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Statistical bulletin: Quarterly National Accounts, Quarter 1 (Jan to Mar) 2015 This product is designated as National Statistics

Released: 30 June 2015 Download PDF

Main points

  • UK Gross Domestic Product in volume terms was estimated to have increased by 0.4% between Quarter 4 (Oct to Dec) 2014 and Quarter 1 (Jan to Mar) 2015, revised up 0.1 percentage points from the previous estimate of GDP published 28 May 2015.
  • GDP was estimated to have increased by 3.0% in 2014, compared with 2013, revised up 0.2 percentage points from the previously published estimate.
  • Between Quarter 1 2014 and Quarter 1 2015, GDP in volume terms increased by 2.9%, revised up 0.5 percentage points from the previously published estimate.
  • Revisions for GDP in volume terms are mainly due to the introduction of the interim solution for the Construction and Cost Price Indices which have impacted on both the construction industry and gross fixed capital formation estimates.
  • GDP in current prices was estimated to have increased by 0.7% between Quarter 4 2014 and Quarter 1 2015, revised down 0.2 percentage points from the previously published estimate.
  • GDP per head was estimated to have increased by 0.2% between Quarter 4 2014 and Quarter 1 2015, revised up 0.1 percentage points from the previously published estimate. Between 2013 and 2014, GDP per head increased by 2.3%.
  • The households and non-profit institutions’ serving households saving ratio was estimated to be 4.9% in Quarter 1 2015 compared with 5.9% in Quarter 4 2014. In 2014, the households and non-profit institutions’ serving households saving ratio was estimated to be 6.1%.

Understanding Gross Domestic Product

Change in GDP is the main indicator of economic growth. 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 the methods and sources page of our website).

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 process i.e. 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) 2014.

About the Quarterly National Accounts

The Quarterly National Accounts are typically published around 90 days after the end of the quarter. At this stage the data content of this estimate from the output measure of GDP has risen to around 91% of the total required for the final output based estimate. There is also around 90% data content available to produce estimates of GDP from the expenditure approach and around 70% data content from the income approach.

The quality of the GDP estimate

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 don’t publish a measure of the sampling error associated with GDP.

Headline Sector Accounts, GDP and Selected components

Table 1: Key data for the UK

Gross Domestic Product, Quarter 4 (Oct to Dec) 2012 to Quarter 1 (Jan to Mar) 2015

  Household saving ratio Real household disposable income Current market prices Chained volume measure Chained volume measure
  % %1 2011=100 2011=100 %1
Seasonally           
adjusted
Q4 2012 6.4 -1.1 103.0 100.8 -0.3
Q1 2013 5.7 -1.2 103.7 101.4 0.6
Q2 2013 6.8 1.7 105.8 102.0 0.6
Q3 2013 7.0 0.8 106.5 102.8 0.7
Q4 2013 6.2 -1.3 107.6 103.2 0.4
Q1 2014 5.3 -1.6 108.7 104.1 0.9
Q2 2014 7.0 3.1 110.4 105.0 0.9
Q3 2014 6.0 -0.3 111.5 105.8 0.7
Q4 2014 5.9 1.5 112.5 106.7 0.8
Q1 2015 4.9 0.2 113.3 107.1 0.4

Table source: Office for National Statistics

Table notes:

  1. Percentage change on previous quarter
  2. Q1 is Quarter 1  (Jan to Mar)
    Q2 is Quarter 2 ( Apr to June)
    Q3 is Quarter 3 ( July to Sept)
    Q4 is Quarter 4 (Oct to Dec)

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Historical context

Figure 1: Quarterly growth and levels of GDP for the UK, table A2

Quarter 1 (Jan to Mar) 2003 to Quarter 1 (Jan to Mar) 2015

Figure 1: Quarterly growth and levels of GDP for the UK, table A2
Source: Office for National Statistics

Notes:

  1. Q1 is Quarter 1 (Jan to Mar)

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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 on average 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) and Quarter 3 (July to Sept) 2009, GDP decreased by 6.0%. 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 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 broadly flat or declining GDP. This two-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 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 3 2013.

Quarter 1 2015 has shown continued strength with GDP growing by 0.4% compared with the previous quarter; by 2.9% between Quarter 1 2014 and Quarter 1 2015, and by 3.0% between 2013 and 2014. GDP has now increased for 9 consecutive quarters, breaking a pattern of slow and erratic growth from 2009.

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

Annex A (36.5 Kb Excel sheet) contains output component growth rates back to Quarter 1 (Jan to Mar) 2014.

The output components of GDP showed increases in Quarter 1 2015 for production and services. There were decreases for agriculture, forestry and fishing and construction.

Production output increased by 0.2% in Quarter 1 2015 compared with Quarter 4 (Oct to Dec) 2014, revised up 0.1 percentage points from the previously published estimate. Within the production sub-industries, output from mining and quarrying, including oil and gas extraction, fell by 0.5%; manufacturing (the largest component of production) increased by 0.1% (Figure 2), while electricity, gas, steam and air conditioning supply industries rose by 2.8%. Water supply and sewerage rose by 0.2%.

When comparing Quarter 1 2015 with Quarter 1 2014, production output rose by 1.0%, revised up 0.4 percentage points from the previously published estimate. Manufacturing increased by 1.4% between these periods while electricity, gas, steam and air conditioning supply industries increased by 4.1%. Mining and quarrying, including oil and gas extraction, fell by 0.7% while water supply and sewerage contracted by 2.0%.

Figure 2: UK manufacturing growth, quarter-on-quarter

Quarter 1 (Jan to Mar) 2011 to Quarter 1 (Jan to Mar) 2015

Figure 2: UK manufacturing growth, quarter-on-quarter
Source: Office for National Statistics

Notes:

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

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Construction output decreased by 0.2% in Quarter 1 2015, revised up 0.9 percentage points from the previously published estimate. Construction output rose by 4.5% between Quarter 1 2014 and Quarter 1 2015, revised up 4.8 percentage points from the previously published estimate. More information on the revisions to construction output is available in the Quarterly Revisions section of this release.

The service industries grew by 0.4% in Quarter 1 2015 (Figure 3), unrevised from the previous estimate, marking the ninth consecutive quarter of positive growth. This follows a 0.9% increase in Quarter 4 2014.

