Second Estimate of GDP: Quarter 4 (Oct to Dec) 2015

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.

This is not the latest release. View latest release

25 February 2016

An error has been identified during further quality assurance of the GFCF dataset published as part of our annual Blue Book publication on 30 September 2015. The affected series are NPQS, NPQT, NPEL, L636, DLWL, DLWO, DLWT and their associated growth rate series. Higher level aggregates including Gross Domestic Product are also affected.

Data will be revised and fully incorporated into the GFCF and GDP estimates in the Blue Book consistent Quarterly National Accounts release to be published 30 June 2016.

Further detail on the expected impact on GFCF and GDP estimates will be provided in the articles listed

  • 'Impact on GDP Current Price annual estimates 1997-2011'
  • 'Impact on GDP Chained Volume Measure annual estimates 1997-2011' to be published 23 March 2016
  • 'Impact on GDP Current Price and Chained Volume Measure quarterly and annual estimates 1997-2014' to be published 20 May 2016
This is an accredited national statistic.

Contact:
Email Matthew Hughes

Release date:
25 February 2016

Next release:
31 March 2016

1. Main points

UK GDP in volume terms was estimated to have increased by 0.5% between Quarter 3 (July to Sept) 2015 and Quarter 4 (Oct to Dec) 2015, unrevised from the preliminary estimate of GDP published on 28 January 2016.

Between 2014 and 2015, GDP in volume terms increased by 2.2%, unrevised from the previous estimate. Between Quarter 4 2014 and Quarter 4 2015, GDP in volume terms increased by 1.9%, unrevised from the previously published estimate.

GDP in current prices remained flat between Quarter 3 2015 and Quarter 4 2015.

GDP per head in volume terms was estimated to have increased by 0.3% between Quarter 3 2015 and Quarter 4 2015. Between 2014 and 2015, GDP per head increased by 1.5%.

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2. Understanding GDP

GDP growth is the main indicator of economic performance. There are 3 approaches used to measure GDP.

Gross value added (GVA) is the sum of goods and services produced within the economy less the value of goods and services used up in the production process (intermediate consumption). The output approach measures 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 (more information on creating the preliminary estimate of GDP is available on our methods and sources page).

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.

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, that is, final consumption (not intermediate) for the whole economy.

The second estimate of GDP is based on revised output data, together with data from some expenditure and income components. 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 3 approaches to measuring GDP can be found in the Short Guide to National Accounts (105.5 Kb Pdf).

All data in this bulletin are seasonally adjusted estimates and 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.

Growth for GDP and its components is given between different periods. Latest year-on-previous-year gives the annual growth between one calendar year and the previous. Latest quarter-on-previous-quarter growth gives growth between one quarter and the quarter immediately before it. Latest quarter-on-corresponding-quarter-of-previous-year shows the growth between one quarter and the same quarter a year ago.

In line with national accounts revisions policy, the earliest period open for revision in this release is Quarter 1 (Jan to Mar) 2015.

About the Second Estimate of GDP

The second estimate of GDP is produced around 7 and a half weeks after the end of the quarter to provide a timely estimate of GDP. At this stage the data content of this estimate from the output measure of GDP has risen to around 80% of the total required for the final output based estimate. There is also around 50 to 60% data content available to produce estimates of GDP from the expenditure and income approaches.

The quality of the GDP estimate

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, e.g. sales by retailers and purchases by households. One source of information is from business surveys which use information provided directly from UK businesses. These data are subject to many layers of vigorous quality assurance by highly trained personnel, from clarity and confirmation of individual unit data direct from the business contact to scrutiny of data at the macro level. Other sources of data include other government departments and administrative data, including Value-Added Tax data from HM Revenue & Customs (HMRC) which are subject to quality checks and challenge from ONS. By comparing and contrasting these different sources, the national accounts produce a single picture of the economy which is consistent, coherent and fully integrated.

The production and publication of each GDP release is managed by a highly skilled team with a strong emphasis on statistical, analytical and economic debate throughout the production process to publish the headline GDP estimate and components. Although a limited audience have access to GDP data ahead of publication, those involved in the process are selected to ensure each GDP balance achieves a rigorous statistical and economic challenge. A 'balancing meeting' is held during each production round where presentations assess GDP and components against a swathe of external indicators and a focus on GDP headline components. This is attended by senior managers within ONS who challenge the data to ensure consistency and plausibility of the GDP balance. We recognise the importance of transparency and have recently introduced an additional section in our background notes where the balancing adjustments applied - size and the components targeted - are now published.

