic Product Preliminary Estimate, Q3 2012. The index number for CDID KLH7, Gross Value added exc oil & gas for Q3 2012 should read 104.1, not 104.0. This has now been corrected. This did not impact on any other indices or growth rates.

Key points

  • GDP was estimated to have increased by 1.0 per cent in Q3 2012 compared with Q2 2012.
  • Output of the production industries was estimated to have increased by 1.1 per cent in Q3 2012 compared with Q2 2012, following a decrease of 0.7 per cent between Q1 2012 and Q2 2012.
  • Construction sector output was estimated to have decreased by 2.5 per cent in Q3 2012 compared with Q2 2012, following a decrease of 3.0 per cent between Q1 2012 and Q2 2012.
  • Output of the service industries was estimated to have increased by 1.3 per cent in Q3 2012 compared with Q2 2012, following a decrease of 0.1 per cent between Q1 2012 and Q2 2012.
  • GDP in volume terms was estimated to have been flat in Q3 2012, when compared with Q3 2011.

Key figures

Gross Domestic Product (GDP) is one of the main indicators of economic growth in the economy. 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 and have had the effect of price changes removed (ie 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.

Figure 1: GDP and main components

GDP and main components quarter 3 2012

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Table 1: Key Figures

Seasonally adjusted
GDP Index (2009=100) Percentage change on previous quarter
GDP Production Construction Services
2010 Q3 102.4 0.6 0.4 2.9 0.4
Q4 102.0 -0.4 0.1 -1.8 -0.4
2011 Q1 102.5 0.5 -0.1 0.0 0.6
Q2 102.5 0.1 -1.1 1.6 0.3
Q3 103.1 0.5 -0.2 -0.5 0.8
Q4 102.7 -0.4 -1.4 0.2 -0.1
2012 Q1 102.4 -0.3 -0.2 -5.9 0.2
Q2 102.0 -0.4 -0.7 -3.0 -0.1
Q3 103.0 1.0 1.1 -2.5 1.3

Table source: Office for National Statistics

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Supplementary analysis

The preliminary estimate of GDP focuses on the growth in output between two consecutive quarters (in this release Q2 and Q3 2012). GDP was estimated to have increased by 1.0 per cent in the third quarter of 2012. The largest contribution to the increase came from the services sector. There was also an increase in activity in the production sector. Activity in the construction sector fell.

The latest GDP estimate was affected by the changes made to the quarter two Bank Holidays in May and June 2012 as part of the celebrations for the Queens Diamond Jubilee. The end of May bank holiday moved to June and there was an additional day's holiday in June. Over the second quarter, this resulted in one fewer working days. The change to the bank holidays was not a regular event so no adjustment was made to account for it as part of the seasonal adjustment process. This means that any impact of the changes fed directly through to the GDP estimate.

In comparison to quarter two, the latest quarter had one more working day and this will impact on the growth between the second and third quarters. It is not possible to quantify the impact of this effect; retrospective analysis will be carried out, in line with the ONS special events policy, when data for later periods are available.

In addition to the impact of the bank holiday changes, the latest GDP estimate was affected by the Olympics and Paralympics events in the third quarter. 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 events were likely to have impacted on the economy in a number of ways (note that ‘Olympic’ or ‘Olympics’ below refers to both the Olympics and Paralympic events):

  • Sports activities, amusement and recreation: tickets for the Olympics were sold in tranches through 2011 and 2012 but, in accordance with national accounts principles, these have been allocated to the third quarter, when the output actually occurred. The impact of the ticket sales on GDP can be clearly seen in the lower level data for sports activities, which is part of the Government and other services aggregate in Table B1. Ticket sales were estimated to have increased GDP in the quarter by about 0.2 percentage points.

  • Employment activities: employment agencies showed some strength in the quarter and it is possible that some of this strength was related to the Olympics. However, there was no direct evidence from survey respondents to support this.

