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Statistical bulletin: Gross Domestic Product Preliminary Estimate, Quarter 2 (Apr to June) 2015 This product is designated as National Statistics

Released: 28 July 2015 Download PDF

Main points

  • Change in gross domestic product (GDP) is the main indicator of economic growth. GDP is estimated to have increased by 0.7% in Quarter 2 (Apr to June) 2015 compared with growth of 0.4% in Quarter 1 (Jan to Mar) 2015.
  • Output increased in 2 of the main industrial groupings within the economy in Quarter 2 (Apr to June) 2015. Services increased by 0.7% and production increased by 1.0%. Construction growth was flat. In contrast agriculture decreased by 0.7%.
  • GDP was 2.6% higher in Quarter 2 (Apr to June) 2015 compared with the same quarter a year ago.
  • In Quarter 2 (Apr to June) 2015, GDP was estimated to have been 5.2% higher than the pre-economic downturn peak of Quarter 1 (Jan to Mar) 2008. From the peak in Quarter 1 (Jan to Mar) 2008 to the trough in Quarter 2 (Apr to June) 2009, the economy shrank by 6.0%.
  • The preliminary estimate of GDP is produced using the output approach to measuring GDP. 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.
  • All figures in this release are seasonally adjusted.

Understanding the preliminary estimate of GDP

About the preliminary estimate of GDP

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 and uses the same data that feed into the Index of Services, Index of Production and Output in the Construction Industry datasets. 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 of the main movements (further information on longer-term patterns of GDP, including a comparison with other countries, can be found in the Economic context section).

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 Methods and sources page of our website).

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 3 approaches to measuring GDP can be found in the Short guide to national accounts (136.8 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). Further information on some of the main concepts (including seasonal adjustment and deflation) underlying the estimates can be found in background note 8.

The quality of the estimate of GDP

The preliminary estimate of GDP is produced around 25 days after the end of the quarter to provide a timely estimate of GDP and at this stage the data content of this estimate is around 44% of the total required for the final output-based estimate. The methods for producing the preliminary GDP estimate use monthly data for the first 2 months in the quarter (April and May) and forecasts for estimating the third month (June), which incorporate early survey responses where available. More information about the data content for this release can be found in the Assumptions made for June 2015 section and the background notes. 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.

All estimates, by definition, are subject to statistical uncertainty and for many well-established statistics we measure and publish the sampling error associated with the estimate, using this as an indicator of accuracy. The estimate of GDP, however, is currently constructed from a wide variety of data sources, some of which are not based on random samples, and as such it is very difficult to measure the sampling error. While development work continues in this area, like all other G7 national statistical institutes, we do not publish a measure of the sampling error associated with GDP (more information on the quality of the output approach to measuring GDP can be found on the Methods and sources page on our website). It should be noted that we are continually working on methodological changes to improve the accuracy of the output approach to measuring GDP. As part of the GDP Continuous Improvement Programme, articles are regularly published on the Statistical continuous improvement page, which provide detailed updates of the work carried out so far.

On 11 December 2014, the UK Statistics Authority announced its decision to suspend the designation of Construction Price and Cost Indices (CPCIs) due to concerns about the quality of these deflators. As a result, the UK Statistics Authority also suspended the designation of Output and New Orders as National Statistics in respect of the Code of Practice for Official Statistics.

We took over responsibility for the publication and development of the CPCIs from the Department for Business Innovation & Skills on 1 April 2015. On 8 May 2015, we published an article describing the proposed interim solution for construction price and cost indices (CPCIs) (254.5 Kb Pdf) to replace the statistical models that had been used in the production of chained volume measures (CVMs) for output in the construction industry since Quarter 3 (July to Sept) 2014 and to provide an ongoing source of data from Quarter 1 (Jan to Mar) 2015 onwards. This interim solution is used within this release.

Main information

Table 1: GDP preliminary estimate main figures, Quarter 2 (Apr to June) 2015

UK, 2013 to 2015

Percentage change on previous quarter
  GDP Index (2011=100) GDP     Agriculture     Production     Construction Services
    Weights 1000 6 146 64 784
Q2 20131 102.0 0.6 1.0 0.7 2.4 0.5
Q3 20132 102.8 0.7 0.7 0.8 3.0 0.6
Q4 20133 103.2 0.4 0.7 0.3 0.3 0.6
Q1 20144 104.1 0.9 5.0 0.5 4.1 0.7
Q2 2014 105.0 0.9 2.2 0.3 2.2 1.0
Q3 2014 105.8 0.7 1.4 0.2 2.2 0.7
Q4 2014 106.7 0.8 1.2 0.4 0.2 0.9
Q1 2015 107.1 0.4 -2.3 0.2 -0.2 0.4
Q2 2015 107.8 0.7 -0.7 1.0 0.0 0.7

Table source: Office for National Statistics

Table notes:

  1. Q2 is Quarter 2 (Apr to June)
  2. Q3 is Quarter 3 (Jul to Sep)
  3. Q4 is Quarter 4 (Oct to Dec)
  4. Q1 is Quarter 1 (Jan to Mar)

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The preliminary estimate of GDP focuses on the growth in output between 2 consecutive quarters (in this release Quarter 1 (Jan to Mar) 2015 and Quarter 2 (Apr to June) 2015). GDP increased by 0.7% in the second quarter of 2015.

