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Statistical bulletin: Quarterly National Accounts, Q1 2014 This product is designated as National Statistics

Released: 27 June 2014 Download PDF

Key Findings

  • UK gross domestic product (GDP) in volume terms was estimated to have increased by 0.8% between Q4 2013 and Q1 2014, unrevised from the second estimate of GDP published 22 May 2014.
  • GDP is estimated to have increased by 1.7% in 2013, compared with 2012, unrevised from the estimate published on 22 May 2014.
  • Between Q1 2013 and Q1 2014, GDP in volume terms increased by 3.0%, revised down 0.1 percentage points from the previously published estimate.
  • The households’ saving ratio was estimated to be 4.9% in Q1 2014.
  • Real households’ disposable income fell by 0.2% between Q4 2013 and Q1 2014.
  • GDP in current prices was estimated to have increased by 1.3% between Q4 2013 and Q1 2014, revised up 0.1 percentage points from the previously published estimate.

What is GDP?

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 calendar year. 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 third estimate of GDP for Q1 2014 includes revisions to, and more detail on, the output, expenditure and income approaches to GDP. Also included are data on the institutional sector accounts, including the households’ saving ratio and real household disposable income. In line with national accounts revisions policy, the earliest period open for revision in this release is Q1 2013.

Headline Sector Accounts, GDP and Selected Components

Table 1: Q1 2014

          Gross Domestic Product
  Households' saving ratio Real households' disposable income Current market prices Chained volume measure Chained volume measure
  % %1 2010=100 2010=100 %1
Seasonally           
adjusted
Q2 2012 8.1 2.3 103.8 101.0 -0.4
Q3 2012 7.8 -0.4 104.6 101.7 0.8
Q4 2012 6.1 -1.0 106.5 101.5 -0.2
           
Q1 2013 4.2 -1.7 107.2 102.1 0.5
Q2 2013 6.0 2.1 107.6 102.7 0.7
Q3 2013 5.8 0.8 108.7 103.6 0.8
Q4 2013 4.8 -0.7 110.7 104.3 0.7
           
Q1 2014 4.9 -0.2 112.2 105.1 0.8

Table source: Office for National Statistics

Table notes:

  1. 1 Percentage change on quarter from previous quarter.

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Historical Context

 

Figure 1: Quarterly growth and levels of GDP, table A2

Figure 1: Quarterly growth and levels of GDP, table A2
Source: Office for National Statistics

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Figure 1 shows the quarterly path of GDP over the last 26 years. It shows the steady economic growth in the UK from the mid 1990s through to 2008 when, partly due to a financial market shock, the UK suffered an economic downturn. Figure 2 compares economic downturns since the 1970s, showing that the most recent downturn was the deepest in post-war history, with GDP falling by 7.2% between its peak in Q1 2008 to its trough in Q2 2009.  The recovery in GDP since Q2 2009 has also been more subdued compared to past experience. However, the UK economy has shown signs of increasing momentum throughout 2013 and in the first quarter of 2014.

Figure 2: GDP quarter-on-quarter growth from peak for previous and latest economic downturns

Figure 2: GDP quarter-on-quarter growth from peak for previous and latest economic downturns
Source: Office for National Statistics

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The latest figures for Q1 2014 show the UK recovery continuing with GDP in real terms growing by 0.8% compared with the previous quarter and by 3.0% between Q1 2013 and Q1 2014, the strongest quarter on same quarter a year ago growth since before the economic downturn. GDP is now only 0.6% below the pre-economic downturn level. From the output approach, services have surpassed their pre-downturn peak while production and construction output continues to grow. The expenditure measure shows continued growth in gross fixed capital formation and the largest component, household final consumption expenditure. The income measure shows strong growth in gross operating surplus of corporations for the third consecutive quarter.

GDP Analysed by Output Categories, Chained Volume Measures, Tables B1 and B2

Annex A (29.5 Kb Excel sheet) contains growth rates back to Q1 2013.

