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Statistical bulletin: Quarterly National Accounts, Q2 2013 This product is designated as National Statistics

Released: 26 September 2013 Download PDF

Key findings

  • UK gross domestic product (GDP) in volume terms was estimated to have increased by 0.7% between Q1 2013 and Q2 2013, unrevised from the Second Estimate of GDP published 23 August 2013. Between Q4 2012 and Q1 2013, GDP in volume terms increased by 0.4%, revised up from the previously estimated 0.3% increase.
  • GDP in volume terms increased by 1.3% when comparing Q2 2013 with Q2 2012, revised down by 0.2 percentage points from the estimate published 23 August 2013. When comparing Q1 2013 with Q1 2012, GDP in volume terms increased by 0.2%.
  • GDP in current prices was estimated to have increased by 0.4% between Q1 2013 and Q2 2013, unrevised from the estimate published 23 August 2013. Between Q4 2012 and Q1 2013, GDP in current prices increased by 1.1%.
  • Household final consumption expenditure increased by 0.3% between Q1 2013 and Q2 2013 - the seventh consecutive quarter on quarter increase - revised down from the 0.4% increase published 23 August 2013.
  • The households’ saving ratio was estimated to be 5.9% in Q2 2013 and 4.4% in Q1 2013.

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. 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 bulletin contains information on the third estimate of GDP for Q2 2013. It includes revisions to and more detail on the estimates 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 is Q1 2012.

Headline sector accounts, GDP and selected components

Table 1: Q2 2013

          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
2011 Q2 7.1 0.7 102.7 100.9 0.1
2011 Q3 6.4 -0.3 104.5 101.5 0.6
2011 Q4 7.1 0.5 104.3 101.4 -0.1
2012 Q1 7.1 0.2 104.9 101.4 0.0
2012 Q2 7.4 1.8 104.3 100.9 -0.5
2012 Q3 6.7 -1.1 105.7 101.5 0.6
2012 Q4 5.9 0.6 106.3 101.2 -0.3
2013 Q1 4.4 -1.7 107.5 101.6 0.4
2013 Q2 5.9 1.5 107.9 102.3 0.7

Table source: Office for National Statistics

Table notes:

  1. Percentage change on previous quarter

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Historical context

Figure 1: Quarterly GDP , £ billion, CVM SA, table A2

Figure 1: Quarterly GDP , £ billion, CVM SA, table A2
Source: Office for National Statistics

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Figure 1 shows the quarterly level of GDP over the past 25 years and shows how 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 across the same period. UK construction activity grew strongly at the start of the period before a slight fall in 2005 and 2006. Construction activity then recovered so that it was around 20% higher at the end of 2007 compared with the start of 2001. The deterioration in economic conditions during 2008 had a large effect on the construction and production sectors, but the effect on the service sector was less pronounced.

Coming out of the economic downturn in 2008-09, the rate of GDP growth has been slower compared with the early-2000s, owing to weaknesses in the domestic and global markets. Services have continued to grow steadily from 2009, and activity in these industries is now approximately at the level previously seen in early 2008. Production began to decrease from the start of 2011 following a mild recovery in 2010, as increased inflation and slower wage growth began to reduce households’ real income. Compounding this subdued domestic demand was the development of the euro area sovereign debt crisis, which affected business sentiment in the EU, a key export market for the UK. Construction activity saw a more marked increase than that of production in 2010. Despite the positive signs during 2010, construction has trended downwards from late 2011.

Figure 2 shows quarterly GDP chained volume measure growth between Q1 1998 and Q2 2013.

Figure 2: Quarterly GDP growth, CVM SA, table A2

Figure 2: Quarterly GDP growth, CVM SA, table A2
Source: Office for National Statistics

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Although GDP growth since mid-2011 has been broadly flat, in the first half of 2013 the economy has expanded by 1.0%.

GDP analysed by output categories, chained volume measures, tables B1 and B2

Annex A (38 Kb Excel sheet) contains growth rates back to Q1 2012.