  • Creative arts and entertainment activities: the arts and entertainment sector has been showing some strength for some time, with quite strong growth in the most recent quarter. There was some evidence from survey returns that output was higher in July and August because of the Olympics. 

  • Office administration: office administration was quite strong in the quarter but the evidence on any Olympic effect was mixed, with some respondents suggesting that it may have had an adverse effect, as opposed to explaining the strength.

  • Accommodation: hotels showed greater activity in the quarter and this was one area where one might expect to see an Olympic effect, albeit mainly in London. There was some evidence from survey returns that output was higher in July and August because of the Olympics.

  • Food and beverage services: there was some strength in the food and drink sector and some evidence from survey returns that part of this might have been due to the Olympics.

  • Land transport: there was some strength in parts of the transport sector and some evidence from survey returns that this might have been due to the Olympics.

  • Retail: retail showed some strength in the quarter but there was very little evidence of any significant Olympic effect. Indeed there was some feedback from online retailers that sales were lower as consumers watched the Olympics instead of shopping online.

  • Motion picture, video and TV programme production: the data here were quite weak for the quarter and there was some evidence from survey respondents to support this weakness - 'people watching the Olympics instead'.

It is not possible to quantify the overall impact of the Olympics and indeed some of the activity may have displaced other activity (for example, the comments on watching the Olympics in preference to films or DVDs) but the text above provides some idea of where the main impacts were likely to have been. A separate article published today provides more information on the Olympics and the impact on the data.

Sector Analysis

Index of production

The index of production was estimated to have increased by 1.1 per cent in Q3 2012, following a decrease of 0.7 per cent in the previous quarter:

  • Output increased in three of the four sub-sectors.

  • Manufacturing contributed the most to the increase, followed by water and sewerage. 

Production output decreased by 1.2 per cent between Q3 2011 and Q3 2012.

Construction

The index of construction output was estimated to have decreased by 2.5 per cent in Q3 2012, following a decrease of 3.0 per cent in the previous quarter.

Construction output decreased by 10.8 per cent between Q3 2011 and Q3 2012.

Distribution, hotels & restaurants

The index for distribution, hotels & restaurants was estimated to have increased by 1.6 per cent in Q3 2012, following a flat picture in the previous quarter:

  • Output increased in all five components.

  • Motor trades and retail made the largest contributions to the increase.

Distribution, hotels & restaurants increased by 1.1 per cent between Q3 2011 and Q3 2012.

Transport, storage & communication

The index for transport, storage & communication was estimated to have increased by 0.8 per cent in Q3 2012, following a decrease of 1.3 per cent in the previous quarter:

  • Output increased in seven of the twelve components.

  • Water transport, transport support and land transport excluding rail made the largest contributions to the increase.

Transport, storage & communication fell by 0.4 per cent between Q3 2011 and Q3 2012.

Business services & finance

The index for business services & finance was estimated to have increased by 1.0 per cent in Q3 2012, following a flat picture in the previous quarter:

  • Output increased in sixteen of the twenty-one components.

  • Employment activities and rental & leasing made the largest positive contributions to the increase.

Business services & finance increased by 1.0 per cent between Q3 2011 and Q3 2012.

Government & other services

The index for government & other services was estimated to have increased by 1.6 per cent in Q3 2012, following an increase of 0.3 per cent in the previous quarter:

  • Output increased in ten of the thirteen components.

  • Sports activities, arts & entertainment and health made the largest positive contributions to the increase. The strength in sports activities was mainly due to Olympic ticket sales.

Government & other services increased by 2.5 per cent between Q3 2011 and Q3 2012.

