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 second estimate of GDP for Q1 2014. It includes initial estimates on the expenditure and income approaches to GDP along with revisions to, and more detail on, the output approach. In line with national accounts revisions policy, the earliest period open for revision in this release is Q1 2014.
|Current market prices||Chained volume measures|
|Gross domestic product||Compensation of employees||Gross domestic product||Household expenditure||Gross fixed capital formation|
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 1990’s 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.
GDP in chained volume measures grew by 0.8% in Q1 2014 compared with the previous quarter and by 3.1% between Q1 2013 and Q1 2014, the largest quarter on same quarter a year ago growth since Q4 2007.
Annex A (31.5 Kb Excel sheet) contains growth rates back to Q1 2013.
The output measure shows a broad based rise in GDP for Q1 2014, with production, construction and services all expanding on the quarter. The agriculture, forestry & fishing industry was the only headline industry to decline, falling by 0.7 % in Q1 2014. With three quarters of consecutive growth previously in 2013, the industry has grown by 1.8% since Q1 2013.
Total production output grew by 0.7% in Q1 2014 compared with Q4 2013. However there was a mixed performance within sub-industries. Electricity, gas, steam & air conditioning fell by 5.1% in Q1 2014 while output from mining and quarrying including oil & gas extraction was unchanged. Manufacturing (the largest component of production) and the water supply and sewerage industry both rose on the quarter, with the latter contributing most to the positive growth in production.
When comparing Q1 2014 with Q1 2013, production output rose by 2.5%. All production industries contributed positively to this growth, with the exception of electricity, gas, steam and air conditioning, which contracted by 10.9%.
Manufacturing output increased by 1.4% between Q4 2013 and Q1 2014, revised up 0.1 percentage points from the previous estimate (see Figure 3). Between Q1 2013 and Q1 2014 manufacturing output rose by 3.5%.
Construction output increased by 0.6% in Q1 2014 and by 5.4% since Q1 2013.
The service industries grew by 0.9% in Q1 2014 (see Figure 4), unrevised from the previous estimate, following a 0.8% increase in Q4 2013, marking 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 grew by 1.8% and 1.7% respectively.
Output of the distribution, hotels & restaurants industries rose by 1.7% in Q1 2014, revised up by 0.2 percentage points from the previous estimate. The 1.7% increase in the latest quarter was largely due to increases in wholesale & retail trade & repair 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 0.9% in Q1 2014 following a 0.4% increase in Q4 2013. The largest upward contribution to growth in Q1 2014 came from warehousing and support activities for transportation.
Business services & finance industries output rose by 0.9% in Q1 2014, unrevised from the previous 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 0.3% in Q1 2014, revised downwards by 0.1 percentage points from the previous estimate, following a 0.8% 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). The service industries are the only headline industries to have surpassed their pre-downturn peak, with the production, construction and agriculture industries remaining below their respective peaks. Within production, manufacturing also remains below its pre-downturn levels. Total production output has grown positively over the latest four quarters, increasing by 2.4% between Q1 2013 and Q1 2014, with manufacturing output increasing by 3.5% over the same period.
Annex B (27 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 0.7% in Q1 2014, following a 0.3% fall in Q4 2013.
Household final consumption expenditure rose by 0.8% in Q1 2014 and has increased for ten consecutive quarters (see Figure 6). Household final consumption expenditure when compared with the same quarter a year ago has been rising each quarter since Q1 2012 and was 2.1% higher in Q1 2014 than in the same period a year ago.
Government final consumption expenditure increased by 0.1% in Q1 2014 and was unchanged in Q4 2013. Between Q1 2013 and Q1 2014 government final consumption expenditure increased by 2.2%.
Non-profit institutions serving households (NPISH) final consumption expenditure fell by 2.2% in Q1 2014 following a 1.5% decrease in Q4 2013. Between Q1 2013 and Q1 2014 NPISH final consumption expenditure fell by 0.9%.
Gross fixed capital formation (the purchase and disposal of fixed assets used in the production process for more than a year) increased by 0.6% in Q1 2014 (see Figure 7) following an increase of 1.9% in Q4 2013. Within gross fixed capital formation, business investment increased by 2.7% in Q1 2014 following a 2.4% 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.
Including the alignment adjustment, the level of inventories increased by £2.8 billion in Q1 2014, following an increase of £1.9 billion in Q4 2013.
