UK gross domestic product (GDP) in volume terms was estimated to have increased by 0.4% in Quarter 3 (July to Sept) 2019, revised upwards by 0.1 percentage points from the first quarterly estimate.
When compared with the same quarter a year ago, UK GDP increased by 1.1% to Quarter 3 2019; revised upwards by 0.1 percentage points from the previous estimate.
At headline level, the GDP dataset is largely unrevised, with 0.1 percentage point revisions to Quarter 4 (Oct to Dec) 2018 and Quarter 3 2019; revisions reflect the inclusion of annual benchmarks from a number of sources for 2018 and the incorporation of administrative Value Added Tax turnover data in the output approach to measuring GDP for Quarter 2 (Apr to June) 2019.
Services remained the strongest contributor to growth in the output approach to GDP in Quarter 3 2019; construction and production also contributed positively to growth.
Household consumption and net trade contributed positively, while gross capital formation and government expenditure contributed negatively to GDP growth in Quarter 3 2019.
GDP was estimated to have increased by 1.3% between 2017 and 2018; this has been revised downwards from the previous estimate of 1.4% and slowed from the 1.9% growth seen between 2016 and 2017.
Gross domestic product (GDP) growth is the main indicator of economic performance. There are three approaches used to measure GDP:
- the output approach
- the expenditure approach
- income approach
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 approach to GDP has risen since the first quarterly estimate to around 90% 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. Further information on all three approaches to measuring GDP can be found in the short guide to national accounts (PDF, 317KB).
Data in chained volume measures within this bulletin have had the effect of price changes removed (in other words, the data are deflated), with the exception of income data, which are only available in current prices.
International Financial Reporting Standards (IFRS16)
In January 2019, a new reporting standard took effect for those businesses using the International Financial Reporting Standards (IFRS) accountancy framework. “IFRS16 Leases” brings the reporting of operating leases onto balance sheets. This has impacted how some businesses have reported on their fixed assets, mainly through our Quarterly Acquisition and Disposal of Capital Assets Survey (QCAS), used in the compilation of gross fixed capital formation (GFCF) and business investment. While we recognise there is a change to the accounting standards for some businesses, there has been no change to national accounts standards on the treatment of leases.
We have carried out an exercise to assess the impact of IFRS16’s introduction on GFCF and business investment estimates throughout the year. As a result, we made a downward adjustment of approximately £244 million to remove the quantified impact of its introduction in Quarter 1 (Jan to Mar) 2019, a downward adjustment of £133 million in Quarter 2 (Apr to June) 2019 and a downward adjustment of £188 million in Quarter 3 (July to Sept) 2019.
The assets most affected by the introduction of IFRS16 in Quarter 1 2019 were ICT equipment and other machinery and equipment. In our Quarter 2 and Quarter 3 2019 estimates, intellectual property products was the asset most affected. We will continue to monitor the impact of IFRS 16’s introduction for future releases.
Quarterly Stocks Inquiry temporary expansion
The Quarterly Stocks Inquiry is used in the compilation of the changes in inventories component. To address users’ concerns about the sample size of the Inquiry and the potential impact on quality, we temporarily increased the sample size from 5,500 to 9,500 businesses for Quarter 2 and Quarter 3 2019 to assist understanding of changes in stocks in preparation for the UK’s planned departure from the EU. We have decided to extend this sample boost into Quarter 4 (Oct to Dec) 2019, and will assess whether to extend this further in due course. Our early analyses have shown that the introduction of this increased sample has not caused any significant discontinuity in estimates of changes in inventories.Nôl i'r tabl cynnwys
UK gross domestic product (GDP) increased by 0.4% in Quarter 3 (July to Sept) 2019, upwardly revised by 0.1 percentage points compared with the first quarterly estimate as a result of broad-based increases to the output components of GDP. This follows volatility in the first half of the year, which largely reflected changes in the timing of activity related to the UK’s original planned exit date from the European Union in late March (Figure 1). The underlying momentum in the UK economy continued to show some signs of slowing; compared with the same quarter a year ago, the UK economy has grown by 1.1%.