Accompanying each quarterly and annual production cycle, external quality assurers with particular areas of expertise are invited to challenge and report on the statistical and economic coherence of the headline national account and component dataset. Current assessors include HM Treasury, Bank of England, National Institute of Economic and Social Research, HMRC and Tax Administration Research Centre. Drawing on their personal experience, expertise and subject knowledge, the external quality assurers work in a personal capacity to challenge the synergy of the dataset from a full range of views - from producers, data compilers and from users of the statistics - before final sign off.

Unlike many short term indicators published by the ONS, there is no simple way of measuring the accuracy of GDP. All estimates, by definition, are subject to statistical uncertainty and for many well-established statistics we measure and publish the sampling error and non-sampling error associated with the estimate, using this as an indicator of accuracy. Since sampling is typically done to determine the characteristics of a whole population, the difference between the sample and population values is considered a sampling error. Non-sampling errors are a result of deviations from the true value that are not a function of the sample chosen, including various systematic errors and any other errors that are not due to sampling. The estimate of GDP, however, is currently constructed from a wide variety of data sources, some of which are not based on random samples or do not have published sampling and non-sampling errors available and as such it is very difficult to measure both error aspects and their impact on GDP. While development work continues in this area, like all other G7 national statistical institutes, we don't publish a measure of the sampling error/non-sampling error associated with GDP.

One dimension of measuring accuracy is reliability, which is measured using evidence from analyses of revision to assess the closeness of early estimates to subsequently estimated values. Many users try to minimise the impact of uncertainty through using the historical experience of revisions as a basis for estimating how confident they are in early releases and predicting how far and in what direction the early release might be revised. Revisions are an inevitable consequence of the trade-off between timeliness and accuracy. The estimate is subject to revisions as more data become available, but between the preliminary and third estimates of GDP, revisions are typically small (around 0.1 to 0.2 percentage points), with the frequency of upward and downward revisions broadly equal. Many different approaches can be used to summarise revisions; the Validation and Quality Assurance section in the Quality and Methodology Information paper (518.9 Kb Pdf) analyse the mean average revision and the mean absolute revision for GDP estimates over data publication iterations. In addition to this analysis, Section 14 of the Revisions to GDP and components in Blue Books 2014 and 2015 article updates the metrics used to test revisions performance in order to answer the question ‘Is GDP biased?’

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3. Headline GDP components and GDP per head

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4. Historical context

As seen in Figure 1, GDP in the UK grew steadily during the 2000s until a financial market shock affected UK and global economic growth in 2008 and 2009. Economic growth resumed towards the end of 2009, but generally at a slower rate than the period prior to 2008. From the peak in Quarter 1 (Jan to Mar) 2008 to the trough in Quarter 2 (Apr to June) 2009 GDP decreased by 6.1%. This can be compared to previous economic downturns in the early 1980s and early 1990s, which saw lower levels of impact on GDP. In the early 1990s downturn, GDP decreased by 2.2% from the peak in Quarter 2 1990 to the trough in Quarter 3 (Jul to Sept) 1991. In the early 1980s downturn, GDP decreased by 5.6% from the peak in Quarter 2 1979 to the trough in Quarter 1 1981.

From Quarter 3 2009 growth continued to be erratic, with several quarters between 2010 and 2012 recording low or negative GDP growth. This two-year period coincided with special events (for example severe winter weather in Quarter 4 (Oct to Dec) 2010, the Diamond Jubilee in Quarter 2 2012 and the London Olympics and Paralympics in Quarter 3 2012 that are likely to have affected growth both adversely and positively. Since 2013, GDP has grown steadily, with the economy exceeding pre-downturn peak levels in Quarter 2 2013.

Quarter 4 2015 has shown continued strength with GDP growing by 0.5% compared with the previous quarter, by 1.9% between Quarter 4 2014 and Quarter 4 2015, and by 2.2% between 2014 and 2015. GDP has now increased for 12 consecutive quarters, breaking a pattern of slow and erratic growth from 2009.

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5. GDP analysed by output categories, chained volume measures, tables B1 and B2

Annex A contains output component growth rates back to Quarter 1 (Jan to Mar) 2015.