Growth and contributions to growth – output components

Table 2: Growth, quarter-on-quarter percentage, for the output components of GDP

Component 2011 Q3 2011 Q4 2012 Q1 2012 Q2 2012 Q3
Agriculture, forestry & fishing -0.7 -2.4 -2.3 -2.6 2.2
Total Production -0.2 -1.4 -0.2 -0.7 1.1
    Mining & quarrying (Extraction) -1.0 -2.7 -3.0 -3.3 2.3
    Manufacturing -0.4 -1.0 0.0 -0.8 1.0
    Electricity, gas, steam & air (Utilities) 1.9 -3.9 1.2 5.1 -2.2
    Water supply, sewerage etc. 0.2 0.4 1.1 -3.2 4.1
Construction -0.5 0.2 -5.9 -3.0 -2.5
Total Services  0.8 -0.1 0.2 -0.1 1.3
    Distribution, hotels & restaurants 0.2 -0.7 0.1 0.0 1.6
    Transport, storage & communication 0.9 -0.7 0.9 -1.3 0.8
    Business services & finance 1.3 0.0 0.0 0.0 1.0
    Government & other services 0.4 0.3 0.3 0.3 1.6

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Table 3: Contributions to growth, quarter-on-quarter, for the output components of GDP

Component 2011 Q3 2011 Q4 2012 Q1 2012 Q2 2012 Q3
Agriculture, forestry & fishing 0.0 0.0 0.0 0.0 0.0
Total Production 0.0 -0.2 0.0 -0.1 0.2
    Mining & quarrying (Extraction) 0.0 -0.1 -0.1 -0.1 0.0
    Manufacturing 0.0 -0.1 0.0 -0.1 0.1
    Electricity, gas, steam & air (Utilities) 0.0 -0.1 0.0 0.1 0.0
    Water supply, sewerage etc. 0.0 0.0 0.0 0.0 0.1
Construction 0.0 0.0 -0.4 -0.2 -0.2
Total Services  0.6 -0.1 0.2 -0.1 1.0
    Distribution, hotels & restaurants 0.0 -0.1 0.0 0.0 0.2
    Transport, storage & communication 0.1 -0.1 0.1 -0.1 0.1
    Business services & finance 0.4 0.0 0.0 0.0 0.3
    Government & other services 0.1 0.1 0.1 0.1 0.4

Table notes:

  1. Components may not sum to total due to rounding

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Table 4: Growth, year on year percentage, for the output components of GDP

Component 2007 2008 2009 2010 2011
Agriculture, forestry & fishing -2.6 6.1 -6.3 -1.5 -2.3
Total Production 0.5 -2.8 -9.1 2.1 -0.7
    Mining & quarrying (Extraction) -2.7 -6.2 -9.0 -4.3 -14.2
    Manufacturing 0.9 -2.5 -9.7 3.8 2.0
    Electricity, gas, steam & air (Utilities) 0.5 0.3 -4.7 3.2 -4.6
    Water supply, sewerage etc. 3.4 -1.6 -8.5 -0.9 4.9
Construction 2.1 -2.7 -13.5 7.9 2.6
Total Services  4.7 -0.2 -2.1 1.1 1.2
    Distribution, hotels & restaurants 5.2 -2.6 -4.1 1.4 0.6
    Transport, storage & communication 5.4 -0.5 -5.7 2.8 0.7
    Business services & finance 6.8 0.8 -3.5 0.8 1.7
    Government & other services 1.4 0.0 2.8 0.6 1.3

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Table 5: Contributions to growth, year on year, for the output components of GDP

Component 2007 2008 2009 2010 2011
Agriculture, forestry & fishing 0.0 0.0 0.0 0.0 0.0
Total Production 0.1 -0.5 -1.5 0.3 -0.1
    Mining & quarrying (Extraction) -0.1 -0.2 -0.2 -0.1 -0.3
    Manufacturing 0.1 -0.3 -1.1 0.4 0.2
    Electricity, gas, steam & air (Utilities) 0.0 0.0 -0.1 0.0 -0.1
    Water supply, sewerage etc. 0.0 0.0 -0.1 0.0 0.1
Construction 0.2 -0.2 -1.0 0.6 0.2
Total Services  3.5 -0.2 -1.6 0.9 0.9
    Distribution, hotels & restaurants 0.7 -0.4 -0.6 0.2 0.1
    Transport, storage & communication 0.6 -0.1 -0.6 0.3 0.1
    Business services & finance 1.8 0.2 -1.0 0.2 0.5
    Government & other services 0.3 0.0 0.6 0.1 0.3