Nominal GDP growth has continued to slow of late. It increased by a revised 0.7% in Quarter 3 2019, easing from the 0.9% recorded in the previous quarter. The implied GDP deflator represents the broadest measure of inflation in the domestic economy, reflecting changes in the price of all goods and services that make up GDP. This includes the price movements in private and government consumption, investment, and the relative price of exports and imports. The implied deflator slowed notably in Quarter 3 compared with the previous quarter, increasing by 0.3%.
Compared with the same quarter a year ago, the implied GDP deflator increased by an unrevised 2.0%. The easing in the implied GDP deflator predominantly reflects a slowing in the price of household consumption because of a slowing in the implied deflators of alcohol and tobacco, housing, transport, communication, and recreation and culture. Movements in the implied deflator are in line with recent movements in consumer price inflation.
In line with the National Accounts Revisions Policy, all quarters from Quarter 1 (Jan to Mar) 2018 onwards are open for revision. Figure 2 shows that the revised figures continue to exhibit the volatility through 2019. There has been a downwards revision to real GDP growth in Quarter 4 (Oct to Dec) 2018, while annual growth in 2018 has been revised down 0.1 percentage points to 1.3%. There has also been an upward revision to real GDP growth in Quarter 3 2019, in which the UK economy is now estimated to have grown by 0.4%.
The revisions made in this publication reflect a variety of factors, including new survey data, new Value Added Tax (VAT) turnover data, updates to seasonal factors and the inclusion of annual benchmarks. It also reflects the incorporation of improved estimates of mixed income. More information on the reasons for revisions in this release can be found in the revisions to GDP section of this bulletin.
|Chained volume measures||Current market prices|
Download this table Table 1: Headline economic indicators for the UK.xls .csv
The output measure of gross domestic product (GDP) grew by 0.4% in Quarter 3 (July to Sept) 2019. Services output increased by a revised 0.5% in Quarter 3 2019, following the weakest quarterly figure in three years in the previous quarter. Manufacturing grew by 0.1% in Quarter 3 2019, as did production output. Construction output experienced a pickup following a weak Quarter 2 (Apr to June), increasing by 1.2% (Figure 3).
These revised estimates continue to show that there was a period of increased volatility in the first half of the year relating to the UK’s original planned exit date from the European Union. This likely reflects the effects of bringing forward activity in the first quarter of the year, and the decline in car production following widespread car plant shutdowns in April. This has been most evident in the quarterly movements in manufacturing output, which increased by 2.4% in Quarter 1 (Jan to Mar) 2019, followed by a fall of 2.6% in Quarter 2 2019.
There have been some revisions to the components of the output measure of GDP throughout 2018 and 2019, although the cumulative effect is relatively minor (Figure 4). Services output is now estimated to have grown by 2.0% in 2018, downwardly revised by 0.1 percentage point. There have been upward revisions to services growth in Quarter 2 2019, driven by updated VAT turnover data, new survey returns and updates to seasonal adjustment.
Growth in production output in 2018 has been upwardly revised by 0.7 percentage points to 0.8%. There have also been upward revisions to all three quarters in 2019, reflecting updated VAT turnover in Quarter 2, new survey returns and updates to seasonal factors. Annual growth in 2018 for construction output is now estimated to be flat.
Service output increased by an upwardly revised 0.5% in Quarter 3 2019, a pickup from the loss in momentum that has been evident over the previous year. Compared with the same quarter in the previous year, services output increased by 1.6% – the weakest since the Quarter 1 of 2018. The easing has also been reported in the Quarter 3 2019 Bank of England Agents’ summary, which recorded how business services continued to grow at a modest rate, with weaker demand for transaction-related services, partially offset by strong demand for IT services. The Services sector PMI (PDF, 183.25KB) also reported a decline in activity in September 2019, with survey respondents attributing the decline to political uncertainty.
