GDP first quarterly estimate, UK (2024)

• UK gross domestic product (GDP) is estimated to have increased by 0.6% in Quarter 2 (Apr to June) 2024, following an increase of 0.7% in Quarter 1 (Jan to Mar) 2024.

• Compared with the same quarter a year ago, GDP is estimated to have increased by 0.9% in Quarter 2 2024.

• In output terms, services grew by 0.8% on the quarter with widespread growth across the sector; this offset falls of 0.1% in both the production and construction sectors.

• In expenditure terms, there were increases in gross capital formation, government consumption and household spending, partially offset by falls in net trade.

• There are no revisions to previously published data in this quarterly release because of the regular National Accounts Revisions Policy; data revisions up to 2022 as announced in our Blue Book 2024: advanced aggregate estimates release, and any additional updates to data from 2023 onwards, will be published in the Quarterly national accounts release on 30 September.

UK real gross domestic product (GDP) is estimated to have grown by 0.6% in Quarter 2 (Apr to June) 2024, following growth of 0.7% in the previous quarter (Figure 1 and Table 1). Compared with the same quarter a year ago, real GDP is estimated to have increased by 0.9%.

OurGDP monthly estimatespublished today (15 August 2024) show that GDP is estimated to have shown no growth in June 2024, following unrevised growth of 0.4% in May 2024 and no growth in April 2024 (unrevised).

It is important to note thatearly estimates of GDP are subject to revision(positive or negative). For more information please refer to ourGDP revisions in Blue Book: 2023 release. In the past, the absolute average revision between the first quarterly GDP estimate and the same quarterly estimate three years later is 0.2 percentage points when more detailed information is available through the comprehensive annual supply and use balancing process. The GDP growth vintages from 2023 onwards are shown in Table 6.

In line with theNational Accounts Revisions Policy, no periods are open to revision in this publication. Our Blue Book 2024: advanced aggregate estimates release showed the pre-announced revisions to real GDP quarterly growth up to 2022. These historical data revisions and additional updates to data from 2023 onwards will be fully incorporated into the Quarterly national accounts release, which will be published on 30 September 2024.

As well as producing estimates of GDP, the Office for National Statistics (ONS) also produces estimates of GDP per head (or per capita), which divides UK GDP by the total UK population. This is one proxy indicator of welfare, rather than production. We are also exploring a more holistic view of national progress, prosperity and well-being.

As the UK population might not be changing at the same rate as GDP, this means that growth in GDP per head can show a different trend to growth in headline GDP.

Real GDP per head is estimated to have increased by 0.3% in Quarter 2 2024 and is 0.1% lower compared with the same quarter a year ago.

It is important to note that estimates of GDP per head up to 2021 are based onpopulation estimates, whereas data from 2022 to 2024 are based oninterim population projections. In our September 2024 Quarterly national accounts, we will update our estimates of GDP per head for 2022 in line with the latestmid-year population estimates, as well as revisions to GDP, as highlighted in Table 4 of our Blue Book 2024: Advanced aggregate estimates release.

Population data for 2023 will be updated later in line with mid-year estimates, which are expected to be published in autumn 2024.

Nominal GDP is estimated to have increased by 0.9% in Quarter 2 2024, mainly driven by increases in gross operating surplus of corporations, other income and compensation of employees. Compared with the same quarter a year ago, nominal GDP is estimated to have increased by 3.0%.

The implied GDP deflator represents the broadest measure of inflation in the domestic economy, reflecting changes in the price of all goods and services that comprise GDP. It is important to note that the GDP deflator covers the whole of the domestic economy, not just consumer spending, and also reflects the change in the relative price of exports to imports. For more information on the implied GDP deflator, see ourMeasuring price changes of the UK national accounts: February 2023 release.

The implied price of GDP rose by 0.3% in Quarter 2 2024, where the increase is primarily driven by higher prices in government consumption. Compared with the same quarter a year ago, the GDP implied deflator further eased to 2.2% (Figure 2).

The three approaches to measuring GDP

As explained in ourprevious release, UK GDP is estimated to have increased by 0.1% in 2023. Estimates of real GDP from 2023 onwards have not yet been fully reconciled in a supply and use tables (SUTs) framework so this estimate of real GDP growth in 2023 reflects the average of the output, expenditure and income measures.

There are differences in the three approaches to measuring GDP at this stage in the production cycle. The differences in these approaches from 2022 onwards may be for various reasons, this is further discussed inSection 9: Data sources and quality.

