Commenting on today’s GDP figures, Head of GDP Rob Kent-Smith said:
“GDP contracted in the second quarter for the first time since 2012 after robust growth in the first quarter. Manufacturing output fell back after a strong start to the year, with production brought forward ahead of the UK’s original departure date from the EU.
“The construction sector also weakened after a buoyant beginning to the year, while the often-dominant service sector delivered virtually no growth at all.
“The trade deficit narrowed markedly, as imports fell following a sharp rise in the first quarter ahead of the UK’s original departure date from the EU.”
The services sector was the only positive contributor to GDP growth in Quarter 2 (Apr to Jun) 2019. However, growth in services was still subdued at 0.1%, the weakest quarterly growth in this sector since Quarter 2 2016, when services output also fell by 0.1%. Output in both the production and construction sectors contracted, at negative 1.4% and negative 1.3%, respectively. Within production, manufacturing fell by negative 2.3%, following strong growth of 1.9% in Quarter 1.
To put the volatility seen in recent periods in some context it can be useful to look at the six-month on six-month growth rate which, while showing some signs of weakening growth, do not present such a stark picture suggested by the most recent quarterly estimate.Back to table of contents
Rolling three-month growth was negative 0.2% in June 2019, continuing the steady decline that followed the relatively strong growth seen earlier in the year.
Rolling three-month growth is based on output gross value added (GVA) and so there will be discrepancies in the time series with our quarterly estimates of gross domestic product (GDP), which include information on the expenditure and income approaches to measuring GDP.Back to table of contents
|April 2019||May 2019||June 2019||Quarter 2 2019|
|Index of Services||0.0%||0.0%||0.0%||0.1%|
|Index of Production||-3.1%||1.2%||-0.1%||-1.4%|
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Monthly GDP growth was flat in June 2019, as services showed no growth for the fourth month in a row. Production and construction output both contracted in June.
Month on month GDP growth in April and May has been revised down by 0.1 percentage points each. Without these revisions GDP for Quarter 2 2019 would have been negative 0.1%.
The monthly growth rate for GDP is volatile and so 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
The services sector continued to show weakness in Quarter 2 (Apr to June) 2019 with subdued growth of 0.1%. There was widespread contraction within individual services industries, with 26 out of 51 industries falling. Architectural and engineering activities showed a notable fall in the most recent quarter.
The main driver of the quarterly growth was information and communication, which grew by 1.6%. Within this sub-sector, computer programming performed particularly well, in line with its general performance over the last few years.
Month-on-month growth in the services sector was flat in June 2019 for the fourth consecutive month. Growth of 0.8% in the professional, scientific and technical activities sector was offset by a fall of 1.4% in the administrative and support service activities sector.Back to table of contents
Quarterly growth in production was negative 1.4% in Quarter 2 2019. Manufacturing growth saw the biggest rolling three-month fall since April 2009, at negative 2.3%. This was partly as a result of an increase in activity in the previous three months as the UK approached its original planned exit date from the European Union, and partly as a result of the widespread car firm shut-downs in April. Elsewhere, electricity and gas production increased by 2.5%, partially offsetting the fall in manufacturing.
Monthly growth for June in production and manufacturing was negative 0.1% and negative 0.2%, respectively. This weakening in manufacturing comes despite the manufacture of transport equipment continuing its recovery. The main driver behind the weakness in manufacturing was the manufacture of basic metals and metal products, which fell by 2.8%.Back to table of contents
Quarterly growth in construction was negative 1.3% in Quarter 2 (Apr to Jun) 2019, while the month-on-month growth in June 2019 was 0.7%. Both the quarterly and monthly growth were driven by repair and maintenance, with the largest positive contributor being the construction of housing by government.Back to table of contents
The expenditure approach to measuring GDP contracted by 0.2% in Quarter 2 (Apr to June) 2019. Private consumption and government consumption continued to contribute positively to GDP growth in Quarter 2 2019. While gross capital formation (including gross fixed capital formation) decreased by 19.9%, this reflected volatile valuables (which are offset in trade) and inventories data.
More information on the expenditure and income approaches can be found in the GDP First quarterly estimate bulletin.Back to table of contents
Growth in nominal GDP slowed to 0.4% in Quarter 2 (Apr to June) 2019, following an increase of 0.9% in Quarter 1 (Jan to Mar) 2019. This was driven by a 1.3% increase in compensation of employees, partially offset by a 3.2% fall in the gross operating surplus of corporations.
More information on the expenditure and income approaches can be found in the GDP First quarterly estimate bulletin.
Blue Book 2019
Each year we produce an annual update to the UK National Accounts in the Blue Book and Pink Book and the associated releases. As already announced, the Blue Book and Pink Book 2019 consistent datasets will be published on 30 September 2019. The publication of monthly GDP on 10 October will also incorporate these changes.
Details have already been provided on the scope in the article Latest developments and changes to be implemented in Blue Book and Pink Book 2019. Indicative impacts on headline gross domestic product (GDP) components for the years 1997 to 2016 were published on 27 June 2019 in the article Blue Book 2019 indicative impacts on GDP current price and chained volume measure estimates: 1997 to 2016.
This year, due to the demanding set of changes being put through in the annual update, we are exceptionally not going to fully reconcile 2017 annual data, instead producing an indicative balance to allow further time for final quality assurance of the data.
Consequently, the reference year and last base year for all chained volume measure series will remain as 2016. A series of articles will be published on 20 August 2019 outlining some of the main methodological changes and their impact on quarterly GDP estimates quality and methodology.
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
Contact details for this Statistical bulletin
Telephone: +44 (0)1633 455284