Second estimate of GDP: July to September 2017

The second quarterly estimate of GDP based on additional data but produced later than the preliminary estimate, providing a more precise indication of economic growth.

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Release date:
23 November 2017

Next release:
22 February 2018

1. Main points

  • UK gross domestic product (GDP) in volume terms was estimated to have increased by 0.4% between Quarter 2 (Apr to June) and Quarter 3 (July to Sept) 2017, unrevised from the preliminary estimate of GDP.
  • Services remained the strongest contributor to GDP growth in Quarter 3 2017, with the components of the output approach broadly unrevised from the preliminary estimate.
  • The rate of growth in household final consumption expenditure strengthened to 0.6% between Quarter 2 and Quarter 3 2017, with car purchases recovering somewhat from a low Quarter 2.
  • Business investment growth softened to 0.2% between Quarter 2 and Quarter 3 2017.
  • GDP per head was estimated to have increased by 0.3% between Quarter 2 and Quarter 3 2017.
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2. Things you need to know about this release

Gross domestic product (GDP) growth is the main indicator of economic performance. There are three approaches used to measure GDP; the output approach, the expenditure approach and the income approach.

This second estimate of GDP is produced around seven and a half weeks after the end of the quarter. At this stage the data content of this estimate from the output measure of GDP has risen since the preliminary estimate to around 90% of the total required for the final output-based estimate. There is also around 70% data content available to produce estimates of GDP from the expenditure approach and 60% data content for the income approach. Further information on all three approaches to measuring GDP can be found in the short guide to national accounts (PDF, 317KB).

Data in chained volume measures within this bulletin have had the effect of price changes removed (in other words, the data are deflated), with the exception of income data, which are only available in current prices.


In line with National Accounts Revisions Policy the only time series open for revision in this release is Quarter 3 (July to Sept) 2017.

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3. Growth for Quarter 3 (July to Sept) 2017 unrevised

UK gross domestic product (GDP) increased by 0.4% between Quarter 2 (Apr to June) 2017 and Quarter 3 (July to Sept) 2017, a similar rate of growth to the previous two quarters. This is unrevised from the preliminary estimate of GDP published on 25 October 2017.

Table 1 shows GDP and the headline economic indicators from 2015 onwards.

Figure 1 shows the seasonally adjusted level of GDP along with quarterly growths. The growth between Quarter 2 2017 and Quarter 3 2017 is the 19th consecutive quarterly increase and continues the UK’s period of growth since Quarter 1 (Jan to Mar) 2013.

Growth in UK GDP is now 9.7% above the GDP pre-economic downturn peak in Quarter 1 2008, having surpassed it in Quarter 2 2013.

When looking at UK GDP growth in volume terms in the current quarter compared with the same quarter a year ago, GDP increased by 1.5% between Quarter 3 2016 and Quarter 3 2017.

Implied deflator

The GDP implied deflator at market prices for Quarter 3 2017 is 1.9% above the same quarter of 2016. The GDP implied deflator is calculated by dividing current price (nominal) GDP by chained volume (real) GDP and multiplying by 100 to convert to an index. It is not used in the calculation of GDP; the deflators for expenditure components, which are the basis for the implied GDP deflator, are used directly in the compilation of real GDP.

GDP per head

GDP per head is calculated by dividing GDP in chained volume measures by the population estimates and projections. It is not a measure of productivity or well-being, but is a useful statistic as it removes the impact of the changing size of the population from headline GDP figures.

In Quarter 3 2017, GDP per head grew by 0.3% compared with Quarter 2 2017.

GDP per head is now 2.4% above the GDP pre-economic downturn peak in Quarter 1 2008, having surpassed it in Quarter 2 2015 (Figure 2).

The population estimates used in this release are those published on 22 June 2017 and the population projections used are those published on 29 October 2015. The population projections published on 26 October 2017 will be included in the Quarterly National Accounts Quarter 3 2017 release to be published on 22 December 2017.

