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Statistical bulletin: Gross Domestic Product Preliminary Estimate, Q4 2011 This product is designated as National Statistics

Released: 25 January 2012 Download PDF

Key points

  • Updated 25 January 2012 - Correction Note: A production error was discovered in the GDP preliminary estimate Q4 2011, originally published at 9.30am on 25 January 2012. The series affected are the 2011 annual pounds million level (ABMI), and the annual index level (YBEZ). All associated growth rates were correct at the time of publishing, and the error has now been corrected.
  • The chained volume measure of GDP decreased by 0.2 per cent in the fourth quarter of 2011.
  • Output of the production industries decreased by 1.2 per cent in Q4 2011, compared with an increase of 0.2 per cent in the previous quarter.
  • Construction sector output decreased by 0.5 per cent in Q4 2011, compared with an increase of 0.3 per cent in the previous quarter.
  • Output of the service industries was unchanged in Q4 2011, following a rise of 0.7 per cent in the previous quarter.
  • GDP in volume terms increased by 0.8 per cent in Q4 2011 compared with Q4 2010.

Key figures

GDP at market prices

Percentage change: latest quarter on previous quarter

  Chained Volume Measure 2008=100 GDP   Total Production   Construction   Total Services  
2010 Q1  96.6 0.4 1.3 0.9 0.0
Q2  97.7 1.1 1.2 8.1 0.5
Q3  98.3 0.7 0.2 3.1 0.6
Q4  97.9 -0.5 0.2 -1.4 -0.3
2011 Q1  98.3 0.4 -0.3 -1.6 0.8
Q2  98.3 0.0 -1.4 3.1 0.1
Q3  98.8 0.6 0.2 0.3 0.7
Q4  98.6 -0.2 -1.2 -0.5 0.0

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Supplementary analysis

Gross Domestic Product (GDP) decreased by 0.2 per cent in the fourth quarter of 2011, driven by weakness in the Production sector and the Construction sector. 

The public sector strike on 30 November

The public sector strike on 30 November 2011 is likely to have had some impact on GDP in the fourth quarter. It is not possible to measure the effect on GDP directly.

Information from the ONS's Labour Disputes Inquiry, which was published as part of the Labour Market release on 18 January, suggests that nearly one million working days were lost, representing about 0.2 per cent of the total number of working days for the public sector for the quarter. There are two categories to consider when thinking about the possible impact on output:

  1. The lost output or production of those sectors directly affected by the strike (for example, health, education, public administration).

  2. The lost output or production of those businesses indirectly affected by the strike (for example, employees having to take a day off to provide child care).

The effect of the first category on the official estimates does depend to some extent on how GDP(O) is measured:

  • health sector output is in part measured by the number of operations and there are reports of delays as a result of the strike, thus reducing the number of operations (and therefore output) in the month. The impact is likely to have been small, even if we assume that there was no catch-up. A loss of one day’s activity accounts for about 1.5 per cent of activity in the quarter and the extent of the disruption - looking at the number of operations which were postponed - was relatively small when considering the total number of operations in one day. In turn, this is quite a small part (about 16 per cent) of the health sector. 

  • education output is measured by the number of pupils, adjusted for attendance. In practice strike days are often made up or partly made up (for example, by adjusting teacher training days) so that the overall needs of the curriculum are still met. There is no specific adjustment made for strike days in the official estimates so there is no impact on education output.

  • public administration is measured by the number of staff (on a full-time equivalent basis). The strike has no measured impact on the data.

The overall impact of the first category on GDP is therefore likely to be small. The impact of the second category is difficult to assess but is likely to have resulted only in moving activity within the quarter.

An article on Analysing the path of GDP in the presence of special events (26.5 Kb Pdf) can be found on the ONS website.

GDP in detail

Gross Domestic Product measures the chained volume index movements of the UK. The service sector accounts for more than three quarters of total gross domestic product. Figures are adjusted for seasonal variations unless otherwise stated and the reference year is 2008=100. For an explanation of the terms used in this bulletin, please see the Background Notes section. An assessment of the quality of the services statistics is available in the background notes.

Index of production

The seasonally adjusted index of production in Q4 2011 decreased by 1.2 per cent compared with an increase of 0.2 per cent in the previous quarter:

  1. Output decreased in three of the four sub-sectors.

  2. Manufacturing contributed the most to the decline, followed by electricity, gas, steam and air conditioning supply.

Production output decreased by 2.6 per cent between Q4 2010 and Q4 2011.

Construction

Construction output in Q4 2011 decreased by 0.5 per cent compared with an increase of 0.3 per cent in the previous quarter. Construction increased by 1.3 per cent between Q4 2010 and Q4 2011.

Distribution, hotels and restaurants

The seasonally adjusted index for distribution, hotels and restaurants in Q4 2011 decreased by 0.5 per cent compared with a 0.2 per cent increase in the previous quarter:

  1. Output decreased in four of the five components.

  2. Wholesale and motor trades made the largest contributions to the decrease.

Distribution, hotels and restaurants increased by 0.7 per cent between Q4 2010 and Q4 2011.

Transport, storage and communication

The seasonally adjusted index for transport, storage and communication in Q4 2011 decreased by 0.1 per cent compared with a 0.3 per cent increase in the previous quarter: 

  1. Output decreased in six of the twelve components.

  2. Computer programming, consultancy and related activities and land transport made the largest contributions to the decrease.

Transport storage and communication decreased by 0.1 per cent between Q4 2010 and Q4 2011.

