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Services sector helps drive growth of 1.9% in UK economy during 2013

UK gross domestic product (GDP) has achieved its strongest growth since 2007, increasing by 0.7% in the last quarter of 2013, according to the Economic Review, February 2014 released by Office for National Statistics (ONS) on Wednesday.

The ONS report shows that the country’s economy grew by 1.9% between calendar years 2012 and 2013, with the services sector and production output both increasing. Output of the services sector, which accounts for 78% of the whole economy, is currently 1.3% higher than at the pre-recession peak in the first quarter of 2008.

A variety of types of economic activities are included in the services sector, ranging from privately provided service activities such as business services, distribution, hotels and restaurants to defence, health and education which are mainly provided by government.

Positive GDP growth over four consecutive quarters in 2013 has been complemented by an improvement in the labour market. Unemployment in each of the main age categories fell during 2013. Older workers, especially those aged 35-49, were said to have fared relatively better than workers in the 18-24 year age group. Younger workers reportedly bore a larger proportion of the unemployment adjustment than their share in the labour force.

The ONS figures also revealed that the UK’s Consumer Price Index (CPI) continued to fall in the year to December, despite the rise in the labour market and consistent positive GDP growth in 2013. This followed a 5 year period when inflation was continually above the Bank of England’s 2.0% target.

According to ONS, poor results for labour productivity in the UK are a reflection of weak productivity growth in the services sector, as well as in the non-manufacturing elements of the production sector, including the extraction industries. Manufacturing output per hour returned to strong growth during 2010 and 2011; however it has dropped since then.


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