This bulletin contains information on the second estimate of GDP for 2012 quarter two. It includes initial estimates on the expenditure and income approaches to GDP, along with revisions to and more detail on the output approach.
|Current Market Prices||Chained volume measures||Gross fixed capital formation|
|Gross domestic product||Compensation of employees||Gross domestic product||Household expenditure|
Annex A (27.5 Kb Excel sheet) contains growth rates back to 2011 Q1.
Output of the agriculture, forestry & fishing industries decreased by 2.6 per cent in the second quarter of 2012 compared with a decrease of 2.2 per cent in the first quarter of 2012.
Output of the production industries fell by 0.9 per cent in the second quarter of 2012. In the first quarter of 2012 output of the production industries fell by 0.5 per cent.
Mining & quarrying output decreased by 4.4 per cent in the second quarter of 2012. This compares with a decrease of 3.6 per cent in the previous quarter.
Manufacturing output fell by 0.9 per cent in the second quarter of 2012. This compares with a decrease of 0.3 per cent in the previous quarter.
Electricity, gas, steam & air conditioning supply increased by 5.6 per cent in 2012 quarter two compared with an increase of 1.2 per cent in 2012 quarter one.
Water supply, sewerage & waste management decreased by 3.2 per cent in the second quarter of 2012 compared with an increase of 0.8 per cent in the first quarter of 2012.
Gross value added excluding oil and gas extraction decreased by 0.4 per cent in the second quarter of 2012 following a decrease of 0.3 per cent in the first quarter of 2012.
Construction output decreased by 3.9 per cent in 2012 quarter two. This compares with a decrease of 4.9 per cent in 2012 quarter one.
Services output decreased by 0.1 per cent in the second quarter of 2012 compared with an increase of 0.2 per cent in the first quarter of 2012.
Output of the distribution, hotels & restaurants' industries decreased by 0.1 per cent in 2012 quarter two, compared with an increase of 0.3 per cent in 2012 quarter one. This was due to weakness in wholesale trade except of motor vehicles and retail trade except of motor vehicles.
Output of the transport, storage & communication industries fell by 0.7 per cent in 2012 quarter two compared with an increase of 1.0 per cent in 2012 quarter one. The decrease was mainly due to computer programming, consultancy & related activities.
Output of the business services & finance industries fell by 0.1 per cent in 2012 quarter two, compared with a decrease of 0.3 per cent in 2012 quarter one. The fall in 2012 quarter two was mainly due to activities of head offices, management consultancy activities and architectural & engineering activities, technical testing & analysis.
Output of government & other services increased by 0.3 per cent in 2012 quarter two compared with an increase of 0.3 per cent in 2012 quarter one. The 0.3 per cent increase in 2012 quarter two was due to human health activities.
Annex B (26.5 Kb Excel sheet) contains growth rates back to 2011 Q1.
Gross domestic expenditure increased by 0.5 per cent in the second quarter of 2012 compared with an increase of 0.1 per cent in 2012 quarter one.
Household final consumption expenditure decreased by 0.4 per cent in 2012 quarter two, compared with a decrease of 0.1 per cent in 2012 quarter one. The level of household expenditure is now 0.8 per cent lower than in 2011 quarter two.
Government final consumption expenditure was unchanged in 2012 quarter two, compared with an increase of 1.9 per cent in 2012 quarter one.
Gross fixed capital formation decreased by 3.2 per cent in the latest quarter, compared with an increase of 1.9 per cent in the previous quarter.
Including the alignment adjustment, the level of inventories increased by £2.6 billion in the latest quarter.
The deficit in net trade was £7.3 billion in 2012 quarter two, compared with a deficit in net trade of £3.7 billion in 2012 quarter one.
Annex D (27 Kb Excel sheet) contains growth rates back to 2011 Q1.
The gross domestic product implied deflator at market prices for 2012 quarter two is 2.5 per cent above the same quarter of 2011.
Annex C (21 Kb Excel sheet) contains growth rates back to 2011 Q1.
