1. Main points

  • UK gross domestic product (GDP) was estimated to have increased by 0.3% in Quarter 2 (Apr to June) 2017.
  • The growth in Quarter 2 2017 was driven by services, which grew by 0.5% compared with 0.1% growth in Quarter 1 (Jan to Mar) 2017.
  • The largest contributors to growth in services were retail trade, which improved after a fall in the first quarter, and film production and distribution.
  • Construction and manufacturing were the largest downward pulls on quarterly GDP growth, following 2 consecutive quarters of growth.
  • GDP per head was estimated to have increased by 0.1% during Quarter 2 2017.
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2. What’s changed in this release?

We launched a consultation on proposed changes to the GDP release schedule on 13 July 2017. Further details on the proposal, including a survey to respond to the consultation are available on our Consultation Hub.

Monthly economic commentary has been published alongside this release, presenting new analysis on the latest economic data.

We also welcome your feedback on the UK GDP(O) Low Level Aggregates dataset within this release via our short survey.

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3. Things you need to know about this release

Change in GDP is the main indicator of economic growth. The preliminary estimate of GDP is based solely on the output approach to measuring GDP.

The output approach measures gross value added (GVA) at a detailed industry level before aggregating to produce an estimate for the whole economy. GDP (as measured by the output approach) can then be calculated by adding taxes and subtracting subsidies (both only available at whole economy level) to this estimate of total GVA. However, as there is no information available on taxes and subsidies at this stage, the quarterly growth for output GVA is taken as a proxy for GDP growth (more information on creating the preliminary estimate of GDP is available on the methodology page of our website).

The preliminary estimate is the first of three estimates of GDP published by the Office for National Statistics, followed by the second estimate and the quarterly national accounts. In the second estimate of GDP and the quarterly national accounts, the output GVA and GDP estimates are balanced with the equivalent income and expenditure approaches to produce headline estimates of GVA and GDP. Further information on all three approaches to measuring GDP can be found in the national accounts.

All data in this bulletin are seasonally adjusted, chained volume estimates and have had the effect of price changes removed (in other words, the data are deflated).

The growth estimates within this release are created from short-term measures of output and should be considered alongside medium and long-term patterns in the series to give a more comprehensive picture. At this stage, data content is less than half of the total required for the final output estimate. The estimate is subject to revision as more data become available, but these revisions are typically small between the preliminary and third estimates of GDP, with no upward or downward bias to these revisions. More information on the data content and the monthly path of the components of the output measure of GDP are included in section 6.

In accordance with National Accounts Revisions Policy, there are no periods open for revision in this release.

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.

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4. Gross domestic product (GDP) main figures

Table 1 shows data for GDP, GDP per head and each of the main industry aggregates for Quarter 2 (Apr to June) 2017.

Figure 1 shows the seasonally adjusted volume series for GDP, along with quarter-on-quarter growths, over the past decade. Following growth of 0.3% in Quarter 2 2017, GDP has grown for 18 consecutive quarters.

Figure 2 shows the average compound quarterly growth rate experienced over the 5 years prior to the economic downturn in 2008 to 2009, the average compound quarterly growth rate experienced between Quarter 3 (July to Sept) 2009 and Quarter 2 (Apr to June) 2014 (5 years following the downturn), and the current quarterly growth rate seen in the most recent period (Quarter 2 2017). Compound average growth is the rate at which a series would have increased or decreased if it had grown or fallen at a steady rate over a number of periods. This allows the composition of growth in the recent economic recovery to be compared with the long run average.

The UK experienced slightly slower average compound GDP growth in the 5 years following the economic downturn compared with the 5 years prior; this is also true of the services industry. Figure 2 shows that in Quarter 2 2017, total GDP, production and construction were all weaker than their post-downturn average. Services has grown in line with its post-downturn average in Quarter 2 2017.