The quarterly increase has been driven by growth in all four of the main service industries shown in Figure 5, with the most notable contribution to growth coming from “other services”. This increase reflected a 0.8% increase in human health and social work activities alongside a 1.2% increase in financial and insurance activities, which grew following five consecutive quarters of decline. It should be noted that early estimates are reliant on a higher level of forecast content. These increases more than offset the most notable declines in other industries such as accommodation and food services in Quarter 3 2019.
The wholesale, retail and motor trades sector increased by 0.4% in Quarter 3 2019, partially a result of an increase in the retail industry, with official retail sales figures showing a 0.6% pickup in Quarter 3 2019. Looking at external indicators, the British Retail Consortium (BRC) reported a 1.3% decline in year-on-year sales in September 2019, while the CBI reported a decline in retail sales volumes for the fifth consecutive month, citing the tough retail conditions and the recent sterling depreciation as the main factors. When comparing external indicators, it should be noted that there are different methodological factors that can affect comparability with official figures.
The volatility throughout the first half of 2019 has been particularly pronounced in the production sector. Despite some revisions in this publication, the overall narrative has remained relatively unchanged. Following an increase of 1.3% in Quarter 1 2019, production output fell by 1.7% in Quarter 2 2019 (Figure 6). Production output remained largely flat in Quarter 3, increasing by an upwardly revised 0.1%.
The trends throughout 2019 have broadly reflected movements in the manufacturing industry, which experienced volatility in the first half of the year. This was consistent with activity being brought forward ahead of the UK’s original intended European Union departure date, followed by a slowdown in activity in Quarter 2 exacerbated by widespread car plant shutdowns in April.
The subdued performance of the manufacturing sector in the three months to September – in which output grew 0.1% – has also been recorded by the recent CBI Industrial Trends Survey, which noted that stock levels were above adequate, as uncertainty and the ongoing global manufacturing slowdown continued to have an adverse effect on manufacturers. The British Chambers of Commerce reported a deterioration in manufacturing activity, reporting how the “manufacturing sector continues to toil under the weight of diminishing cashflow, weakening global demand and disrupted supply chains.”
Mining and quarrying output fell for the fourth consecutive quarter in Quarter 3 2019, decreasing by 0.1%. However, the decline in mining and quarrying is not as pronounced as initially estimated in the first quarterly estimate, with growth revised up 1.6 percentage points as a result of the inclusion of additional data from the Department for Business, Energy and Industrial Strategy. Following some volatility in the first half of 2019, electricity, gas, steam and air conditioning fell by a revised 1.8% in Quarter 3. Water supply and sewerage production grew by 1.6% in Quarter 3 2019
Construction output increased by an upwardly revised 1.2% in Quarter 3 2019, following a 1.0% decline in Quarter 2. The latest Bank of England Agents’ summary of business conditions reported strength in residential construction, with the development of lower-priced properties remaining strong, supported by the Help to Buy schemes.Nôl i'r tabl cynnwys
The expenditure measure of gross domestic product (GDP) increased by 0.4% in Quarter 3 (July to Sept) 2019. Private consumption (which consists of both household expenditure and non-profit institutions serving households (NPISH) expenditure) and net trade contributed positively to growth in the latest quarter, while there were falls in government consumption and gross capital formation (Figure 7).
There have been some revisions to the expenditure components in the latest quarter, most notably to gross capital formation and net trade. Gross capital formation is now estimated to have fallen by 11.4% in Quarter 3 2019, reflecting revisions to changes in inventories. Meanwhile, net trade is estimated to have made a larger positive contribution than previously estimated in Quarter 3 2019, resulting in a more pronounced narrowing of the trade deficit.
Looking across the entire period open to revision since Quarter 1 (Jan to Mar) 2018, cumulative GDP growth is largely unrevised. The latest estimates show that GDP has increased by 2.2% since Quarter 1 2018, slightly revised from 2.1% in the previous estimate (Figure 8). However, there have been some offsetting revisions to lower-level estimates of expenditure. The latest figures mean that net trade is now estimated to have added 1.2 percentage points to GDP growth over this period compared with the almost flat contribution in the previous estimate.