Table notes:

  1. Components may not sum to total due to rounding

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Background notes

  1. What's New?

    Economic Analysis

    Additional supporting economic analysis relating to the Preliminary Estimate of GDP can be found in the Economic Review

    Special Events

    An article outlining the ONS policy on special events can be found in the Special events policy & article

    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.

  2. 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.

  3. 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.

  4. Definitions and explanations

    Definitions found within the main statistical bulletin are listed here:

    Index number

    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 Q3 2012 is given in Table 1 as 103.0. This means that GDP is 3.0 per cent higher than the reference point, which in the case of GDP is 2009.

    Seasonal adjustment

    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.

    Deflation

    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.

    Chained volume

    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.

  5. 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 the third month.

    The amount of data available at this stage is about 45 per cent 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 requested each month from about 44,000 businesses for each of the first two months of the quarter and from about 15,000 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.

  6. Quality

    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.

  7. Summary Quality Report

    A Summary Quality Report for this statistical bulletin can be found on the ONS 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.

  8. 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 October 2012.

    The National Accounts revision policy is available in the  National Accounts: Revisions statement (41.7 Kb Pdf) .

  9. Revisions Triangles

    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 recent move to the new SIC. They will be reinstated shortly. The revisions triangles for total GDP are still available and the service sector analysis is still 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 6 and 7 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.

    Table 6 shows the revisions between the early estimates of GVA. The analysis of revisions between month 1 and month 2 uses month 2 estimates published from November 2007 (Q3 2007) to August 2012 (Q2 2012). The analysis of revisions between month 2 and month 3 uses month 3 estimates published from December 2007 (Q3 2007) to September 2012 (Q2 2012).

    Table 6: Revisions to early estimates of GVA growth

    Revisions to GVA growth Revisions between early estimates of GVA growth (quarterly, chained volume measure)
    GVA Growth in the latest period (per cent) Average over the last five years  Average over the last five years without regard to sign (average absolute revision)
    Between M1 and M2 1.0 0.02 0.07
    Between M2 and M3 1.0 -0.05 0.09

    Table source: Office for National Statistics

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    Table 7 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 December 2004 (Q3 2004) to September 2009 (Q2 2009).

    Table 7: Revisions to month 3 estimates of GVA growth

    Revisions to GVA growth Revisions between early estimates of GVA growth (quarterly, chained volume measure)
    GVA growth in the latest period   (per cent) Average over the last five years  Average over the last five years without regard to sign (average absolute revision)
    GVA growth (quarterly CVM) 1.0 -0.08 0.34

    Table source: Office for National Statistics

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    An article titled 'Understanding the quality of early estimates of Gross Domestic Product', which was first published in December 2009, is available on the ONS website at: Understanding the quality of early estimates of Gross Domestic Product.

    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. 

  10. Following ONS

    You can follow ONS on Twitter or Facebook. View the latest podcasts on YouTube.

  11. Publication policy

    Details of the policy governing the release of new data are available from the press office. Also available is a list of those given pre-publication access to the contents of this release (27.2 Kb Pdf) .

    A complete set of series in the statistical bulletin are available to download within the data section of this publication.

    Alternatively, for low-cost tailored data, call Online Services on 0845 601 3034 or email tailored@statistics.gsi.gov.uk

  12. Next publication: Tuesday 27 November 2012 (Second Estimate of GDP)

    Issued by: Office for National Statistics, Government Buildings, Cardiff Road, Newport NP10 8XG

    Media contact:

    Tel:  Luke Croydon +44 (0)845 6041858
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    Email media.relations@ons.gsi.gov.uk
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  13. Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: media.relations@ons.gsi.gov.uk

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