The 0.7% increase in output between Q1 2013 and Q2 2013 was broad based, with all three major industry groups – services, production and construction - making positive contributions.

Output of the agriculture, forestry & fishing industries rose by 2.0% in Q2 2013, revised up from the previously estimated 1.7% increase. This follows a decrease of 5.1% in Q1 2013.

In Q2 2013, production output increased by 0.8%, revised up from the previously estimated 0.6% increase, and follows a 0.5% increase in Q1 2013. Manufacturing output increased by 0.9% between Q1 2013 and Q2 2013, the highest quarter on quarter growth since Q3 2010 when output increased by 1.2%. The increase in Q2 2013 was previously estimated to be 0.7%. Between Q4 2012 and Q1 2013 manufacturing output was unchanged (see Figure 3). Electricity, gas, steam & air conditioning supply was the only production industry to contract, falling by 2.1% in Q2 2013 compared with an increase of 1.4% in Q1 2013.

The revisions to production data shown in this bulletin will be reflected in the Index of Production statistical bulletin to be published on 9 October 2013. 

Figure 3: Manufacturing growth, quarter on quarter, CVM SA

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

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Construction output rose by 1.9% in Q2 2013, revised up from a 1.4% increase, following a decrease of 1.3% in the previous quarter. When compared with Q2 2012, construction output increased by 0.5%.

The service industries grew by 0.6% in both Q2 2013 and Q1 2013 (See Figure 4). The 0.6% increase in Q2 2013 was unrevised while service industries output in Q1 2013 was revised up from the previously estimated 0.5% increase. Most service industries experienced positive growth in the quarter with the exception of financial & insurance activities which decreased by 1.6%, public administration, defence & social security which decreased by 0.4% and other services which also decreased by 0.4%. Service industries output has increased in every quarter compared with the same quarter a year ago since Q2 2010, whereas production output has been contracting on the same basis in each quarter since Q2 2011.

Figure 4: Services growth, quarter on quarter, CVM SA

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

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Output of the distribution, hotels & restaurants industries rose by 1.8% in Q2 2013, largely due to increases in wholesale activities. Growth in Q2 2013 was revised up from the previously estimated 1.7% increase and follows an increase of 1.3% in Q1 2013.

Output of the transport, storage & communication industries rose by 0.2% in Q2 2013, mainly due to increases in telecommunications and air transport and has been revised down from the previously estimated 0.6% increase. The 0.2% increase in Q2 2013 follows an increase of 1.7% in Q1 2013.

Business services & finance industries output rose by 0.7% in Q2 2013, revised up from the previously estimated 0.6% increase. In Q1 2013 output rose by 0.1%. The increase in Q2 2013 was mainly due to architectural & engineering activities, technical testing and employment activities.

Output of government & other services was unchanged in Q2 2013, as previously estimated, following an increase of 0.5% in Q1 2013. Upward growth in Q2 2013 from human health activities was offset by downward growth from activities of households as employers of domestic personnel, residential care activities and public administration & defence; compulsory social security.

Gross value added excluding oil and gas extraction rose by 0.6% revised down from the previously estimated 0.7% increase. In Q1 2013 oil and gas extraction rose by 0.3%.  

GDP analysed by expenditure categories, chained volume measures, table C2

Annex B (24.5 Kb Excel sheet) contains growth rates back to Q1 2012.

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 0.6% in Q2 2013, revised up from the previously estimated 0.3% increase and follows no change in Q1 2013.

Household final consumption expenditure rose by 0.3% in Q2 2013, a seventh consecutive quarter on quarter increase (see Figure 5). Growth in Q2 2013 has been revised down from the previously estimated 0.4% increase and follows an increase of 0.6% in Q1 2013. The level of household expenditure is now 1.8% higher than in Q2 2012. The largest increases in household spending in the latest quarter were in transport, miscellaneous goods & services and clothing & footwear.