The output measure shows a broad-based rise in GDP for Q1 2014 with agriculture forestry & fishing, production, construction and services all expanding on the quarter.

Total production output grew by 0.7% in Q1 2014 compared with Q4 2013. Mining and quarrying including oil & gas extraction increased by 0.8% in Q1 2014. Manufacturing (the largest component of production) increased by 1.5% between Q4 2013 and Q1 2014 (see Figure 3), revised up 0.1 percentage points from the previous estimate and contributed 0.2 percentage points to the 0.8% increase in GDP in Q1 2014. This is the largest increase in manufacturing since Q2 2010 when it grew by 2.0%. Output from water supply & sewerage also increased in Q1 2014. Electricity, gas, steam & air fell by 6.4% in Q1 2014, the only industry grouping within production to have fallen in this period.

Figure 3: Manufacturing growth, quarter-on-quarter

Figure 3: Manufacturing growth, quarter-on-quarter
Source: Office for National Statistics

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When comparing Q1 2014 with Q1 2013, production output rose by 2.4%. All production industries contributed positively to this growth, with the exception of electricity, gas, steam and air conditioning, which contracted by 13.3% as demand for electricity and gas in March 2014 was lower than the same period a year ago. This is likely to be attributable to the warmer March weather in 2014. Between Q1 2013 and Q1 2014, manufacturing output rose by 3.6%, revised up 0.1 percentage points from the previous estimate.

Construction output increased by 1.5% in Q1 2014 compared with Q4 2013, revised up from the previously estimated 0.6% increase. Between Q1 2013 and Q1 2014 construction output increased by 6.7%.

The service industries grew by 0.8% in Q1 2014 (see Figure 4), revised down 0.1 percentage points from the previous estimate. This follows a 0.7% increase in Q4 2013, marking Q1 2014 as the fifth consecutive quarter of positive growth. The increase in the latest quarter was broad-based, the largest contributions coming from the wholesale & retail industries and the scientific, administration & support industries, which each grew by 1.9%. 

Figure 4: Services growth, quarter-on-quarter

Figure 4: Services growth, quarter-on-quarter
Source: Office for National Statistics

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Output of the distribution, hotels & restaurants industries rose by 1.7% in Q1 2014, unrevised from the previous estimate. The 1.7% increase in the latest quarter was largely due to increases in wholesale trade except of motor vehicles & motorcycles. In Q4 2013 distribution, hotels & restaurants industries output increased by 0.5%.

Output of the transport, storage & communication industries rose by 0.6% in Q1 2014, revised down from the previously published 0.9% increase. This follows a 0.3% increase in Q4 2013. The largest upward contribution to growth in Q1 2014 came from land transport services and transport services via pipelines, excluding rail transport.

Business services & finance industries output rose by 0.9% in Q1 2014, unrevised from the previously published estimate.  In Q4 2013 business services & finance output rose by 1.0%. The largest upward contribution to growth in Q1 2014 came from other professional, scientific & technical activities.

Output of government & other services rose by 0.2% in Q1 2014,and was revised downwards by 0.1 percentage points from the previous estimate, following a 0.7% increase in Q4 2013. The increase in Q1 2014 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 Q1 2014, and 0.7% in Q4 2013.

Figure 5 shows output components indexed to Q1 2008 (the economy’s pre-downturn peak). Services output has now surpassed its pre-downturn peak by 1.9 percentage points having increased by 2.8% between Q1 2013 and Q1 2014. However it is the only headline industry to achieve this milestone, with the production, construction and agriculture industries remaining below their respective peaks. Within production, manufacturing output was 7.6% below pre-downturn levels.

Figure 5: GDP output components growth, quarter-on-quarter

Figure 5: GDP output components growth, quarter-on-quarter
Source: Office for National Statistics

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GDP Analysed by Expenditure Categories, Chained Volume Measures, Table C2

Annex B (26.5 Kb Excel sheet) contains growth rates back to Q1 2013.

