GDP monthly estimate, UK: January 2020

Commenting on today’s GDP figures for the three months to January, Head of GDP Rob Kent-Smith said:

“The economy continued to show no growth overall in the latest three months. Growth in construction, driven by housebuilding, offset yet another decline in manufacturing, particularly the drinks, cars and machinery industries.

“The dominant services sector also showed no growth in the latest three months with falls in retail and telecoms balanced by strength in rentals, employment and education.”

The services sector was flat in the three months to January 2020 following a period of subdued growth. Although construction showed relatively strong growth of 1.4% over the same period, production fell by 1.0%, continuing its longer-term decline and offsetting the growth seen in other areas.

Rolling three-month growth was zero in January 2020, the same as Quarter 4 (Oct to Dec) 2019.

Rolling three-month growth is based on output gross value added (GVA) and so there will be discrepancies in the time series with our quarterly estimates of gross domestic product (GDP), which include information on the expenditure and income approaches to measuring GDP.

Gross domestic product (GDP) showed no growth in January 2020, with growth in services offset by falls in production and construction.

The monthly growth rate for GDP is volatile and so it should be used with caution and alongside other measures, such as the three-month growth rate, when looking for an indicator of the longer-term trend of the economy. However, it is useful in highlighting one-off changes that can be masked by three-month growth rates.

The services sector showed no growth in the three months to January 2020. The main drivers behind the weakening seen in services were the wholesale, retail and motor trade sector and the information and communication sector, which fell by 0.7% and 1.0%, respectively. This fall was largely offset by increases in administrative and support services activities, and education, growing by 1.1% and 0.8%, respectively.

Services grew by 0.1% in January, with strong growth in wholesale, retail and motor trade following falls in the last two months of 2019. The main drag on growth in the most recent month was information and communication, and within that motion pictures, which performed well in December 2019.

The production sector fell by 1.0% in the three months to January 2020, driven by widespread falls in the manufacturing industry. Elsewhere in production, mining and quarrying performed poorly in the three months to January, falling by 2.9%.

Monthly growth for production was negative 0.1% in January 2020, with energy production acting as the main drag on growth.

Growth in construction was 1.4% in the three months to January 2020. This increase was driven by private new housing, non-housing repair and maintenance, and private commercial. The strong growth is in part related to the weakness seen in October 2019 now moving into the base period.

The month-on-month growth in January 2020 was negative 0.8%. This fall was driven by private commercial and private housing repair and maintenance.

UK National Accounts following the UK’s exit from the European Union

As the UK leaves the EU, it is important that our statistics continue to be of high quality and are internationally comparable. During the transition period, those UK statistics that align with EU practice and rules will continue to do so in the same way as before 31 January 2020.

After the transition period, we will continue to produce our national accounts statistics in line with the UK Statistics Authority’s Code of Practice for Statistics and in accordance with internationally agreed statistical guidance and standards.

The Withdrawal Agreement outlines a need for UK gross national income (a fundamental component of the national accounts, which includes gross domestic product (GDP)) statistics to remain in line with those of other EU countries until the EU budgets are finalised for the years in which we were a member. To ensure comparability during this cycle, the national accounts will continue to be produced according to European System of Accounts (ESA) 2010 definitions and standards.

Identifying recessions

Early estimates of GDP are subject to uncertainty, with more mature estimates leading to revisions as we receive more comprehensive data from a wide range of survey and administrative sources. On 16 April we will be publishing an article in the Economic review, which will outline our latest thinking and analysis on how we communicate the uncertainty associated with changes in the economy. Typically, most interest in the uncertainty associated with estimating GDP comes around turning points in the economy – as such this will be an important focus of the article.

Quality and methodology information on strengths, limitations, appropriate uses, and how the data were created is available in the Gross domestic product QMI.