Home > Data, UK GDP > UK 2013 Nominal GDP

UK 2013 Nominal GDP

The ONS published the first nominal GDP figure for 2013 Q4 this week, and so we have calendar 2013 too.  Quarterly nominal growth rates continue to be erratic with revisions appearing to move nominal growth around between quarters; so I think we should not to put too much emphasis on the quarterly growth rates.  However, the good news is that NGDP growth has picked up to 4.5% over the year to Q4, from a sub-2% low in the second half of 2012.

Here are the annual growth rates for the last six years, nominal, real and deflator growth, with nominal GVA at basic prices (and deflator) included to show the distortions from indirect tax changes:

Year Nominal
GDP
GDP
Deflator
Real
GDP
Nominal
GVA
GVA
Deflator
2008 2.4 3.3 -0.8 2.9 3.5
2009 -3.1 2.2 -5.2 -2.4 3.3
2010 4.8 3.1 1.7 3.7 2.0
2011 3.5 2.3 1.1 2.5 1.3
2012 2.0 1.8 0.3 2.0 1.6
2013 3.4 1.6 1.8 3.2 1.5

This graph shows year-on-year quarterly growth:

UK GVA Growth.  Source: ONS ABML ,  CGBV ,  ABMM

UK GVA Growth. Source: ONS ABML , CGBV , ABMM

Contrary indicators do remain for the “strong nominal growth revival” thesis: growth of nominal imports is fairly slow (2.4% ex oil over 12 months to Q4), as is growth of income tax receipts (OBR says 3.2% ex special factors), and the labour market slowed a little in December, though the LFS monthly sampling effects may distort this.

On that last point, Ben Chu tweeted a good chart showing how unemployment has changed for each of the three cohorts surveyed; the headline unemployment rate being a rolling 3m average.  The fall in the headline rate is driven by two of the cohorts seeing a 0.6% and 0.7% fall in unemployment over just three months to October and November respectively.  Which seems almost too good to be true.  The collapse in the claimant count is perhaps the most convincing reason to believe that the labour market really is doing so well.

Looking forward, the ECFIN ESI confidence indicator rose in February to its highest level since 1989.  Should we call it the Carney boom… or the Osborne boom?  You decide.  But where is that 4%+ output growth?

ECIN Economic Sentiment Indicator vs Real GDP Growth.  ECFIN Economic Sentiment Indicator ,  ABMI

ECIN Economic Sentiment Indicator vs Real GDP Growth. ECFIN ESI, ABMI

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Categories: Data, UK GDP
  1. james in london
    March 19, 2014 at 08:29

    I can’t see anything good in the changes announced for the BoE, except maybe it entrenches the power of Carney. The new Deputy Governor of the BoE for Monetary Policy is a bit of an unknown, but I fear he is a “bond market” man, who will be anti-“inflation” above all else, including growth.

    The FT quote from the Shafik, the other new Deputy Governor is hardly encouraging either, seeing the “poor” as needing most protection from the tax that is inflation.She seems to have been brought in precisely because she is good in a crisis. A crisis that the BoE seems to hint will arise when they end QE. Well, don’t then!

    • March 19, 2014 at 09:31

      Spencer Dale is to be removed from his post as Chief Economist and from the MPC, James! That cannot be a bad thing. Broadbent seems like a good replacement, his papers and speeches are certainly the most interesting and challenging of the MPC’s output, even if he is hawkish and rather a “creditist”. I agree about QE naturally! I skimmed the Shafik speech and it reads like orthodox CB speech, nothing controversial really.

      • james in london
        March 19, 2014 at 10:40

        Am not sure what Dales’ new boss, Sir John Cunliffe does, exactly. Spy on behalf of the Treasury, I’d always assumed. So, fairly limited in the damage that can be actively done by this part of the new structure.

        I thought Philip Stephens was a bit soft on the BoE here:
        http://blogs.ft.com/money-supply/2014/03/18/the-bank-that-got-away-with-it/

        Maybe Andy Haldane’s reptuation for “thinking outside the box” can lead him to NGDP targeting … in the interests of promoting (nominal) financial stability. And he could then influence Ben Broadbent, and then … . I am probably just dreaming.