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 0.5% in Q1 2014, revised down 0.2 percentage points from the previously published estimate.

Household final consumption expenditure rose by 0.8% in Q1 2014, unrevised from the previous estimate (see Figure 6). This is the tenth consecutive quarter-on-quarter increase and follows a 0.3% increase in Q4 2013. The largest increases in household final consumption expenditure in Q1 2014 came from transport and miscellaneous goods & services. Household final consumption expenditure, when compared with the same quarter a year ago, has been rising each quarter since Q1 2012 and was 2.2% higher in Q1 2014 than in the same period a year ago.

 

Figure 6: Household final consumption expenditure growth, quarter-on-quarter

Figure 6: Household final consumption expenditure growth, quarter-on-quarter
Source: Office for National Statistics

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Government final consumption expenditure was unchanged in Q1 2014, revised down 0.1 percentage points from the previous estimate and follows a 0.1% fall in Q4 2013. Between Q1 2013 and Q1 2014, government final consumption expenditure increased by 1.8%.

Non-profit institutions serving households (NPISH) final consumption expenditure fell by 2.3% in Q1 2014, revised down 0.1 percentage points from the previous estimate and follows a 1.0% decrease in Q4 2013. Between Q1 2013 and Q1 2014 NPISH final consumption expenditure fell by 0.6%.

Gross fixed capital formation (the purchase and disposal of fixed assets used in the production process for more than a year) increased by 2.4% in Q1 2014 (see Figure 7), revised up from the previously estimated 0.6% increase. This follows a 1.3% increase in Q4 2013. Between Q1 2013 and Q1 2014, gross fixed capital formation rose by 9.7%. Within gross fixed capital formation, business investment increased by 5.0% between Q4 2013 and Q1 2014, revised up from the previously estimated 2.7% increase. This follows a 1.5% increase in Q4 2013.

More detail on gross fixed capital formation is available in the Business Investment statistical bulletin published on the same day as this release.

Figure 7: Gross fixed capital formation growth, quarter-on-quarter

Figure 7: Gross fixed capital formation growth, quarter-on-quarter
Source: Office for National Statistics

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Excluding the alignment adjustment, the level of inventories rose by £3.3 billion in Q1 2014, following an increase of £1.7 billion in Q4 2013. Including the alignment adjustment, the level of inventories increased by £1.9 billion in Q1 2014, following an increase of £3.2 billion in Q4 2013.

The trade balance deficit decreased from £5.5 billion in Q4 2013 to £4.2 billion in Q1 2014 (see Figure 8). The trade position reflects exports minus imports. Following a 0.9% rise in Q4 2013, exports fell by 0.1% in Q1 2014, while imports fell by 1.3% in Q4 2013 and by 1.2% in Q1 2014.

Exports of goods fell by 1.3% in Q1 2014, due to a fall in semi-manufactured goods (chemicals and materials). Exports of services rose by 1.6% in Q1 2014 mainly due to an increase in financial services. In Q1 2014 imports of goods fell by 1.1%, due to a decrease in fuels and oil imports in particular. Imports of services decreased by 1.5% in Q1 2014 due to falls in travel services and financial services. With exports contracting to a lesser extent than imports, the net trade balance has improved compared to the previous quarter, but worsened slightly compared to Q1 2013.

Figure 8: Trade balance, £ billion

Figure 8: Trade balance, £ billion
Source: Office for National Statistics

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Figure 9 shows the quarterly contribution of the expenditure components to GDP growth in the latest quarter. The largest contribution came from household final consumption expenditure (0.5%) while gross fixed capital formation made a smaller contribution of 0.3%. Changes in inventories made a negative contribution of 0.3%. With exports falling less than imports this quarter, net trade made a positive 0.3% contribution to GDP.