Business services and finance

The seasonally adjusted index for business, services and finance was unchanged in Q4 2011 following an increase of 1.2 per cent in the previous quarter:

  1. Output increased in eight of the twenty-one components.

  2. Buying and selling of real estate made the largest positive contribution and legal & accounting activities made the largest negative contribution.

Business services and finance increased by 2.1 per cent between Q4 2010 and Q4 2011.

Government and other services

The seasonally adjusted index of government and other services increased by 0.4 per cent in Q4 2011 compared with an increase of 0.6 per cent in the previous quarter:

  1. Output increased in nine of the thirteen components

  2. Health, education and creative arts and entertainment made the largest positive contributions to the increase

Government and other services increased by 2.5 per cent between Q4 2010 and Q4 2011.

Background notes

  1. Additional supporting economic analysis relating to the Preliminary Estimate of GDP can be found in the Economic Review - January 2012.

  2. An article on  Analysing the path of GDP in the presence of special events (26.5 Kb Pdf) can be found on the ONS website.

  3. As a result of a review of the content and presentation of GDP statistical bulletins and following consultation with key users, ONS will be making some presentational changes to future releases. From the second estimate of GDP for Q4 2011 published on 24 February. Table E (the detailed breakdown of changes to inventories) will no longer be included, but an additional table, equivalent to table M in the quarterly national accounts bulletin (quarterly alignment adjustments), will be included. Additionally, in all subsequent second estimate and quarterly national accounts bulletins, the aggregate income and expenditure tables will include the alignment adjustments as 'of which' items within the relevant components - changes in inventories and gross operating surplus.

  4. 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 provided 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

  5. Figures for the most recent quarter are provisional and subject to revision in light of:

    • late responses to surveys and administrative sources

    • forecasts being replaced by actual data

    • revisions to seasonal adjustment factors which are re-estimated every quarter and reviewed annually (changes from the latest review are included in this release)

  6. Definitions found within the main statistical bulletin are listed here:

    Chained volume measure is an index number from a chain index of quantity. The index number for the reference period of the index may be set equal to 100 or to the estimated monetary value of the item in the reference period.

    Index numbers are a measure of the average level of prices, quantities or other measured characteristics relative to their level for a defined base reference period or location. It is usually expressed as a percentage above or below, but relative to, the base index of 100.

  7. A link to the GDP methodology and a guide to UK National Accounts can be found in the Guide to National Accounts on the ONS website.

    In the coming months ONS will be reviewing and updating existing guidance and methodology documents to reflect the move to SIC 2007.

  8. 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 effects of day of the week and Easter are used respectively to make trading day and Easter adjustments prior to seasonal adjustment.

  9. It is common for the value of a group of financial transactions to be measured in several time periods. The values measured will include both the change in the volume sold and the effect of the change of prices over that year. Deflation is the process whereby the effect of price change is removed from a set of values to derive the volume. These volumes are described as ‘at constant prices’.

    Within GDP, all series, unless otherwise quoted, are measured at constant market prices. Deflators adjust the value series to take out the effect of price changes to give the volume series.

  10. 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.

  11. A Summary Quality Report for Gross Domestic Product (518.9 Kb Pdf)  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.

  12. 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 17 January 2012.

    The National Accounts: Revisions Statement (41.7 Kb Pdf)  is available on the ONS website.

  13. Spreadsheets giving revisions triangles (real time databases) of estimates from 1992 to date are available to download from the data section of this release. Revisions triangles for the main components of gross value added by industry are also available.

    Revisions to data provide one indication of the reliability of key indicators. Tables 1 and 2 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.

    The data used are consistent with that used in more detailed analysis that have been published in the article Revisions to quarterly GDP growth and its production (output), expenditure and income components (130.4 Kb Pdf)  in Economic Trends published on the ONS website in December 2006.

    Table 1 below 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 February 2007 (Q4 2006) to November 2011 (Q3 2011). The analysis of revisions between month 2 and month 3 uses month 3 estimates published from March 2007 (Q4 2006) to December 2011(Q3 2011).

    Table 1: Revisions to early estimates of GVA growth

    Revisions to GVA growth GVA Growth in the latest period (per cent) Revisions between early estimates of GVA growth (quarterly, chained volume measure)
    Average over the last five years  Average over the last five years without regard to sign (average absolute revision)
    Between M1 and M2 -0.2 0.01 0.05
    Between M2 and M3 -0.2 -0.04 0.08

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    Table 2 below 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 March 2004 (Q3 2004) to December 2008 (Q3 2008).

    Table 2: Revisions to month 3 estimates of GVA growth

    Revisions to GVA growth GVA Growth in the latest period (per cent) Revisions between early estimates of GVA growth (quarterly, chained volume measure)
    Average over the last five years  Average over the last five years without regard to sign (average absolute revision)
    GVA growth (quarterly CVM) -0.2 -0.10 0.27

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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. 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.

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  15. Details of the policy governing the release of new data are available from the Media Relations Office. Also available is a list of those given pre-publication access (30.9 Kb Pdf) 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.

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

  16. 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.

    © Crown copyright 2012

  17. Next publication date is Friday 24 February 2012 (Second Estimate of GDP)

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Statistical contacts

Name Phone Department Email
Harry Duff +44 (0)1633 456771 Business Indicators and Balance of Payments harry.duff@ons.gsi.gov.uk
Get all the tables for this publication in the data section of this publication .
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