Figure 3: UK services growth, quarter-on-quarter

Quarter 1 (Jan to Mar) 2011 to Quarter 1 (Jan to Mar) 2015

Figure 3: UK services growth, quarter-on-quarter
Source: Office for National Statistics

Notes:

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

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Output of the distribution, hotels and restaurants industries rose by 1.1% in Quarter 1 2015, following a 1.4% increase in Quarter 4 2014. The increase in the latest quarter was largely due to retail trade, except of motor vehicles and motorcycles, and wholesale trade, except of motor vehicles and motorcycles.

Output of the transport, storage and communication industries rose by 0.7% in Quarter 1 2015, following a 1.0% increase in Quarter 4 2014. The largest contributor to the increase was motion picture, video and TV programme production, sound recording and music publishing activities.

Business services and finance industries’ output rose by 0.1% in Quarter 1 2015, following a 1.4% increase in Quarter 4 2014. The largest upward contribution to growth in Quarter 1 2015 came from rental and leasing activities and activities of head offices; management consultancy activities.

Output of government and other services rose by 0.3% in Quarter 1 2015 and was flat in Quarter 4 2014. In the latest quarter the largest upward contribution came from activities of households as employers of domestic personnel, and human health activities.

Further detail on the service industries’ lower level components can be found in the Index of Services statistical bulletin published on 30 June 2015.

Gross value added (GVA) excluding oil and gas extraction rose by 0.4% in Quarter 1 2015 following a 0.8% increase in Quarter 4 2014. 

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. In the decade prior to the downturn, the services industry grew steadily, while production output was broadly flat over the same period. Construction activity grew strongly in the early part of the decade, and although there was a temporary decline in the mid-2000s - this was reversed by the end of 2007.

Figure 4: GDP output components growth for the UK, quarter-on-quarter

Quarter 1 (Jan to Mar) 2008 to Quarter 1 (Jan to Mar) 2015

Figure 4: GDP output components growth for the UK, quarter-on-quarter
Source: Office for National Statistics

Notes:

  1. Q1 is Quarter 1 (Jan to Mar)

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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%, 12.2% and 10.7% respectively. In contrast, output in the services industry only fell by 4.0% from its peak to trough.

Production activity began to grow again in 2010, and the manufacturing and the construction industries showed particular strength, however neither industry sustained this growth. Production output fell in both 2011 and 2012, falling below levels seen at the depth of the downturn in 2009. Construction output also fell sharply in 2012, with output falling close to its 2009 trough after further contraction in Quarter 1 2013. Construction output improved over much of 2014. However, output declined in the most recent quarter. Although, there has been widespread 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 5 years prior to the economic downturn in 2008 to 2009, the average growth rate experienced between Quarter 3 (July to Sept) 2009 and Quarter 2 (Apr to June) 2014 (5 years following the downturn), and the current quarterly growth rate observed in the most recent period (Quarter 1 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 5 years following the economic downturn compared with the 5 years prior: this is also true of the services industry. Figure 5 shows that in Quarter 1 2015, all industries shown underperformed compared to the post-downturn average rate of growth, with the exception of production, which performed at the same rate. The electricity, gas and steam industries have shown particular strength when compared with both the production 5 year average, prior and post the downturn.
It should be noted that the third column, which shows the current quarterly growth rate, is based on only 1 data point. Consequently users should use caution when making direct comparisons with the long run averages.

Figure 5: UK GDP quarterly average compound growth by industry grouping before and after the 2008 to 2009 economic downturn

Quarter 1 (Jan to Mar) 2003 to Quarter 4 (Oct to Dec) 2007, Quarter 1 (Jan to Mar) 2009 to Quarter 4 (Oct to Dec) 2014

Figure 5: UK GDP quarterly average compound growth by industry grouping before and after the 2008 to 2009 economic downturn
Source: Office for National Statistics

Notes:

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

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

Annex B (33 Kb Excel sheet) contains expenditure component growth rates back to Quarter 1 (Jan to Mar) 2014.

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) rose by 1.0% in Quarter 1 (Jan to Mar) 2015, following no change in Quarter 4 (Oct to Dec) 2014. Annually, between 2013 and 2014 gross domestic expenditure increased by 3.5%.

Household final consumption expenditure rose by 0.9% in Quarter 1 2015, revised up 0.4 percentage points from the previously published estimate, and has increased for 15 consecutive quarters (Figure 6). The largest increase in household final consumption expenditure in Quarter 1 2015 came from housing, and recreation and culture. When compared with the same quarter a year ago, household final consumption expenditure has been rising each quarter since Quarter 4 2011, and was 3.4% higher in Quarter 1 2015 than in the same period a year ago. Between 2013 and 2014, household final consumption expenditure increased by 2.6%.

Figure 6: UK household final consumption expenditure growth, quarter-on-quarter

Quarter 1 (Jan to Mar) 2011 to Quarter 1 (Jan to Mar) 2015

Figure 6: UK household final consumption expenditure growth, quarter-on-quarter
Source: Office for National Statistics

Notes:

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

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Government final consumption expenditure rose by 0.9% in Quarter 1 2015, revised up 0.3 percentage points from the previously published estimate, and follows a 0.1% increase in Quarter 4 2014. Between Quarter 1 2014 and Quarter 1 2015, government final consumption expenditure increased by 2.3%. Between 2013 and 2014, government final consumption expenditure increased by 1.6%.

Figure 7 shows the contribution of different categories of goods and services to the growth in UK household domestic expenditure, quarter-on-corresponding-quarter-of-previous-year. The positive consumption growth since Quarter 4 2011 is shown to have been broad-based across both goods and services. The most notable change over recent periods is the return to a negative contribution from consumption of non-durable goods. However, in the first quarter of 2015, the consumption of non-durable goods has returned to a positive contribution of 0.4 percentage points. Non-durable goods include items which can only be consumed or used once; a good example of these is food products.