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4. Services drive growth in the output measure of GDP in Quarter 3 2017

The output approach to measuring gross domestic product (GDP) involves estimating production activity within the UK economy. It increased by 0.4% between Quarter 2 (Apr to June) 2017 and Quarter 3 (July to Sept) 2017 and was unrevised from the preliminary estimate of GDP.

In Quarter 3 2017:

  • agriculture increased by 0.2%
  • production increased by 1.1%
  • construction decreased by 0.9%
  • services increased by 0.4%


The largest component within the output approach of GDP is the services industries, which drove the growth in the output measure of GDP in Quarter 3 2017. Services increased by 0.4%, unrevised from the preliminary estimate of GDP. Positive growth was recorded within three out of four sub-sectors of the services industries between Quarter 2 2017 and Quarter 3 2017, with transport, storage and communications remaining flat with zero growth. The largest contribution to quarterly GDP growth was from business services and finance, which contributed 0.2 percentage points; within this industry group the largest contributor to growth was professional, scientific, administration and support, which includes employment activities, and accounting, bookkeeping and auditing activities.

Further detail on the services industries’ lower-level components can be found in the Index of Services statistical bulletin.


Production output was estimated to have increased by 1.1% between Quarter 2 2017 and Quarter 3 2017, revised up by 0.1 percentage points from the preliminary estimate of GDP. Within production, growth was broad-based with all four sub-sectors of the production industries seeing positive growth into Quarter 3 2017. Mining and quarrying including oil and gas extraction increased by 2.1%, whilst electricity, gas and steam and air conditioning, and manufacturing both increased by 1.1%. The fourth component of production, water supply industries, increased by 0.7%.


Construction output was estimated to have decreased by 0.9% in the third quarter of 2017, which has been revised downwards from negative 0.7% in the preliminary estimate of GDP. This is the second consecutive quarter with a decrease in growth after a sustained period of positive growth in all quarters since Quarter 4 (Oct to Dec) 2015. Further information relating to the most recent quarter can be found in the Construction output in Great Britain statistical bulletin.


Agriculture, the sector that makes up the smallest proportion of total output, increased by 0.2% into Quarter 3 2017, revised down by 0.8 percentage points from the preliminary estimate of GDP. New data received for the period has driven this revision.

Figure 3 shows the contributions to growth from the sectors of output. The services industries contributed the largest to GDP growth, with 0.3 percentage points. Total production contributed 0.2 percentage points to GDP. These positive contributions were offset by a negative 0.1 percentage point contribution from the construction industry. Agriculture provided no contribution to GDP growth to one decimal place.

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5. Household spending strengthens, driving growth in expenditure

The expenditure approach to measuring gross domestic product (GDP) increased by 0.4% between Quarter 2 (Apr to June) 2017 and Quarter 3 (July to Sept) 2017. The expenditure approach is the sum of all final expenditures within the economy, that is, all expenditure on goods and services that are not used up or transformed in the production process.

Household final consumption expenditure (HHFCE)

HHFCE, or household spending, grew by 0.6% between Quarter 2 2017 and Quarter 3 2017, recovering from a lower growth of 0.2% between Quarter 1 2017 and Quarter 2 2017.

The path of quarterly growth in household spending through the first three quarters of 2017 was in part driven by changes in the timing of car purchases in response to increases in Vehicle Excise Duty on high-polluting vehicles (which came into force in April 2017). These changes led to consumers bringing forward planned new car purchases, leading to a decline in Quarter 2 and since then we have seen a modest recovery to expenditure on transport (including motor cars) into Quarter 3.

General government final consumption expenditure (GGFCE)

Government expenditure grew by 0.3% in volume terms, while current price expenditure decreased by 0.3% between Quarter 2 and Quarter 3 2017. The largest contributors to volume GDP growth are healthcare services and education services; healthcare also had the largest contribution to the corresponding decline in the current price measure.

