We project that the output of the economy in the three months ending in December was 0.5% higher than in the previous three months. This is an acceleration compared to the three months ending in November over which output is estimated to have grown by 0.4%. The key indicators of retail sales and manufacturing output have both improved. We expect to see this improvement carry through into the current year with growth returning to its trend rate. The figures do not make a case for an interest rate reduction.
Overall the economy grew by 1.7% from 2004 to 2005 as compared to the 3-3 ½ % forecast by the Chancellor of the Exchequer in his Spring Budget. There is nothing unusual in the size of his forecast error.
Our track record over six years in producing early estimates of GDP suggests that our projection for the most recent three-month period has a standard error of 0.14% point when compared to the first estimate produced by the Office for National Statistics. This comparison can be made only for complete calendar quarters. Outside calendar quarters the figures are less reliable than this. A paper describing the methodology used to produce the data has been published in the February 2005 volume of the Economic Journal.
Contents available to GDP Estimates Subscribers:
NIESR uses statistical projection techniques to project UK GDP one month ahead, giving NIESR's highly respected monthly UK GDP estimates. We also estimate economic growth in the three months ending in the month just ended. This means that each calendar quarter an estimate of quarterly growth is produced about 3 weeks ahead of the Office of National Statistics. The importance of the NIESR GDP estimates is well recognised, being widely reported in the press. The minutes of the Monetary Policy Committee sometimes refer to them as one of the factors which influence interest rate decisions. Four summary tables are available to Premium GDP Estimates Subscribers, as well as a full monthly set of time series:
Table 1: Summary table of quarterly growth rates showing monthly data, 3 months ending in that month, and quarterly growth (% per quarter). All contain figures for industry & GDP.
Table 2: Output by sector (industry, agriculture, construction, private services, public services, GDP(B) (calculated at prices excluding taxes and subsidies), GDP
Table 3: Output in quarter ending in month shown by sector (as above)
Table 4: Growth in quarter ending in month shown over previous quarter (% at annual rate) by sector (as above)
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