Estimates for 2023 will next be open for revision in September 2024, where 2022 supply-use balanced data will also be included and, as a result, there will be one single estimate of GDP for 2022, as well as updating the base year from 2019 to 2022. Data up to and including 2022 have already been published as part of our Blue Book 2024: advanced aggregate estimates release.

Output is estimated to have grown by 0.6% in Quarter 2 (Apr to June) 2024. This follows two consecutive quarterly falls of 0.1% in Quarter 3 (July to Sept) and 0.3% in Quarter 4 (Oct to Dec) 2023 and growth of 0.7% in Quarter 1 (Jan to Mar) 2024.

The growth in the latest quarter was driven by a 0.8% increase in services output while production and construction fell on the quarter. Across Quarter 2, early estimates suggest 14 out of 20 of the subsectors grew, up from 13 the previous quarter.

Services

Services output increased by 0.8% in Quarter 2 2024 for the second consecutive quarter. There was widespread growth in the services sector, with 11 out of 14 subsectors increasing in Quarter 2 2024, shown in Figure 3. Overall, non-consumer facing services (business facing services) grew by 1.0% in Quarter 2 2024.

The largest contributor to the growth in services output was a 2.5% increase in the professional, scientific and technical activities subsector. Within this subsector, scientific research and development is estimated to have increased by 11.0%, last higher in Quarter 1 2020. There was also strength in legal activities, and architectural and engineering activities this quarter.

Information and communication increased by 1.7% in Quarter 2 2024 and was the second largest positive contributor to the strength in services output, with growth of 2.8% in April 2024. Within this subsector, growth in the latest quarter was driven by computer programming, consultancy and related activities, and telecommunications, which increased by 2.0% and 1.2%, respectively.

Elsewhere, the transportation and storage subsector grew for the third consecutive quarter with growth of 2.2%, as all its six industries contributed positively.

Overall, consumer-facing services fell by 0.1% in Quarter 2 2024, following growth of 0.6% in Quarter 1 2024. The largest drivers of this were a 1.2% decline in buying and selling, renting and operating of own or leased real estate, excluding imputed rental, and a 1.4% fall in wholesale and retail trade; repair of motor vehicles and motorcycles.

Further detail on services can be found in our Index of Services, UK: June 2024 bulletin.

Production

The production sector is estimated to have fallen by 0.1% in Quarter 2 2024 following growth of 0.6% in Quarter 1 2024. This reflects a fall of 1.0% in April 2024, which was partially recovered by growth in May and June 2024. In Quarter 2 2024, production output is estimated at 0.6% below the same quarter a year ago.

Within production, manufacturing was the largest negative contributor with 9 out of the 13 manufacturing subsectors showing falls in the latest quarter, shown in Figure 4.

Manufacturing output is estimated to have declined by 0.6% in Quarter 2 2024 following an increase of 1.1% in Quarter 1 2024. The manufacture of transport equipment fell by 1.8% after six consecutive quarters of growth. Anecdotal evidence from the Society of Motor Manufacturers and Traders suggests factories have been repurposing to prepare for increased electric car manufacturing, which has reduced output, and also that temporary supply chain issues have restricted commercial vehicle production.

There was also a fall of 6.6% in the manufacture of textiles, wearing apparel and leather products, continuing the downward trend in this industry over the last seven quarters.

Elsewhere in the production sector, there was growth in water supply, sewerage, waste management and remediation activities of 2.2%, and electricity, gas, steam and air conditioning supply of 2.5%. However, mining and quarrying is estimated to have fallen by 0.8%, the subsector's third consecutive quarterly decline. Mining and quarrying fell by 4.0% in June 2024, the weakest monthly growth rate since January 2023.

Further detail on production can be found in our Index of Production, UK: June 2024 bulletin.

Construction

Construction output is shown to have fallen by 0.1% in Quarter 2 2024, the third consecutive quarterly fall, despite growth in May and June 2024. However, the rate of decline in construction is easing according to our early estimates, in line with anecdotal evidence provided by the Bank of England in their Agents' summary of business conditions. The level of construction output in Quarter 2 2024 was 1.0% lower than the same quarter a year ago.

The fall in construction in Quarter 2 2024 reflects a decline in new work of 0.5%, which fell for its sixth consecutive quarter. However, repair and maintenance increased for the 11th consecutive quarter, with growth of 0.4% in Quarter 2 2024.