Two of the four main output industrial groupings within GDP showed increases in Quarter 4 (Oct to Dec) 2015 compared with Quarter 3 (July to Sept) 2015, with production and construction falling in this period. Within production, three of the four components decreased with only manufacturing showing flat growth. This resulted in overall negative growth in total production. All components within the service industries showed increases.

Production output decreased by 0.5% in Quarter 4 2015 compared with Quarter 3 2015, revised down 0.3 percentage points from the previously published estimate. Within the production sub-industries, output from mining and quarrying, including oil and gas extraction, decreased by 2.3%; manufacturing (the largest component of production) remained flat (Figure 2), and electricity, gas, steam and air conditioning supply industries decreased by 2.4%. Water supply and sewerage decreased by 0.4%.

When comparing Quarter 4 2015 with Quarter 4 2014, production output increased by 0.6%, revised down 0.5 percentage points from the previously published estimate. Mining and quarrying, including oil and gas extraction, increased by 8.7%, while water supply and sewerage increased by 4.0%. Manufacturing fell by 1.0% between these periods while the electricity, gas, steam and air conditioning supply industries decreased by 1.3%.

Construction output decreased by 0.4% in Quarter 4 2015, revised down 0.3 percentage points from the previously published estimate. Construction output increased by 0.4% between Quarter 4 2014 and Quarter 4 2015, revised up 0.1 percentage points from the previously published estimate.

The service industries increased by 0.7% in Quarter 4 2015 (Figure 3), unrevised from the previous estimate, marking the twelfth consecutive quarter of positive growth. This follows a 0.6% increase in Quarter 3 2015.

Output of the distribution, hotels and restaurants industries increased by 1.4% in Quarter 4 2015, following a 0.9% increase in Quarter 3 2015. The increase in the latest quarter was largely due to retail trade, except of motor vehicles and motorcycles.

Output of the transport, storage and communication industries increased by 0.9% in Quarter 4 2015, following a 0.9% increase in Quarter 3 2015. The largest contributor to the increase was computer programming, consultancy and related activities.

Business services and finance industries’ output increased by 0.7% in Quarter 4 2015, following a 0.6% increase in Quarter 3 2015. The largest contributors to the increase were office administrative, office support and other business support activities and imputed rent.

Output of government and other services increased by 0.2% in Quarter 4 2015, after increasing by 0.3% in Quarter 3 2015. In the latest quarter the largest upward contribution came from education.

Further detail on the service industries’ lower level components can be found in the Index of Services statistical bulletin published on the same day as this release.

Gross value added (GVA) excluding oil and gas extraction increased by 0.5% in Quarter 4 2015 following a 0.4% increase in Quarter 3 2015.

Figure 4 shows the path of GDP and its headline industries (this excludes agriculture, and includes manufacturing which is a sub-component of production) relative to their level of output achieved in Quarter 1 2008.

Industries have shown differing trends following the recent economic downturn. The construction, manufacturing and production industries were more acutely affected by the deterioration in economic conditions, with output falling from peak to trough by 17.1%, 12.3% and 10.6% respectively. In contrast, output in the services industry only fell by 4.1% from its peak to trough.

Production and construction began to grow again in 2010, with manufacturing showing particular strength – neither industry sustained this growth. Production output fell between 2011 and 2013, falling below levels seen at the height of the downturn in 2009. Construction output also fell sharply in 2012, with output falling close to its 2009 trough. Construction output in 2015 as a whole was 3.4% higher than 2014, much lower than the rate of growth for 2014 (7.5%). This was largely due to the 2 consecutive quarters of negative growth in the second half of 2015, with construction output falling by 1.7% and 0.4% in Quarter 3 2015 and Quarter 4 2015 respectively. Although there has been some growth across all major components of GDP since the start of 2013, the service industry remains the largest and steadiest contributor to overall economic growth, and is the only headline industry in which output has exceeded pre-downturn levels.

Figure 5 shows the average compound quarterly growth rate experienced over the five years prior to the economic downturn in 2008, the average growth rate experienced between Quarter 3 2009 and Quarter 2 (Apr to June) 2014 (five years following the downturn), and the current quarterly growth rate observed in the most recent period (Quarter 4 2015). 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 to the long run average.