Figure 7: Contribution to UK household expenditure growth, quarter-on-same-quarter previous year

Quarter 1 (Jan to Mar) 2008 to Quarter 1 ( Jan to Mar) 2015

Figure 7: Contribution to UK household expenditure growth, quarter-on-same-quarter previous year
Source: Office for National Statistics

Notes:

  1. Q1 is Quarter 1 (Jan to Mar)

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Non-profit institutions serving households’ (NPISH) final consumption expenditure rose by 2.6% in Quarter 1 2015, following a 3.2% fall in Quarter 4 2014, unrevised from the previously published estimate. Between Quarter 1 2014 and Quarter 1 2015, NPISH final consumption expenditure increased by 2.3%. Annually, NPISH final consumption expenditure rose by 0.9% between 2013 and 2014. 

In Quarter 1 2015, gross fixed capital formation was estimated to have increased by 2.0% (Figure 8), revised up 0.5 percentage points from the previously published estimate. Between Quarter 1 2014 and Quarter 1 2015, gross fixed capital formation increased by 5.0%. Gross fixed capital formation rose by 8.6% between 2013 and 2014. More information on the revisions to gross fixed capital formation is available in the Quarterly Revisions section of this release.

In Quarter 1 2015, we migrated to the Quarterly Acquisitions and Disposals of Capital Assets Survey (QCAS) from the Quarterly Survey of Capital Expenditure (CAPEX) as one of the main data sources for gross fixed capital formation.  The main reasons for the changes to the survey are to move to the updated European System of Accounts (ESA) 2010 manual, the international guidance for national accounts. More information on this change and more detail on gross fixed capital formation can be found in the Business Investment statistical bulletin published on 30 June 2015.

Business investment was estimated to have risen by 2.0% in Quarter 1 2015, revised up 0.3 percentage points from the previously published estimate. Between Quarter 1 2014 and Quarter 1 2015, business investment increased by 5.7%. Annually, business investment rose by 8.0% between 2013 and 2014. 

Figure 8: UK gross fixed capital formation growth, quarter-on-quarter

Quarter 1 (Jan to Mar) 2011 to Quarter 1 (Jan to Mar) 2015

Figure 8: UK gross fixed capital formation growth, quarter-on-quarter
Source: Office for National Statistics

Notes:

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

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Excluding the alignment adjustment, the level of inventories increased by £4.5 billion in Quarter 1 2015, following an increase of £1.4 billion in Quarter 4 2014. Including the alignment adjustment, the level of inventories increased by £2.5 billion in Quarter 1 2015, following an increase of £3.4 billion in Quarter 4 2014. More information on the alignment adjustment can be found in the Balancing GDP section within the Background Notes which accompany this release.

The trade balance deficit widened from £10.6 billion in Quarter 4 2014 to £13.4 billion in Quarter 1 2015 (Figure 9). The trade position reflects exports minus imports. Following a 4.5% increase in Quarter 4 2014, exports rose by 0.4% in the latest quarter, while imports increased by 2.3% following a 1.6% increase in Quarter 4 2014. Between 2013 and 2014, exports increased by 0.5%, while imports increased by 2.4%.

Exports of goods rose by 0.3% in Quarter 1 2015, due mainly to an increase in chemicals, specifically pharmaceutical products. Exports of services rose by 0.5% in Quarter 1 2015, due to increases in financial services. In Quarter 1 2015 imports of goods rose by 2.1%, due to an increase in finished manufactures, specifically imports of cars. Imports of services increased by 2.6% in Quarter 1 2015, due to an increase in financial and transport services.

Figure 9: UK trade balance

Quarter 1 (Jan to Mar) 2011 to Quarter 1 ( Jan to Mar) 2015

Figure 9: UK trade balance
Source: Office for National Statistics

Notes:

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

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Figure 10 shows a breakdown of the trade components and their contribution to GDP growth from Quarter 1 2008 to Quarter 1 2015. The series indicates that in the most recent quarter the UK trade balance has made a negative contribution to GDP growth. Imports of goods rose by  6.7% when comparing Quarter 1 2014 with Quarter 1 2015, contributing -1.7 percentage points to GDP growth, with this being partially offset by exports of goods, which increased by 4.1% in the same period, contributing 0.7 percentage points to GDP growth.

Figure 10: Net trade components contribution to GDP growth for the UK, quarter-on-same-quarter previous year

Quarter 1 (Jan to Mar) 2008 to Quarter 1 ( Jan to Mar) 2015

Figure 10: Net trade components contribution to GDP growth for the UK, quarter-on-same-quarter previous year
Source: Office for National Statistics

Notes:

  1. Q1 is Quarter 1 (Jan to Mar)

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Figure 11 shows the quarterly contribution of the expenditure components to the growth of GDP in chained volume measures. For Quarter 1 2015, the largest positive contribution to GDP came from household final consumption expenditure, which contributed 0.5 percentage points. Gross fixed capital formation contributed 0.3 percentage points to GDP; general government final consumption expenditure contributed 0.2 percentage points and NPISH contributed 0.1 percentage points. There were negative contributions to GDP from net trade and changes in inventories which contributed 0.6 and 0.2 percentage points respectively.

Figure 11: Expenditure components percentage contribution to GDP growth for the UK, quarter-on-quarter

Quarter 1 (Jan to Mar) 2014 to Quarter 1 (Jan to Mar) 2015

Figure 11: Expenditure components percentage contribution to GDP growth for the UK, quarter-on-quarter
Source: Office for National Statistics

Notes:

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

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GDP implied deflator

Annex D (28.5 Kb Excel sheet) contains implied deflator component growth rates back to Quarter 1 (Jan to Mar) 2014.

The GDP implied deflator at market prices for Quarter 1 2015 is 1.4% above the same quarter of 2014 (Figure 12). 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.

Figure 12: GDP at market prices implied deflator for the UK. quarter-on-quarter corresponding-quarter-of-previous year

Quarter 1 (Jan to Mar) 2011 to Quarter 1 ( Jan to Mar) 2015

Figure 12: GDP at market prices implied deflator for the UK. quarter-on-quarter corresponding-quarter-of-previous year
Source: Office for National Statistics

Notes:

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

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GDP analysed by income categories at current prices, table D

Annex C (29.5 Kb Excel sheet) contains income component growth rates back to Quarter 1 (Jan to Mar) 2014.

