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December 22, 2020UK GDP Q3 2020 (SECOND ESTIMATE) The Office for National Statistics (ONS)' second estimate of UK Gross Domestic Product (seasonally adjusted annualized rate) for Q3 2020 reports an increase of 81.1% following the 56.4% decline in Q2. These are the largest quarterly changes on record since 1955 when ONS quarterly records began, which signifies the impact the COVID-19 pandemic is having on the UK economy. UK GDP is estimated to have increased by 16.0% in Q3 2020, revised up from the first estimate of 15.5% growth. UK GDP remains 8.6% below where it was at the end of 2019.
Services output growth was revised upwards to 14.7% for Q3 2020. The increase in services was largely driven by growth in wholesale, retail and motor vehicle repair sectors.
Production output increased 14.7% compared to Q2 2020. Manufacturing grew 19.5% in the quarter, with increases in nearly all subsectors. Manufacturing output remains 7.1% below where it was in Q4 2019. Mining and quarrying output fell 0.4% in Q3.
Construction output increased by a revised 41.2% in Q3 2020. The level of construction output in the third quarter is estimated to be 7.0% below the level in Q4 2019. Growth in construction reflects increases in both new projects and repair and maintenance, following the easing of lockdown restrictions.
With reduced public health restrictions, there has been improvements in private consumption, government consumption and to a lesser extent business investment in Q3 2020. Household consumption increased 19.5% in Q3 2020, with the increase driven by higher spending on restaurants and hotels, and transport. Household consumption remains 9.8% below pre-lockdown levels. The households’ saving ratio decreased from 27.4% in Q3 to 16.9% in Q3.
A seasonally adjusted annualized rate shows what the percent change would be if the quarterly rate continued for four quarters. It is computed by compounding the quarterly rate for four quarters. Reporting annualized rates facilitates comparability between annual and quarterly growth but can exaggerate change when series are volatile. The COVID-19 shocks do not indicate growth of UK GDP by 81.1% in Q3. It would take four quarters of compounded contraction at the same pace as reported in Q2 to increase UK GDP by 81.1%. Real GDP in Q3 increased 16.0% compared to Q2 2020.
Office for National Statistics
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