Gross fixed capital formation (GFCF)

In Quarter 3 2017, GFCF increased by 0.2% compared with Quarter 2 2017. Within the sectors of GFCF, business investment growth softened to 0.2% in Quarter 3 2017. When looking at the asset breakdown of GFCF, both dwellings and intellectual property products showed positive growth in Quarter 3 2017. All other assets were flat or decreased in this period.

Further details of the asset and sector breakdown can be found within the Business investment release.

Trade in goods and services

In Quarter 3 2017, the net trade deficit widened by £2,536 million to negative £11,737 million in volume terms, the largest widening since Quarter 3 2016, contributing negative 0.5 percentage points to GDP growth. Total trade exports decreased by 0.7% whilst total imports increased by 1.1%, between Quarter 2 and Quarter 3 2017.

The decrease in total exports was due to a decrease of 1.8% in goods exported, partially offset by 0.6% positive growth in services exported. The decrease in goods exported was driven by fuels, specifically oils and chemicals. The increase in services exported was driven by other business services.

The increase in total imports was due to an increase of 1.9% in goods imported, partially offset by a fall of 1.5% in services imported. The increase in goods imported was driven by non-monetary gold within the unspecified goods component, fuels, and machinery and transport equipment. The decrease in services imported was driven by other business services.

The trade data used within this release are consistent with the monthly UK trade release published on 10 November 2017 and are the latest monthly trade figures available.

Figure 4 shows the quarterly contribution of the expenditure components to the growth of GDP in chained volume measures from Quarter 4 (Oct to Dec) 2015 to Quarter 3 2017. In the latest quarter the largest contribution to growth was from gross capital formation (GCF), at 0.5 percentage points. This was driven by acquisitions less disposals of valuables, in particular the trade in non-monetary gold. However, this was offset by the negative contribution from net trade of 0.5 percentage points, which also includes non-monetary gold, therefore making this transaction GDP neutral. You can find out more about the impact of non-monetary gold in the article A brief explanation of non-monetary gold in national accounts.

The only other positive contributor to GDP growth was household final consumption expenditure contributing 0.4 percentage points. The contribution of all other components of the expenditure approach was flat to one decimal place.

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6. Compensation of employees leads growth in nominal measure of GDP

Nominal gross domestic product (GDP) increased by 0.7% between Quarter 2 (Apr to June) 2017 and Quarter 3 (July to Sept) 2017.

The income approach measures income generated by production in the form of gross operating surplus (profits), compensation of employees (income from employment) and mixed income (self-employment income) for the whole economy.

All data quoted in the rest of this section are in current prices seasonally adjusted.

Within the income measure of GDP, all four components increased between Quarter 2 2017 and Quarter 3 2017.

Compensation of employees (CoE)

CoE, which includes wages and salaries, and employers' social contributions, showed positive growth of 0.7% (seasonally adjusted) into Quarter 3 2017. This was due to positive growth in both wages and salaries, and employers’ social contributions.

Taxes on products and production less subsidies

Taxes on products and production less subsidies showed an increase of 1.4% in Quarter 3 2017.

Other income

There was also an increase in other income, of 0.2%. This category includes mixed income and the operating surplus of the non-corporate sector.

Gross operating surplus of corporations

Gross operating surplus of corporations saw positive growth in Quarter 3 2017 of 0.6%. This includes the operating surplus of private corporations, private non-financial corporations and public corporations. This is in contrast to the previous quarter where this category of income experienced negative 0.2% growth in Quarter 2 2017.

Figure 5 shows the contribution made by income components to current price GDP. CoE was the largest contributor to the income measure of GDP, contributing 0.4 percentage points to growth.

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7. How is the UK economy performing compared with other European and non-European countries?

The estimates quoted in this international comparison section are the latest available estimates at the time of preparation of this statistical bulletin and may subsequently have been revised.

All of the areas included within our international comparisons that have reported gross domestic product (GDP) saw positive growth in Quarter 3 (July to Sept) 2017, with growth rates within 0.5 percentage points of each other.

