U.K. GDP Contracts 0.3% quarter-on-quarter in Q4

The U.K. economy contracted 0.3 percent quarter-on-quarter in the fourth quarter, unrevised from the previous estimate, the latest figures from the Office for National Statistics showed.

A number of unusual factors may have impacted on growth in 2012. In the second quarter, the poor weather and the loss of a working day due to the Diamond Jubilee may have reduced output. In contrast, the London 2012 Olympic and Paralympic Games in the third quarter supported output, and this may have been partly responsible for the fall back in output of 0.3 percent during the fourth quarter.

Output of the agriculture, forestry and fishing industries fell by 0.5 percent in the fourth quarter of 2012 following an increase of 4.8 percent in the third quarter of 2012. Output of the production industries fell by 2.1 percent in the fourth quarter of 2012. In the third quarter of 2012 output of the production industries rose by 0.5 percent. In the year 2012, production industries output fell by 2.4 percent. Mining and quarrying output decreased by 10.7 percent in the fourth quarter of 2012 following an increase of 2.0 percent in the previous quarter.
The fall in output contrasts with a resilient labour market. The employment rate in the fourth quarter of 2012 was 71.5 percent, 0.3 percentage points higher than the previous quarter and 1.1 percentage points higher than the same quarter a year ago. The rise in employment was accompanied by a rise of 0.2 percent in total hours. In contrast to this, the average weekly hours worked fell by 0.3 percent, as the number of people employed increased at a faster rate than the total number of hours worked. 
Real household disposable income increased by 2.1 percent between 2011 and 2012. This is the highest growth since 2003 when it rose by 2.7 percent. The largest contributions to the increases in the households’ saving ratio and real household disposable income were an estimated £20.1 billion increase in wages and salaries in 2012 compared with 2011.

ONS | Nuno Fontes | nuno@tradingeconomics.com
3/27/2013 9:58:48 AM