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There had been growing concern of a triple-dip recession
The UK economy has avoided entering a triple-dip recession following the announcement of a 0.3% GDP increase in the first quarter of 2013.
Compiled by the Office for National Statistics the data shows that whilst construction output continues to struggle production, mining, quarrying and the service sector all saw improvements.
The Chancellor George Osborne welcomed the figures and said that they were “encouraging sign the economy is healing”. Acknowledging that the UK still faced a “tough economic backdrop” he stressed that the economy was “making progress”.
The official data showed that:
- GDP increased by 0.3% in Q1 2013 compared with Q4 2012. GDP was 0.4% higher in Q1 2013 than in Q3 2011 and therefore has been broadly flat over the last 18 months.
- By far the largest contribution to Q1 2013 GDP growth came from services; these industries increased by 0.6% contributing 0.47 percentage points (pp) to the 0.3% increase in GDP.
- There was also a small upward contribution (0.03pp) from production; these industries rose by 0.2%, largely due to mining & quarrying, which increased by 3.2% following a weak Q4 2012 when extended maintenance in the North Sea reduced output.
- These upward contributions were partially offset by construction; these industries fell by 2.5%, reducing GDP growth by 0.17pp.
- Before the sharp fall in output in 2008 and 2009 the economy peaked in Q1 2008; the lowest level was in Q2 2009. GDP fell 6.3% from peak to trough. In Q1 2013 GDP was estimated to be 2.6% below the peak in Q1 2008.
- At this stage the snowfall and cold weather during Q1 2013 appears to have had a limited impact on GDP growth. The strongest evidence was that it reduced retail output in January and March 2013 but boosted demand for electricity and gas in February and March, which increased output in the energy supply industries.
- The preliminary estimate of Gross Domestic Product (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 it is estimated that the information 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 becomes 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.