During Quarter 3 2017, Japan experienced the slowest growth of 0.3% among European and G7 countries, just below that of the UK and USA, whose GDP grew by 0.4% each. Growth in the UK economy was the lowest of these countries in both Quarter 1 (Jan to Mar) and Quarter 2 (Apr to June). In Quarter 3, the UK was the joint-second lowest within this table. In Quarter 3 2017, Germany experienced the highest growth at 0.8%. Both France and Italy experienced growth of 0.5% (Table 2).

The European Union (EU28) grew by 0.6%, marking 18 consecutive quarters of positive growth, and in the same period, the group of Euro Area countries (EA19) grew by 0.7%.

All G7 countries are currently above pre-economic downturn peaks except for Italy whose gross domestic product (GDP) remains 5.9% below the pre-downturn peak (Quarter 1 2008). Canada shows signs of the strongest recovery at 16.8% (based on Quarter 2 2017 figures), while the USA has the second strongest of 15.2%. The UK has the fourth strongest rate at 9.7%.

The data used for these international comparisons are gathered from the Organisation for Economic Co-operation and Development’s website excluding the data from the UK, which is compiled within Office for National Statistics.

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9. Are there any upcoming changes?

GDP release schedule consultation

We ran a consultation on proposed changes to the GDP release schedule and the introduction of monthly GDP estimates, which closed on 14 September 2017. We published our response to the consultation on 19 October 2017.

VAT project

The latest VAT turnover research article was published on 20 November 2017, which reviewed the methodological improvements and provides further detail on implementation plans for the use of VAT returns data in the compilation of Quarterly National Accounts July to September 2017 and the Index of Services October 2017 bulletins, which are both due for publication on 22 December 2017.

Annual benchmarks

In the next quarterly national accounts release (22 December 2017) we will take on the 2016 annual benchmarks. These relate mostly to the components of GDP that include data from annual surveys such as the annual International Trade in Services (ITIS) survey and Financial Inquiries surveys. These updates will help to improve the quality of our estimates where we are able to replace forecast and short-term estimates with annual survey data.

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10. 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

The national accounts are drawn together using data from many different sources. This ensures that the national accounts are comprehensive and provide different perspectives on the economy, for example, sales by retailers and purchases by households.

Important quality issues

There are common pitfalls in interpreting data series and these include:

  • 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”.

Many different approaches can be used to summarise revisions; the “Validation and quality assurance” section in the Quality and Methodology Information report analyses the mean average revision and the mean absolute revision for GDP estimates over data publication iterations. In addition to this analysis, section 11 of the Revisions to gross domestic product in Blue Book 2016 article updates the metrics used to test revisions performance to answer the question “Is GDP biased?”

Reaching the GDP balance

The different data content of the three approaches – the output approach, the expenditure approach and the income approach – dictates the approach taken in balancing quarterly data. In the UK, there are more data available on output than in either of the other two approaches. However, to obtain the best estimate of GDP (the published figure), the estimates from all three approaches are balanced to produce an average, except in the latest quarter where the output data takes the lead due to its larger data content.

Information on the methods we use for Balancing the output, income and expenditure approaches to measuring GDP is available.

Alignment adjustments, found in Table M of the second estimate of GDP datasets in this release, have a target limit of plus or minus £2,000 million on any quarter. To achieve the balance through alignment, balancing adjustments are applied to the expenditure and income components of GDP as required. They are applied to those individual components where data content is particularly weak in a given quarter due to a high level of forecast content.

The size and direction of the quarterly alignment adjustments in Quarter 3 2017 indicate that in this quarter the growth of expenditure and income are higher than the growth of output before the alignment adjustment is taken into account.

Table 3 shows the balancing adjustments applied to the GDP estimates in this publication.

Further information

We are committed to ensuring all information provided is kept strictly confidential and will only be used for statistical purposes. Further details regarding confidentiality can be found in the respondent charters for businesses and households.

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