GDP at current market prices rose by 0.7% in Quarter 1 (Jan to Mar) 2015, following a 0.9% increase in Quarter 4 (Oct to Dec) 2014. GDP at current market prices rose by 4.3% when compared to Quarter 1 2014. In 2014, GDP at current market prices rose by 4.6%.

Compensation of employees – which includes both wages and salaries, and pension contributions – decreased by 0.5% in Quarter 1 2015, following an increase of 1.1% in Quarter 4 2014 (Figure 13). Between Quarter 1 2014 and Quarter 1 2015, compensation of employees rose by 3.9%. Between 2013 and 2014, compensation of employees rose by 3.1%.

Figure 13: UK compensation of employees growth, quarter-on-quarter

Quarter 1 (Jan to Mar) 2011 to Quarter 1 (Jan to Mar) 2015

Figure 13: UK compensation of employees growth, quarter-on-quarter
Source: Office for National Statistics

Notes:

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

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The gross operating surplus of corporations (effectively the profits of companies operating within the UK), including the alignment adjustment, rose by 3.5% in Quarter 1 2015 compared with the previous quarter; this follows a decrease of 1.7% in Quarter 4 2014 (Figure 14). Between 2013 and 2014 the gross operating surplus of corporations rose by 5.6%. More information on the alignment adjustment can be found in the Balancing GDP section within the Background Notes which accompany this release.

Figure 14: UK gross operating surplus of corporations' growth, quarter-on-quarter

Quarter 1 (Jan to Mar) 2011 to Quarter 1 ( Jan to Mar) 2015

Figure 14: UK gross operating surplus of corporations' growth, quarter-on-quarter
Source: Office for National Statistics

Notes:

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

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On an unaligned basis, private non-financial corporations’ operating surplus fell by 0.1% in Quarter 1 2015, following a 1.1% fall in Quarter 4 2014. Private non-financial corporations’ operating surplus on an aligned basis rose by 4.8% in Quarter 1 2015 following a decrease of 4.5% in Quarter 4 2015.

Taxes less subsidies on products and production fell by 2.7% in Quarter 1 2015, following an increase of 3.4% in Quarter 4 2014. Between 2013 and 2014 taxes less subsidies on products and production rose by 4.8%.

Figure 15 shows the contribution made by income components to current price GDP. In Quarter 1 2015, there were positive contributions to GDP from gross operating surplus of corporations and other income which respectively contributed 0.8 and 0.5 percentage points. Compensation of employees contributed a negative 0.3 percentage points to GDP while taxes less subsidies contributed a negative 0.3 percentage points.

Figure 15: Income components percentage contribution to GDP growth for the UK , quarter-on-quarter

Quarter 1 (Jan to Mar) 2014 to Quarter 1 (Jan to Mar) 2015

Figure 15: Income components percentage contribution to GDP growth for the UK , quarter-on-quarter
Source: Office for National Statistics

Notes:

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

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GDP per head, table P

In Quarter 1 (Jan to Mar) 2015, UK GDP per head increased by 0.2% compared with Quarter 4 (Oct to Dec) 2014, having increased by 0.7% in the previous quarter. This was lower than the 0.4% increase in GDP in Quarter 1 2015. In Quarter 1 2015 GDP per head remained 0.6% below its pre-economic downturn peak level (Quarter 1 2008), while GDP exceeded the level of its pre-downturn peak in Quarter 3 (July to Sept) 2013, and in Quarter 1 2015 was 4.5% above its pre-downturn peak (Figure 16).

Between Quarter 1 2014 and Quarter 1 2015, GDP per head rose by 2.2%. Between 2013 and 2014, GDP per head rose by 2.3%.

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 26 June 2014.

Figure 16: Quarterly growth of GDP and GDP per head for the UK,

Quarter 1 (Jan to Mar) 2008 to Quarter 1 (Jan to Mar) 2015

Figure 16: Quarterly growth of GDP and GDP per head for the UK,
Source: Office for National Statistics

Notes:

  1. Q1 is Quarter 1 (Jan to Mar)
  2. Click on the image to view a larger version

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Sector Accounts, Tables I, J1, J2, J3, K1 and K2

Summary

Annually for 2014, the central government, financial corporations, private non-financial corporations and the household and non-profit institutions serving households sectors were net borrowers. Local government, public corporations and the rest of the world sectors were net lenders.

In Quarter 1 (Jan to Mar) 2015, the central government, local government, financial corporations, private non-financial corporations and households and non profit institutions serving households sectors were net borrowers. The public corporations and rest of the world sectors were net lenders (Figure 17).

Compared to the previous year, in 2014, there has been a switch to net lending in the local government sector and a switch to net borrowing in the private non-financial sector. All other sectors remain unchanged.

Figure 17: UK net lending (+)/ net borrowing (-) by sector

Quarter 1 (Jan to Mar) 2015

Figure 17: UK net lending (+)/ net borrowing (-) by sector
Source: Office for National Statistics

Notes:

  1. Click on the image to view a larger version.

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There were no switches to net lending/borrowing by sector when compared to the previous quarter.

Table I has further details.

The household and non-profit institutions serving households (NPISH) sector (tables J1, J2 and J3)

Saving ratio:

Annually for 2014 the saving ratio was 6.1%, compared with 6.4% in 2013.

The saving ratio in Quarter 1 2015 was 4.9%, compared with 5.9% in the previous quarter (Figure 18).

Figure 18: UK household and NPISH saving ratio

Quarter 3 (Jul to Sep) 2010 to Quarter 1 (Jan to Mar) 2015

Figure 18: UK household and NPISH saving ratio
Source: Office for National Statistics

Notes:

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

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This decrease in the latest quarter reflects increased taxes on income and wealth with a fall in social benefits and compensation of employees partially offset by a rise gross operating surplus and mixed income. Figure 19 shows the main components contributing to the quarterly saving ratio movement.

The decrease in the saving ratio in 2014 reflects increases in consumption expenditure, taxes on income and wealth and a fall in social benefits, which are partially offset by increases in wages and salaries, gross operating surplus, and mixed income.