The UK experienced slightly slower average compound GDP growth in the five years following the economic downturn compared with the five years prior: this is also true of the services industry. Figure 5 shows that in Quarter 4 2015, only the services industry outperformed its post-downturn average rate of growth, with production and construction being relatively weak (falling by 0.5% and 0.4% respectively) while manufacturing was broadly stable. In Quarter 4 2015 the accommodation and food services have shown particular strength when compared to both the production 5 year average, prior and post downturn.

It should be noted that the third column, which shows the current quarterly growth rate, is based on only one data point. Consequently users should use caution when making direct comparisons with the long run averages.

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6. GDP analysed by expenditure categories, chained volume measures, table C2

Annex B contains expenditure component growth rates back to Quarter 1 (Jan to Mar) 2015.

Gross domestic expenditure (the sum of all expenditure by UK residents on goods and services that are not used up or transformed in a productive process) increased by 0.8% in Quarter 4 (Oct to Dec) 2015. Annually, between 2014 and 2015 gross domestic expenditure increased by 2.7%.

Household final consumption expenditure (HHFCE) increased by 0.7% in Quarter 4 2015, and has increased for 10 consecutive quarters (Figure 6). The largest contribution to the increase in household final consumption expenditure in Quarter 4 2015 came from furniture and furnishings. When compared with the same quarter a year ago, HHFCE has been rising each quarter since Quarter 4 2011 and was 3.1% higher in Quarter 4 2015 than in the same period a year ago. Between 2014 and 2015 HHFCE increased by 3.0%.

Note that in the quarters of 2013 only, “National” HHFCE chained volume measure data is not the sum of its components.

Government final consumption expenditure increased by 0.5% in Quarter 4 2015, following a 0.6% increase in Quarter 3 (July to Sept) 2015. Between Quarter 4 2014 and Quarter 4 2015, government final consumption expenditure increased by 2.5%. Between 2014 and 2015, government final consumption expenditure increased by 1.7%.

Non-profit institutions serving households’ (NPISH) final consumption expenditure increased by 0.5% in Quarter 4 2015, following a 1.5% fall in Quarter 3 2015. Between Quarter 4 2014 and Quarter 4 2015, NPISH final consumption expenditure increased by 3.2%. Annually, NPISH final consumption expenditure increased by 0.9% between 2014 and 2015.

In Quarter 4 2015, gross fixed capital formation (GFCF) was estimated to have decreased by 0.1% (Figure 7). Between Quarter 4 2014 and Quarter 4 2015, GFCF increased by 2.7%. GFCF increased by 4.2% between 2014 and 2015. More detail on GFCF, including a breakdown of the GFCF components, can be found in the Business Investment statistical bulletin published on the same day as this release.

Including the alignment adjustment, the level of inventories increased by £3.6 billion in Quarter 4 2015, following a rise of £1.7 billion in Quarter 3 2015.

The trade balance deficit widened from £14.7 billion in Quarter 3 2015 to £16.6 billion in Quarter 4 2015 (Figure 8). The trade position reflects exports minus imports. Following a 0.5% decrease in Quarter 3 2015, exports decreased by 0.1% in the latest quarter, while imports increased by 1.2% in Quarter 4 2015 following a 2.7% rise in Quarter 3 2015.

Figure 9 shows the quarterly contribution of the expenditure components to the growth of GDP in chained volume measures. For Quarter 4 2015, the largest positive contribution to GDP came from household final consumption expenditure, which contributed 0.4 percentage points. Gross capital formation contributed 0.3 percentage points to GDP and general government final consumption expenditure contributed 0.1 percentage points. There was one negative contribution to GDP; Net Trade contributing a negative 0.4 percentage points. Non-profit institutions serving households made a flat contribution to GDP.

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7. GDP implied deflator

Annex D contains implied deflator component growth rates back to Quarter 1 (Jan to Mar) 2015.

The GDP implied deflator at market prices for Quarter 4 (Oct to Dec) 2015 is flat compared to the same quarter of 2014 (Figure 10). 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 to calculate nominal GDP, not real GDP.

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8. GDP analysed by income categories at current prices, table D

Annex C contains income component growth rates back to Quarter 1 (Jan to Mar) 2015.

GDP at current market prices showed flat growth in Quarter 4 (Oct to Dec) 2015, following a 0.4% increase in Quarter 3 (July to Sept) 2015. GDP at current market prices increased by 1.9% when compared to Quarter 4 2014. In 2015, GDP at current market prices increased by 2.6%.