 

Figure 5: Household final consumption expenditure growth, quarter on quarter, CVM SA

Figure 5: Household final consumption expenditure growth, quarter on quarter, CVM SA
Source: Office for National Statistics

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General government final consumption expenditure increased 0.5% in Q2 2013 revised down from the previously published estimate of 0.9% increase. The Government data published in this bulletin addresses two data issues identified since the previous Quarterly National Accounts publication, consistent with ONS’ Blue Book 2013 publication. These are:

- data on Critical Care beds

- data driven revisions and a processing error on Local Government figures

Correcting the data used in the calculation of Critical Care Beds aligns the pre and post 2012 data but introduces data revisions for Q1 2012 onwards. This correction accounts for about three-fifths of the revision to volume measures. In addition a number of new data supplies and a processing error introduced revisions to current price measures of Local Government Final Consumption Expenditure. This correction accounts for about two-fifths of the revision to volume measures.

Non-profit institutions serving households (NPISH) final consumption expenditure rose by 0.7% in Q2 2013 revised up from the previously estimated 2.5% decrease due to a review of the balancing adjustments applied to the NPISH estimates. This is normal practice when reconciling the three approaches to GDP.

Gross fixed capital formation (the purchase and disposal of fixed assets used in the production process for more than a year) increased by 0.8% in Q2 2013 (see Figure 6), revised down from the previously estimated 1.7% increase and follows an increase of 0.1% in Q1 2013. Following three consecutive quarters of negative quarterly growth between Q2 2012 and Q4 2012, this suggests an improvement in investment appetite in the most recent quarters. 

Figure 6: Gross fixed capital formation growth, quarter on quarter, CVM SA

Figure 6: Gross fixed capital formation growth, quarter on quarter, CVM SA
Source: Office for National Statistics

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Including the alignment adjustment, the level of inventories increased by £1.8 billion in Q2 2013, revised up from the previously estimated £1.1 billion decrease.  Excluding the alignment adjustment, the level of inventories rose by £1.2 billion. The revision for Q2 2013 was due to the change in the alignment adjustment position for that period which has been revised from -£1.7 billion to +£0.6 billion.

The deficit in net trade was £5.5 billion in both Q2 2013 and Q1 2013 (see Figure 7).

Figure 7: Net trade, £ billion, CVM SA

Figure 7: Net trade, £ billion, CVM SA
Source: Office for National Statistics

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Exports of goods rose by 4.9% in Q2 2013, due to an increase in exports of finished manufactures. Exports of services rose by 0.1% in Q2 2013 due to increases in exports of insurance and transportation services. In Q2 2013 imports of goods rose by 2.8% due to an increase in imports of fuels. Imports of services rose by 3.0% in Q2 2013 due to an increase in imports of travel services.

GDP implied deflator

Annex D (35.5 Kb Excel sheet) contains growth rates back to Q1 2012.

The gross domestic product implied deflator at market prices for Q2 2013 is 2.1% above the same quarter of 2012 (see Figure 8), revised up from the previously estimated 1.8% increase. Positive growth in the implied deflator in Q2 2013 is due to increases in the household and non-profit institutions serving households final consumption expenditure implied deflators. The GDP implied deflator is calculated by dividing current price (nominal) GDP by chained volume (real) GDP and multiplying by one hundred 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 8: GDP at market prices implied deflator, quarter on same quarter of previous year

Figure 8: 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 (29.5 Kb Excel sheet) contains growth rates back to Q1 2012.

GDP at current market prices rose by 0.4% in Q2 2013. In Q1 2013, GDP at current market prices rose by 1.1%.

Overall the seasonally adjusted compensation of employees increased by 2.9% between Q1 2013 and Q2 2013 (see Figure 9), an increase of £6,181 million. Wages and salaries data increased in Q2 2013 by 3.4% (£5,861 million) partly reflecting unusually high bonus payments in April 2013. Employers' contributions in Q2 2013 increased by 0.9% (£320 million). Further analysis on these bonus payments can be found in ONS’ Economic Review - September 2013 published 4 September 2013.