GDP at current market prices rose by 0.4 per cent in 2012 quarter two, compared with an increase of 0.5 per cent in 2012 quarter one.
Compensation of employees increased by 1.8 per cent in 2012 quarter two, compared with an increase of 1.1 per cent in 2012 quarter one.
The gross operating surplus of corporations, including the alignment adjustment, fell by 3.8 per cent in 2012 quarter two, compared with an increase of 1.2 per cent in 2012 quarter one.
Taxes on products and production less subsidies decreased by 0.4 per cent in 2012 quarter two compared with an increase of 0.4 per cent in 2012 quarter one.
The second estimate of GDP indicates that the economy contracted by slightly less during the second quarter than had previously been estimated. This primarily reflects the availability of additional data from surveys and administrative sources.
The estimate has been revised from a fall of 0.7 per cent to a fall of 0.5 per cent which indicates a mild contraction and reflects the difficult economic conditions faced by businesses and consumers, domestically and globally. It is also noted that the additional public holiday and bad weather during the second quarter may have adversely affected economic performance.
The main causes of the revision to GDP came from upward revisions to both the construction and production industries, with each contributing approximately 0.1 percentage points to the upward revision to GDP.
Indicators outlining the economic and financial conditions facing households and businesses continue to be weak or adverse. Wage growth remains weak and the climate for major economic purchases remains subdued. Businesses seem to be undertaking defensive strategies involving cost cutting, rather than increasing capital spending.
The independent Office for Budget Responsibility (OBR) reduced its forecast for UK business investment in 2012 to an increase of 0.7 per cent, down from 7.7 per cent last November. Low expectations are likely to be a result of the continuing Eurozone debt crisis and weak domestic growth.
In contrast the headline indicators for the labour market for quarter two showed remarkable resilience. Between January to March 2012 and April to June 2012, employment increased and unemployment and inactivity fell. Employment increases were broadly based with increases in full time workers (130,000) and part time workers (71,000). These figures are in line with an increase of 1.8 per cent in compensation of employees this quarter.
The weakness in GDP growth in the second quarter may have been affected by the changed timing of bank holidays or the bad weather this summer. These short term factors would not be expected to have a significant impact on headline labour market indicators such as the levels of employment or unemployment.
The weakness of growth over the last three quarters means that GDP is now around the same level as it was in the second quarter of 2010, so GDP growth has been broadly flat over the last two years.
ONS publishes a monthly Economic Review discussing the economic background giving economic commentary on the latest GDP estimate and other ONS economic releases.
As part of the celebrations for the Queen's Diamond Jubilee there were changes to bank holidays in May and June 2012. The Spring Bank Holiday moved into June, and there was an additional day's holiday.
The change to the holidays has been classified as a statistical special event in line with ONS policy on Special Events. The event was not regular, so no adjustment has been made to account for it as part of the seasonal adjustment process.
It is not possible to quantify the impact of the changes to the bank holidays at this stage; retrospective analysis will be carried out, in line with the ONS special events policy, when data for later periods are available. The bad weather in the quarter may have also had an impact in some components although it has not been formally designated as a special event.
The change in the bank holidays in May and June due to the Diamond Jubilee and the poor weather between April and June 2012 added additional uncertainty to the estimate for June 2012 used within the compilation of the quarter two 2012 preliminary estimate of gross domestic product (GDP) published on 25 July 2012. An article produced at that time showed users how the quarter two 2012 preliminary estimate of GDP was compiled.
In 2012 quarter two, GDP fell by 0.2 per cent in both the Euro Area and the European Union as a whole in comparison with the first quarter of 2012 when GDP was unchanged. These estimates are based upon flash estimates for the second quarter of 2012 published by Eurostat, the statistical office of the European Union.
Seasonally adjusted GDP in both the Euro area and European Union as a whole is now 0.4 per cent lower than in 2011 quarter two.
United States GDP rose by 0.4 per cent in the second quarter of 2012 compared with the previous quarter when it rose by 0.5 per cent. Japanese GDP increased by 0.3 per cent in 2012 quarter two. This follows an increase of 1.3 per cent in 2012 quarter one.
