July 2012 GDP estimates

Our monthly estimates of GDP suggest that output declined by 0.2 per cent in the three months ending in June after growing by 0.1 per cent in the three months ending in May 2012. These data are distorted by the additional bank holiday for the Diamond Jubilee. Underling growth was more robust than these headline estimates suggest. We estimate that underlying growth for the three months to June was around +0.2 per cent. Nevertheless, these figures suggest that the UK economy remains broadly flat; a trend that has persisted for around 24 months.

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 Simon Kirby on 020 7654 1916.