Economic review: November 2016

Assessing the post-referendum UK Economy

ONS is launching a newly developed dashboard of economic indicatorswhich have particular relevance to monitoring the UK economy going forwards. This contains a range of economic statistics, commentary and trends to consider that are relevant to assessing the post-referendum UK economy. 

GDP quarter 3

The economy as a whole has grown an estimated 0.5% in Quarter 3 (July to September) 2016. Although this is a slightly slower growth rate than the previous quarter, GDP has continued the trend of positive growth seen since 2015.

Continued growth in services this quarter means that Gross Domestic Product (GDP) is now 8.2% above its pre-downturn level. The recovery of output in the other main industrial groupings has been relatively slow, with all of these sharing negative growth in the quarter.

Labour productivity analysis before and after the economic downturn

Manufacturing, financial and insurance activities, and information and communication industries make the biggest contribution to the cumulative gap in productivity when compared to the UK’s pre-downturn trend. 

Annual Survey of Hours and Earnings (ASHE) 2016

In 2016, there was a continuation of the trend for a growing concentration of pay at the bottom of the UK’s earnings distribution, clustered around the new National Living Wage (NLW) of £7.20 per hour, which is required to be paid for those employees who are 25 years and older. 

Around 10% of full-time 16- to 24-year-olds and 15% of part-time 16- to 24-year-olds appear to be getting paid at around the £7.20 NLW in April 2016, although they are not legally required to be paid this rate.

There is less evidence of a concentration at earnings around the new National Living Wage in the public sector compared to the private sector as workers are generally paid above this level in the public sector. 

This edition of the Economic Review launches the newly developed dashboard of economic indicators which have particular relevance to monitoring the UK economy going forwards.

An updated table of forthcoming ONS economic statistics releases and the data periods they cover is at Annex A.
This edition of the Economic Review also provides further commentary and analysis of:

• the preliminary estimate of gross domestic product for quarter 3 2016
• an explainer for Gross Capital Formation (GCF)
• labour productivity analysis for the period before and after the 2008 economic downturn
• an analysis of 2016 Annual Survey Hours and Earnings (ASHE) provisional data

ONS produces a wide range of economic statistics, which now contain data which fall after the UK vote on EU membership that was held on 23 June.

The commentary and trends to consider information is not a forecast or prediction of whether the statistics will show any discernible effects of the EU referendum result but are to aid understanding of how these data are potentially impacted by the international and domestic economic environment as we move forward in time.

Economic overview: November 2016

The economy as a whole has grown by an estimated 0.5% in Quarter 3 (July to September) 2016. Although this is a slightly slower growth rate than the previous quarter, GDP has continued the trend of positive growth seen since 2015.

ONS Chief Economist Nick Vaughan said: 

“The ONS data so far have shown an economy largely undisrupted by the UK’s decision to leave the EU. Growth has continued at roughly the same rate seen for the past few years with our large and relatively robust services sector still significantly outperforming the rest of the economy. 

“On the downside, the costs of raw materials have clearly started to rise due to the weakened pound but there is little sign yet of this feeding through to consumer prices. 

“Of course this is only the first chapter of a long story. As well as continuing to survey many thousands of households and businesses, ONS is developing innovative data sources that will help to provide an even more timely and comprehensive picture of the post-referendum economy.”