Commenting on today’s GDP figures, Head of GDP Rob Kent-Smith said:
“Growth in the economy picked up in the three months to July. Services grew particularly strongly, with retail sales performing well, boosted by warm weather and the World Cup. The construction sector also bounced back after a weak start to the year.
“However, production fell back, with manufacturing again slipping a little while energy generation and supply fell due to reduced demand.
“The dominant service sector again led economic growth in the month of July with engineers, accountants and lawyers all enjoying a busy period, backed up by growth in construction, which hit another record high level.”
In today’s headline figures, the three months of the current period (May, June and July) are being compared with the three months of the base period (February, March and April). While monthly growths in the current period weren’t notably strong, the months in the base period had weak or negative growth. Therefore, at face value the current period growth appears strong when compared with the base period. When Quarter 3 (July to Sept) growth is calculated, the poor growths of February and March will have dropped out of the base period. For more information on these effects, see A guide to interpreting monthly gross domestic product.Back to table of contents
Contributions to rolling three-month gross domestic product (GDP) growth in July followed a similar pattern to last month’s figures, with a rolling three-month growth of 0.6% in the services industries resulting in a large positive contribution. Production industries had growth of negative 0.5%, dragging on GDP growth. However, construction had a larger contribution to GDP growth than last month, with a large rolling three-month growth of 3.3%.Back to table of contents
Rolling three-month growth in July 2018 was the highest since August 2017, when it was also 0.6%. This continued a pickup from flat growth seen in April 2018, which was in some part related to the bad weather seen in the first quarter of 2018. Rolling three-month growth was last higher in February 2017 at 0.9%.
Rolling three-month growth is based on output gross value added (GVA) and therefore there will be discrepancies in the time series with our quarterly estimates of GDP, which include information on the expenditure and income approaches to measuring GDP.Back to table of contents
Table 1: Breakdown of GDP growth rates by month
|Table 1: Breakdown of GDP growth rates by month|
|Index of Services||0.2%||0.0%||0.3%|
|Index of Production||-0.2%||0.4%||0.1%|
|Source: Office for National Statistics|
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The month-on-month gross domestic product (GDP) growth rate was 0.3% in May 2018, 0.1% in June and 0.3% in July.
The monthly growth rate for GDP is volatile and therefore it should be used with caution and alongside other measures, such as the three-month growth rate, when looking for an indicator of the longer-term trend of the economy. However, it is useful in highlighting one-off changes that can be masked by three-month growth rates.Back to table of contents
Three-month growth to July in services industries was driven by growth in retail trade and wholesale trade. Retail trade contributed 0.11 percentage points to three-month growth and wholesale trade contributed 0.06 percentage points. These two industries experienced strong growths in the months of May and July. High growth in these industries was due in part to the good weather experienced in the months May to July. According to Met Office data, summer 2018 was the joint hottest summer in the UK since records began.
Month-on-month growth in services in July was 0.3%. This was mainly driven by professional, scientific and technical activities industries, with a monthly growth of 1.5% and a contribution of 0.12 percentage points to headline gross domestic product (GDP). This industry has shown substantial growth over the past two years. Within this industry, architectural and engineering activities was the largest contributor with a monthly growth of 4.4%, although this follows a month-on-month growth rate of negative 2.6% in June.Back to table of contents
Rolling three-month growth in the production industries was negative 0.5%.
Within production, mining and quarrying had a monthly growth rate of 3.3%. This was due to a recovery following maintenance in May and June. However, this maintenance in part explained the negative 0.5% rolling three-month growth in July.
Manufacturing month-on-month growth in July was negative 0.2%, largely due to negative growth in pharmaceutical products, an industry that is known to be volatile. However, 8 out of 13 manufacturing industries experienced positive growth this month. Rolling three-month manufacturing growth to July was negative for the fifth consecutive rolling period at negative 0.1%.
Electricity, gas, steam and air conditioning supply month-on-month growth in July was 0.2%. Rolling three-month growth to July was negative 4.5%, the third consecutive rolling period of negative growth.Back to table of contents
Construction rolling three-month growth to July was 3.3%. The sector continued to recover from a period of negative growth in the start of 2018. This is the highest rolling three-month growth since February 2017 when growth was 4.1%. Growth was largely driven by repair and maintenance work.
Monthly growth for construction was 0.5%. This was largely driven by stronger than usual growth in housebuilding for this time of year. Construction output reached a record high level in July.Back to table of contents
On 15 June 2017, we announced that automatic pre-release access to official statistics would end from 1 July 2017 and would only be considered in exceptional circumstances, where denying such access would significantly impede the taking of action in the public interest. In accordance with this, exceptional pre-release access for the Bank of England has been granted for this release.Back to table of contents
The Gross Domestic Product (GDP) Quality and Methodology Information report contains important information on:
the strengths and limitations of the data and how it compares with related data
uses and users of the data
how the output was created
the quality of the output including the accuracy of the data
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