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UK GDP grows by 0.6% in Q2.
UPDATED: 10:30
Is this the start of a sustained recovery?
The Office for National Statistics (ONS) has published their Preliminary Estimate for the UK’s economic performance for Q2 of 2013. Subject to further revision, the initial figures are likely to give a boost to the standing of the coalition government and a strengthening of Chancellor George Osborne’s position as the nation’s chief financial manager.
Outlining their results the ONS stated that the “largest contribution to Q2 2013 GDP growth came from services; these industries increased by 0.6% contributing 0.48 percentage points to the 0.6% increase in GDP”.
There was also positive news for construction. In Q2 2013, output in the industry was estimated to have increased by 0.9% compared with Q1 2013, supported by an upward contribution (0.08 percentage points) from production; these industries rose by 0.6%, with manufacturing increasing by 0.4% following negative growth of 0.2% in Q1 2013.
Key points
- Users are reminded that figures in this release are estimates and are on a seasonally adjusted basis.
- Gross domestic product (GDP) increased by 0.6% in Q2 2013 compared with Q1 2013.
- All four main industrial groupings within the economy (agriculture, production, construction and services) increased in Q2 2013 compared with Q1 2013.
- The largest contribution to Q2 2013 GDP growth came from services; these industries increased by 0.6% contributing 0.48 percentage points to the 0.6% increase in GDP.
- There was also an upward contribution (0.08 percentage points) from production; these industries rose by 0.6%, with manufacturing increasing by 0.4% following negative growth of 0.2% in Q1 2013.
- In Q2 2013, output in the construction industry was estimated to have increased by 0.9% compared with Q1 2013. In Q1 2013 construction output was at its lowest level since Q1 2001.
Before the sharp fall in output in 2008 and 2009 the economy peaked in Q1 2008. From peak to trough the economy shrank by 7.2%. In Q2 2013, GDP was estimated to be 3.3% below the peak in Q1 2008. - GDP was 1.4% higher in Q2 2013 compared with the same quarter a year ago. Q2 2012 contained an extra bank holiday for the Queen’s Diamond Jubilee. Users should therefore show caution when interpreting the quarter on same quarter a year ago growth in Q2 2013.
- The preliminary estimate of GDP is produced using the output approach to measuring GDP and is published less than four weeks after the end of the quarter to which it relates. At this stage the data content of this estimate is around 44% of the total required for the final output based estimate. This includes good information for the first two months of the quarter, with an estimate for the third month which takes account of early returns to the monthly business survey of 44,000 businesses (which typically has a response rate of between 30-50% at this point in time). The estimate is therefore 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.