Compensation of employees – which includes both wages and salaries, and pension contributions, increased by 0.7% in Quarter 4 2015, following an increase of 0.6% in Quarter 3 2015 (Figure 11). Between Quarter 4 2014 and Quarter 4 2015, compensation of employees increased by 3.1% and increased by 3.6% between 2014 and 2015.

The gross operating surplus of corporations (effectively the profits of companies operating within the UK), including the alignment adjustment, decreased by 3.6% in Quarter 4 2015 compared with the previous quarter; this follows an increase of 0.4% in Quarter 3 2015 (Figure 12). Between 2014 and 2015 the gross operating surplus of corporations decreased by 0.3%. More information on the alignment adjustment can be found in the Balancing GDP section within the Background Notes of this release.

Taxes less subsidies on products and production increased by 2.1% in Quarter 4 2015, following an increase of 0.3% in Quarter 3 2015. Between 2014 and 2015 taxes less subsidies on products and production increased by 2.1%.

Figure 13 shows the contribution made by income components to current price GDP. In Quarter 4 2015, there were positive contributions to GDP from compensation of employees, other income and taxes less subsidies which all contributed 0.3 percentage points respectively. There was a negative contribution of 0.8 percentage points from gross operating surplus of corporations.

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9. GDP per head, table P

In Quarter 4 (Oct to Dec) 2015, GDP per head increased by 0.3% compared with Quarter 3 (July to Sept) 2015. GDP per head is now 0.7% above its pre-downturn peak in Quarter 1 (Jan to Mar) 2008, having surpassed it in Quarter 2 (Apr – June) 2015. Headline GDP exceeded the level of its pre-downturn peak in Quarter 2 2013 and is now 6.7% above its pre-downturn peak (Figure 14).

Between Quarter 4 2014 and Quarter 4 2015, GDP per head increased by 1.2%. Between 2014 and 2015, GDP per head increased by 1.5% compared to a growth of 2.1% between 2013 and 2014.

GDP per head is calculated by dividing GDP in chained volume measures by the latest population estimates and projections. The population estimates used in this release are those published on 25 June 2015 and the population projections used are those published 29 October 2015.

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10. International comparisons for Quarter 4 (Oct to Dec) 2015

The estimates quoted in this international comparison section are the latest available estimates published by the respective bodies (referenced) at the time of preparation of this statistical bulletin and may subsequently have been revised.

All areas included within our international comparison, saw positive growth, except Japan, when comparing Quarter 4 (Oct to Dec) 2015 with Quarter 3 (Jul to Sep) 2015 (Figure 15). The European Union (EU28) grew by 0.3% in the fourth quarter of 2015, marking 11 consecutive quarters of positive growth (Table 2). In the same period, the eurozone (EA19) also expanded by 0.3%. When comparing Quarter 4 2014 with Quarter 4 2015, EA19 grew by 1.5 % whilst the EU28 expanded by 1.8% (Figure 16).

Germany saw its GDP increase by 0.3% between Quarter 3 2015 and Quarter 4 2015, following a similar increase in the previous quarter. GDP for France increased by 0.2% in the same period, following 0.3% growth in Quarter 3 2015.

In the fourth quarter of 2015 the USA’s economy increased by 0.2%. Between Quarter 4 2014 and Quarter 4 2015, GDP for the USA increased by 1.8%. GDP for Japan decreased by 0.4% in Quarter 4 2015, following an increase of 0.3% in the previous quarter, although between Quarter 4 2014 and Quarter 4 2015, Japan’s economy grew by 0.7%.

GDP for the Group of Seven (G7) countries increased by 0.1% in Quarter 4 2015, following a 0.4% increase in the previous quarter. When comparing Quarter 4 2014 with Quarter 4 2015, G7 GDP increased by 1.5% and is now 6.2% above its pre-recession peak in Quarter 1 (Jan to Mar) 2008.

More detailed information on these estimates can be found on the Eurostat website. Information on the estimates for the USA can be found on the Bureau of Economic Analysis website; information on the estimates for Japan can be found on the Japanese Cabinet Office website while information for the G7 countries can be found on the Organisation for Economic Co-operation and Development’s website.

Figure 17 shows GDP for the UK, EU, the USA and Japan, all indexed to Quarter 1 2008 (the pre-downturn peak in the UK) to allow comparison of each since that period.

