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NIESR: January 2016 GDP estimates
GDP growth of 0.6 per cent in 2015Q4, 2.2 in 2015
Our monthly estimates of GDP suggest that output grew by 0.6 per cent in the three months ending in December 2015 after growth of 0.6 per cent in the three months ending in November 2015. This implies the UK economy expanded by 2.2 per cent in 2015. Although this is a moderation compared to the 2.9 per cent growth in 2014, it remains consistent with the economy growing at close to its long-run potential rate.
Jack Meaning, NIESR Research Fellow, said: “The slowdown in the economy last year was largely due to a sharp moderation in growth of the construction sector and public spending, exacerbated by weaker net trade. The year looks to have ended with reasonable growth, close to the economy’s long-run potential. There is little spare capacity in the economy, and we expect the output gap to continue to close in 2016.”
Figure 1. Annual real GDP growth
Technical notes: Our track record in producing early estimates of GDP suggests that our projection for the most recent three-month period has a root mean squared error (RMSE) of 0.227% point (for the full sample period 1999Q3-2014Q4) when compared to the first estimate produced by the ONS. For the period 2008Q1 to 2014Q4 the RMSE is 0.309% point. The impact of the adverse weather in 2010Q4 is a noticeable outlier. Excluding 2010Q4 from the analysis, the RMSE for the full sample period is 0.189% point, and for 2008Q1 to 2014Q4 the RMSE is 0.240% point. These comparisons can be made only for complete calendar quarters. Outside calendar quarters the figures are less reliable than this.
A paper describing the methodology used to produce the data was published in the February 2005 volume of the Economic Journal:
Mitchell, J. Smith, R. J., Weale, M. R., Wright, S. and Salazar, E. L. (2005) ‘An Indicator of Monthly GDP and an Early Estimate of Quarterly GDP Growth’, Economic Journal, No. 551, pp. F108-F129.
- Available from: http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1468-0297
A paper describing the methodology used to produce the data for the inter-war period was published in the October 2012 volume of Explorations in Economic History:
Mitchell, J., Solomou, S. and Weale, M. (2012) ‘Monthly GDP estimates for inter-war Britain’,Explorations in Economic History, Vol. 49, No. 4, pp. 543-556.
From April until October 2006 our estimates were computed using the Index of Services published by ONS. However this monthly series shows considerable volatility which has caused us some problems in estimating GDP. From our November 2006 press release we have therefore reverted to using a model of private services output based on indicator variables. This means that, while all our figures for calendar quarters are fully coherent with ONS data, our estimates of monthly private service output are not. The series can be thought of as indicating the underlying value of the ONS series.
Notes for editors: For further information please contact the NIESR Press Office or Jane Padgham on 020 7654 1923/ j.padgham@niesr.ac.uk
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Contents of Press Release
Table 1, Page 3: Summary Table of Quarterly Growth Rates showing Monthly Data, 3 months ending in that month, and Quarterly Growth (% per quarter). All contain Figures for Industry & GDP.
Table 2, Page 4: Output by Sector (Industry, Agriculture, Construction, Private Services, Public Services, GDP(B) (calculated at prices excluding taxes and subsidies), GDP
Table 3, Page 5: Output in Quarter Ending in Month Shown by sector (as above)
Table 4, Page 6: Growth in Quarter Ending in Month Shown over Previous Quarter (% at Annual Rate) by sector (as above)