Figure 9: Compensation of employees growth, quarter on quarter, CP SA

Figure 9: Compensation of employees growth, quarter on quarter, CP SA
Source: Office for National Statistics

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In contrast, the gross operating surplus of corporations – effectively the profits of companies operating within the UK – including the alignment adjustment, fell by 6.3% in Q2 2013 compared with the previous quarter; previously the fall was estimated to have been 4.8%. This follows an increase of 4.2% in Q1 2013 (see Figure 10). Private non-financial corporations’ operating surplus on an aligned basis fell by 5.6% in Q2 2013 following an increase of 3.6% in Q1 2013. On an unaligned basis private non-financial corporations rose by 1.2% in Q2 2013 following a decrease of 0.3% in Q1 2013.

Figure 10: Gross operating surplus of corporations growth, quarter on quarter, CP SA

Figure 10: Gross operating surplus of corporations growth, quarter on quarter, CP SA
Source: Office for National Statistics

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Taxes on products and production less subsidies fell by 0.3% in Q2 2013, revised down from the previously estimated 1.0% increase. This follows a decrease of 0.7% in Q1 2013.

Sector accounts, tables I, J1, J2, J3, K1 and K2

Summary

For the year 2012, the saving ratio was 6.8% following 6.7% in 2011. The household saving ratio was 5.9% in Q2 2013 following 4.4% in the previous quarter.

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 of which can be found on 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), sometimes known as nominal prices, meaning that they include the effects of price changes.

The saving ratio is published in both non-seasonally (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, as saving is a small difference between two numbers. It is therefore often revised at successive publications when new or updated data is included. 

Net lending by sector, table I

In Q2 2013, the central government and financial corporations sectors were net borrowers. The local government, public corporations, private non-financial corporations, households’ and rest of the world sectors were net lenders (see Figure 11).

Annually for 2012, the central government, local government and financial corporations sectors were net borrowers. Public corporations, private non-financial corporations, households’ and the rest of the world sectors were net lenders.

Figure 11: Net Lending by Sector £billion, CP SA

Figure 11: Net Lending by Sector £billion, CP  SA
Source: Office for National Statistics

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Central government

Net borrowing was £18.7 billion in Q2 2013 following net borrowing of £19.2 billion in the previous quarter. For the year 2012, central government net borrowing was £93.4 billion following net borrowing of £120.4 billion in 2011. 

Local government

Net lending was £3.4 billion in Q2 2013 following net borrowing of £0.2 billion in the previous quarter. For the year 2012, local government net borrowing was £4.2 billion following net borrowing of £1.2 billion in 2011.

Public corporations

Net lending was £0.3 billion in Q2 2013 following net lending of £1.4 billion in the previous quarter. For the year 2012, public corporations net lending was £3.0 billion following net lending of £1.3 billion in 2011.

Financial corporations

Net borrowing was £8.4 billion in Q2 2013 following net borrowing of £3.0 billion in the previous quarter. For the year 2012, financial corporations net borrowing was £17.4 billion following net lending of £30.9 billion in 2011.

Private non-financial corporations

Net lending was £11.3 billion in Q2 2013, following net lending of £1.8 billion in the previous quarter. For the year 2012, private non-financial corporations net lending was £36.2 billion following net lending of £56.3 billion in 2011.

Household and non-profit institutions serving households

Net lending was £0.4 billion in Q2 2013 following net borrowing of £2.1 billion in the previous quarter. For the year 2012, households net lending was £16.5 billion following net lending of £14.7 billion in 2011.

Rest of the world

Net lending was £11.6 billion in Q2 2013 following net lending of £20.8 billion in the previous quarter. For the year 2012, net lending was £56.1 billion following net lending of £18.5 billion in 2011.

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

Annually for 2012, the saving ratio was 6.8% compared with 6.7% in 2011.

