Gross domestic product (GDP) in the UK rose by 7% in the fourth quarter of 2013, according to the Office for National Statistics (ONS), which released its Preliminary Estimate, Q4 2013 on Tuesday.
The preliminary estimate of seasonally adjusted GDP is compiled about 25 days after the end of the quarter in order to give a timely estimate of GDP. Change in gross domestic product (GDP) is said to be the main indicator of economic growth.
Compared to the previous quarter, ONS data showed that three of the four main industry groupings, agriculture, production and services, increase in the fourth quarter. Output rose by 0.5% in agriculture, 0.7% in production and 0.8% in services. However, the construction sector showed a 0.3% decrease in the quarter.
GDP for Q4 2013 was estimated to be 1.3% below the peak in Q1 2008, indicating that the economy shrank by 7.2% from peak to trough in 2009. However, GDP increased by 2.8% in the fourth quarter of 2013 compared with the same period in 2012. Year-on-year, GDP is estimated to have increased by 1.9% during 2013.
The service industries made the largest contribution to GDP in Q4 2013, increasing by 0.8% and contributing 0.61 percentage points to the increase in GDP, which followed an increase of 0.8% in Q3 2013. There was widespread growth in the fourth quarter, with increases in the four main services aggregates: distribution, hotels & restaurants; transport, storage & communication; business services & finance; and government & other services. Services output is currently 1.3% more than the previous peak in Q1 2008.
Production also contributed 0.10 percentage points to the rise in GDP, with industries increasing by 0.7% and manufacturing up by 0.9% following an increase of 0.8% in Q3 2013.
Energy supply grew by 2.2% and water & waste management rose by 1.2% during the quarter. Because these are smaller industries than manufacturing, the contribution to GDP was lower and a decrease of 1.5% in mining & quarrying partially offset the increases in Q4.
Construction output was lower by 0.3% in the fourth quarter of 2013, when compared with the previous quarter, which reduced GDP growth by 0.02 percentage points. Monthly construction data reportedly showed that construction output dropped sharply in November 2013 when compared with October 2013, with a decrease in new work and repair & maintenance.
ONS Chief Economist Joe Grice commented: “We have now seen four successive quarters of significant growth and the economy does seem to be improving more consistently.
“Today’s estimate suggests over four fifths of the fall in GDP during the recession has been recovered, although it still remains 1.3 per cent below the pre-recession peak.”