GDP first quarterly estimate, UK: July to September 2024

• UK gross domestic product (GDP) is estimated to have increased by 0.1% in Quarter 3 (July to Sept) 2024, following growth of 0.5% in Quarter 2 (Apr to June) 2024.

• GDP is estimated to have increased by 1.0% in Quarter 3 2024, compared with the same quarter a year ago.

• Within the output approach to measuring GDP, the services sector grew by 0.1% on the quarter; the construction sector grew by 0.8%, while the production sector fell by 0.2%.

• Within the expenditure approach to measuring GDP, there was an increase in net trade, household spending, business investment, and government consumption in expenditure terms in the latest quarter.

• Nominal GDP is estimated to have increased by 0.8% in Quarter 3 2024, mainly driven by increases in compensation of employees and other income.

• Real GDP per head is estimated to have fallen by 0.1% in Quarter 3 2024, and is flat, compared with the same quarter a year ago.

UK real gross domestic product (GDP) is estimated to have grown by 0.1% in Quarter 3 (July to Sept) 2024, following growth of 0.5% in the previous quarter (Figure 1). Real GDP is estimated to have increased by 1.0%, compared with the same quarter a year ago.

We published our GDP monthly estimate, UK bulletin on 15 November 2024. This showed that GDP is estimated to have fallen by 0.1% in September 2024, following unrevised growth of 0.2% in August 2024 and unrevised no growth in July 2024.

It is important to note that early estimates of GDP are subject to positive or negative revision. For more information, please refer to our GDP revisions in Blue Book: 2024 article. The absolute average revision between the first quarterly GDP estimate and the same quarterly estimate three years later is typically 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 our National Accounts Revisions Policy, no periods are open to revision in this publication.

We also produce estimates of GDP per capita (or per head) which divides UK GDP by the total UK population. Further information on this is available in our Trends in UK real GDP per head: 2022 to 2024 article. This is one proxy indicator of welfare, rather than production. It is one indicator for a country’s living standards, as it captures the volume of goods and services available to the average person. We are also exploring a more holistic view of national progress, prosperity, and well-being, as described in our Measuring progress, well-being and beyond GDP in the UK bulletins.

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

Real GDP per head is estimated to have fallen by 0.1% in Quarter 3 2024, and is flat, compared with the same quarter a year ago. It is important to note that estimates of GDP per head up to 2022 are based on our Population estimates for England and Wales: mid-2023, whereas data from 2023 to 2024 are based on our interim population projections. Population estimates for 2023 will be updated in our GDP quarterly national accounts, UK: July to September 2024 to be published in December, to be in line with our mid-year population estimates published on 8 October 2024.

Nominal GDP is estimated to have increased by 0.8% in Quarter 3 2024, mainly driven by increases in compensation of employees and other income. Nominal GDP is estimated to have increased by 3.4%, compared with the same quarter a year ago.

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 our Measuring price changes of the UK national accounts: February 2023 article.

The implied price of GDP rose by 0.7% in Quarter 3 2024, where the increase is primarily driven by lower prices in imports, which contributes positively to GDP. The GDP implied deflator further eased to 2.4%, compared with the same quarter a year ago (Figure 2).

The three approaches to measuring GDP

Real annual GDP in 2023 was estimated to have increased by 0.3%, as explained in our previous GDP quarterly national accounts bulletin. The three approaches to measuring GDP are currently closely aligned in 2023 (Figure 8). However, there can still be uncertainty at the component level at this stage in the production cycle for 2023 onwards, until these data have been confronted through the supply and use tables framework (SUTs). This uncertainty may be for various reasons and is further discussed in Section 9: Data sources and quality.

Output is estimated to have grown by 0.1% in Quarter 3 (July to Sept) 2024, following growth of 0.5% in the previous quarter.

The growth in the latest quarter was driven by a 0.1% increase in the services sector and a 0.8% increase in construction output, while production fell by 0.2% on the quarter. Across Quarter 3, early estimates show that 11 out of 20 of the sub-sectors grew, down from the 13 in the previous quarter.

Services

Services output increased by 0.1% in Quarter 3 2024, following growth of 0.6% in the previous quarter.

Figure 3 shows 8 out of 14 services subsectors increased in Quarter 3 2024, down from 10 in the previous quarter. Overall, non-consumer-facing services (business-facing services) showed no growth in Quarter 3 2024, while consumer-facing services increased by 0.5%.

The largest contributor to the growth in service output was a 0.7% increase in the professional, scientific and technical activities subsector. There was widespread growth across this subsector, with five out of eight industries contributing positively.

The second largest positive contributor to growth in services output was wholesale and retail trade; repair of motor vehicles and motorcycles subsector, which increased by 0.6%. Within this subsector, growth in the latest quarter was driven by retail trade, except of motor vehicles and motorcycles, which increased by 1.9%. More information can be found in our Retail sales, Great Britain bulletin.