Figure 19: UK main household and NPISH saving ratio components

Quarter 2 (Apr to Jun) 2011 to Quarter 1 (Jan to Mar) 2015

Figure 19: UK main household and NPISH saving ratio components
Source: Office for National Statistics

Notes:

  1. Q1 is Quarter 1 (Jan to Mar)
  2. Q2 is Quarter 2 (Apr to June)
  3. Q3 is Quarter 3 (July to Sept)
  4. Q4 is Quarter 4 (Oct to Dec)
  5. Click on the image to view a larger version

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What is the saving ratio?

The saving ratio estimates the amount of money households and NPISH have available to save (known as gross saving) as a percentage of their total disposable income (known as total available resources). Both can be found in table J3 of this release.

Gross saving estimates the difference between households’ and NPISH  total available resources (mainly wages received, revenue of the self-employed, social benefits and net income such as interest on savings and dividends from shares but excluding taxes on income and wealth) and their current consumption (expenditure on goods and services).

All of the components that make up gross saving and total available resources, and in fact all sector accounts data apart from real household disposable income (RHDI), are estimated in current prices (CP). These are sometimes known as nominal prices, meaning that they include the effects of price changes.

The saving ratio is published in both non-seasonally adjusted (NSA) and seasonally adjusted (SA) formats with the latter removing seasonal effects to allow comparisons over time. However, the saving ratio can be volatile and is sensitive to even relatively small movements to its components, particularly on a quarterly basis. This is because saving is a small difference between two numbers. It is therefore often revised at successive publications when new or updated data are included.

Real household and NPISH disposable income:

For the year 2014, real household and NPISH disposable income increased by 0.8%, following a rise of 0.1% in 2013. This reflects an increase of 2.3% in nominal gross disposable income, partially offset by a 1.5% rise in the household and NPISH final consumption deflator. This increase in nominal gross disposable income was predominantly due to a rise in wages and salaries together with increased gross operating surplus and mixed income, partially offset by increased taxes on income and wealth and decreased social benefits.

The level of real household and NPISH disposable income increased by 0.2% in Quarter 1 2015, following an increase of 1.5% in the previous quarter (Figure 20).

Figure 20: UK real household and NPISH disposable income, quarter-on-quarter

Quarter 1 (Jan to Mar) 2011 to Quarter 1 (Jan to Mar) 2015

Figure 20: UK real household and NPISH disposable income, quarter-on-quarter
Source: Office for National Statistics

Notes:

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

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The rise in the latest quarter reflects a 0.4% fall in nominal gross disposable income offset by a fall of 0.6% in the household and NPISH final consumption deflator. The fall in nominal gross disposable income was due to a rise in taxes on income and wealth and falls in social benefits and compensation of employees partially offset by a rise in gross operating surplus and mixed income.

Figure 21 shows the main components contributing to the quarterly movement of gross disposable income.  

Figure 21: UK main gross disposable income components, quarter-on-quarter growth

Quarter 2 (Apr to Jun) 2011 to Quarter 1 (Jan to Mar) 2015

Figure 21: UK main gross disposable income components, quarter-on-quarter growth
Source: Office for National Statistics

Notes:

  1. Q1 is Quarter 1 (Jan to Mar)
  2. Q2 is Quarter 2 (Apr to June)
  3. Q3 is Quarter 3 (July to Sept)
  4. Q4 is Quarter 4 (Oct to Dec)
  5. Click on the image to view a larger version

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What is real household and NPISH disposable income?

There are two measures of household and NPISH income, in real terms or in current prices (or nominal as it is often called), and both of these time series can be found in table J2 of this release.

Gross household and NPISH disposable income (GDI) is the estimate of the total amount of money from income that households and NPISH have available from wages received, revenue of the self-employed, social benefits and net income (such as interest on savings and dividends from shares) less taxes on income and wealth. All the components that make up GDI are estimated in current prices.

However, by adjusting GDI to remove the effects of inflation, we are able to estimate another useful measure of disposable income called real disposable income. This is a measure of real purchasing power of household and NPISH incomes, in terms of the physical quantity of goods and services they would be able to purchase. We use the household and NPISH expenditure deflator (which can be found in table J2 of this release) to remove the effects of price inflation.

Private non-financial corporations’ sector (tables K1 and K2)

For the year 2014, net borrowing was £4.4 billion following net lending of £13.3 billion in 2013. This decrease was due to a fall in net property income together with a rise in gross capital formation partially offset by an increase in gross operating surplus.

Net borrowing of private non-financial corporations’ was £2.9 billion in Quarter 1 2015, following net borrowing of £3.8 billion in the previous quarter. This decrease in net borrowing in the latest quarter was due to a rise in gross operating surplus partially offset by a fall in net property income.
 

International comparisons for GDP, Quarter 1 (Jan to Mar) 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, excluding the United States of America (USA) saw positive growth when comparing Quarter 4 (Oct to Dec) 2014 and Quarter 1 (Jan to Mar) 2015 (Figure 22). The European Union (EU28) grew by 0.4% in the first quarter of 2015 following 7 quarters of positive growth (Table 2). In the same period, the eurozone (EA19) expanded by 0.4%. When comparing Quarter 1 2014 with Quarter 1 2015, EA19 grew by 1.0 % whilst EU28 expanded by 1.5% (Figure 23).

Germany saw its GDP grow by 0.3% between Quarter 4 2014 and Quarter 1 2015, a decrease of 0.4 percentage points from the previous quarter-on-quarter growth. In contrast, France saw growth of 0.6% between Quarter 4 2014 and Quarter 1 2015 having increased by 0.1% between Quarter 3 (July to Sept) 2014 and Quarter 4 2014.

In the first quarter of 2015 the USA’s economy saw no growth, however when comparing Quarter 1 2014 and Quarter 1 2015, GDP for the USA increased by 2.9%. GDP for Japan continued to increase with Quarter 1 2015 growing by 1.0%, following a 0.3% increase in the previous quarter. Although between Quarter 1 2014 and Quarter 1 2015, Japan’s economy contracted at a rate of 1.0%, this was revised up from the previously estimated 1.4% decrease.

GDP for the Group of Seven (G7) countries increased by 0.2% in Quarter 1 2015, following a 0.5% increase in the previous quarter. When comparing Quarter 1 2014 with Quarter 1 2015, G7 GDP increased by 1.7% and is now 5.3% above its pre-recession peak in Quarter 1 2008.

