Our monthly estimates of GDP suggest that output fell by 0.4% in the three months ending in June, after the decline of 1.3% in the three months ending in May. Revisions to the official estimates of economic growth in the first quarter of 2009 suggest that March can no longer be considered the trough of the recession. However, on the basis of the monthly profile we estimate that the UK economy is now stagnating rather than continuing to contract at a sharp pace. In the three months to June 2009 the UK economy was around 5½ per cent below its peak in March 2008.
Our track record in producing early estimates of GDP suggests that our projection for the most recent three-month period has a standard error of 0.1-0.2% 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 and they are also likely to be less accurate in the current disturbed economic circumstances. A paper describing the methodology used to produce the data was published in the February 2005 volume of the Economic Journal. From April until October 2006 our estimates were computed using the Index of Services published by ONS. However this monthly series shows considerable volatility which has caused us some problems in estimating GDP. From our November 2006 press release we have therefore reverted to using a model of private services output based on indicator variables. This means that, while all our figures for calendar quarters are fully coherent with ONS data, our estimates of monthly private service output are not. The series can be thought of as indicating the underlying value of the ONS series.
For more information please telephone Martin Weale on 020 7654 1945.