The quarterly growth figures are subject to revision since they are projections based on partial data – as more hard data is received, the numbers become more solid. Equally, in the fullness of time, data for earlier quarters may also be revised. This is the case for the UK economy.
The Office for National Statistics (ONS) is the body charged with tracking the performance of the UK economy. The ONS has just revised the UK’s economic growth in the April-June quarter (Q2) to reflect a slightly stronger performance than previously thought. The Q2 figure has been revised upwards from a growth figure of 0.8% to 0.9%. The revised figure means that the year-on-year growth for Q2 came in at 3.2%, comparing very favourably with the performance of the UK’s major trading partner, the Eurozone.
Retroactive treatment of the data suggests that the UK economy finally surpassed its pre-crisis peak earlier than previously thought, passing the milestone in Q3 2013 rather than Q2 2014. ONS estimate that the UK economy was 2.7% higher than the pre-crisis peak in Q2 2014 – in other words, the crisis has cost nearly six years of economic growth in real terms.
On the other hand, according to ONS, the UK Q1 figure flattered growth by 0.1% and the figure has been revised down from 0.8% to 0.7%.
The upwards revision of the Q2 figure is based on a stronger performance from the construction sector (up from flat to 0.7%) and the service industry which was up by 1.1% in Q2.
UK growth for the full year is anticipated to come in at 3.5% according to the Bank of England, against a backdrop of strengthening business confidence – ONS data shows an 11% increase in business investment in Q2 2014 compared to the Q2 2013 figure.