  

Figure 9: Expenditure components contribution to GDP growth, quarter-on-quarter

Figure 9: Expenditure components contribution to GDP growth, quarter-on-quarter
Source: Office for National Statistics

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GDP Implied Deflator

Annex D (25.5 Kb Excel sheet) contains growth rates back to Q1 2013.

The gross domestic product implied deflator at market prices for Q1 2014 is 1.6% above the same quarter of 2013 (see Figure 10). The GDP implied deflator is calculated by dividing current price (nominal) GDP by chained volume (real) GDP and multiplying by 100 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.

Figure 10: GDP at market prices implied deflator, quarter on same quarter of previous year

Figure 10: GDP at market prices implied deflator, quarter on same quarter of previous year
Source: Office for National Statistics

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GDP Analysed by Income Categories at Current Prices, Table D

Annex C (23 Kb Excel sheet) contains growth rates back to Q1 2013.

GDP at current market prices rose by 1.3% in Q1 2014, following a 1.8% increase in Q4 2013. GDP at current market prices rose by 4.7% when compared to Q1 2013.

Compensation of employees – which includes both wages & salaries and pension contributions - increased by 0.8% in Q1 2014, unrevised from the previous estimate. This follows an increase of 0.4% in Q4 2013 (see Figure 11). Compensation of employees rose by 4.1% between Q1 2013 and Q1 2014.
 

Figure 11: Compensation of employees growth, quarter-on-quarter

Figure 11: Compensation of employees growth, quarter-on-quarter
Source: Office for National Statistics

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The gross operating surplus of corporations – effectively the profits of companies operating within the UK – including the alignment adjustment, rose by 2.0% in Q1 2014, compared with the previous quarter; revised up 0.5 percentage points from the previously published estimate. This follows an increase of 6.0% in Q4 2013 (see Figure 12). Between Q1 2013 and Q1 2014, gross operating surplus of corporations rose by 3.5%.

On an unaligned basis, private non-financial corporations’ operating surplus fell by 0.4% in Q1 2014, following a 4.9% increase in Q4 2013. Private non-financial corporations’ operating surplus on an aligned basis rose by 1.3% in Q1 2014, following an increase of 6.9% in Q4 2013. 

Figure 12: Gross operating surplus of corporations' growth, quarter-on-quarter

Figure 12: Gross operating surplus of corporations' growth, quarter-on-quarter
Source: Office for National Statistics

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Taxes less subsidies on products and production fell by 0.6% in Q1 2014, following an increase of 1.7% in Q4 2013.

Figure 13 shows the contribution made by income components to current price GDP during Q1 2014. Other income, compensation of employees and gross operating surplus of corporations all contributed positively to GDP growth in the latest quarter. These contributed 0.5, 0.4 and 0.4 percentage points respectively.

Private non-financial corporations' (PNFC) gross operating surplus - the largest component of gross operating surplus of corporations - contributed 0.2 percentage points to current price GDP growth in Q1 2014. Gross operating surplus of financial corporations and public corporations each contributed 0.1 percentage points to current price GDP growth. 

Figure 13: Income components contribution to GDP growth, quarter-on-quarter

Figure 13: Income components contribution to GDP growth, quarter-on-quarter
Source: Office for National Statistics

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Sector Accounts, Tables I, J1, J2, J3, K1 and K2

Summary

Annually for 2013, the central government, local government, financial corporations and household sectors were net borrowers. Public corporations, private non-financial corporations and the rest of the world sectors were net lenders.

In Q1 2014, the central government and household sectors were net borrowers. The local government, public corporations, financial corporations, private non-financial corporations and rest of the world sectors were net lenders (see Figure 14).

Figure 14: Net lending (+)/net borrowing (-) by sector

Figure 14: Net lending (+)/net borrowing (-) by sector
Source: Office for National Statistics

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Compared to the previous quarter, there has been a switch to net lending in the local government and financial corporations sectors. All other sectors remain unchanged.