The saving ratio in Q2 2013 was 5.9% following 4.4% in the previous quarter (see Figure 12). This increase was due to a rise in the compensation of employees offset by increases in household final consumption expenditure.

Figure 12: Households' Saving Ratio, CP SA

Figure 12: Households' Saving Ratio, CP SA
Source: Office for National Statistics

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For the year 2012, real household disposable income increased by 1.6% following a fall of 1.2% in 2011. This reflects a rise in nominal gross disposable income of 4.2% offset by a rise of 2.6% in the household and NPISH final consumption deflator. This increase in nominal gross disposable income was due to rises in the compensation of employees, social benefits other than transfers in kind and gross operating surplus and mixed income.

The level of real household disposable income increased by 1.5% in the latest quarter following a fall of 1.7% in the previous quarter (see Figure 13). This increase is due to a 2.2% rise in nominal gross disposable income offset by an increase of 0.7% in the household and NPISH final consumption expenditure deflator.

Figure 13: Real Households' Disposable Income, quarter-on-quarter, CVM SA

Figure 13: Real Households' Disposable Income, quarter-on-quarter, CVM SA
Source: Office for National Statistics

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What is 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

Net lending of private non-financial corporations was £11.3 billion in Q2 2013 following net lending of £1.8 billion in the previous quarter. This increase in net lending in the latest quarter was due to a rise in net property income of £7.9 billion and a fall in gross capital formation of £2.2 billion, partially offset by a fall in gross operating surplus of £3.8 billion.

For the year 2012, net lending was £36.2 billion following net lending of £56.3 billion in 2011, this decrease was due to a fall in net property income. 

International comparisons for Q2 2013

In Q2 2013, GDP grew by 0.3% quarter on quarter in the euro area, while in the European Union (EU 27) (see Figure 14) quarterly growth for Q2 2013 was revised upwards by 0.1 percentage points from the flash estimate to 0.4%. In Q1 2013, GDP decreased by 0.2% in the euro area and by 0.1% in the EU 27. These are based upon second estimates of GDP for Q2 2013 published by Eurostat, the statistical office of the European Union.

With Croatia joining the European Union in July 2013, Eurostat have also produced GDP including the new 28th member for Q2 2013. The addition of Croatia, creating EU 28, had no impact on GDP growth in Q2 2013.

GDP for the United States of America increased by 0.6% in Q2 2013 due to an upwards revision of 0.2 percentage points. This follows an increase of 0.3% in Q1 2013. GDP for Japan grew by 0.9% in Q2 2013 after being revised up 0.3 percentage points, making quarterly growth in Q2 2013 slightly lower than the 1.0% rise in the previous quarter. When compared with the same quarter a year ago, GDP for the United States of America rose by 1.6% and GDP for Japan rose by 1.3%.

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. 

 

Figure 14: International GDP growth rates, quarter on quarter, annual, CVM SA

Figure 14: International GDP growth rates, quarter on quarter, annual, CVM SA
Source: Office for National Statistics

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Quarterly revisions, GDP and components, previously published 23 August 2013

The earliest period open for revision in this release is Q1 2012 (see Figure 15).

It was announced on 26 July 2013, that errors were found in the sector and asset breakdowns of Gross Fixed Capital Formation (GFCF), published on 27 June 2013. These data were corrected immediately in the Q1 2013 Business Investment publication. It was also announced that the errors would be corrected on 26 September for the series which were affected in the Quarterly National Accounts. These corrections have now been made.

Tables F and K2, and quarterly net lending by sector in Table I are affected.

This correction has no impact on the estimates of total GFCF and therefore no impact on gross domestic product.

ONS apologises for any inconvenience this may cause. For further information please contact gcf@ons.gsi.gov.uk.

Figure 15: Gross domestic product, quarter on quarter growth, CVM SA

Figure 15: Gross domestic product, quarter on quarter growth, CVM SA
Source: Office for National Statistics

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Output components:

Output revisions are shown in Annex E (39 Kb Excel sheet) of this release.

