This bulletin contains information on the second estimate of GDP for 2012 quarter three. 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 domestic product||Compensation of employees||Gross domestic product||Household expenditure||Gross fixed capital formation|
|Seasonally adjusted||1 per cent||1 per cent||1 per cent||1 per cent||1 per cent|
Annex A (31 Kb Excel sheet) contains growth rates back to Q1 2011.
Output of the agriculture, forestry & fishing industries increased by 2.1 per cent in the third quarter of 2012 following a decrease of 2.6 per cent in the second quarter of 2012.
Output of the production industries rose by 0.9 per cent in the third quarter of 2012. In the second quarter of 2012 output of the production industries fell by 0.7 per cent.
Mining & quarrying output increased by 2.9 per cent in the third quarter of 2012. This follows a decrease of 3.3 per cent in the previous quarter.
Manufacturing output rose by 0.9 per cent in the third quarter of 2012. In 2012 quarter two manufacturing output fell by 0.8 per cent (see Figure 2).
Electricity, gas, steam & air conditioning supply decreased by 2.8 per cent in the third quarter of 2012 following an increase of 5.1 per cent in the second quarter of 2012.
Water supply, sewerage & waste management increased by 2.3 per cent in the third quarter of 2012 following a decrease of 3.2 per cent in the second quarter of 2012.
Gross value added excluding oil and gas extraction increased by 1.0 per cent in the third quarter of 2012 following a decrease of 0.3 per cent in the second quarter of 2012.
Construction output decreased by 2.6 per cent in the third quarter of 2012. This follows a decrease of 3.0 per cent in the second quarter of 2012.
Services output increased by 1.3 per cent in the third quarter of 2012 following a decrease of 0.1 per cent in the second quarter of 2012 (see Figure 3).
Output of the distribution, hotels & restaurants industries increased by 2.0 per cent in 2012 quarter three. In 2012 quarter two output of the distribution, hotels & restaurants industries was unchanged. The increases in 2012 quarter three were mainly due to wholesale.
Output of the transport, storage & communication industries rose by 0.6 per cent in 2012 quarter three following a decrease of 1.3 per cent in 2012 quarter two. The increase was mainly due to programming & broadcasting activities and warehousing and support activities for transportation. These were offset by decreases in motion picture, video & TV programme production and information service activities.
Output of the business services & finance industries rose by 1.0 per cent in the third quarter of 2012. In 2012 quarter two output of the business services & finance industries was unchanged. In 2012 quarter three, increases were mainly due to employment activities and rental & leasing activites. These were offset by decreases in financial service activities
Output of government & other services increased by 1.6 per cent in 2012 quarter three following an increase of 0.3 per cent in 2012 quarter two. The 1.6 per cent increase in 2012 quarter three was mainly due to sports activities & amusement & recreation and education.
Annex B (31.5 Kb Excel sheet) contains growth rates back to Q1 2011.
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) increased by 0.3 per cent in the third quarter of 2012 following an increase of 0.4 per cent in 2012 quarter one.
Household final consumption expenditure increased by 0.6 per cent in 2012 quarter three, following a decrease of 0.2 per cent in 2012 quarter two (see Figure 4). The level of household expenditure is now 0.9 per cent higher than in 2011 quarter three.
Government final consumption expenditure increased by 0.6 per cent in 2012 quarter three, following a decrease of 1.6 per cent in 2012 quarter two.
Gross fixed capital formation increased by 0.5 per cent in the third quarter of 2012, following a decrease of 2.7 per cent in the previous quarter (see Figure 5).
Including the alignment adjustment, the level of inventories decreased by £0.1 billion in the third quarter of 2012.
The deficit in net trade was £4.5 billion in 2012 quarter three, compared with a deficit in net trade of £6.9 billion in 2012 quarter two (see Figure 6).
Annex D (28.5 Kb Excel sheet) contains growth rates back to Q1 2011.
The gross domestic product implied deflator at market prices for 2012 quarter three is 2.9 per cent above the same quarter of 2011 (see Figure 7). The GDP implied deflator is calculated by dividing current price GDP by chained volume GDP and multiplying by one hundred to convert to an index. It is not used in the calculation of GDP, rather it is generated after the calculation of GDP.
Annex C (22 Kb Excel sheet) contains growth rates back to Q1 2011.
GDP at current market prices rose by 1.2 per cent in 2012 quarter three. In 2012 quarter two GDP at current market prices rose by 1.0 per cent.
Compensation of employees increased by 1.4 per cent in 2012 quarter three. This follows an increase of 0.2 per cent in 2012 quarter two (see Figure 8).
The gross operating surplus of corporations, including the alignment adjustment, decreased by 1.0 per cent in 2012 quarter three, following an increase of 5.1 per cent in 2012 quarter two (see Figure 9).
Taxes on products and production less subsidies increased by 3.3 per cent in 2012 quarter three following a decrease of 0.7 per cent in 2012 quarter two.
The second estimate of GDP for the third quarter of 2012 was unrevised from the previously published 1.0 per cent increase in the preliminary estimate of GDP, despite small revisions within the production and service industries.
Downward revisions of 0.1 percentage points to manufacturing and construction were offset by a 0.6 percentage point upward revision to mining & quarrying including oil & gas extraction. Despite these revisions the picture remains broadly unchanged, with output indicators suggesting weak growth bolstered by special factors such as the Olympic and Paralympic Games.
The second estimate of GDP includes new information on expenditure and income for the third quarter of 2012. Household expenditure increased by 0.6 per cent following a slight decline in the second quarter, the strongest growth since the second quarter of 2010.
Household expenditure also grew strongly on the same quarter a year ago at 0.9 per cent, the largest change since the fourth quarter of 2010. The robust growth in comparison with the same quarter last year suggests that the Olympic and Paralympic Games may have had a positive and significant effect on household spending patterns.