See table I for further detail.

The household and non-profit institutions serving households (NPISH) sector (Tables J1, J2 and J3)

Saving ratio:

Annually for 2013 the saving ratio was 5.2%, compared with 7.3% in 2012.

The saving ratio in Q1 2014 was 4.9%, compared with 4.8% in the previous quarter. This small increase was due to rises in gross operating surplus and mixed income and pension fund reserves offset by a fall in social benefits and a rise in final consumption expenditure (see Figure 15).

Figure 15: Households' saving ratio

Figure 15: Households' saving ratio
Source: Office for National Statistics

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What is the saving ratio?

The saving ratio estimates the amount of money households have available to save (known as gross saving) as a percentage of their total disposable income (known as total available households’ resources). Both can be found in table J3 of the Quarterly National Accounts (QNA) release.

Gross saving estimates the difference between households’ total available resources (mainly wages received, revenue of the self-employed, social benefits and net income such as interest on savings and dividends from shares but excluding taxes on income and wealth) and their current consumption (expenditure on goods and services).

All of the components that make up gross saving and total available resources, and in fact all sector accounts data apart from real household disposable income (RHDI), are estimated in current prices (CP). These are sometimes known as nominal prices, meaning that they include the effects of price changes.

The saving ratio is published in both non-seasonally adjusted (NSA) and seasonally adjusted (SA) formats with the latter removing seasonal effects to allow comparisons over time. However, the saving ratio can be volatile and is sensitive to even relatively small movements to its components, particularly on a quarterly basis. This is because saving is a small difference between two numbers. It is therefore often revised at successive publications when new or updated data are included.

Real household disposable income:

For the year 2013, real household disposable income decreased by 0.3% following a rise of 2.5% in 2012. This reflects an increase of 2.2% in the household and NPISH final consumption deflator, partially offset by a 2.0% rise in nominal gross disposable income. This increase in nominal gross disposable income was due to a rise in wages and salaries and social benefits, partially offset by increased taxes on income and wealth.

The level of real household disposable income decreased by 0.2% in Q1 2014, following a fall of 0.7% in the previous quarter (see Figure 16). The decrease in the latest quarter was driven by a 0.4% rise in the household and NPISH final consumption deflator, partially offset by a 0.1% rise in nominal gross disposable income.

Figure 16: Real households' disposable income, quarter-on-quarter growth

Figure 16: Real households' disposable income, quarter-on-quarter growth
Source: Office for National Statistics

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What is real household disposable income?

There are two measures of household income, in real terms or in current prices (or nominal as it is often called), and both of these time series can be found in table J2 of this release.

Gross household disposable income (GDI) is the estimate of the total amount of money from income that households have available from wages received, revenue of the self-employed, social benefits and net income (such as interest on savings and dividends from shares) less taxes on income and wealth. All the components that make up GDI are estimated in current prices. 

However, by adjusting gross disposable income to remove the effects of inflation, we are able to estimate another useful measure of disposable income called real. This is a measure of real purchasing power of household incomes, in terms of the physical quantity of goods and services they would be able to purchase. We use the household expenditure deflator (which can be found in table J2 of this release) to remove the effects of price inflation.

Private non-financial corporations sector, tables K1 and K2

For the year 2013, net lending was £24.0 billion following net lending of £29.7 billion in 2012. This decrease was due to a fall in net property income, partially offset by a rise in gross operating surplus.

Net lending of private non-financial corporations was £5.2 billion in Q1 2014, following net lending of £8.4 billion in the previous quarter. This decrease in net lending in the latest quarter was due to a fall in net property income of £5.3 billion.

