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NIESR - September 2015 GDP estimates: GDP growth by 0.5 per cent in 3 months ending in August 2015

Our monthly estimates of GDP suggest that output grew by 0.5 per cent in the three months ending in August after growth of 0.6 per cent in the three months ending in July 2015.

Download : http://www.niesr.ac.uk/sites/default/files/gdp0915.pdf

Despite the slight softening, growth remains close to the estimated long run potential of the economy, but below the average rate of growth (0.7 per cent per quarter) observed since the start of 2013.*

* NIESR’s latest quarterly forecast (published 5th August 2015) projects GDP growth of 2.5 per cent per annum in 2015 and 2.4 per cent in 2016 (see http://niesr.ac.uk/media for the associated press release).

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.

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 Luca Pieri on 020 7654 1931/ l.pieri@niesr.ac.uk

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