The UK’s trade position also improved during the third quarter of 2012, with imports falling by 0.4 per cent and exports rising by 1.7 per cent when compared with the previous quarter. The rise in exports can partly be attributed to higher spending by foreign tourists, as this spending is recorded as an export. During August, when most of the Olympic events were held, the International Passenger Survey (IPS) recorded that earnings from visitors to the UK increased by 9 per cent compared to August 2011, despite a 5 per cent fall in visitor numbers.
For the income approach, compensation of employees showed solid growth of 1.4 per cent, the strongest quarter on previous quarter growth since the fourth quarter of 2009. It is important to note that compensation of employees is a broader category than ‘wages’ – it also includes social and pension contributions by employers. The strong rise in compensation of employees was partly offset by a 1.0 per cent fall in the aligned gross operating surplus of corporations, the largest fall since the first quarter of 2012 when gross operating surplus of corporations contracted by 4.4 per cent.
Overall, the picture remains broadly unchanged from the preliminary estimate. The reduction in working days as a result of the Diamond Jubilee in the second quarter of 2012 and hosting of the Olympic and Paralympic Games in the third quarter of 2012 may explain why growth appears so buoyant compared with recent quarters. However, it is not possible to quantify the effects of these factors and determine the underlying strength of the economy at this stage.
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 three, GDP fell by 0.1 per cent in the Euro Area and rose by 0.1 per cent in the European Union as a whole (EU 27), (see Figure 10). These are based upon flash estimates of GDP for the third quarter of 2012 published by Eurostat, the statistical office of the European Union.
Compared with the third quarter of 2011, seasonally adjusted GDP in the Euro area fell by 0.6 per cent. In the European Union as a whole, GDP was 0.4 per cent lower than in 2011 quarter three.
GDP for the United States of America rose by 0.5 per cent in the third quarter of 2012 compared with the previous quarter when it rose by 0.3 per cent. GDP for Japan decreased by 0.9 per cent in 2012 quarter three. This follows an increase of 0.1 per cent in 2012 quarter two.
When compared with the same quarter a year ago GDP for the United States of America rose by 2.3 per cent and GDP for Japan increased by 0.2 per cent.
More detailed information on these estimates can be found on the Eurostat website.
The preliminary estimate of GDP released on 25 October included a description of where Olympic and Paralympic effects may have been seen in the output components of GDP. This section will describe possible effects of the games on expenditure and income approaches. As previously stated, it is not possible to quantify these effects, as there may have been offsetting positive and negative effects on different components and in different parts of the UK.
The most obvious effect is that of ticket sales, which are included in household final consumption expenditure (for domestic ticket-buyers) and exports (for non-UK residents). There may also have been a different pattern of household consumption by product category caused by the Olympics. Spending on categories such as hotels & restaurants and transport, may have been affected, because those not attending the games consumed these services differently, during the games period.
There may also have been some people who chose not to travel at all during the games period. Additionally a small upward effect on government final consumption expenditure may have resulted from the Games. In addition to the ticket sales already mentioned, it might be expected that there would be additional exports of both goods and services from the UK from those non-residents visiting during the Olympics and Paralympics Games.
There may have been an effect on the gross operating surplus of corporations, both as a result of Olympic and Paralympic ticket sales and also due to extra sales from corporations providing goods and services to spectators. The compensation of employees figure may have been affected if employers had to recruit extra staff to meet extra demand, although some employers may have just redeployed existing staff from other parts of their organisations.
The effects of the Olympic and Paralympic Games are not easily identifiable in the GDP data and are not all in the same direction. A detailed article (229 Kb Pdf) describing possible effects and comparing with earlier Olympic Games was published by ONS on 25 October.
The earliest period open for revision in this release is Q3 2012, (see Figure 11). Revisions are shown in Annex E (31.5 Kb Excel sheet) of this release. At this stage revisions are applicable to output components only.
This release includes data available up to 16 November 2012. Data are consistent with the Index of Production statistical bulletin published on 6 November 2012 and the ccurrent price trade in goods data within the UK Trade statistical bulletin published on 9 November.
A full set of quarterly national accounts for the third quarter of 2012 will be published on 21 December 2012. A preliminary estimate of GDP for the fourth quarter of 2012 will be published on 25 January 2013. The second estimate of GDP for the fourth quarter of 2012 will be published on 27 February 2013.
Release content and context
This release is 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 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.
Measuring the impact of the 2012 Olympic and Paralympic games in the National Acounts
An article titled 'Measuring the impact of the Olympics and Paralympic games in the National Accounts' (115.6 Kb Pdf) is available on the ONS' website which describes ONS' approach to ensuring that the planning, organising and economic activities associated with staging the games are recorded and recognised within the National Accounts.
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.
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 (197.4 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 November 2007 (2007 Q3) to August 2012 (2012 Q2). The analysis of revisions between month 2 and month 3 uses month 3 estimates published from December 2007 (2007 Q3) to September 2012 (2012 Q2).
|GDP growth in the 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)|
|per cent||per cent||per cent|
|Between M1 and M2||1.0||0.02||0.07|
|Between M2 and M3||1.0||-0.03||0.09|
Table 2 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 December 2004 (2004 Q3) to September 2009 (2009 Q2) for GDP.
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.
Revisions triangles for the main components of GDP from expenditure, output and income approaches are also available,
An article titled 'Updated analysis of revisions to quarterly GDP' (206.7 Kb Pdf) , published in October 2012 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 adjustments in the third quarter of 2012 indicate that, for 2012 quarter three, the level of both expenditure and income were higher than that of output.
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 relations office. Also available is a list of the names of those given pre-publication access (54.4 Kb Pdf) to the contents of this bulletin.
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