Figure 1: GDP contributions[1] to the quarter-on-quarter percentage change, Quarter 2 (Apr to June) 2015

UK

Figure 1: GDP contributions[1] to the quarter-on-quarter percentage change, Quarter 2 (Apr to June) 2015
Source: Office for National Statistics

Notes:

  1. Components may not sum due to rounding.
  2. Percentage change

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The contribution an industry grouping makes to GDP quarterly growth is dependent on the change in that industry grouping and its weight within the output approach to measuring GDP. The current 2011 based weights are: services 78.4%; production 14.6%; construction 6.4%; and agriculture 0.6%.

Services increased by 0.7%, contributing 0.5 percentage points to Quarter 2 (Apr to June) 2015 GDP growth (as seen in Figure 1). This followed an increase of 0.4% in Quarter 1 (Jan to Mar) 2015. In the latest quarter there were increases in all 4 of the main services aggregates (distribution, hotels and restaurants; transport, storage and communication; business services and finance; government and other services). Growth in business services and finance increased from 0.1% growth in Quarter 1 (Jan to Mar) 2015 to 0.8% in Quarter 2 (Apr to June) 2015. This was the main reason behind the increase in services growth between the 2 quarters.

There was a upward contribution (0.14 percentage points) from the production industries; these industries grew by 1.0%, with mining and quarrying increasing by 7.8% following a decrease of 0.5% in Quarter 1 (Jan to Mar) 2015 and water and waste management increasing by 4.8% following a rise of 0.2% in Quarter 1 (Jan to Mar) 2015. Evidence from the Department of Energy and Climate Change (DECC) suggested the recent tax changes announced in the March budget could be a contributing factor to the rise in mining and quarrying. Partially offsetting these increases was a fall of 2.9% in energy supply following an increase of 2.8% in Quarter 1 (Jan to Mar) 2015 and a fall of 0.3% in manufacturing following an increase of 0.1% in Quarter 1 (Jan to Mar) 2015.

Construction output made no contribution to Quarter 2 (Apr to June) 2015 GDP growth. This follows a fall of -0.2% in Quarter 1 (Jan to Mar) 2015. The monthly data published in the Output in the Construction Industry - May 2015 release showed falls in both April 2015 and May 2015 when compared with the previous months.


 

Economic context

Figure 2: GDP (£billion) and quarter-on-quarter growth[1], Quarter 2 (Apr to June) 2015

UK, 2003 to 2015

Figure 2: GDP (£billion) and quarter-on-quarter growth[1], Quarter 2 (Apr to June) 2015
Source: Office for National Statistics

Notes:

  1. Growth rates are calculated using unrounded data.
  2. Please click on image to view larger version.
  3. Q1 refers to Quarter 1 (January to March), Q2 refers to Quarter 2 (April to June), Q3 refers to Quarter 3 (July to September), Q4 refers to Quarter 4 (October to December). 

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As seen in Figure 2, 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 (Figure 2). This growth was also erratic, with several quarters between 2010 and 2012 recording stagnant or declining GDP. This 2-year period coincided with special events (for example severe winter weather in Quarter 4 (Oct to Dec) 2010 and the Diamond Jubilee in Quarter 2 (Apr to June) 2012) that are likely to have affected growth. Since 2013, GDP has grown steadily, passing its pre-downturn peak in Quarter 3 (July to Sep) 2013.

The 0.7% increase in GDP growth in Quarter 2 (Apr to June) 2015 implies that GDP per head would be broadly equal to the pre-economic downturn peak in Quarter 1 (Jan to Mar) 2008. As usual, data underlying the GDP per head calculation and a time series will be published in the Second Estimate of GDP on 28 August 2015.

Figure 3 shows the industry breakdown of GDP from 2002. Up until the downturn, services in the UK grew steadily, while production output was broadly flat over the same period. Construction activity grew strongly between 2002 and 2004 and although there was a temporary decline in the mid-2000s, this was reversed by the end of 2007.

