We project that the output of the economy in the three months ending in May was 0.8% higher than in the previous three months. Rounding means that the underlying increase in the growth rate compared with the first quarter data is less than 0.1 percentage point and the underlying message is therefore that the economy continues to grow at faster than its trend rate. Obviously these figures are not greatly affected by the most recent interest rate increases and it is important to remember that only recently have interest rates moved into a neutral range. Nevertheless it is likely that the Monetary Policy Committee will be looking for evidence of easing in the pace of economic growth and, in its absence will face pressure for further interest rate increases. 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 0.14% 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 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.
Contents of Press Release
Table 1, Page 2: 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, Page 3: Output by Sector (Industry, Agriculture, Construction, Private Services, Public Services, GDP(B) (calculated at prices excluding taxes and subsidies), GDP
Table 3, Page 4: Output in Quarter Ending in Month Shown by sector (as above)
Table 4, Page 5: Growth in Quarter Ending in Month Shown over Previous Quarter (% at annual Rate) by sector (as above)
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