3. UK GDP continues to grow in Quarter 4 (Oct to Dec) 2016

Headline GDP components and GDP per head.

Table 1: Headline economic indicators and GDP per head for the UK, Quarter 1 (Jan to Mar) 2015 to Quarter 4 (Oct to Dec) 2016 % growth1 Chained volume measures Current market prices GDP Household expenditure Gross fixed capital formation GDP per head GDP Compensation of employees Seasonally adjusted 2016 1.8 3.1 0.5 1.1 3.6 3.7 Q1 2015 0.3 0.7 1.5 0.0 0.3 0.5 Q2 2015 0.5 0.5 1.2 0.3 1.5 0.8 Q3 2015 0.3 1.1 0.8 0.1 -0.1 0.9 Q4 2015 0.7 0.4 -0.9 0.5 0.4 0.5 Q1 2016 0.2 0.9 0.1 0.0 0.9 0.3 Q2 2016 0.6 0.8 -0.2 0.4 1.6 2.3 Q3 2016 0.6 0.9 0.9 0.4 0.9 1.3 Q4 2016 0.7 0.7 0.0 0.5 1.4 0.1 Source: Office for National Statistics Notes: 1. Percentage change on previous period 2. Q1 refers to Quarter 1 (Jan to Mar), Q2 refers to Quarter 2 (Apr to June), Q3 refers to Quarter 3 (July to Sept) and Q4 refers to Quarter 4 (Oct to Dec). Download this table Table 1: Headline economic indicators and GDP per head for the UK, Quarter 1 (Jan to Mar) 2015 to Quarter 4 (Oct to Dec) 2016 .xls

As seen in Figure 1, between Quarter 3 (July to Sept) 2016 and Quarter 4 (Oct to Dec) 2016 GDP grew by 0.7%, which is the 16th consecutive quarterly increase and continues the UK’s steady period of growth since Quarter 1 (Jan to Mar) 2013.

Figure 1: Quarterly growth and levels of GDP for the UK, Table A2 Quarter 1 (Jan to Mar) 2004 to Quarter 4 (Oct to Dec) 2016 Source: Office for National Statistics Notes: Q1 refers to Quarter 1 (Jan to Mar), Q2 refers to Quarter 2 (Apr to June), Q3 refers to Quarter 3 (July to Sept) and Q4 refers to Quarter 4 (Oct to Dec). Download this chart Figure 1: Quarterly growth and levels of GDP for the UK, Table A2 Image .csv .xls

Output approach

The output approach of GDP has increased by 0.7% between Quarter 3 (July to Sept) 2016 and Quarter 4 (Oct to Dec) 2016, revised up by 0.1 percentage points from the preliminary estimate published on 26 January 2017.

All main output industrial groupings within GDP showed increases in Quarter 4 2016 compared with Quarter 3 2016. Within production, 3 of the 4 components increased, which resulted in overall positive growth in total production, while construction also showed a small increase of 0.2% between Quarter 3 2016 and Quarter 4 2016. All of the 4 components within the services industries showed an increase between Quarter 3 2016 and Quarter 4 2016.

The quarterly revision to production growth almost entirely drove the 0.1 percentage points increase to the output approach to GDP and within manufacturing this increase was broad- based across multiple industries. Within the production sub-industries, output from mining and quarrying (including oil and gas extraction) decreased by 7.0%; manufacturing (the largest component of production) increased by 1.2% and electricity, gas, steam and air conditioning supply industries increased by 3.1%. Water supply and sewerage increased by 2.0%.

The services industries increased by 0.8% in Quarter 4 2016, compared with the previous quarter, unrevised from the previous estimate, marking the 16th consecutive quarter of positive growth. The main drivers of the growth were wholesale trade except motor vehicles and motor cycles, retail trade except motor vehicles and motor cycles and travel agency activities. This follows a 1.0% increase in Quarter 3 2016.

Further detail on the services industries’ lower level components can be found in the Index of Services statistical bulletin published on 22 February 2017.

Expenditure approach

The expenditure approach of GDP increased by 0.7% between Quarter 3 (July to Sept) 2016 and Quarter 4 (Oct to Dec) 2016.

As has been the case in recent years, household final consumption expenditure (HHFCE) was a main driver and contributor to GDP growth in all quarters of 2016. Household spending grew by 0.7% in Quarter 4 2016, which was higher than the average quarter-on-quarter growth (0.6%) seen since Quarter 1 (Jan to Mar) 2013 when the economy started growing steadily. Much of the HHFCE estimate for Quarter 4 is forecast at this point, however, the continuing growth is in line with the Retail Sales Index for Quarter 4, which grew by 1.2% (published on 20 January 2017). A detailed breakdown of consumer spending will be available in the Quarterly National Accounts published on 31 March 2017.

In Quarter 4 2016, there has been a slowdown within business investment, which fell by 1.0%, driven by subdued growth within the “ICT equipment and other machinery and equipment” assets. Further details regarding the business investment data can be found within the Business investment release published on 22 February 2017.

Income approach

The income approach of GDP increased by 0.7% in chained volume measures (1.4% in current prices seasonally adjusted) between Quarter 3 (July to Sept) 2016 and Quarter 4 (Oct to Dec) 2016.

All data quoted in this section are in current prices seasonally adjusted.

Within the income measure of GDP, 3 out of 4 components showed growth between Quarter 3 2016 and Quarter 4 2016, with gross operating surplus of corporations, which is the profits of companies, showing the largest growth of 4.5%. The only component to show negative growth is other income which fell by 0.2%. Other income includes mixed income and the operating surplus of the non-corporate sector.

Compensation of employees, which includes wages and salaries and pensions, showed subdued growth of 0.1%. There was positive growth within the wages and salaries data, which has been partially offset by a fall within the Employer’s Social Contributions data which has showed some weakness in the latest quarter, however, the social contributions data are primarily forecast at this point.

GDP per head for Quarter 4 (Oct to Dec) 2016

In Quarter 4 (Oct to Dec) 2016, gross domestic product (GDP) per head increased by 0.5%, compared with Quarter 3 (July to Sept) 2016. GDP per head is now 1.8% above the pre-downturn peak in Quarter 1 (Jan to Mar) 2008, having surpassed it in Quarter 4 2015 (Figure 2).

Figure 2: Quarterly growth of UK GDP and GDP per head for the UK, indexed to Quarter 1 (Jan to Mar) 2008 Quarter 4 (Oct to Dec) 2006 to Quarter 4 (Oct to Dec) 2016 Source: Office for National Statistics Notes: Q1 refers to Quarter 1 (Jan to Mar), Q2 refers to Quarter 2 (Apr to June), Q3 refers to Quarter 3 (July to Sept) and Q4 refers to Quarter 4 (Oct to Dec). Download this chart Figure 2: Quarterly growth of UK GDP and GDP per head for the UK, indexed to Quarter 1 (Jan to Mar) 2008 Image .csv .xls

Between 2015 and 2016, GDP per head increased by 1.1% compared with a growth of 1.4% between 2014 and 2015.

GDP per head is calculated by dividing GDP in chained volume measures by the latest population estimates and projections. The population estimates used in this release are those published on 23 June 2016 and the population projections used are those published on 29 October 2015.