Figure 3: GDP and main components, Quarter 2 (Apr to June) 2015

UK, 2002 to 2015

Figure 3: GDP and main components, Quarter 2 (Apr to June) 2015
Source: Office for National Statistics

Notes:

  1. Please click on image to view larger version.
  2. Q2 refers to Quarter 2 (April to June).

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GDP and all of its components are referenced to 2011, making the average index in 2011 equal to 100. It is for this reason that Figure 3 shows all components converging in 2011.

Figure 4: GDP and main components relative to Quarter 1 (Jan to Mar) 2008 level

UK, 2008 to 2015

Figure 4: GDP and main components relative to Quarter 1 (Jan to Mar) 2008 level
Source: Office for National Statistics

Notes:

  1. Please click on image to view larger version.
  2. Q1 refers to Quarter 1 (January to March), Q2 refers to Quarter 2 (April to June), Q3 refers to Quarter 3 (July to September), Q4 refers to Quarter 4 (October to December). 

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Industries have shown differing trends following the recent economic downturn. This is illustrated in Figure 4, which shows the path of GDP and its components (excluding agriculture, but including manufacturing, which is a sub-component of production), relative to their level in Quarter 1 (Jan to Mar) 2008. The construction and production industries were more acutely affected by the deterioration in economic conditions. Following the downturn, the services industries generally grew steadily, albeit slowly, with output exceeding its pre-downturn peak in Quarter 3 (July to Sep) 2011.

Production and construction activity began to grow in 2010 but neither industry sustained this growth. Production output fell in both 2011 and 2012 to below levels seen at the height of the downturn in 2009. Construction output sharply decreased in 2012, and was close to its 2009 trough after further contraction in Quarter 1 (Jan to Mar) 2013. Construction output in 2014 as a whole was 9.5% higher than 2013, however, a fall in growth in Quarter 1 (Jan to Mar) 2015 and flat growth in Quarter 2 (Apr to June) 2015 means output has recently stagnated. Although there has generally been growth across all major components of GDP since the start of 2013, the service industries remain the largest and steadiest contributor to economic growth (Table 1) and the only component of GDP where output has exceeded its pre-downturn peak.

Figure 5: Quarterly growth in GDP across the G7 nations

UK, 2008 to 2015

Figure 5: Quarterly growth in GDP across the G7 nations
Source: Office for National Statistics, Organisation for Economic Co-operation and Development

Notes:

  1. At the time of publication, data for Quarter 2 (Apr to June) was only available for the UK.
  2. OECD data correct at 22 July 2015.
  3. Please click on image to view larger version.
  4. Q1 refers to Quarter 1 (January to March), Q2 refers to Quarter 2 (April to June), Q3 refers to Quarter 3 (July to September), Q4 refers to Quarter 4 (October to December).

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Table 2: Quarterly growth in GDP across the G7 nations[1]

Quarter 1 (Jan to Mar) 2015 to Quarter 2 (Apr to June) 2015

  Growth, quarter-on-quarter percentage (%) Growth, quarter-on-year percentage (%)
  Q1 20152 Q2 20153 Q1 2015 Q2 2015
UK 0.4 0.7 2.9 2.6
Canada -0.1 .. 2.1 ..
France 0.6 .. 0.8 ..
Germany 0.3 .. 1.0 ..
Italy 0.3 .. 0.1 ..
Japan 1.0 .. -1.0 ..
United States of America 0.0 .. 2.9 ..
OECD4 0.4 .. 2.0 ..

Table source: Office for National Statistics

Table notes:

  1. Where a country has not yet published an estimate for Quarter 2 (Apr to June) 2015, this is represented by ..
  2. Q1 is Quarter 1 (Jan to Mar)
  3. Q2 is Quarter 2 (Apr to June)
  4. Organisation for Economic Co-operation and Development (OECD) data are used in this table, data correct at 22 July 2015

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Our preliminary estimate of GDP is one of the earliest GDP releases to be published internationally. As a result, comprehensive cross country GDP comparisons cannot yet be made for Quarter 2 (Apr to June) 2015.

However, GDP data are widely available for most major economies up to the first quarter (Jan to Mar) of 2015, and a comparison of this information is shown in Figure 6. Each country has been indexed to Quarter 1 (Jan to Mar) 2008 so that a comparison of recoveries since the global downturn can be made between countries. Cross country GDP data are publicly available from the Organisation for Economic Co-operation and Development (OECD).

The level of GDP in the UK took until Quarter 3 (July to Sep) 2013 to surpass its pre-downturn peak. Figure 5 indicates that the UK recovery took longer than some other countries in the G7. This is in part due to the nature of the downturn in the UK; GDP fell to a greater extent and as a result has taken longer to recover.