  2. March 19, 2014 at 11:15

    I was browsing Haldane’s papers and found a nice one with Bennett McCallum, nominal GDP (level or growth) targeting using the monetary base as the instrument of policy.

    http://www.bankofengland.co.uk/archive/Documents/historicpubs/workingpapers/1996/wp45.pdf

  3. james in london
    March 19, 2014 at 12:18

    Surely Haldane was still at school 18 years ago? I guess he just looks young.

    Didn’t Ben Bernanke write similar things back then, too. NGDP targeting seemed more orthodox at one point.

    Still it does give one hope. Especially as he is already an “insider”.

  4. jamesxinxlondon
    March 22, 2014 at 22:06

    Just looking for some stuff on the 2014 budget and found this classic after the 2013 budget:
    http://www.huffingtonpost.co.uk/2013/03/18/former-mpc-economists-ada_n_2900881.html

    • March 24, 2014 at 08:48

      I was very pessimistic after the 2013 Budget too :( The perils of making predictions!

      25% unemployment, Blanchflower takes his hyperbole to a new level.

  5. james in london
    April 29, 2014 at 12:22

    Looks like you now get Nominal GVA with the first estimate of GDP …
    http://www.ons.gov.uk/ons/dcp171778_361287.pdf
    Page 22 and note 2 and follow the link …

    1q 14 YoY looks like 4.0% and a rising trend
    1q14 QoQ a reasonably healthy 4.3%, though lower than the storming 5.1% seen in 4q13

    Is that your interpretation?

    • April 29, 2014 at 13:32

      James, wow, thanks! I’m unreasonably excited about seeing that data in the first estimate. The first sheet says that data hasn’t been balanced with the income and expenditure methods, and it makes the 2013 recovery look a lot weaker than the current “official” series for NGDP, where 2013 Q3/Q4 growth rates are 6%+ q/q

      That said, I match your interpretation. It looks like we now have a demand-side recovery with 4-5%+ y/y NGDP growth.

      The ESI figure this morning was off-the-charts again, 119.5. Lawson boom, without the RGDP figures to match. http://ec.europa.eu/economy_finance/db_indicators/surveys/documents/2014/esi_2014_04_en.pdf

      • April 29, 2014 at 16:17

        Glad to be of service. Was just trawling to see if theONS were living up to their promise from last year of providing more timely NGDP figures.

        Looking forward to your next blog ;-)

        A follow up question (or two): Can you have strong RGDP with such weak price growth, and weak price expectations? (especially in the EZ) Are we getting the “wrong sort” of growth? (ie that which makes us miserable as it means more work for less pay)

  6. April 29, 2014 at 17:50

    Off topic, sligthly. I was intrigued to look at just how the GVA method comes up with its figure for the 80%-of UK economy Services Sector, and particularly for the famously high productivity “business and finance” sector.

    Looks like GIGO to me.

    Output fell because markets fell, since output is (partially) measured by asset prices, eg value of assets under management. You might as well use the FTSE to measure NGDP.
    For other services like accounting and computing it is merely a turnover measure, ie gross sales. Nothing to do with “inputs and outputs” as it says on the packet.

    And then all “deflated” by not very appropriate price series from quite different surveys.

    http://www.ons.gov.uk/ons/guide-method/user-guidance/index-of-services/source-data/index.html
    [and then downloand the “Business and finance” .pdf or the “Full list of GDP(O) source data” on the right hand side]

    • April 29, 2014 at 19:56

      I had a discussion about this with somebody before… was that you, I don’t remember.

      The financial services output and deflator measures do look crazy. AUM deflated by the FTSE? And all those series where they are deflating by wages *adjusted for productivity*? Or just throwing in the GDP(E) deflator. It looks a lot like “we made stuff up and hope nobody looks too hard”. But then how should you measure the output of a fund manager? It is not a simple idea to me.

      Interesting topic.

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