International Comparisons for Q1 2014

In Q1 2014, GDP for the Eurozone and the European Union (EU 28) grew by 0.2% and 0.3% respectively quarter-on-quarter (see Table 2 and Figure 17). This is the fourth consecutive quarter both economies have grown. When compared to Q1 2013, GDP for the Eurozone expanded by 0.9%, while GDP for the European Union grew by 1.4% (see Figure 18). Following 0.7% quarterly growth in Q4 2013, GDP for the United States of America contracted by 0.2% in Q1 2014, the first time the economy has contracted since 2011. GDP for the United States of America grew by 2.0% between Q1 2013 and Q1 2014. The Japanese economy grew by 1.6% in Q1 2014, making five consecutive quarters of positive growth, and increased by 2.8% between Q1 2013 and Q1 2014.

Table 2: International GDP quarterly growth rate comparisons for selected economic areas

chained volume measure, seasonally adjusted

  EU28   Eurozone    France   Germany   Japan   United Kingdom   United States of America
             
             
Q1 2012   0.0   -0.1   0.2   0.7   1.0   0.0   0.9
Q2 2012   -0.2   -0.3   -0.3   -0.1   -0.6   -0.4   0.3
Q3 2012   0.0   -0.2   0.3   0.2   -0.8   0.8   0.7
Q4 2012   -0.4   -0.5   -0.3   -0.5   0.0   -0.2   0.0
                             
Q1 2013   0.0   -0.2   0.0   0.0   1.3   0.4   0.3
Q2 2013    0.4   0.3   0.6   0.7   0.7   0.8   0.6
Q3 2013   0.3   0.1   -0.1   0.3   0.3   0.8   1.0
Q4 2013   0.4   0.3   0.2   0.4   0.1   0.7   0.7
                             
Q1 2014   0.3   0.2   0.0   0.8   1.6   0.8   -0.2

Table source: Office for National Statistics

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Figure 17: International GDP growth rates, quarter-on-quarter

Figure 17: International GDP growth rates, quarter-on-quarter
Source: Office for National Statistics

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Figure 18: International GDP growth rates, quarter on same quarter a year ago

Figure 18: International GDP growth rates, quarter on same quarter a year ago
Source: Office for National Statistics

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Figure 19 shows GDP for the UK, EU, the United States of America and Japan, all indexed to Q1 2008 (the pre-downturn peak in the UK).

Figure 19: International GDP growth rates, quarter-on-quarter, indexed to Q1 2008=100

Figure 19: International GDP growth rates, quarter-on-quarter, indexed to Q1 2008=100
Source: Office for National Statistics

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More detailed information on these 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 Analysis website, while information on the estimates for Japan can be found on the Japanese Cabinet Office website.

GDP Quarterly Revisions

GDP and components, previously published on 22nd May 2014.

The earliest period open for revision in this release is Q1 2013 (see Figure 20).

Figure 20: Gross domestic product, quarter-on-quarter growth

Figure 20: Gross domestic product, quarter-on-quarter growth
Source: Office for National Statistics

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Detailed revisions for the three GDP approaches are shown in the Annexes listed.

Output components:

Output revisions are shown in Annex E (36.5 Kb Excel sheet) of this release.

Expenditure components:

Expenditure revisions are shown in Annex F (27.5 Kb Excel sheet) of this release.

Income components:

Income revisions are shown in Annex G (23.5 Kb Excel sheet) of this release.

Sector Accounts Revisions, Previously Published 28 March 2014

Sector accounts revisions are shown in Annex H (30.5 Kb Excel sheet) of this release. 

Background notes

  1. Forthcoming changes

    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 Q2 until the Blue Book 2014 consistent Quarterly National Accounts release on 30 September 2014. This will incorporate major changes to the National Accounts - more details are given in the article 'Latest Developments to National Accounts' published on the ONS website.

    Blue Book 2014 will itself be published on 31 October 2014.

  2. Release policy

    This release includes data available up to 12 June 2014. Data are consistent with the current price trade in goods data within the UK Trade statistical bulletin published on 6 June 2014 and the Index of Production statistical bulletin published on 10 June 2014.