European economies have continued to struggle since the euro area sovereign debt crisis in 2011, with Italy particularly affected. In Quarter 1 Jan to Mar 2015, GDP growth in France was positive at 0.6% following negative growth in the first half of 2014. Meanwhile, GDP in both Germany and Italy increased by 0.3% on the quarter, but Italy continued to show little growth compared to the same quarter of the previous year at 0.1%. GDP in Italy still remains 9.3% below the level observed in Quarter 1 Jan to Mar 2008.

Industry analysis

Agriculture

Agriculture output decreased by 0.7% in Quarter 2 (Apr to June) 2015, following a decrease of 2.3% in the previous quarter. Between Quarter 2 (Apr to June) 2014 and Quarter 2 (Apr to June) 2015, agriculture output decreased by 0.4%.

Production

The index of production increased by 1.0% in Quarter 2 (Apr to June) 2015, following an increase of 0.2% in the previous quarter. Mining and quarrying contributed the most to the increase, expanding by 7.8%. Between Quarter 2 (Apr to June) 2014 and Quarter 2 (Apr to June) 2015, production output increased by 1.8%.

Construction

Construction output was flat in Quarter 2 (Apr to June) 2015, following a decrease of 0.2% in the previous quarter. Between Quarter 2 (Apr to June) 2014 and Quarter 2 (Apr to June) 2015, construction output increased by 2.2%.

Distribution, hotels and restaurants

The index for distribution, hotels and restaurants increased by 0.9% in Quarter 2 (Apr to June) 2015, following an increase of 1.1% in the previous quarter. Motor vehicles made the largest positive contribution to the increase. Between Quarter 2 (Apr to June) 2014 and Quarter 2 (Apr to June) 2015, distribution, hotels and restaurants output increased by 4.5%.

Transport, storage and communication

The index for transport, storage and communication increased by 0.8% in Quarter 2 (Apr to June) 2015, following an increase of 0.7% in the previous quarter. Motion picture, video and TV programme production made the largest contribution to the increase. Between Quarter 2 (Apr to June) 2014 and Quarter 2 (Apr to June) 2015, transport, storage and communication output increased by 3.7%.

Business services and finance

The index for business services and finance increased by 0.8% in Quarter 2 (Apr to June) 2015, following an increase of 0.1% in the previous quarter. Both legal activities, and activities of head offices and management consultancies made the largest positive contributions to the increase. Between Quarter 2 (Apr to June) 2014 and Quarter 2 (Apr to June) 2015, business services and finance output increased by 3.1%.

Government and other services

The index for government and other services increased by 0.2% in Quarter 2 (Apr to June) 2015, following an increase of 0.3% in the previous quarter. Human health activities made the largest positive contribution to the increase. Between Quarter 2 (Apr to June) 2014 and Quarter 2 (Apr to June) 2015, government and other services output increased by 0.6%.

Assumptions made for June 2015 in the Quarter 2 (Apr to June) 2015 GDP preliminary estimate

Background

The methods for producing the preliminary GDP estimate use monthly data for the first 2 months in the quarter and forecasts for estimating the third month. The forecasts are reinforced by early responses to our Monthly Business Survey (MBS), but the monthly response rate is generally lower at this stage (typically between 30 and 50% at this point in time).

Each of the first 2 months includes monthly data from the MBS of 44,000 businesses, covering the production, manufacturing, services, retail and construction industries.

The forecasts for June use our standard method of fitting an autoregressive integrated moving average (ARIMA) model with adjustments made for Easter, trading days and outliers. The forecasts are calculated for each individual industry level series (for example, food and beverage services). More information on creating the preliminary estimate of GDP is available on the Methods and sources page.

Purpose of this section

This section provides details of the assumptions made for June 2015 for each of the main components of the output approach to measuring GDP: services, production and construction.

Table 3: Monthly Index of Services (chain volume measure, seasonally adjusted) month-on-month growth rates

UK, 2009 to 2015

Percent (%)
  2009 2010 2011 2012 2013 2014 2015
January -0.7 -0.8 0.3 0.4 0.5 0.2 -0.2
February -0.1 1.1 0.7 -0.6 0.7 0.3 0.3
March -0.6 0.4 0.5 0.7 -0.1 0.5 0.1
April 0.7 -0.2 -0.7 -0.3 0.3 0.3 0.2
May -0.8 0.2 1.1 0.9 0.1 0.4 0.3
June -0.1 0.5 -0.2 -1.5 0.0 0.2 0.4*
July 0.7 0.3 0.8 1.3 0.3 0.3  
August -0.4 -0.1 -0.1 0.8 0.3 0.0  
September 0.2 0.3 0.4 -0.3 0.2 0.5  
October 0.1 -0.1 -0.7 0.0 0.1 0.3  
November 0.0 0.2 1.0 -0.2 0.3 0.0  
December 0.4 -0.6 0.0 -0.3 0.1 0.6  

Table source: Office for National Statistics

Table notes:

  1. *based on forecasts and early responses to the June Monthly Business Survey.

