NIESR: August 2017 GDP Estimates - GDP growth of 0.2% in the 3 months to July 2017
Our monthly estimates of GDP suggest that output grew by 0.2 per cent in the three months ending in July 2017 after growth of 0.3 per cent in the second quarter of 2017: the economy continues to grow below its long run trend of 0.6 percent.
Amit Kara, Head of UK Macroeconomic Forecasting at NIESR, said “We estimate that economic growth decelerated to 0.2 per cent in the three months to July, compared with 0.3 per cent in the second quarter of 2017. The service sector, which was the main driver for economic growth in the second quarter, appears to have slowed.
We see a modest recovery in the second half of this year in response to strengthening global growth and a weaker currency, but on the flip side, consumer spending is likely to be weighed down by weak wage growth and investment spending held back by Brexit-related uncertainty.
Further out, we see quarterly economic growth strengthen somewhat to 0.4-0.5 per cent as the economy rebalances away from domestic demand and towards net trade. Economic growth however, remains below its long-run average growth rate of 0.6 per cent because of subdued productivity growth”.
NIESR’s latest quarterly forecast (published 2nd August 2017) projected GDP growth of 1.7 per cent per annum in 2017 and 1.9 per cent in 2018 (see here for the associated press release).
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 0.224% point (for the full sample period 1999Q3-2015Q4) when compared to the first estimate produced by the ONS. For the period 2008Q1 to 2015Q4 the RMSE is 0.290% 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 0.188% point, and for 2008Q1 to 2015Q4 the RMSE is 0.231% 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.
Latest News from
NIESR: UK’s obsession with housing wealth could be making the country poorer16/11/2017 11:05:00
Favourable public policy treatment of home ownership means mortgages are crowding out other forms of long term savings and investment, with potentially significant repercussions for individual pension savings but also for the UK economy as a whole, new NIESR research for the Association of British Insurers revealed yesterday.
JRF - Single-earner families face living standards drop16/11/2017 10:35:00
Cuts to Universal Credit will leave many low income families worse off despite tax changes and a rising National Living Wage, new analysis for the Joseph Rowntree Foundation has revealed.
IEA - Decision on minimum alcohol pricing disappointing & will hit poorest the hardest16/11/2017 09:35:00
IEA reacts to Supreme Court ruling on minimum alcohol pricing in Scotland
NIESR: Head of UK Macroeconomic Forecasting reacts to the latest CPI inflation data released today15/11/2017 14:20:00
NIESR’s Head of UK Macroeconomic Forecasting, Amit Kara yesterday reacted to the latest CPI inflation data released.
Adam Smith Inst - Time to update employment law14/11/2017 16:35:00
Sam Dumitriu, Research Economist at the Adam Smith Institute commented on the news that Uber have lost their employment tribunal appeal and that Uber drivers will be classified as workers and entitled to sick pay, holiday pay and the minimum wage