Further detail on construction output can be found in our Construction output in Great Britain: June 2024, new orders and Construction Output Price Indices, April to June 2024 bulletin.

Looking at the expenditure approach to measuring gross domestic product (GDP), there was an increase in gross capital formation, government consumption and household spending in Quarter 2 (Apr to June) 2024, partially offset by falls in net trade (Figure 5). Within gross capital formation, the largest contribution was from acquisitions less disposals of valuables which saw a change of £6.7 billion between Quarter 1 and Quarter 2 of 2024. This component is largely made up of non-monetary gold which appears within net trade and so the effect is GDP neutral.

Household consumption

There was an increase of 0.2% in real household expenditure in Quarter 2 2024, following growth of 0.4% in the previous quarter. Within household consumption, the largest contributions to the growth were from transport, housing, and recreation and culture.

Net tourism contributed negatively to growth in the latest quarter. Net tourism is offset within trade and therefore there is no impact on the GDP aggregate. Information on how we measure net tourism is provided in ourNational accounts article: treatment of tourism in the UK National Accounts. Excluding net tourism, domestic consumption increased by 0.3% in the latest quarter.

Consumption of government goods and services

Real government consumption expenditure increased by 1.4% in Quarter 2 2024, following no growth in the previous quarter. The increase in government consumption in the latest quarter mainly reflects higher activity in public administration and defence, and education, which offset a fall in health.

Gross capital formation

Gross fixed capital formation (GFCF) is estimated to have increased by 0.4% in the latest quarter, following growth of 0.9% in Quarter 1 (Jan to Mar) 2024. Growth was driven by increases in transport, other buildings and structures, and intellectual property products.

Within GFCF, business investment is estimated to have fallen by 0.1% in Quarter 2 2024, following growth of 0.5% in the previous quarter. Compared with the same quarter a year ago, business investment is estimated to have fallen by 1.1%.

Excluding the alignment and balancing adjustments, early estimates show that inventories fell by £915 million in Quarter 2 2024 (Table 2), driven by lower stocks in wholesale and retail.

Net trade

The UK’s trade deficit for goods and services was 2.7% of nominal GDP in Quarter 2 2024. However, this includes non-monetary gold, which is an erratic series so it can be useful to exclude this from the trade balance. Excluding non-monetary gold, the trade deficit was 1.9% of nominal GDP in Quarter 2 2024 (Figure 6).

Export volumes grew by 0.8% in the latest quarter, following five consecutive quarterly falls. The increase in the latest quarter was driven by growth of 3.5% in services exports, which offset a 2.6% fall in goods exports.

The increase in services exports was driven mainly by other business services, travel, telecommunications, and computers and information services.

The decline in goods exports was mainly driven by large movements in non-monetary gold, however, this series also appears within gross capital formation (GCF) as valuables and so the effect is GDP neutral. Elsewhere there were falls in material manufactures, and beverages and tobacco.

Import volumes increased by 7.7% in the latest quarter, following three consecutive quarterly falls. Growth in the latest quarter was driven by increases of 9.9% in goods and 4.1% in services.

The increase in goods imports was driven by large movements in non-monetary gold, as well as increases in machinery and transport equipment, and fuels.

The increase in services imports was mainly because of growth in other business services, in particular legal, accounting and management services, and advertising and market research services.

Nominal gross domestic product (GDP) increased by 0.9% in Quarter 2 (Apr to June) 2024, following growth of 1.6% in the previous quarter. Growth in nominal GDP was driven by increases in gross operating surplus of corporations, other income, and compensation of employees, which offset a fall in taxes less subsidies (Figure 7).

There has been additional challenge in balancing the income approach to measuring GDP reflected by the alignment adjustment, which is larger than normal (Table 3). This reflects the current challenges and uncertainties within the income approach as the data content for components are lower in a first quarterly estimate. Work will continue with a focus on the income approach to GDP, and we will continue to review this over the coming months as and when more information becomes available.

Compensation of employees

Compensation of employees increased by 0.3% in the latest quarter, driven by an increase of 1.2% in wages and salaries, which offset a 4.0% decline in employers' social contributions. Early indications are that the cut in the main National Insurance rate in April 2024 is driving the decrease in employers' social contributions. However, it should be noted that these data are a forecast and therefore subject to revision.