The trade balance deficit decreased from £4.2 billion in Q4 2013 to £4.1 billion in Q1 2014 (see Figure 8). The trade position reflects exports minus imports. Following a 2.8% rise in Q4 2013, exports fell by 1.0% in the latest quarter, while imports also fell by slightly more than exports (1.1%). With exports contracting to a lesser extent than imports, the net trade balance has improved slightly compared to the previous quarter, but worsened compared to Q1 2013.
Figure 9 shows the quarterly contribution of the expenditure components to the growth of GDP in chained volume measures. The largest contribution to growth came from household final consumption expenditure which contributed 0.5 percentage points to GDP, while gross fixed capital formation made a smaller contribution of 0.1 percentage points. Changes in inventories contributed 0.2 percentage points. With exports falling by almost the same amount as imports this quarter, net trade’s contribution was neutral.
Annex D (26 Kb Excel sheet) contains growth rates back to Q1 2013.
The gross domestic product implied deflator at market prices for Q1 2014 is 1.3% 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 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.
Annex C (23 Kb Excel sheet) contains growth rates back to Q1 2013.
GDP at current market prices rose by 1.2% in Q1 2014 following a 1.6% increase in Q4 2013. GDP at current market prices rose by 4.4% when compared to Q1 2013.
Compensation of employees – which includes both wages & salaries and pension contributions - increased by 0.8% in Q1 2014 following an increase of 0.3% in Q4 2013 (see Figure 11). This is the fourteenth successive quarter of growth.
The gross operating surplus of corporations – effectively the profits of companies operating within the UK – including the alignment adjustment, rose by 1.5% in Q1 2014 compared with the previous quarter; this follows an increase of 5.4% in Q4 2013 (see Figure 12).
Taxes less subsidies on products and production fell by 0.1% in Q1 2014, following an increase of 1.1% in Q4 2013.
Figure 13 shows the contribution made by income components to current price GDP during Q1 2014. The contribution to growth was evenly spread across three of the components, with contributions from other income, compensation of employees and gross operating surplus of 0.5, 0.4 and 0.3 percentage points respectively.
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 Figure 14). 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 15). The United States of America GDP was unchanged in Q1 2014, after increasing by 0.7% last quarter. GDP for the United States of America grew by 2.3% between Q1 2013 and Q1 2014. GDP for Japan grew by 1.5% in Q1 2014, making six consecutive quarters of positive growth. The Japanese economy grew by 2.7% in Q1 2014 compared to Q1 2013.
Figure 16 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).
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.
The only period open for revision in this release is Q1 2014 (see Figure 17).
Detailed revisions for the three GDP approaches are shown in the Annexes listed.
Output revisions are shown in Annex E (29 Kb Excel sheet) of this release.
This release includes data available up to 15 May 2014. Data are consistent with the current price trade in goods data within the UK Trade statistical bulletin published on 9 May 2014 and the Index of Production statistical bulletin also published on 9 May 2014.
Release content and context
This release includes the second 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 (43.3 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.
Changes to publication dates
To bring the Quarterly National Accounts (QNA) into line with the standard national accounts publication timetable the June Q1 2014 QNA publication date is being moved from Thursday 26 June 2014 to Friday 27 June 2014. This is in line with other related outputs which are now also being published on these revised dates.
Other 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 the second quarter until the Quarterly National Accounts release on 30 September 2014.
ONS will be making some major changes to the National Accounts in September 2014 - more details are given in the article Latest Developments to National Accounts published on the ONS website.
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's 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.
National Accounts methodolgy 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.
ONS has produced an article 'Interpretating the Recent Behaviour of the Economy', available on the ONS website to aid interpretation of 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.
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.
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 4 June 2014.
Basic Quality Information for GDP Statistical Bulletin
A Quality and Methodology Information (518.9 Kb Pdf) report for this Statistical Bulletin can be found on the ONS website.
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.
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.
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 May 2009 (Q1 2009) to February 2014 (Q4 2013). 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).
|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 4 shows the revisions to GDP 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 June 2006 (Q1 2006) to March 2011 (Q4 2010) for GDP.
|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|
Revisions triangles for the main components of GDP from expenditure, output and income approaches and spreadsheets containing revision 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 '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.
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.
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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