Gross capital formation is now estimated to have subtracted 1.2 percentage points from GDP growth since Quarter 1 2018 compared with the negative contribution of 0.5 percentage points previously recorded.
Household consumption increased by 0.3% in Quarter 3 2019, a slight downward revision from the previous estimate, and is broadly in line with the recent relatively subdued trend. The increase was mainly driven by higher spending on transport, restaurants and miscellaneous goods and services. This is corroborated by the moderate pace of growth in retail sales of 0.6% in Quarter 3 2019.
There have been small revisions to household consumption throughout the open period reflecting new data from a range of data sources in a number of areas including transport and recreation and culture. The annual household consumption growth figure remains unrevised at 1.6%. The consumer trends, UK: July to September 2019 release provides further information on the latest movements in household consumption.
External survey evidence, such as the latest Bank of England Agents’ summary of business conditions, notes the weakness in retail sales in Quarter 3 compared with a year ago, citing “base effects from strong sales a year ago when there was a boost from warm weather and the football World Cup”. Meanwhile, the GfK Consumer Confidence Index was at negative 12 in September 2019 as “consumers continue to feel less than positive about the state of their personal finances and the general economy”.
Government consumption fell by a revised 0.6% in Quarter 3 2019, mainly driven by public administration. The latest central government expenditure figures are principally derived from a snapshot of HM Treasury’s public spending database, OSCAR (Online System for Central Accounting and Reporting), which collects financial information from central government departments. The latest expenditure outturn data are lower than previous budgetary forecasts, most notably in public administration. Expenditure by local government bodies is mainly collected by the Ministry of Housing, Communities and Local Government (MHCLG), the Scottish Government and the Welsh Government. There have been small revisions reflecting the inclusion of final outturn data for the financial year ending 2019 for England and Wales.
Trade imports and exports have been volatile in the first half of 2019, in part reflecting the effects of movements of “unspecified goods”, which includes non-monetary gold. In Quarter 3 2019, there was a more pronounced narrowing of the trade deficit than previously estimated (Figure 9). The latest trade estimates include new data from the International Trade in Services (ITIS) survey which has affected both trade in goods and trade in services. This shows that the UK trade deficit narrowed to 0.1% of nominal GDP in Quarter 3 2019 compared with the previous estimate of 1.2%. As a percentage of GDP, this is the lowest trade deficit since Quarter 4 1997.
The narrowing of the trade deficit reflects strong export volume growth of 7.9% in Quarter 3, reflecting upward revisions to trade in goods exports – in particular, revisions to machinery and transport equipment and chemicals – and to trade in services exports. These revisions reflect updated estimates of exports of telecommunications and other business services and finance.
Import volumes fell by 0.3% in Quarter 3 2019, in contrast to the previous estimate of an increase of 0.8%. The UK trade: October 2019 release provides further information on the latest movements in trade estimates.
Gross fixed capital formation (GFCF) increased by a revised 0.2% in Quarter 3 2019, while the latest estimates show that business investment was flat in this quarter, continuing its recent subdued performance (Figure 10). External evidence suggests that investment intentions remained weak in Quarter 3 2019; for example, the latest Bank of England Agents’ Summary of business conditions reports that investment intentions remained at a nine-year low in the third quarter as “Brexit uncertainty continued to dampen companies’ appetite to invest”.
Despite revisions to the quarterly path, the latest estimates continue to show four consecutive quarters of a fall in business investment throughout 2018. These data are seasonally adjusted using data from multiple years to derive adjustments for each quarter. We have seen some unusual seasonal behaviour through the quarters of 2019, therefore there is some heightened uncertainty around business investment estimates at this time. When data for the fourth quarter of 2019 become available, we will be able to deliver a better view of the profile in 2019. The business investment in the UK: July to September 2019 release provides further information on the recent movements in business investment.
The latest estimates show that government investment fell by 0.4% in Quarter 3 2019, an upward revision of the previous estimate of a 1.8% decline. Government investment figures have been downwardly revised in three quarters of 2018. It is now estimated to have increased by 1.3% in 2018 compared with 2.1% in the previous estimate.