Table 2: International GDP quarterly growth rate comparisons for selected economic areas, quarter-on-quarter

Quarter on previous quarter % growth rates, Chained volume, seasonally adjusted, Quarter 1 (Jan to Mar) 2013 to Quarter 1 ( Jan to Mar) 2015

  EU281 EA192  France Germany UK Japan USA G73
                 
                 
                 
Q1 2013 -0.1 -0.4 0.1 -0.4 0.6 1.3 0.7 0.5
Q2 2013  0.4 0.4 0.8 0.8 0.6 0.7 0.4 0.5
Q3 2013 0.3 0.2 -0.1 0.3 0.7 0.5 1.1 0.7
Q4 2013 0.3 0.3 0.2 0.4 0.4 -0.2 0.9 0.5
                 
Q1 2014 0.4 0.2 -0.2 0.8 0.9 1.1 -0.5 0.0
Q2 2014 0.3 0.1 -0.1 -0.1 0.9 -1.7 1.1 0.4
Q3 2014 0.3 0.2 0.2 0.1 0.7 -0.5 1.2 0.6
Q4 2014 0.4 0.4 0.1 0.7 0.8 0.3 0.5 0.5
                 
Q1 2015 0.4 0.4 0.6 0.3 0.4 1.0 0.0 0.2

Table source: Office for National Statistics

Table notes:

  1. EU28 is the European Union

  2. EA19 is the eurozone
  3. G7 is the Group of Seven countries
  4. Q1 is Quarter 1 (Jan to Mar)
    Q2 is Quarter 2 (Apr to June)
    Q3 is Quarter 3 (July to Sept)
    Q4 is Quarter 4 (Oct to Dec)

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Figure 22: International GDP growth rates, quarter-in-quarter

Quarter 1 (Jan to Mar) 2003 to Quarter 1 (Jan to Mar) 2015

Figure 22: International GDP growth rates, quarter-in-quarter
Source: Office for National Statistics

Notes:

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

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Figure 23: International GDP growth rates, quarter-on-same-quarter a year ago

Quarter 1 (Jan to Mar) 2003 to Quarter 1 (Jan to Mar) 2015

Figure 23: International GDP growth rates, quarter-on-same-quarter a year ago
Source: Office for National Statistics

Notes:

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

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Figure 24 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.

Figure 24: International GDP growth rates, quarter-on-quarter, indexed to Q1 2008=100

Quarter 1 (Jan to Mar) 2008 to Quarter 1 (Jan to Mar) 2015

Figure 24: International GDP growth rates, quarter-on-quarter, indexed to Q1 2008=100
Source: Office for National Statistics

Notes:

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

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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.

Quarterly revisions

GDP and components, previously published on 28 May 2015

Figure 25 shows quarterly revisions between latest and previously published estimates of GDP. The earliest period open for revision in this release is Quarter 1 (Jan to Mar) 2014.

Figure 25: GDP for the UK quarter-on-quarter growth

Quarter 3 (Jul to Sep) 2011 to Quarter 1 (Jan to Mar) 2015

Figure 25: GDP for the UK quarter-on-quarter growth
Source: Office for National Statistics

Notes:

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

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Revisions in this release are due to the replacement of forecasts with actual survey or external source data and the change in methodology for the Construction Price and Cost Indices.

Table 3 shows the revisions to quarter-on-quarter growth for GDP.

Table 3: Revisions to quarter-on-quarter percentage change growths for GDP for the UK

Chained volume measure, seasonally adjusted, Quarter 1 (Jan to Mar) 2014 to Quarter 1 (Jan to Mar) 2015

Period Quarter-on-quarter previously published Quarter-on-quarter latest estimate Total quarter-on-quarter revision
  % growth  % growth  % growth 
Q1 2014 0.9 0.9 0.0
Q2 2014 0.8 0.9 +0.1
Q3 2014 0.6 0.7 +0.1
Q4 2014 0.6 0.8 +0.2
Q1 2015 0.3 0.4 +0.1

Table source: Office for National Statistics

Table notes:

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

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The revisions to the headline quarter-on-quarter growth for GDP are explained in the section ‘Revisions to headline GDP quarter-on-quarter growth’ of this bulletin.

Table 4 shows the revisions to the quarter–on-same-quarter a year ago growth for GDP.

The revisions for the quarter-on-same-quarter a year ago growths for GDP in 2014 are due to revisions in 2014 as 2013 has been unrevised in this release. For Quarter 1 2015, revisions are the impact of both revisions in this quarter and the corresponding quarter of 2014. These revisions are explained in the ‘Revisions to headline GDP quarter-on-quarter growth’ section of this bulletin.

Table 4: Revisions to quarter-on-same-quarter-a-year-ago, percentage change growths to GDP for the UK

Seasonally adjusted, chained volume measure, Quarter 1 (Jan to Mar) 2014 to Quarter 1 (Jan to Mar) 2015

Period Quarter-on-quarter previously published Quarter-on-quarter latest estimate Total quarter-on-quarter revision
  % growth  % growth  % growth 
Q1 2014 2.7 2.7 0.0
Q2 2014 2.9 3.0 +0.1
Q3 2014 2.8 3.0 +0.2
Q4 2014 3.0 3.4 +0.4
Q1 2015 2.4 2.9 +0.5
 

Table source: Office for National Statistics

Table notes:

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

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Revisions to headline GDP quarter-on-quarter growth

Upward revisions to the annual 2014 arise mainly from higher output estimates (in particular construction); higher income estimates (higher company profits) and to a lesser extent higher expenditure (higher gross capital formation and households).

The Quarter 1 2015 upward revision to growth arises from higher output, expenditure and income measures, with particular strength coming from construction, gross fixed capital formation, household consumption and company profits. The quarterly pattern of growth revisions is as follows:

GDP for Quarter 1 2014 was unrevised.

GDP for Quarter 2 (Apr to June) 2014 has been revised up by 0.1 percentage points to 0.9%. This is due to upward revisions for the agriculture and construction industries within the output approach. The former was due to annual benchmark data being returned and the latter is the result of the change in methodology for the Construction Price and Cost Indices along with the incorporation of late data and new seasonal adjustment parameters. These upward revisions were partially offset by downward revisions to the expenditure and income measures. Broad-based upward revisions to gross domestic expenditure components were offset by a large upward revision to imports of goods.

