Wednesday, November 25, 2009

UK Q3 GDP declined 0.3% (instead of 0.4%)


According to the latest ONS data (November 25), in Q3 of 2009 (July-September) the UK gross domestic product (GDP) in volume terms fell by 0.3% compared with the previous
quarter, revised from a fall of 0.4 per% published in the initial estimates for Q3 last month. Growth was last positive in 2008 Q1 (0.6%).

(Meanwhile in the US, Q3 annualised GDP growth was also revised, yesterday, downwards, from 3.5% to 2.8% see http://npthinkingus.blogspot.com/2009/11/us-q3-gdp-28-instead-of-initial-35.html)

Compared with the same quarter (Q3) of 2008, GDP now shows a fall of 5.1% from a fall of 5.2% published last month.

Growth in the volume of output in the production industries in Q3 of 2009 has been revised down to show a fall of 0.8% from a fall of 0.7% published in October.

Manufacturing output was revised up to show a fall of 0.1% from a fall of 0.2%
published last month.

Growth in the volume of output in the service industries in quarter three of 2009 has been revised up to show a fall of 0.1%, from a fall of 0.2% published in October.

There were upward revisions to output of distribution and transport services since the preliminary release as a result of more complete survey returns.

A full set of quarterly national accounts for Q3 of 2009 will be published on 22
December 2009, while the preliminary estimate of GDP for Q4 of 2009 will be
published on 26 January 2010.

In more detail (source: ONS):

Production, Manufacturing, etc: The volume of output in the production industries fell by 0.8%, within which manufacturing fell by 0.1% (prelim estimate had been -0.2%). Gross value added excluding oil and gas fell by 0.2 per cent over the quarter.

Production output fell by 0.8 per cent in 2009 Q3, in comparison with the fall of 0.5 per cent in the previous quarter and is down 10.5 per cent compared with 2008 Q3.

Mining and quarrying output fell by 4.7 per cent, driven by a decline in oil and gas extraction. This compares with a decline of 0.6 per cent in 2009 Q2. This component contributed 0.1 per cent to the decline in GDP in the latest quarter.

Manufacturing output fell by 0.1 per cent in 2009 Q3. Substantial increases in production of motor vehicles were offset by continued declines in paper and publishing, and manufacturing of machinery and equipment.

Electricity, gas and water continued to decline with output falling by 0.8 per cent over the quarter.

Services: Output of the service industries decreased by 0.1% compared with the
decline of 0.6 per cent in the previous quarter.

The output of the distribution, hotels and catering industries rose by 0.3 per cent over the quarter compared with a decline of 0.4 per cent in 2009 Q2. There was a recovery in motor trades which was supported by additional registrations as a result of the Government’s
car scrappage scheme. There was continued growth in retail trade, although activity in hotels and restaurants continued to decline.

The transport, storage and communication industries rose by 0.5 per cent, compared with a decline of 1.8 per cent in 2009 Q2. The rise was driven by a recovery in land and water transport, while air transport continued to show increasing activity.

The business services and finance industries declined by 0.3 per cent, compared with a fall of 0.7 per cent in 2009 Q2. While there was a continued decline in output of financial services, this was partly offset by increases in computer services, management consultancy, legal and
architectural services.

Government and other services fell by 0.2 per cent over the quarter. Health and social services increased by 0.8 per cent. Education services output was down by 0.6 per cent as a result of a decline in private sector education and training. Other services fell by 1.1 per cent largely as
a result of a reduction in output of recreational services.

Construction: Output is estimated to have fallen by 1.1% compared with a fall of 0.8% in the previous quarter.

Household expenditure: In real terms, in Q3 it was broadly unchanged from the level of Q2, while gross fixed capital formation fell by 0.3%

Nominal GDP: GDP at current market prices rose by 1.0% compared with a fall of 0.6% in 2009 Q2.


Growth in household expenditure remained flat over the quarter, compared with a fall of 0.6 per cent in 2009 Q2.

There was a strong increase in expenditure on motor vehicles and higher spending on recreational goods and services. These increases were offset by reductions in
spending on clothing and footwear, energy, and restaurants and hotels.

Government expenditure rose by 0.2 per cent and the volume of spending is now 1.9 per cent higher than in the same quarter of 2008.

Trade

The deficit in net trade increased to £7.2 billion from £6.5 billion in 2009 Q2, trimming GDP growth by 0.2 per cent as imports rose faster than exports.

Exports of goods rose by 2.4 per cent. The main contributors to this rise were motor vehicles and chemicals.
Imports of goods rose by 3.2 per cent, due mainly to motor vehicles, fuels, intermediate goods, and capital goods.

Exports of services fell by 2.1 per cent on the quarter due largely to reductions in travel to the UK and reduced earnings from royalties and license fees.
Imports of services decreased by 3.7 per cent; driven by reductions in spending abroad.


Salaries: Compensation of employees decreased by 0.4 per cent in 2009 Q3, compared with an increase of 0.8 per cent in the previous quarter. This reflects flat earnings growth and declining employment over the quarter. Compensation of employees was 0.9 per cent below the
same quarter of 2008, the biggest decline on record.


Note re statistics and their revisions:

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.

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