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

Production

The production sector is estimated to have fallen by 0.2% in the latest quarter, following a 0.3% decline in Quarter 2 2024. Production output is estimated to have fallen by 1.9%, compared with the same quarter a year ago.

The fall in production was largely driven by a 2.7% decline in electricity, gas, steam and air conditioning supply. Additionally, there was a fall of 0.9% in water supply; sewerage, waste management and remediation activities, and no growth in mining and quarrying.

Manufacturing output increased by 0.2%, with 7 out of the 13 manufacturing subsectors increasing in the latest quarter, as highlighted in Figure 4. Within manufacturing, the largest positive contribution was in basic metals and metal products, which grew by 1.4% on the quarter.

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

Construction

Construction output is estimated to have grown by 0.8% in Quarter 3 2024, following three consecutive quarterly falls. The level of construction output in Quarter 3 2024 was 0.4% lower than the same quarter a year ago.

New work increased by 2.0% in the latest quarter, while repair and maintenance decreased by 0.6%. Within new work, the largest contribution to the increase came from infrastructure new work, which grew by 2.8%. Within repair and maintenance, the largest negative contribution came from private housing repair and maintenance, which fell by 5.8%.

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

Looking at the expenditure approach to measuring gross domestic product (GDP), there was an increase in net trade, household spending, business investment, and government consumption in the latest quarter. These increases were partially offset by a fall in gross capital formation, specifically the acquisitions less disposals of valuables (Figure 5). 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 0.5% in real household expenditure in Quarter 3 2024, following growth of 0.2% in the previous quarter. Within household consumption, the largest contributions to the growth were from higher spending on housing, miscellaneous, and clothing and footwear.

Net tourism had no contribution to growth in the latest quarter. Net tourism is offset within trade and has no impact on the GDP aggregate. Information on how we measure net tourism is provided in our National Accounts articles: Treatment of tourism in the UK National Accounts article. Excluding net tourism, domestic consumption increased by 0.5% in the latest quarter.

Consumption of government goods and services

Real government consumption expenditure increased by 0.6% in Quarter 3 2024, following growth of 1.1% in the previous quarter. The increase in government consumption in the latest quarter mainly reflects increased expenditure in education, as well as higher school attendance numbers.

Gross capital formation

Gross fixed capital formation (GFCF) is estimated to have increased by 1.1% in the latest quarter, following growth of 0.6% in Quarter 2 2024. Growth was mainly driven by a 10.0% increase in transport.

Within gross fixed capital formation, business investment is estimated to have increased by 1.2% in Quarter 3 2024, following growth of 1.4% in the previous quarter. Business investment is estimated to have increased by 4.5%, compared with the same quarter a year ago.

Excluding the alignment and balancing adjustments, early estimates show that real inventories increased by £1.7 billion in Quarter 3 2024, driven by higher stocks in manufacturing.

Net trade

The UK’s trade deficit for goods and services was 1.5% of nominal GDP in Quarter 3 2024. However, this includes non-monetary gold. This is an erratic series, so it can be useful to exclude this from the trade balance. Excluding non-monetary gold, the trade deficit was 1.6% of nominal GDP in Quarter 3 2024 (Figure 6).

Export volumes fell for the third consecutive quarter, with a 0.2% decline in the latest quarter. The fall in the latest quarter was driven by a 1.0% decline in services exports, which offset a 0.8% increase in good exports. The decrease in services exports were driven mainly by other business services and telecommunications, computers and information services. The increase in goods exports was mainly driven by fuels (in particular gas exports), and material manufacturers.

Import volumes fell by 1.5% in the latest quarter, following growth of 6.3% in Quarter 2 2024. The fall in the latest quarter was driven by a 2.7% decline in goods imports, which offset a 1.0% increase in services imports. The fall in goods imports was 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. The increase in services imports was mainly because of growth in charges for the use of intellectual property, and imports of telecommunications, computers and information services.

Nominal gross domestic product (GDP) increased by 0.8% in Quarter 3 (July to Sept) 2024, following growth of 1.1% in the previous quarter. Growth in nominal GDP was mainly driven by increases in compensation of employees and other income (Figure 7).

Compensation of employees

Compensation of employees increased by 0.8% in the latest quarter, driven by an increase of 1.0% in wages and salaries and a 0.3% increase in employers’ social contributions.

Early estimates of private sector wages and salaries are based on estimates of the number of employees in the economy from the Labour Force Survey (LFS) and average earnings (from our Average Weekly Earnings statistics). However, because of low response rates in the LFS, there is some additional uncertainty around the employees estimates used to derive our figures of wages and salaries. We have therefore used additional information from our Pay As You Earn Real Time Information bulletin to help improve the accuracy of the income measure of GDP.