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It was estimated that there was a 0.4% rise in the output of the services industries between May and June 2015.

At the more detailed level, it was estimated that distribution, hotels and restaurants rose by 0.3%, transport, storage and communication rose by 0.5%, business services and finance rose by 0.5%, and government and other services rose by 0.2%.

The services data for April and May 2015 used in the calculation of the Quarter 2 (Apr to June) 2015 GDP preliminary estimate are consistent with the data contained in the May 2015 Index of Services release published on 28 July 2015.

Table 4: Monthly Index of Production (chain volume measure, seasonally adjusted) month-on-month growth rates

UK, 2009 to 2015

Percent (%)
  2009 2010 2011 2012 2013 2014 2015
January -2.5 0.3 0.4 -0.1 -0.9 -0.5 -0.1
February -0.3 1.0 -1.8 -0.4 0.2 1.3 0.2
March -0.9 1.7 -0.2 -0.6 0.2  - 0.6
April 1.9 -0.2 -0.8 -0.1 -0.2 0.2 0.3
May -1.7 0.1 0.5 0.6 0.5 -0.5 0.4
June 0.6 -0.9 0.1 -2.0 1.0  - 0.1*
July -0.1 -0.2 -0.6 2.4 -0.3 0.3  
August -1.6 1.2 0.0 -0.2 -0.4 -0.3  
September 0.8 0.4 -0.1 -3.1 1.3 0.7  
October 0.7 0.1 0.0 -0.6 -0.4 -0.1  
November 0.7 0.3 -0.6 0.7 -0.3 0.2  
December -0.3 0.0 0.1 0.9 0.4 -0.1  

Table source: Office for National Statistics

Table notes:

  1. *based on forecasts and early responses to the June Monthly Business Survey.

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It was estimated that there was a 0.1% rise in the output of the production industries between May and June 2015.

At the more detailed level, it was estimated that manufacturing increased by 0.1%, water and waste management increased by 3.8% and energy supply increased by 1.4%. Partially offsetting these increases was a fall in mining and quarrying of 3.1%

Small revisions (following revised seasonal factors allowing for the addition of June data) to the April and May 2015 estimates, published in the latest Index of Production (IoP) release on 7 July 2015, have been used in the calculation of the Quarter 2 (Apr to June) 2015 GDP preliminary estimate. To retain coherence between the published monthly and quarterly indices for Quarter 2 (Apr to June) 2015, small adjustments have been made to the monthly growth rates for June 2015 for total production, mining and quarrying, energy supply and water and waste management. This ensures that if the monthly growth rates for June are applied to the published May 2015 indices for total production and the main components (and then an average taken of the April, May and June 2015 indices), the results are consistent with the published quarterly indices.

Table 5: Output in the Construction industry (chain volume measure, seasonally adjusted) month-on-month growth rates

UK, 2010 to 2015

Percent (%)
  2010 2011 2012 2013 2014 2015
January .. 0.5 -6.4 0.1 6.1 -1.1
February 7.1 2.5 0.6 2.2 -1.8 -0.9
March 3.6 4.7 1.1 -0.8 0.9 1.4
April -0.6 -4.3 -5.0 1.8 2.6 -0.5
May -0.5 0.1 4.0 1.1 -0.8 -1.3
June 3.5 2.5 -5.9 -0.9 0.4 2.3*
July -0.8 -2.0 2.8 2.7 2.4  
August 2.2 -0.1 -0.2 1.5 -0.9  
September -0.3 0.4 -3.0 -1.5 1.2  
October -3.3 -4.4 3.9 3.6 -0.5  
November 1.4 3.2 -0.1 -4.3 -0.7  
December -3.0 1.8 -4.3 0.7 2.0  

Table source: Office for National Statistics

Table notes:

  1.  No data represented by ..
  2. *based on forecasts and early responses to the June Monthly Business Survey.

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Monthly data for the construction industries are only available from January 2010.
The forecast for construction is calculated slightly differently to production and services due to the shorter time span of monthly turnover data. More weight is placed on early responses to the monthly business survey for June 2015. Responses from businesses were the starting point to inform the forecasts; this was then adjusted (using information collected in previous months) in recognition that these early responses from businesses tend to be lower than later responses. This approach led to an estimate of flat growth (0.0%) between Quarter 1 (Jan to Mar) 2015 and Quarter 2 (Apr to June) 2015.