GDP for Quarter 3 (July to Sept) 2014 has also been revised up by 0.1 percentage points to 0.7%. Similarly to the previous quarter, both agriculture and construction contribute positively to this revision. Also, broad-based expenditure upward revisions to gross domestic expenditure components including household consumption and gross fixed capital formation were offset by a large downward revision to exports of goods and a large upward revision to imports of goods. There were upward revisions to the income approach to measuring GDP for financial corporations’ gross operating surplus, again due to external data sources replacing forecast data used in the previous publication.

GDP for Quarter 4 (Oct to Dec) 2014 has been revised up by 0.2 percentage points to 0.8%. Continuing the revision story of previous quarters, agriculture and construction continue to show strong upward revisions in this quarter. In addition there were upward revisions from the transport, storage and communications and business services and finance industries. Income saw further upward revisions to all corporations’ components.

GDP for Quarter 1 2015 has been revised up by 0.1 percentage points to 0.4%. All three measures saw upward revisions in this quarter with key drivers remaining consistent with those of the previous quarters.

Key data changes to Output components

Construction: On 12 June 2015 ONS launched the interim solution for Construction Price and Cost Indices. The supporting article presented the impacts of the interim solution on output in the Construction Industry and Gross Domestic Product (GDP) (214.3 Kb Pdf) when measured from the output approach. Output in the construction industry acts as data source for GDP when measured from the output approach and has a weight of 6.4%. A change in output in the construction industry of 0.8 percentage points will thus revise GDP by 0.0512. The potential revisions to GDP, all else equal, as a result of the introduction of this interim solution are shown in table 3 in the construction article. This methods change wasn’t the sole driver of the revisions to construction, there were also upward revisions due to incorporating late data and the new seasonal adjustment parameters.

Agriculture: Revisions to 2014 data are mainly due to new annual data feeding into crop and animal production, hunting and related service activities, supplied by the Department for Environment Food & Rural Affairs (DEFRA).

Key data changes to Expenditure components

Trade in goods: Revisions from Quarter 1 2014 mainly reflect revised data from HM Revenue & Customs (HMRC). Estimates of both exports and imports (table 5), in current prices (CP) and chained volume measures (CVM) and a summary of the revisions is presented in the table. Annually, the trade in goods deficit in 2014 was revised down by £2.1 billion. The new annual deficit is the largest goods deficit on record. The revision is due to more complete data being available. 

Table 5: Summary of revisions to UK trade in goods

Current prices (CP), Chained volume measures (CVM), Quarter 1 (Jan to Mar) 2014 to Quarter 1 ( Jan to Mar) 2015

£ million
  Total revision to import of goods, CP Total revision to import of goods, CVM Total revision to export of goods, CP Total revision to export of goods, CVM
Q1 2014 -370 -363 192 -31
Q2 2014 483 527 177 308
Q3 2014 392 478 -526 -559
Q4 2014 442 490 -506 -636
Q1 2015 451 322 -63 -69

Table source: Office for National Statistics

Table notes:

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

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Household Final Consumption Expenditure: Revisions are mainly due to the incorporation of new data from the Living Cost and Food Survey, the Department of Energy and Climate Change, HMRC and tourism data. The annual 2014 £m CVM figure for HHFCE has only seen a small upward revision, of £193 million, with the large £574 million downward revision to Quarter 1 2014.  Revisions to classification of individual consumption by purpose (COICOP) data are widespread but include downward revisions to 05 Household goods and services and 09 Recreation and culture. In both instances new data cause the revisions. For all other quarters of 2014 revisions are upwards, the largest being a £425 million revision to Quarter 4 2014. Again, revisions are widespread but include upward revisions to 07 Transport and 12 Miscellaneous, partially offset by downward revisions to 09 Recreation and culture and 11 Restaurants and Hotels. Despite these quarterly revisions, the annual growth rate remains unrevised at 2.6%. In addition, housing saw further revisions to the current price measure of HHFCE on ‘Imputed Rental’ and ‘Actual Rental’. Revisions to the 2014 quarterly data are in order to maintain alignment of household implied deflators with the equivalent Consumer Price Inflation including owner occupiers’ housing costs (CPIH) but revisions over the year are minimal. A summary of the revisions to HHFCE is presented in table 6:

Table 6: Summary of revisions to UK HHFCE

Seasonally adjusted, chained volume measures, Quarter 1 (Jan to Mar) 2014 to Quarter 1 (Jan to Mar) 2015

£ million
Period Total revision to HHFCE Total domestic revision Total net tourism revision
Q1 2014 -574 -303 -271
Q2 2014 160 200 -40
Q3 2014 182 309 -127
Q4 2014 425 766 -341
Q1 2015 1427 834 593

Table source: Office for National Statistics

Table notes:

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

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Gross Fixed Capital Formation: Revisions are seen for all periods from Quarter 1 2014 and for both current price (CP) and chained volume measures (CVM). A summary of the revisions to GFCF is presented in table 7.

Table 7: Summary of revisions to UK gross fixed capital formation

Current prices (CP), chained volume measures (CVM), Quarter 1 (Jan to Mar) 2014 to Quarter 1 (Jan to Mar) 2015

£ million
Period Total revision to GFCF, CP Total revision to GFCF, CVM
Q1 2014 192 197
Q2 2014 150 435
Q3 2014 -69 480
Q4 2014 251 1010
Q1 2015 1094 1380

Table source: Office for National Statistics

Table notes:

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

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There is a slight upward revision to GFCF CP series in 2014 which is reflected in part in the CVM data. There is an expectation of an additional upward revision to CVM due to the incorporation of the new construction price deflators. All quarters, in particular Quarter 1 2015, are also revised due to new data. Further analysis and explanation can be found in Changes to National Accounts: Gross fixed Capital Formation and Business Investment – Quarter 1 (January to March) 2015 published on 30 June 2015.