There is currently more uncertainty around the wages and salaries figures in this publication because of lower response rates in theLabour Force Survey. We have used additional information from ourPay As You Earn Real Time Information bulletinto help inform the estimates.

Taxes less subsidies

Early estimates show that taxes less subsidies declined by 1.4% in Quarter 2 2024, following growth of 3.2% in the previous quarter. The decline in the latest quarter was driven by a 0.8% fall in taxes (mainly Value Added Tax) as well as a 4.4% increase in subsidies.

Gross operating surplus

Total gross operating surplus (GOS) of corporations, excluding the alignment adjustment, fell by 0.8% in Quarter 2 2024 (Table 3), with increases in non-financial corporations.

Within GOS of corporations there is uncertainty around the full impacts of the Energy Bill Relief and Energy Price Guarantee schemes that affect the first half of 2023. This is because we do not have up-to-date quarterly information on the gross trading profits of businesses as these data are collected from HM Revenue and Customs and are available with a lag of approximately two years. As such we rely on contextual data (as outlined in ourProfitability of UK companies Quality and Methodology Information) from other sources to inform these quarterly estimates.

Revisions to GDP

It is also important to note that early estimates of GDP are subject to revision (positive or negative); for more information please refer to our GDP revisions in Blue Book: 2023 article. The GDP growth vintages are shown in Table 6.

In line with the National Accounts Revision Policy, no periods are open to revision in this publication. We will see the data revisions from our pre-announced changes up to 2022 as highlighted in our Blue Book 2024: advanced aggregate estimates article. Updates to data from 2023 onwards will follow in the GDP quarterly national accounts bulletin (publishing on 30 September 2024).

Reaching the GDP balance

The different data content and quality of the three approaches - the output approach, the expenditure approach and the income approach - dictate the approach taken in balancing quarterly data.In the UK, there are more data available on output in the short term than in either of the other two approaches.To obtain the best estimate of GDP (the published figure), the estimates from all three approaches are balanced to produce an average, except in the latest two quarters where the output data take the lead because of the larger data content.

The three approaches to measuring GDP allow us to confront our data sources within the national accounts framework. Figure 8 shows that real GDP is estimated to have increased by 0.1% in 2023, however, there are differences in the three approaches to measuring GDP at this stage in the production cycle. The differences in these approaches across 2022 and 2023 may be for various reasons.

Output approach

In the output approach, we do not currently have final estimates for intermediate consumption (value of goods and services purchased to be used up in the production of goods and services) as outlined in ourImpact of Blue Book 2023 changes on gross domestic product article. Initially, we use turnover and output as a proxy for changes in gross value added and assume that the intermediate consumption ratio by industry, calculated in 2021, holds constant into 2022 onwards. For example, input costs as a proportion of turnover or output remain fixed. In September 2024, data will now be confronted through the supply and use tables (SUTs) framework for the first time, and as a result we will have estimates for intermediate consumption for 2022.

Expenditure approach

In the expenditure approach, we currently have lower response rates for areas such as the Living Costs and Foods survey, which underpin our estimates of household consumption. As explained in our GDP quarterly national accounts, UK: July to September 2023 bulletin, the 2022 annual benchmark data for the International Trade in Services (ITIS) survey are not yet available because of improving sample methodology and requiring additional time to quality assure the data. However, the quarterly ITIS data for 2022 and 2023 were included in this dataset.

Income approach

In the income approach, we do not have up-to-date quarterly information on the gross trading profits of businesses as these data are collected from HMRC and are available with a lag of approximately two years. We rely on contextual data (as outlined in ourProfitability of UK companies Quality and Methodology Information) from other sources to inform these quarterly estimates. There is currently more uncertainty around the compensation of employees figures in this publication because of lower response rates in theLabour Force Survey. We have used additional information from ourPay As You Earn Real Time Information bulletinto help inform the estimates.

Estimates for 2023 will next be open for revision in September 2024 where 2022 data will also be confronted through the SUTs framework for the first time and, as a result there will be one single estimate of GDP for 2022. We will see the data revisions from our pre-announced changes up to 2022 as published in our Blue Book 2024: advanced aggregate estimates article. Updates to data from 2023 onwards will follow in in the GDP quarterly national accounts bulletin (publishing on 30 September 2024).