Some revisions (due to receipt of additional survey data and revised seasonal factors allowing for the addition of June 2015 data) to the April and May 2015 estimates, published in the latest Output in the Construction Industry - May 2015 release, published on 10 July 2015, have been used in the calculation of the Quarter 2 (Apr to June) 2015 GDP preliminary estimate. To retain coherence between the published monthly and quarterly indices for Quarter 2 (Apr to May) 2015, adjustments have been made, in line with our normal practice, to the monthly growth rates for June 2015 for construction output. This ensures that if the monthly growth rates for June 2015 are applied to the published May 2015 indices for construction output (and then an average taken of the April, May and June 2015 indices), the results are consistent with the published quarterly indices.



Background notes

  1. What’s new?

    To improve the format of the Preliminary Estimate of GDP bulletin, the 'growth and contributions to growth - output components' section has been removed. The growth rates and contributions to growth that were previously found in this section are now available in the B1 table and Annex A respectively. 

  2. What do you think?

    As a user of our statistics we would welcome your feedback on this publication. If you would like to get in touch please contact us via email: ios.enquiries@ons.gsi.gov.uk
     

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

    The GDP Output Improvement Report, published on 30 September 2014, provides a detailed update of the implementation of improvements for Blue Book 2014, progress on industry reviews and wider cross-cutting improvements, a comprehensive timetable for the industry review project, an update of industry quality ratings and progress on experimental statistics. It also features sections on deflation and annual coherence adjustments to improve the understanding and transparency of the methods involved in producing Index of Production, Index of Services, and GDP(O).

    Assessment reports by the UK Statistics Authority are available on our website for the output approach to measuring GDP and the short-term indicators that feed into it. Furthermore, the priorities for national accounts production and development over a 5 year period (financial year ending 2014 to financial year ending 2018) are highlighted in the National Accounts and Related Statistics Work Plan and an independent review of the UK's national accounts and balance of payments has been produced as part of our programme of National Statistics Quality Reviews (NSQRs).

  4. Special events

    ONS maintain a list of candidate special events in the Special Events Calendar. As explained in our Special events policy, it is not possible to separate the effects of special events from other changes in the series.

  5. Understanding the data

    Short guide to GDP

    Gross domestic product (GDP) is an integral part of the UK national accounts and provides a measure of the total economic activity in the UK. GDP is often referred to as one of the main “summary indicators” of economic activity and references to “growth in the economy” invariably refer to the growth in GDP during the latest quarter.

    In the UK 3 different, but equivalent, approaches are used in the estimation of GDP:

    • the output or production approach - GDP(O) measures the sum of the value added created through the production of goods and services within the economy (our production or output as an economy); this approach provides the first estimate of GDP and can be used to show how much different industries (for example, services) contribute within the economy

    • the income approach - GDP(I) measures the total income generated by the production of goods and services within the economy; the figures breakdown income into, for example, income earned by companies (corporations), employees and the self employed

    • the expenditure approach - GDP(E) measures the total expenditures on all finished goods and services produced within the economy

    How our statistics explain the economy

    The index of services is mentioned in a video summary 14 ways ONS statistics help you understand the economy. The video summary, along with an interactive version of the 14 ways ONS statistics help you understand the economy video, was released on 27 June 2014 alongside the Quarterly National Accounts for Quarter 1 (Jan to Mar) 2014.

    The Changing Shape of UK Manufacturing, an event coordinated jointly with the Department for Business, Innovation and Skills, took place on 22 October 2014. The event featured a range of talks from users, producers and suppliers of manufacturing statistics, not just from government, but also business representatives and academics. To view the content of the day, please visit Storify.

     

  6. Short guide to national accounts

    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 UK national accounts: a short guide (105.5 Kb Pdf) .

  7. Interpreting the data

    Figures for the most recent quarter are provisional and subject to revision in light of
    a) late responses to surveys and administrative sources
    b) forecasts being replaced by actual data
    c) revisions to seasonal adjustment factors which are re-estimated every quarter and reviewed annually

    Data for the retail industry are broadly comparable with the Retail Sales Index published on 23 July 2015. However, the 2 series operate under different revisions policies meaning there can be timing differences in the updating of the 2 series. Also, adjustments to the data within the Index of Services release are sometimes made at the time of the Blue Book release to improve the coherence of the 3 approaches to measuring GDP. Therefore, inconsistencies between the 2 series are not unusual but tend to be small. There are also conceptual and coverage differences between retail sales and retail output which can lead to apparent inconsistencies.

    The construction industry quarterly growth for Quarter 1 (Jan to Mar) 2013 is inconsistent with the growth figure in the output in the construction industry publication. This inconsistency will be addressed in the 30 September Quarterly National Accounts publication when the revisions period allows us to reconcile the outputs. The impact of the inconsistency is small and only affects the output measure of gross value added.