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11. Quarterly revisions

GDP and components, previously published on 28 January 2016

Figure 18 shows quarterly revisions between latest and previously published estimates of GDP. Quarter 1 (Jan to Mar) 2015 is the earliest period open for revision in this release.

Detailed revisions for the 3 GDP approaches

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12 .Background notes

  1. What do you think?

    We would welcome your feedback on this publication. If you would like to get in touch please contact us via email: gdp@ons.gsi.gov.uk

  2. Release policy

    This release includes data available up to 18 February 2016. Data are consistent with that within the Index of Production statistical bulletin - published on 10 February 2016 and the current price trade in goods data within the UK Trade statistical bulletin - published on 9 February 2016.

  3. Construction industry

    We have reviewed the way we calculate our construction statistics, as part of the process of re-designating them as National Statistics. This included investigating our nominal (current price) data and comparing it with other data sources. An element which stood out was the level of construction output in the first 4 months of the year (January, February, March and April).

    A close investigation of the sampling methods used during the production of the figures for the output in the construction industry release showed that the parameters used in the treatment of outliers resulted in more outliers being detected in the first quarter than at any other point. In reviewing this, we found that this outlier treatment could be improved. This led to revisions across these 4 months in the estimates published by us on 11 December 2015 in the ‘Output in the Construction Industry, October 2015 and New Orders Quarter 3 (July to Sept) 2015’ release and these revisions are also included in this release. Additionally, we incorporated the results of a seasonal adjustment review which also contributed to revisions in the data.

  4. 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 2 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 3 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 (QNA) release, output survey data are available for all 3 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.

    For more information on the different estimates of GDP, we have produced a short guide to the UK National Accounts which gives more information on the principles of national accounting and the various publications available.

  5. Forthcoming changes

    As of the Quarterly National Accounts – Quarter 4 (Oct to Dec) 2015, published on 31 March 2016, we will be making changes to a few of the CDIDs (data identifiers) used within the publication. These are presentational changes to annual growth series to ensure consistency across the publication and have no data impact. This change applies to both the Second Estimate of GDP and Quarterly National Accounts publications in the statistical bulletins, reference tables and times series datasets. See the table below for details of this change.

    In the Quarterly National Accounts release to be published on 31 March 2016, we will be taking the opportunity to combine two reference tables which are currently published separately into one combined reference table. The two tables which will be combined are ‘UK Historic Quarterly National Accounts Data Tables, 1948 – 1996’ and ‘UK Quarterly National Accounts Data Tables’ for 1997 onwards.

  6. National Statistics Quality Review

    In line with the recently published National Statistics Quality Review (NSQR): Review of National Accounts and Balance of Payments, we have published a response, which can be found on our website.

  7. National Accounts Work Plan 2015 to 2018

    On 13 July 2015 users of national accounts were invited to respond to an informal consultation on the national accounts work plan which lays out a proposed set of priorities for the next 3 years. This consultation on the national accounts medium-term work plan (covering the period to 2018) closed on 25 September 2015. It followed a previous work plan for national accounts and related outputs following the consultation held in 2013.

    The final report of the national accounts medium-term work plan was published on our website on 27 November 2015.

  8. Special events

    We maintain a list of candidate special events in the Special Events Calendar. Special events are events that are identifiable; they do not recur on a regular cycle (so are not targeted by seasonal adjustment) and have at least the potential to have an impact on statistics. As explained in our Special Events policy, it is not possible to separate the effects of special events from other changes in the series.

  9. Continuous improvement of GDP: sources, methods and communication

    The UK Statistics Authority published 2 new assessment reports on the Annual and Quarterly National Accounts and Supply and Use Tables and Input-Output Tables on 25 February 2015.

    In order to implement improvements reflected in the European System of Accounts 2010 (ESA 2010), we will introduce a new survey to collect purchases data, and have published a national accounts article detailing our intentions along with a high level project plan.

  10. VAT Project

    On 21 December 2015, ONS published a further "HMRC VAT project update". This article further explores the opportunities for utilising data collected by HMRC from VAT returns as an administrative data source for Short-term Output Indicators, in particular plans to use HMRC turnover data as part of an estimate of nominal gross domestic product (GDP) and the strategic implications this has for National Accounts. This is the latest update in a series of articles. The first article “Feasibility study into the use of HMRC turnover data within Short-term Output Indicators and National Accounts” was published by us on 14 August 2015. This was followed by a second article "Exploitation of HMRC VAT data", published on 7 October 2015.