Quarterly GDP is a balanced measure of the three approaches, while the GDP monthly estimate focuses on gross value added (GVA) and output as a proxy for GDP. This results in data differences (in both levels and growths terms) between the quarterly publications (average GDP) and theGDP monthly estimate(output approach to GDP). Quarterly GDP is the lead measure of GDP because of its higher data content and inclusion of variables, which enable the conversion from a GVA concept to a GDP basis.

Information on the methods we use forBalancing the output, income and expenditure approaches to measuring GDPis available.

Alignment adjustments, found in Table M of ourGDP first quarterly estimate data tables, have a target limit of plus or minus £3,000 million on any quarter. However, in periods where the data sources are particularly difficult to balance, larger alignment adjustments are sometimes needed, as explained in ourRecent challenges of balancing the three approaches of GDP article. Our standard practice is to prefer that the alignment adjustment be out of tolerance rather than over-adjust individual GDP components to achieve a balance. This is most likely to occur in the latest quarter where the constraints are larger, where we must align to the output estimate for the change in GDP, and where the data content is at its lowest.

To achieve a balanced GDP dataset through alignment, balancing adjustments are applied to the components of GDP where data content is particularly weak in a given quarter because of a higher level of forecast content. The balancing adjustments applied in this estimate are shown in Table 7. The resulting series should be considered accordingly.

Net trade

HM Revenue and Customs (HMRC) implemented a data collection changeaffecting data on goods exports from Great Britain (GB) to the EU in January 2021, and data on goods imports from the EU to GB in January 2022. For more information seeHMRC's Methodology changes to trade in goods statistics from March 2022 article. We haveapplied adjustments to our estimates of goods imports from the EU for 2021to reflect this data collection change, which brought imports and exports statistics onto a like-for-like basis in 2021, as detailed in ourTrade in goods: Adjustments to 2021 EU imports estimates, by chapter dataset. The full time series for goods imports from and exports to the EU contains a discontinuity from January 2021 resulting from the move from Intrastat to customs declarations, as detailed in ourImpact of trade in goods data collection changes on UK trade statistics: adjustments to 2021 EU imports estimates article. We are continuing to work with HMRC to consider possible options to account for this discontinuity.

Separately, in 2021, the use of Staged Customs Controls (SCC) allowed customs declarations to be reported up to 175 days after the date of import for imports of non-controlled goods from the EU to GB.The UK government introduced full customs controls in January 2022, while July 2022 marked the first full month of data where delayed customs declarations submitted under SCC could not be included. Temporary arrangements still apply for imports of goods from Ireland to GB. In our articleImpact of trade in goods data collection changes on UK trade statistics: further update on Staged Customs Controlspublished on 3 July 2023, we presented analysis on the impact of SCC on trade in goods data for imports from the EU to GB in 2022. We have previously adjusted for the impact of SCC and have published an article, Impact of trade in goods data collection changes on UK trade statistics: adjustments to 2022 EU imports estimates, providing a detailed breakdown of the impact of these adjustments.

In the December 2023 GDP quarterly national accounts bulletin, we incorporated a number of better quality but less timely annual datasets for 2022, however, annual data for 2022 from the International Trade in Services (ITIS) Survey have not been included in this dataset as we have been developing and improving methodology for the sample and require additional time to quality assure the data. These will be incorporated in our September 2024 quarterly national accounts. Quarterly ITIS data for 2022 are included our current dataset.

Strengths and limitations

The UK National Accounts are drawn together using data from many different sources. This ensures that they are comprehensive and provide different perspectives on the economy, for example, sales by retailers and purchases by households. Further information on measuring gross domestic product (GDP) can be found in theGuide to the UK National Accounts, and more quality and methodology information (QMI) is available in theGross domestic product (GDP) QMI.

Important quality information

There are common pitfalls in interpreting data series, and these include:

• expectations of accuracy and reliability in early estimates are often too high

• revisions are an inevitable consequence of the trade-off between timeliness and accuracy

• early estimates are often based on incomplete data

Very few statistical revisions arise as a result of "errors" in the popular sense of the word. All estimates, by definition, are subject to statistical "error".

Many different approaches can be used to summarise revisions; the "Accuracy and reliability" section in the Gross domestic product (GDP) QMI analyses the mean average revision and the mean absolute revision for GDP estimates over data publication iterations.

Accredited official statistics

These accredited official statistics were independently reviewed by the Office for Statistics Regulation in March 2015. They comply with the standards of trustworthiness, quality and value inthe Code of Practice for Statistics (opens in a new tab)and should be labelled "accredited official statistics".