Key data changes to Income components

Compensation of Employees (CoE): Revisions to CoE (D.1) were downward in all open quarters and the annual downward revisions of £600 million to 2014 also impacted on the annual growth rate, which was revised down to 3.1%. Apart from Quarter 1 2014, revisions were mainly due to downward revisions in seasonally adjusted employers social contributions (D.12). Revisions to seasonally adjusted wages and salaries (D.11) occur due to changes in underlying data and subsequently, a reassessment of seasonal adjustment. A summary of the revisions to CoE is presented in table 8.

Table 8: Summary of revisions to UK compensation of employees (CoE)

Current prices (CP), Quarter 1 (Jan to Mar) 2014 to Quarter 1 (Jan to Mar) 2015

£ million
Period Total revision to CoE Total wages and salaries revision (D.11) Total employers social contributions revision (D.12)
Q1 2014 -118 -203 85
Q2 2014 -249 50 -299
Q3 2014 -103 239 -342
Q4 2014 -130 357 -487
Q1 2015 -872 -54 -818

Table source: Office for National Statistics

Table notes:

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

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Revisions to the other income components were broad-based.

Detailed revisions for the three GDP approaches

Sector accounts revisions, previously published 31 March 2015

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

    As part of our user consultation, we are conducting surveys on the Second Estimate of GDP and the Quarterly National Accounts. The aim of the surveys is to find out how you use some of our key statistics, your understanding of the data published and your views on the quality of the statistical bulletins. Your responses will help us improve some of our most important products. We will analyse the responses and publish a summary of the results over the forthcoming months.

    The surveys will take about 10 minutes to complete and will close on 10 July 2015. All answers will remain anonymous when we report the outcomes of the surveys. Please see our confidentiality statement for further details.

  2. Release policy

    This release includes data available up to 16 June 2015. Data are consistent with the Index of Production statistical bulletin published on 10 June 2015, the current price trade in goods data within the UK Trade statistical bulletin published on 9 June 2015 and the population estimates published 26 June 2014.

  3. Construction industry

    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.

    The change in methodology for the CPCIs resulted in revisions to output in the construction industry (214.3 Kb Pdf) . However, users should note that this is not the sole source of revisions. The incorporation of late data and new seasonal adjustment parameters has also contributed to the revisions to output in the construction industry.

  4. Release content and context

    This release includes the third 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 two 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 three 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 three 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.  More information on the annual data and benchmarks included in this release can be found in the Quarterly Revisions section of this bulletin.

    For more information on the different estimates of GDP, we have released a video explaining these differences.

    We have also produced a short guide to the UK National Accounts (136.8 Kb Pdf) to give more information on the principles of national accounting and the various publications available.

  5. Blue Book 2015 changes

    In September 2015, we will publish revised figures for the UK national accounts, including gross domestic product (GDP) and balance of payments.

    Changes will be made in line with international standards adopted by all European Union (EU) member states and with worldwide best practice. These, and additional improvements we are making, will ensure that our national accounts continue to provide a reliable framework for analysing the UK economy and comparing it with other countries.

    The improvements made in September 2015 can be broadly split into 3 categories:

    • methodological improvements introduced through the European System of Accounts 1995 (ESA95); these are also known as gross national income (GNI) reservations

    • classification changes, under the new ESA2010 international standards are planned to be incorporated into the National Accounts in Blue Book 2015

    • other regular improvements and methodological changes

    We are publishing a series of articles in the lead up to the publication which can be found on the Blue Book and Pink Book 2015 Changes page on our website.

  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 will be 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) will close on 4 September 2015. It follows a previous work plan (231.4 Kb Pdf) for national accounts and related outputs following the consultation held in 2013.

  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. These are available on the UK Statistics Authority website.

    In order to implement improvements reflected in the European System of Accounts 2010 (ESA2010), we will introduce a new survey to collect Purchases data, and have published an article detailing our intentions along with a high level project plan.

  10. 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.

  11. 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.

  12. 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 7 July 2015.

  13. 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.

  14. Key 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’ but 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.

  15. 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 key documentation from the Statistics Commission's report on revisions.

    Revisions to data provide one indication of the reliability of key indicators. Tables 3 and 4 show summary information on the size and direction of the revisions that have been made to data covering a five-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.

  16. Revisions to GDP estimates  

    Table 9 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 August 2010 (Quarter 2 2010) to May 2015 (Quarter 1 2015). The analysis of revisions between month 2 and month 3 (third estimate of GDP) uses month 3 estimates published from June 2010 (Quarter 1 2010) to March 2015 (Quarter 4 2014).

    Table 9: Revisions to early estimates of GDP growth for the UK

    Quarter 2 (Aug) 2010 to Quarter 1 (May) 2015

    Estimate in latest period Revisions between early estimates of GDP growth (quarterly, CVM)
    Revisions to GDP growth  % Average over the last five years  Average over the last five years without regard to sign (average absolute revision)
     Between M1 and M2  0.4 0.01 0.03
     Between M2 and M3  0.4 0.00 0.05

    Table source: Office for National Statistics

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    Table 10 shows the revisions to GDP growth and the household saving ratio between the estimate published three months after the end of the quarter and the equivalent estimate three years later. The analysis uses month 3 estimates first published from June 2007 (Quarter 1 2007) to March 2012 (Quarter 4 2011) for GDP.

    Table 10: Revisions to month 3 estimates of GDP growth and the household saving ratio for the UK

    Quarter 1 (Jun) 2010 to Quarter 4 (Mar) 2011

    Estimate in latest period Revisions between first publication and estimates three years later
     (%) Average over the last five years  Average over the last five years without regard to sign (average absolute revision)
    GDP growth (quarterly, CVM) 0.4 -0.06 0.40
    Household saving ratio 4.9 -0.95 1.21

    Table source: Office for National Statistics

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    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.

    An article titled ‘Revisions to GDP and components’, published on 28 January 2014, is available on our website.

     

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

    Annually, the estimates from all three 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 which 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 three 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 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.

    The size and direction of the quarterly alignment adjustments in Quarter 1 (Jan to Mar) 2015 indicate that in this quarter the level of expenditure was higher than that of output while the level of income was lower than that of output.

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Statistical contacts

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Matthew Hughes +44 (0)1633 455827 ONS / GDP Co-ordination branch gdp@ons.gsi.gov.uk
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