Week 30, 2011: UK GDP by Sector

Summary: Preliminary figures for UK GDP in the second quarter of 2011 came out this week, and a growth rate of only 0.2% was not good news. The usual series of excuses and explanations followed.

What does the chart show? The chart shows the percentage change, from the previous quarter to the current quarter, in the UK's Gross Domestic Product (GDP). The GDP is a measure of total output most commonly used as an indicator of the size of an economy. The black line is the percentage change in the GDP of the whole economy. The coloured lines represent the GDP from the three main sectors of the economy; red for services (including, for example, hotels, restaurants, transport and financial services), blue for production (for example, mining, manufacturing and utilities), and green for construction.

Why is the chart interesting? GDP is possibly the most important indicator of the health of an economy, and the virtually non-existent growth over the past three quarters is not good news (0.5% "growth" in Q1 of 2011 merely took the economy back to where it was before the -0.5% change in the last quarter of 2010). The main drag on the economy at the moment seems to have shifted from the construction sector to the production sector, and particularly mining and the utilities, which saw a 6.6% and a 3.2% drop respectively. The main positive contribution came from business and financial services.

It is important to remember that these are only preliminary figures, which are likely to be revised upwards over the next couple of months, but a number of other excuses for poor growth have already been put forward. The number of bank holidays surrounding the royal wedding, and the wedding itself, as well as the after-effects of the Japanese tsunami are all cited, as well as the usual excuse of the weather (although one might expect the positive effect of the warm weather on the leisure industries to counteract the negative effect on the utilities). The GDP figures will also get a bump next quarter when the money from the Olympic ticket sales, which wasn't included this time, is added; total sales represented 0.1% of GDP (a high figure compared to the total 0.2% growth over the past quarter).

Still, according to ONS estimates these events only represent an additional 0.4% to services and 0.1% to production, still leaving total production at a disappointing -1.3%.