  3. Release content and context

    This release includes the third 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 (QNA) 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 (27.8 Kb Pdf) 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

  4. Special Events

    ONS maintains a list of candidate special events in the Special Events Calendar. There were several special events in 2012. There was some evidence to suggest that construction output was affected by the storms and high rainfall in January and February 2014. However, over the quarter, the storms have not had a significant impact on GDP growth in Q1 2014 and ONS has not classified them as a statistical special event. In addition, ONS is keeping the effects of the weather in January and February 2014 under review in line with the ONS Special Events policy. More information can be found in the report on Adverse weather conditions in December 2013 and January and February 2014 (49.9 Kb Pdf) published 27 March 2014. 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.

  5. 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.

    As part of the programme of continuous improvement to National Accounts, ONS published on its website on 29 May 2014 an article updating users on work undertaken so far on the Continuous Improvements of Gross Domestic Product: Sources, Methods and Communication

  6. National Accounts classification 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 Deficit and Debt (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.

  7. Economic context

    ONS publishes a monthly Economic Review discussing the economic background and giving economic commentary on the latest GDP estimate and other ONS economic releases. The next article will be published on 2 July 2014.

  8. Basic Quality Information for GDP Statistical Bulletin

    A Quality and Methodology Information report  (518.9 Kb Pdf)  for this Statistical Bulletin can be found on the ONS website.

  9. 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.

  10. Reliability

    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 3 and 4 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.

  11. Revisions to GDP estimates

    Table 3 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 August 2009 (Q2 2009) to May 2014 (Q1 2014). The analysis of revisions between month 2 and month 3 (third estimate of GDP) uses month 3 estimates published from June 2009 (Q1 2009) to March 2014 (Q4 2013).

    Table 3: Revisions to early estimates of GDP growth

    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 -0.02 0.08

    Table source: Office for National Statistics

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    Table 4 shows the revisions to GDP growth and the household saving ratio 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 June 2006 (Q1 2006) to March 2011 (Q4 2010) for GDP.

    Table 4: Revisions to month 3 estimates of GDP growth

    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 0.43
           
    Household saving ratio  4.9 -0.95 1.21

    Table source: Office for National Statistics

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    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. The calculations behind the averages in both tables are available on the ONS website.

    An article titled 'Revisions to GDP and Components' (513.5 Kb Pdf) , published on 28 January 2014, is available on the ONS website.

    ONS has recently published real time databases on the ONS website for the income and expenditure components of GDP, which will be regularly updated as part of an ongoing development programme to improve the coverage of the revisions triangles.

  12. Balancing GDP

    Information on the methods ONS uses for balancing the output, income and expenditure approaches to measuring GDP can be found on the ONS website. 

    The different data content of the three approaches dictates the approach taken in balancing quarterly data. In the UK, there are far more data available on output than in the other two approaches. However in order to obtain the best estimate of GDP (the published figure), the estimates from all three approaches are reconciled to produce an average.

    Annually, the estimates from all three approaches are reconciled through the creation of Input-Output Supply Use tables for the years for which data are available.

    For years in which there is no Supply Use balance, a Statistical Discrepancy exists which reflects the differences between the published headline estimate of GDP and the expenditure and income estimates.

    For all periods, the expenditure and income estimates are aligned to the published 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 Q1 2014 indicate that, in this quarter the level of expenditure was higher than that of output, while the level of income was 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, slightly larger alignment adjustments are sometimes needed.

  13. Further information

    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 the names of those given pre-publication access to the contents of this bulletin.

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  15. 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

    These National Statistics are produced to high professional standards and released according to the arrangements approved by the UK Statistics Authority.

Statistical contacts

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Media Relations Office +44 (0)845 6041858 Office for National Statistics media.relations@ons.gsi.gov.uk
Emergency on-call: Media Relations Office +44 (0)7867 906553 Office for National Statistics media.relations@ons.gsi.gov.uk
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