Other income

Other income increased by 2.0% in the latest quarter, driven by growth in mixed income (in particular, self-employment and rental income) and other gross operating surplus (in particular, households).

Taxes less subsidies

Early estimates show that taxes less subsidies declined by 0.3% in Quarter 3 2024, following growth of 2.6% in the previous quarter. The decline in the latest quarter was driven by a 0.4% fall in taxes (mainly value added tax) which offset a 1.5% fall in subsidies.

Gross operating surplus

Total gross operating surplus (GOS) of corporations, excluding the alignment adjustment, increased by 2.6% in Quarter 3 2024 with increases in non-financial corporations (Table 3).

Within GOS of corporations, there is uncertainty around estimates of non-financial corporations. This is because we do not have up-to-date quarterly information on the gross trading profits of businesses. 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 from other sources to inform these quarterly estimates, as outlined in our Profitability of UK companies quality and methodology information (QMI).

Revisions to GDP

It is also important to note that early estimates of gross domestic product (GDP) are subject to positive or negative revision, as described in our Why GDP figures are revised article. For more information, please refer to our GDP revision in Blue Book: 2024 article. The GDP growth vintages are shown in Table 6.

In line with our National Accounts Revisions Policy, no periods are open to revision in this publication.

The three approaches to measuring GDP

There are three approaches to measuring GDP: the output approach, the expenditure approach, and the income approach. The different data content and quality of the three approaches dictate the approach taken to balance 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 get the best estimate of GDP (the published figure), we balance the estimates from all three approaches to produce an average. However, in the latest two quarters, the output data take the lead because of their larger data content.

The three approaches to measuring GDP allow us to confront our data sources within the national accounts framework. While the three approaches to measuring GDP are closely aligned, Figure 8 shows that there can still be uncertainty at the component level at this stage in the production cycle, for 2023 onwards, until these data have been confronted through the supply and use tables framework (SUTs). This uncertainty may be for various reasons and is further discussed in this section.

Output approach

In the output approach, we do not currently have final estimates for intermediate consumption. This is the value of goods and services purchased to be used up in the production of goods and services, as outlined in our Blue Book 2024: advanced aggregate estimates release. Initially, we use turnover and output as a proxy for changes in gross value added. We assume that the intermediate consumption ratio by industry, calculated in 2022, holds constant into 2023 onwards. More information on this is provided in Section 11: Data sources and quality of our previous GDP quarterly national accounts bulletin.

Expenditure approach

In the expenditure approach, we currently have lower response rates for areas such as the Living Costs and Food Survey, which underpin our estimates of household consumption. We therefore rely on additional real time indicators to inform some of our estimates in the short term.

Income approach

In the income approach, we do not have up-to-date quarterly information on the gross trading profits of businesses. This is because these data are collected from HM Revenue and Customs and are available with a lag of approximately two years. We rely on contextual data from other sources to inform these quarterly estimates, as outlined in our Profitability of UK companies quality and methodology information (QMI). There is currently more uncertainty around the compensation of employees figures in this bulletin because of lower response rates in the Labour Force Survey (LFS), as described in our LFS: planned improvements and its reintroduction methodology. We have used additional information from our Earnings and employment from Pay As You Earn Real Time Information bulletin to help inform the estimates.

Reaching the GDP balance

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 our quarterly bulletins (average GDP) and our GDP monthly estimate bulletin (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 is available in our Balancing the output, income and expenditure approaches to measuring GDP article.

Alignment adjustments are found in Table M of our GDP – data tables. These 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 our Recent 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. Please note that balancing adjustments applied to Quarter 2 (Apr to June) 2024 in our previous GDP quarterly national accounts bulletin have also been carried forward so they do not influence Quarter 3 (July to Sept) 2024 growth.

Net trade

The arrangements for how the UK trades with the EU changed since the UK left the EU on 31 January 2020. HM Revenue and Customs (HMRC) implemented some data collection changes following Brexit, which affected statistics on UK trade in goods with the EU. We have made adjustments to our estimates of goods imports from the EU in 2021 and 2022 to account for these changes. However, a structural break remains in the full time series for goods imports from and exports to the EU from January 2021.

We advise caution when interpreting and drawing conclusions from these statistics. Our Impact of trade in goods data collection changes on UK trade statistics: summary of adjustments and the structural break from 2021 article provides more detail.

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 GDP can be found in our A guide to the UK National Accounts: March 2020 methodology, and more quality and methodology information (QMI) is available in our Gross 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 that are often too high
• revisions, which are an inevitable consequence of the trade-off between timeliness and accuracy
• early estimates that 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. We analyse the mean average revision and the mean absolute revision for GDP estimates over data publication iterations in Section 5: Quality characteristics of GDP data subsection Accuracy and reliability in our Gross domestic product (GDP) QMI.