Expenditure components:

Expenditure revisions are shown in Annex F (37 Kb Excel sheet) of this release.

Income components:

Income revisions are shown in Annex G (32 Kb Excel sheet) of this release.

Revisions, sector accounts, previously published 27 June 2013

Sector accounts revisions are shown in Annex H (36 Kb Excel sheet) of this release.

Background notes

  1. Release policy

    This release includes data available up to 13 September 2013. Data are consistent with the current price trade in goods data within the UK Trade statistical bulletin published on 6 September 2013. The revision to production data shown in this bulletin will be reflected in the Index of Production statistical bulletin to be published on 9 October 2013

  2. What's new

    To improve coverage within the GDP dataset ONS is publishing a new reference table to accompany the quarterly national accounts release, detailing key GDP variables on a financial year basis.

  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 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 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 in 2012

    The Diamond Jubilee and the London 2012 Olympic and Paralympic Games made 2012 an unusual and difficult year for policymakers and anybody interested in understanding the behaviour of the UK economy. ONS designated both events as ‘special events’ under the ONS Special Events policy as they had a potentially significant effect on many key economic statistics. An article published by ONS on 17 May 2013 took a retrospective look at each event and considered the impact on a range of published economic indicators, including GDP.

  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.

    Experience shows that the output approach provides the best short term estimate of GDP growth given the availability of data in the UK. GDP growth according to the expenditure and income approaches is therefore brought into line with that recorded by output.

    ONS has produced an article 'Interpreting the Recent Behaviour of the Economy' available on the ONS website to aid interpretation of the recent movements in the economy.

    An article summarising the upcoming improvements to the estimation of gross fixed capital formation and changes in inventories is now available on the ONS National Accounts methodology and articles web pages. These developments are part of the programme of continuous improvement to the UK National Accounts. 

  6. National accounts classifications 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 Debt and Deficit (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 giving economic commentary on the latest GDP estimate and other ONS economic releases. The next article will be published on 2 October 2013. 

  8. Basic Quality Information for the 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 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 2 and 3 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 2 shows the revisions to month 1(M1) and month 2(M2) estimates of GDP. The analysis of revisions between month 1 and month 2 uses month 2 estimates published from November 2008 (Q3 2008) to August 2013 (Q2 2013). The analysis of revisions between month 2 and month 3 uses month 3 estimates published from September 2008 (Q2 2008) to June 2013 (Q1 2013).

    Table 2: 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 0.7 0.04 0.06
    Between M2 and M3 0.7 -0.03 0.09
     

    Table source: Office for National Statistics

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    Table 3 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 September 2005 (Q2 2005) to June 2010 (Q1 2010) for GDP.

    Table 3: Revisions to month 3 estimates of GDP growth and the household saving ratio

    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) 0.7 -0.08 0.40
    Household saving ratio 5.9 -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 and the calculations behind the averages in both tables are available on the ONS website.

    An article titled 'Updated analysis: Why is GDP revised ?' (300.9 Kb Pdf) , published on 13 June 2013, is available on the ONS' website.

    ONS has also recently published revisions triangles for current price GDP at market prices and for the GDP implied deflator which will be updated on an ongoing basis. Both are available on the ONS website and are the first to be released in 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.

    For all periods, the expenditure and income estimates are aligned to the 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 Q2 2013 indicate that in this quarter the level of expenditure was lower than that of output while the level of income was higher 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, like Q1 2013 for instance, a slightly larger alignment adjustment is 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

Name Phone Department Email
Luke Croydon +44 (0)845 6041858 Media Relations media.relations@ons.gsi.gov.uk
ONS Emergency on-call +44 (0)7867 906553 Media Relations media.relations@ons.gsi.gov.uk
Matthew Hughes +44 (0)1633 455827 Office for National Statistics gdp@ons.gsi.gov.uk
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