    Sample sizes and data content

    This is the first estimate of GDP, based on preliminary information for the quarter. Although based on a significant number of returns from businesses, there is still a lot of information to come in, particularly for June.
    The amount of data available at this stage is about 44% of the total data that will be available in 1 year’s time. The estimates in this release are, however, based on a large amount of information returned by businesses across the whole of the economy. Information on activity (more specifically, turnover or sales) is available from about 44,000 businesses for each of the first 2 months of the quarter and from about 20,000 businesses for the third month. In addition, we collect price information on nearly 200,000 individual products each month from around 30,000 businesses. This information is used to remove the effect of price changes from the estimates.

    Response rates

    Approximately 43% of the data used in the preliminary estimate of GDP are based on data collected via ONS’s monthly business survey (MBS) for production and services. In addition, approximately 6% of the data are collected via ONS's Retail Sales Inquiry (RSI) and approximately 6% are collected via ONS’s monthly business survey for construction. The remainder is based on data received from other ONS sources and external data sources. At this stage the estimate of GDP includes actual data for April, May and June for the RSI element, but only April and May for the production, services and construction elements. Forecasts are generated to estimate June growth rates which are then compared with early responses to the MBS surveys to assess their credibility. Response rates (for the percentage of sampled turnover returned and also the percentage of questionnaire forms returned) for the most recent month and the 3 months prior are available in the background notes of the Index of Services, Index of Production and Retail Sales statistical bulletins. The response rates for the historical periods are updated to reflect the current level of response, incorporating data from late returns. In addition, response rates for the most recent month are available in Table 11 of Reference Table A in the latest Output in the Construction Industry release.


  8. Definitions and explanations

    Definitions found within the main statistical bulletin are listed:

    Index number

    An index number is a number which indicates the change in magnitude relative to the magnitude at a specified point, the latter usually taken as 100. For example, the level of GDP for Quarter 2 (Apr to June) 2015 is given in Table 1 as 107.8. This means that GDP was 7.8% higher than the average in the reference period, which is currently 2011.

    Seasonal adjustment

    The index numbers in this statistical bulletin are all seasonally adjusted. This aids interpretation by removing annually recurring fluctuations, for example, due to holidays or other regular seasonal patterns. Unadjusted data are also available.

    Seasonal adjustment removes regular variation from a time series. Regular variation includes effects due to month lengths, different activity near particular events, such as shopping activity before Christmas, and regular holidays, such as the May bank holiday.

    Some features of the calendar are not regular each year, but are predictable if we have enough data - for example the number of certain days of the week in a month may have an effect, or the impact of the timing of Easter. As Easter changes between March and April we can estimate its effect on time series and allocate it between March and April depending on where Easter falls. Estimates of the effect of the day of the week and Easter are used respectively to make trading day and Easter adjustments prior to seasonal adjustment.

    X-13-ARIMA-SEATS is the current seasonal adjustment software used for the short-term indicators that feed into the preliminary estimate of GDP.

    Deflation

    It is standard practice to present many economic statistics in terms of ‘‘constant prices’’. This means that changes or growth, are not affected by changes in price. The process of removing price changes is known as deflation and the resulting series is often described as volume (as opposed to value). The index numbers in this bulletin are volume measures.

    Chained volume

    The indices in this bulletin are “chained volume” measures. This means that successive volume estimates are linked (or chained) together. The process of annual chain-linking was introduced in 2003. More information on chain-linking can be found in the Tuke and Reed (2001) article (92.8 Kb Pdf) , and a paper on chain-linking weights in the output approach to measuring GDP can be found on the methods and sources page.

    Gross value added industry weights dataset

    An update to the annual weights used within the output approach of GDP has been included in our Gross Value added industry weights dataset. These weights have been used since the quarterly national accounts, published on 30 September 2014 and are consistent with the data used in the Blue Book 2014 dataset, published on 31 October 2014. All weights are given in parts per thousand.

  9. Quality

    Some general information on the quality of the estimate of GDP can be found in the Understanding the preliminary estimate of GDP section in the main part of this statistical bulletin.  Further information is available on the methods and sources page of our website.

    In addition, a quality and methodology report (518.9 Kb Pdf) for estimates of GDP is provided on our website. This report describes, in detail, the intended uses of the statistics presented in this publication, their general quality and the methods used to produce them

  10. National accounts revisions policy

    In accordance with the national accounts revision policy (41.6 Kb Pdf) , there are no periods open for revision in this release. More information on revisions in the output approach to measuring GDP can be found on the Methods and sources page.

    This release includes information available up to 20 July 2015.

  11. Revisions triangles

    Spreadsheets giving revisions triangles (real time databases) of estimates from 1992 to date are available to download. They can be found under the section Revisions triangles for gross value added at basic prices, chained volume measure.