Alignment and balancing adjustments are typically applied to the inventories component to help balance the different approaches to GDP – more detail on these can be found in the Quality and methodology section of this publication. When these adjustments are removed, today’s estimates show a decrease of £5.8 billion in stocks being held by UK companies in Quarter 3 2019 (Table 2).
|2018 Q1||Current prices||-783||-739||-500||456|
|Chained volume measure||-2706||-713||-2000||7|
|2018 Q2||Current prices||-1||1620||-2000||379|
|Chained volume measure||-957||1560||-2517|
|2018 Q3||Current prices||-77||-2085||500||1508|
|Chained volume measure||-2985||-1997||-500||-488|
|2018 Q4||Current prices||3993||1204||1000||1789|
|Chained volume measure||1154||1150||1750||-1746|
|2019 Q1||Current prices||4997||-1655||-375||7027|
|Chained volume measure||3181||-1576||-2250||7007|
|2019 Q2||Current prices||3455||1319||750||1386|
|Chained volume measure||360||1242||1500||-2382|
|2019 Q3||Current prices||-5264||-1924||250||-3590|
|Chained volume measure||-8400||-1805||-750||-5845|
Download this table Table 2: Change in inventories, including and excluding balancing and alignment adjustments.xls .csv
Movements in inventories earlier in the year support the narrative of the stockpiling and subsequent unwinding of stocks in the first two quarters of the year. Excluding alignment adjustment, stocks held by UK companies increased in Quarter 1 2019 as stocks were built up and subsequently decreased in Quarter 2 and Quarter 3 2019, as stocks were run down. This is corroborated by external evidence, such as the Bank of England’s Agents’ Summary which showed that “around half of all respondents had been building inventories as part of their contingency planning for Brexit” in Quarter 1 2019.
Similarly, the Markit UK Manufacturing PMI (PDF, 148KB) for June 2019 reported that “the impact of firms unwinding stockpiles built before the original Brexit date continued to reverberate through the sector and exacerbate weak demand”.
Figure 11 shows the contribution of changes in inventories – excluding balancing and alignment adjustments – to GDP growth. Despite the revisions to inventory estimates from Quarter 1 2018 onwards, the recent narrative around stockpiling providing a boost to growth in Quarter 1 2019, and the subsequent unwinding of stocks subtracting from growth in Quarter 2 2019 still holds.
Nôl i'r tabl cynnwys
Nominal gross domestic product (GDP) grew by 0.7% in Quarter 3 (July to Sept) 2019, an upward revision of 0.2 percentage points. The quarterly increase was driven by compensation of employees (CoE) and gross operating surplus (GOS) of corporations (Figure 12). Revisions throughout 2018 have led to annual nominal GDP growth in 2018 being revised up to 3.5% from the previous estimate of 3.3%.
Compensation of employees increased by 1.0% in Quarter 3 2019, a slight upward revision reflecting outturns on employer social contribution replacing forecast data. Annual growth in CoE in 2018 is now estimated at 4.4%. Mixed income fell by 0.3% in Quarter 3 2019. There have been downwards revisions to mixed income throughout all the quarters open for revision. More information on these revisions can be found in the recently published review of households’ mixed income estimates.
Gross operating surplus (GOS) of corporations increased by an upwardly revised 1.7% in Quarter 3 2019, reflecting GOS of private non-financial corporations which grew 0.9% (excluding the alignment adjustment). However, the latest Quarterly Economic Survey from the British Chambers of Commerce (BCC) reports that “indicators for business confidence in turnover and profitability among manufacturers dropped to an eight-year low”, while the balance of service sector firms confident in turnover and profitability improvements also fell in Quarter 3 2019. Meanwhile, GOS of financial corporations increased by 4.2% in Quarter 3 2019 following a decline of 13.3% in the previous quarter.Nôl i'r tabl cynnwys
This release includes the processing and gross domestic product (GDP) balancing of a number of annual benchmarks for 2018 including:
- annual International Trade in Services Survey (calendar year 2018)
- financial inquiries surveys (calendar year 2018)
- local government final outturn data for England and for Wales (financial year ending March 2019)
- annual Living Costs and Food survey (LCF) data (financial year ending March 2019)
The impact of the revised annual estimate does not have to be equally apportioned across the four quarters, as statistical consideration has to be given to the pre-existing quarterly path and the impact of seasonal adjustment. These updates will help to improve the quality of our estimates where we are able to replace forecast and short-term estimates with more comprehensive annual survey data.
