NIESR comment on ONS Preliminary Estimate of GDP

28 Jul 2016 12:57 PM

The preliminary estimate of GDP suggests the economy expanded at a robust pace of 0.6% in 2016Q2. NIESR’s monthly estimate of GDP, published on 7th July, predicted 0.6% for 2016Q2.

• GDP increased by 0.6% in 2016Q2, compared to a 0.4% increase in 2016Q1.
• Construction sector output contracted by 0.4%.
• GDP is now 7.7% above its pre-recession peak (2008Q1).
• Services sector output is now 11.2% above its 2008Q1 level. Construction sector output is still 1.8% below over the same period, and the manufacturing sector 4.4% below.

Simon Kirby, Head of Macroeconomic Modelling and Forecasting at NIESR, said “This first official estimate of GDP might suggest that the economy grew at a healthy pace in the second quarter of this year, but our monthly GDP estimates suggest there has been a marked slowdown in the latter part of the quarter. We have limited data on the economy post-referendum, but what we do have points towards a significant deterioration in performance in the second half of 2016. In light of this, a move, next week, by the MPC to provide monetary stimulus to a weakening economy would be welcome.”

Figure 1. Real GDP growth (per cent per quarter)

 

 

 

 

 

 

 

 

 

Source: ONS. Note: red bar indicates ONS preliminary estimate for 2016Q2.

Monthly data are volatile, and we should be cautious about over-interpreting developments in the fundamentals of the economy from any single month. Nonetheless, the within quarter profile for GDP is of particular interest given the presence of the referendum and the economic and political uncertainty this event has generated.

For more information on NIESR’s estimates of the short and medium term impact of the UK’s decision to leave the EU, see here and for the long term impact see here.

Notes for editors:

For further information and to arrange interviews, please contact the NIESR Press Office:
Luca Pieri on 020 7654 1931 / l.pieri@niesr.ac.uk  

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