    The revisions triangles for the components of GDP have been temporarily removed following the move to the new Standard Industrial Classification (SIC2007) in October 2011. The revisions triangles for total GDP are still available and the services industry analysis is separately available on a monthly basis via the Index of Services dataset.

    Revisions to data provide one indication of the reliability of main indicators. Tables 6 and 7 show summary information on the size and direction of the revisions which 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 average revision close to zero is desirable as it suggests that revisions are not predictable in any one direction. The result of the test is that the average revision is not statistically different from zero.

    Table 6: Revisions to early estimates of GVA growth

    UK

        Revisions between early estimates of GVA growth (quarterly, CVM)
    Revisions to GVA growth       GVA Growth in the latest period % Average over the last five years Average over the last five years without regard to sign (average absolute revision)
    Between Month 1 and Month 2 0.7 0.02 0.04
    Between Month 2 and Month 3 0.7 -0.02 0.06

    Table source: Office for National Statistics

    Download table

    Table 6 shows the revisions between the early estimates of gross value added (GVA). The analysis of revisions between month 1 and month 2 uses month 2 estimates published from August 2010 (Quarter 2 (Apr to June) 2010) to May 2015 (Quarter 1 (Jan to Mar) 2015). The analysis of revisions between month 2 and month 3 uses month 3 estimates published from September 2010 (Quarter 2 (Apr to June) 2010) to June 2015 (Quarter 1 (Jan to Mar) 2015).

    Table 7: Revisions to GVA growth between the estimate published three months after the end of the quarter and the equivalent estimate three years later

    UK

        Revisions between early estimates of GVA growth (quarterly, CVM)
    Revisions to GVA growth       GVA Growth in the latest period % Average over the last five years Average over the last five years without regard to sign (average absolute revision)
    GVA growth (quarterly CVM) 0.7 0.02 0.40

    Table source: Office for National Statistics

    Download table

    Table 7 shows the revisions to GVA 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 September 2010 (Quarter 2 (Apr to June) 2007) to June 2015 (Quarter 1 (Jan to Mar) 2012).

    Understanding the quality of early estimates of Gross Domestic Product (122.9 Kb Pdf) , which was first published in December 2009, is available on our website.

    This article presents an analysis of revisions to the early estimates of GDP based on a long period database of real time GDP back to 1955. This database is regularly updated and is available on our website.

    We published Revisions to GDP and components (513.5 Kb Pdf) which updates analysis undertaken previously on GDP revisions, as well as launching a real time £ million database for all the components of both the expenditure and income approaches to measuring GDP. 

     

  12. Following ONS

    You can follow us on Twitter and Facebook, and view the latest podcasts on YouTube.

  13. Publication policy

    Details of the policy governing the release of new data are available from the media relations team. Also available is a Pre-release Access List of those given pre-publication access to the contents of this release.

    Accessing data

    The data presented in the tables of this statistical bulletin are also available to download from the data section of this publication. A completed run of data is available as a time series dataset on our website.
     

  14. Code of Practice for Official Statistics

    National Statistics are produced to high professional standards set out in the Code of Practice for Official Statistics. They undergo regular quality assurance reviews to ensure that they meet customer needs. They are produced free from any political interference.

    Code of Practice

    The UK Statistics Authority has designated these statistics as National Statistics, in accordance with the Statistics and Registration Service Act 2007 and signifying compliance with the Code of Practice for Official Statistics.
    Designation can be broadly interpreted to mean that the statistics:

    • meet identified user needs

    • are well explained and readily accessible

    • are produced according to sound methods

    • are managed impartially and objectively in the public interest

    Once statistics have been designated as National Statistics it is a statutory requirement that the Code of Practice shall continue to be observed.

    © Crown copyright 2015

    You may use or re-use this information (not including logos) free of charge in any format or medium, under the terms of the Open Government Licence, or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU.

    This document is also available on our ONS website.

    Statistical Contacts

    Robert Doody:  Indicators and Balance of Payments +44 (0)1633 455803 ios.enquiries@ons.gsi.gov.uk 
          
    Contact Us: Office for National Statistics +44 (0)845 6013034 info@statistics.gov.uk      


    Next publication date: Friday 28 August 2015 (Second Estimate of GDP)

    Issued by: Office for National Statistics, Government Buildings, Cardiff Road, Newport NP10 8XG

    Media Contact Details:

    Luke Croydon: +44 (0) 845 604 1858 media.relations@ons.gsi.gov.uk
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    Luke Croydon: +44 (0)7867 906553 media.relations@ons.gsi.gov.uk
    (Emergency out of hours, limited service)
     

  15. Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: media.relations@ons.gsi.gov.uk

Statistical contacts

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