We have also incorporated Value Added Tax (VAT) turnover data up to Quarter 2 (Apr to June) 2019 to estimate the output of small businesses for some industries in the output approach to gross domestic product (GDP). VAT turnover has only been used to estimate growth rates, with the overall level of output still derived from the Annual Business Survey and other annual benchmark sources.
In addition to the annual benchmarks and integration of VAT turnover, there are also revisions in this release because of the replacement of forecasts with actual survey or external source data and new seasonal adjustment factors.
Revisions to output
VAT turnover estimates for Quarter 2 2019 have been included in this release for the first time. These affect the Index of Services, Index of Production and Construction output estimates. Revisions to the monthly path for the short-term indicators will become consistent with this publication on 10 January 2020.
Revisions to the insurance (65.1 to 2) industry are because of the incorporation of annual benchmarks from our financial inquiries surveys.
Detailed revisions to the sectors of output are shown in Table AE.
Revisions to expenditure components
Household final consumption expenditure (HHFCE) revisions are because of a number of factors, including updating annual 2018 Living Costs and Food survey (LCF) estimates across a number of Classification of Individual Consumption by Purpose (COICOP) categories. Revisions to net tourism are in part because of the replacement of forecast International Passenger Survey (IPS) estimates from Quarter 2 2018 with actual estimates of the inclusion of updated annual International Trade in Services (ITIS) survey data.
The main reason for revisions to trade estimates was because of the inclusion of the 2018 annual Survey of International Trade in Services (ITIS). This replaces earlier estimates from the quarterly ITIS surveys which have a smaller sample size. The annual ITIS incorporates a larger sample size than the quarterly ITIS survey that is typically used. The inclusion of the 2018 annual ITIS survey resulted in revisions to both goods and services for 2018 and 2019, as changes have been made to the 2019 data rebased on 2018 data.
The annual ITIS survey has also made methodological improvements that resulted in changes to data. Because of the size of these changes, these improvements are not included in this release, until we can take steps to ensure a consistent back series. Further information on the methodological improvements as well as the improved data will be published in 2020. These revisions are consistent with the 10 December 2019 UK Trade release.
Revisions to government expenditure and investment are because of the inclusion of new information. Government departments provide updates when actual spend (outturn) data become available and replace budgetary information. The main contributor to revision in this quarter is Central Government departments predominately within public administration. Additionally, there are smaller revisions in Local Government following the inclusion of final outturn data for England and for Wales (financial year ending 2019).
Detailed revisions to the expenditure components are shown in Table AF.
Revisions to income components
Downward revisions to mixed income are due to improved methods as discussed in the article ‘A review of households’ missed income estimates and plans for upcoming improvements’ published on 3 December 2019. Results in this release are largely consistent with the indicative impacts shown in the article, where they differ it is largely due to the incorporation of revised estimates. Latest estimates reflect the impact of the new mixed income method, source data revisions since the previous publication and the resultant change to the seasonally adjusted estimates from Quarter 1 2018.
There have been revisions to the gross operating surplus of financial corporations component because of updated annual benchmark figures for 2018 from our financial inquiries surveys.
Detailed revisions to the income components are shown in Table AG.Nôl i'r tabl cynnwys
Download this table Table 3: International GDP growth rate comparisons.xls .csv
All areas included within our international comparison saw positive growth in Quarter 3 (Jul to Sept) 2019. This is a similar narrative as that experienced in Quarter 1 (Jan to Mar) 2019. Both Germany and the UK bounced back from the negative growth of 0.2% they experienced in Quarter 2 (Apr to Jun) 2019. The strongest growth seen in the latest quarter was 0.5% in USA, which remains the same growth as the previous quarter. European Union (EU28) economies grew by an average of 0.3% in Quarter 3 2019, the same as growth experienced in Quarter 3 2018.