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5. Services dominate GDP growth while construction and manufacturing fall

In Quarter 2 (Apr to June) 2017, UK GDP was estimated to have increased by 0.3%. The services aggregate was the main driver to the growth in GDP, contributing 0.42 percentage points. Production and construction recorded falls in Quarter 2 2017 of 0.4% and 0.9% respectively, each contributing negative 0.06 percentage points to GDP. Agriculture recorded moderate growth of 0.6%, contributing nothing to GDP due to the low industry weight.

Services

Services grew by 0.5% in Quarter 2 2017, compared with growth of 0.1% in Quarter 1 (Jan to Mar) 2017. Growth was broad-based in the latest quarter with all four main sectors increasing.

The main contributor to growth was the distribution, hotels and restaurants sector, which increased by 1.1%, contributing 0.15 percentage points to quarter-on-quarter GDP growth. Retail trade, except of motor vehicles, and food and beverage service activities were the main contributors to the growth in this sector (Figure 3). These industries combined contributed 0.12 percentage points to GDP. Following a fall of 1.4% in Quarter 1 2017, retail trade is now largely flat during the first half of 2017.

The second largest contributor was motion picture activities, which grew by 8.2% and contributed 0.07 percentage points to GDP growth. Further information on the high-grossing films in Quarter 2 2017 can be found on the BFI website. Motion picture activities are a subset of the transport, storage and communications sector, which grew by 1.0%.

Business services and finance grew by 0.4%, with office administrative activities being the main contributor to the growth.

Government and other services grew by 0.2%, with human health activities and education being significant contributors, reflecting their large weights within GDP.

Production

Within production, manufacturing decreased by 0.5% in Quarter 2 2017, due mainly to a large fall in the manufacture of motor vehicles. In addition, mining and quarrying decreased by 0.9% and water supply, sewerage, waste management and remediation activities decreased by 0.4%.

However, these negative growths were partially offset by a 0.3% increase in electricity, gas, steam and air conditioning supply. This, however, followed a large fall of 4.2% in Quarter 1 2017.

Construction

Construction output was estimated to have decreased by 0.9% during Quarter 2 2017, following growth of 1.1% during Quarter 1 2017.

Agriculture

Agriculture output was estimated to have increased by 0.6% in Quarter 2 2017, following growth of 0.1% in Quarter 1 2017. Agriculture is the smallest of the main industrial groups with a weight of less than 1% in the output measure of GDP.

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6. Data content and monthly path of components for Quarter 2 (Apr to June) 2017 preliminary estimate

Figure 4 contains information about the data content for each month in Quarter 2 2017 and the quarter as a whole. The data content for the Quarter 2 2017 preliminary estimate is 45% of total output data, which is broadly the same as previous preliminary estimates.

The approach to producing the preliminary GDP estimate uses monthly output data for April and May and forecasts for estimating June. The forecasts are reinforced by early responses to our Monthly Business Survey. More information on creating the preliminary estimate of GDP is available on the methodology page.

The Index of Production, construction output and Index of Services all feed into the headline GDP estimate. Some small revisions have taken place to previously published estimates, as seen in Table 2. Additional detail for sectors within production and services can be found in the Monthly Path dataset, published alongside this bulletin.

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8. Quality and methodology

Some general information on the quality of the estimate of GDP can be found in the “Things you need to know about this release” section in the main part of this statistical bulletin. Further information is available on the methodology page of our website.

The GDP Quality and Methodology Information document contains important information on:

  • the strengths and limitations of the data
  • the quality of the output; including the accuracy of the data and how it compares with related data
  • uses and users
  • how the output was created

The national accounts provide an integrated description of all economic activity within the economic territory of the UK, including activity involving both domestic units (that is, individuals and institutions resident in the UK) and external units (those resident in other countries). In addition to being comprehensive, the accounts are fully integrated and internally consistent. More information can be found in the UK National Accounts: A Short Guide.

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Contact details for this Statistical bulletin

James Scruton
gdp@ons.gsi.gov.uk
Telephone: +44 (0)1633 456724