  11. National accounts methodology and articles

    We regularly publish methodological information and articles to provide more detailed information on developments within the national accounts. This includes; supplementary analyses of data to help users with the interpretation of statistics and guidance on the methodology used to produce the national accounts.

  12. 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 (ESA 2010) and the accompanying Manual on Government Deficit and Debt- Implementation of ESA 2010 – 2014 edition (MGDD).

    In the UK, we are responsible for the application and interpretation of these rules. Therefore we make classification decisions based upon the agreed guidance and rules, and these are published on our website.

  13. Economic context

    We publish a monthly Economic Review discussing the economic background, giving economic commentary on the latest GDP estimate and our other economic releases. The next article will be published on 2 March 2016 and will include an analysis on international GDP revisions.

  14. Basic quality information for GDP statistical bulletin

    A Quality and Methodology Information report (518.9 Kb Pdf) for this statistical bulletin can be found on our website.

  15. Important 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”. 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.

  16. Reliability

    Estimates for the most recent quarters are provisional and are subject to revision in the light of updated source information. We currently provide an analysis of past revisions in the GDP and other statistical bulletins that present time series.

    Our revisions to economic statistics page brings together our work on revisions analysis, linking to articles, revisions policies and important documentation from the Statistics Commission's report on revisions.

    Revisions to data provide one indication of the reliability of main indicators. Tables 3 and 4 provide a summary on the size and direction of the revisions that have been made to data covering a 5-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 result of the test is significant.

  17. Revisions to GDP estimates

    Table 4 shows the revisions to month 1 (preliminary) and month 2 (second) estimates of GDP. The analysis of revisions between month 1 and month 2 uses month 2 estimates published from February 2011 (Quarter 4 2010) to November 2015 (Quarter 3 2015). The analysis of revisions between month 2 and month 3 (third estimate of GDP) uses month 3 estimates published from December 2010 (Quarter 3 2010) to September 2015 (Quarter 2 2015).

    Table 5 shows the revisions to GDP growth between the estimate published 3 months after the end of the quarter and the equivalent estimate 3 years later. The analysis uses month 3 estimates, first published from December 2007 (Quarter 3 2007) to September 2012 (Quarter 2 2012) for GDP.

    Revisions triangles for the main components of GDP from expenditure, output and income approaches and 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 our website.

  18. Balancing GDP

    Information on the methods we use for balancing the output, income and expenditure approaches to measuring GDP can be found on our website.

    The different data content of the 3 approaches dictates the approach taken in balancing quarterly data. In the UK, there are far more data available on output than in the other 2 approaches. However, in order to obtain the best estimate of GDP (the published figure), the estimates from all 3 approaches are reconciled to produce an average.

    Annually, the estimates from all 3 approaches are reconciled through the creation of Input-Output Supply and Use tables for the years for which data are available.

    For years in which there is no Supply and Use balance, a Statistical Discrepancy exists that reflects the differences between the published headline estimate of GDP and the expenditure and income estimates.

    For all periods, the expenditure and income estimates are aligned to the published headline GDP figure. Although annual data is aligned for balanced years, there will still be quarterly differences for balanced and post balanced years, due to timing and data content issues. These are dealt with by means of explicit alignment adjustments that are applied to specific components (gross operating surplus of private non-financial corporations in the income approach and changes in inventories in expenditure) to align the 3 approaches. As these are purely quarterly discrepancies, the alignments sum to zero over the year and are published explicitly in the GDP statistical bulletins. They are also published as “of which” items within the specific components, to enable users to ascertain the underlying picture.

    Alignment adjustments, found in Table M of this release, have a target limit of plus or minus £2,000 million on any quarter. However, in periods where the data sources are particularly difficult to balance, slightly larger alignment adjustments are sometimes needed. To achieve this 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, for example.

    The size and direction of the quarterly alignment adjustments in Quarter 4 (July to Sept) 2015 indicate that in this quarter, the level of expenditure was lower than that of output and the level of income was higher than that of output.

    Table 6 shows the balancing adjustments applied to the GDP estimates in this publication.

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Contact details for this Statistical bulletin

Matthew Hughes
gdp@ons.gsi.gov.uk
Telephone: +44 (0)1633 455827