G7 countries saw an average 0.4% growth in Quarter 3 2019, the same growth rate as the one seen in Quarter 3 2018. Most G7 countries are above their pre-economic downturn peaks, the exception being Italy where GDP remains 4.9% below the pre-downturn peak (Quarter 1 2008). The USA is still showing the biggest recovery over this period, up to 22.0% since the downturn. Canada is also still showing the second largest recovery, up to 21.1% over the period.
The estimates quoted in this international comparison section are the latest available estimates at the time of preparation of this bulletin, and may subsequently have been revised. The data are gathered from the Organisation for Economic Co-operation and Development’s website excluding the data from the UK, which is compiled by the Office for National Statistics (ONS).Nôl i'r tabl cynnwys
The Gross domestic product (GDP) Quality and Methodology Information report contains important information on:
- the strengths and limitations of the data and how it compares with related data
- uses and users of the data
- how the output was created
- the quality of the output including the accuracy of the data
The national accounts are drawn together using data from many different sources. This ensures that they are comprehensive and provide different perspectives on the economy, for example, sales by retailers and purchases by households.
Important quality information
There are common pitfalls in interpreting data series and these include:
- expectations of accuracy and reliability in early estimates are often too high
- revisions are an inevitable consequence of the trade-off between timeliness and accuracy
- early estimates are based on incomplete data
Very few statistical revisions arise as a result of “errors” in the popular sense of the word. All estimates, by definition, are subject to statistical “error”.
Many different approaches can be used to summarise revisions; the “Accuracy and reliability” section in the Quality and Methodology Information report analyses the mean average revision and the mean absolute revision for GDP estimates over data publication iterations.
Reaching the GDP balance
The different data content and quality of the three approaches – the output approach, the expenditure approach and the income approach – dictates the approach taken in balancing quarterly data. In the UK, there are more data available on output in the short-term than in either of the other two approaches. However, to obtain the best estimate of GDP (the published figure), the estimates from all three approaches are balanced to produce an average, except in the latest two quarters where the output data takes the lead because of its larger data content.
Information on the methods we use for Balancing the output, income and expenditure approaches to measuring GDP is available.
Alignment adjustments, found in Table M of the quarterly national accounts data tables in this release, have a target limit of plus or minus £2,000 million on any quarter. To achieve a balanced GDP dataset through alignment, balancing adjustments are applied to the components of GDP where required. They are generally applied to the individual components where data content is comparatively weak, or estimates are prone to revision.
The balancing adjustments applied in this quarter are shown in Table 4, the resulting series should be considered accordingly.
|GDP measurement approach and|
component adjustment applied to
|Q1 2018||Q2 2018||Q3 2018||Q4 2018||Q1 2019||Q2 2019||Q3 2019|
|Trade in Services (exports)||Current prices||-250||-500||250||-||-||250||-|
|Chained volume measure||-250||-||250||500||-500||250||-|
|Trade in Services (imports)||Current prices||-||-||-||-||500||-500||-1000|
|Chained volume measure||750||-||-||-500||-||-||-|
|Changes in inventories||Current prices||-500||-2000||500||1000||-375||750||250|
|Chained volume measure||-2000||-||-500||1750||-2250||1500||-750|
|Acquisition less disposal of valuables||Current prices||-||-||-||-||-125||-||-|
|Chained volume measure||-||-||-||-||-750||-||-|
|Financial corporations gross operating surplus||Current prices||1750||-||-||-1750||-||-||-|
Download this table Table 4: Balancing adjustments applied to the Quarterly National Accounts dataset.xls .csv
While some large balancing adjustments have been applied in certain quarters, over 2018 as a whole the adjustments are smaller. These quarterly adjustments have been applied to ensure a more balanced quarterly path across the three measures of GDP.Nôl i'r tabl cynnwys
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