ONS review says UK GDP down 0.3% in Q3

Last month, the ONS reported GDP to have contracted by 0.4 per cent, but has reviewed the data and found the economy fared slightly better than first assessed.

The ONS says the volume of output in the production industries fell by 0.8 per cent, within which manufacturing fell by 0.1 per cent. Output of the service industries decreased by 0.1 per cent.

It also found that business services and finance industries declined by 0.3 per cent, compared with a fall of 0.7 per cent in 2009 Q2. The ONS says that while there was a continued decline in output of financial services, this was partly offset by increases in computer services, management consultancy, legal and architectural services.

Barclays Capital analyst Simon Hayes says: “Although there has been a furious debate about the validity of the preliminary estimate, the official picture remains one of sustained weakness in economic activity with GDP dropping in six consecutive quarters, the longest recession on record. We do, however, expect the UK to emerge from recession in Q4.

“More interesting than the headline number is the estimated composition of growth in Q3 – in recent months the Monetary Policy Committee has expressed concern about private domestic demand – household consumption and private investment – which had both fallen at their fastest pace on record during this recession. A stabilisation in private domestic demand was seen as a prerequisite for declaring an end to the economic crisis.
Today’s release shows that household consumption was flat, while investment is estimated to have fallen by just 0.3 per cent. These figures were stronger than the consensus and our own forecasts and this earlier-than-expected stabilisation in private domestic spending is encouraging news.”