When compared with the same quarter a year ago United States GDP rose by 2.2 per cent and Japanese GDP increased by 3.6 per cent.
More detailed information on these estimates can be found on the Eurostat website.
Annex E (28.5 Kb Excel sheet) contains revisions back to 2012 Q1.
GDP growth for 2012 quarter two has been revised upwards by 0.2 percentage points from the fall of 0.7 per cent published on 25 July 2012.
Growth in the volume of output in the production industries in 2012 quarter two has been revised upwards by 0.4 percentage points from the fall of 1.3 per cent published on 25 July 2012.
Growth in the volume of output in the service industries in 2012 quarter two is unrevised from the fall of 0.1 per cent published on 25 July 2012.
Growth in construction output in 2012 quarter two has been revised upwards by 1.3 percentage points from the fall of 5.2 per cent published on 25 July 2012.
There were no revisions to earlier quarters.
This release includes data available up to 16 August 2012. Data are consistent with the Index of Production statistical bulletin published on 7 August 2012 and the trade in goods data within the UK Trade statistical bulletin published on 9 August 2012.
A full set of quarterly national accounts for the second quarter of 2012 will be published on 27 September 2012. A preliminary estimate of GDP for the third quarter for 2012 will be published on 25 October 2012. The second estimate of GDP for the third quarter of 2012 will be published on 27 November 2012.
Release content and context
This release is the second estimate of GDP (month 2). Data content for each successive release of GDP varies according to availability.
The preliminary estimate of GDP (month 1) 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 (month 2) 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 (month 3) 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.
Treatment of Olympic ticket sales
An article titled 'Treatment of the Sale of Olympic Tickets in the National Accounts' (19.1 Kb Pdf) is available on the ONS website.
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.
Historic experience shows that the output approach provides the most timely approach to measuring GDP growth. GDP growth according to the expenditure and income approaches is therefore brought into line with that recorded by output.
The size and direction of the quarterly alignment adjustments in the second quarter indicate that, for 2012 quarter two, income data showed a stronger picture than output, while expenditure data were weaker.
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.
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.
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.
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 in the GDP and other Statistical Bulletin 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. The tables below 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 test is significant. The result of the test is that the average revision is not statistically significantly different from zero.
Revisions to GDP estimates
Table 1 below shows the revisions to month 1 and month 2 estimates of GDP. The analysis of revisions between month 1 and month 2 uses month 2 estimates published from August 2007 (2007 Q2) to May 2012 (2012 Q1). The analysis of revisions between month 2 and month 3 uses month 3 estimates published from September 2007 (2007 Q2) to June 2012 (2012 Q1).
|Revisions to GDP growth||GDP growth in the latest period (per cent)||Revisions between early estimates of GDP growth (quarterly, CVM)|
|Average over the last five years||Average over the last five years without regard to sign (average absolute revision)|
|Between M1 and M2||-0.5||0.00||0.06|
|Between M2 and M3||-0.5||-0.03||0.08|
Table 2 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 2004 (2004 Q2) to June 2009 (2009 Q1) for GDP.
|Average over the last five years||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)||-0.5||-0.16||0.36|
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 National Statistics website.
Revisions triangles for the main components of GDP from expenditure, output and income approaches are also available,
An article titled 'Understanding the Quality of Early Estimates of Gross Domestic Product', which was first published in December 2009 is available on the ONS website.
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 size and direction of the quarterly alignment adjustment in the second quarter of 2012 indicate that, for 2012 quarter two, income data showed a stronger picture than output, while expenditure data were weaker.
Latest copies of this and other ONS releases are available under Press Releases on the ONS website. ONS has also produced a short guide to the UK National Accounts (93.6 Kb Pdf) .
Details of the policy governing the release of new data are available from the media relationss office. Also available is a list of the names of those given pre-publication access (47.2 Kb Pdf) to the contents of this bulletin.
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