The UK Saw A Decrease In GDP In Q4 2012

Decrease in GDP in Q4 2012 Contraction du PIB au T4 2012 Output dropped by 0.3% q/q in Q4 2012 after rising by 0.9% the previous quarter. Year-on-year, GDP remained flat. Activity was penalized after the one-off Olympics. The weakness of external and domestic demand probably still have a negative effect on economy at the beginning of the year, which may be in triple-dip recession.

According to the ONS preliminary estimate, output dropped by 0.3% q/q in Q4 2012 after rising by 0.9% the previous quarter, when the one-off Olympics underpinned activity. Year-on-year, GDP remained flat. GDP also remained unchanged between 2012 and 2011 (after +0.9% in 2011). Demand counterpart breakdown will not be available until the end of next month, when GDP second estimate is published.

The main contributor the decrease was the production sector (-1.8% q/q, after 0.7% q/q). Maintenance shutdowns of oil and gas platforms particularly affected activity mining and quarrying (10.2% q/q).

Moreover manufacturing production fell by 1.5% q/q (after +0.7% q/q). However total services output remained flat after having bounced by 1.2% q/q the previous quarter. In particular, sports activities, amusement and recreation and distribution, hotels and restaurants activities were penalized after the one-off Olympics. They respectively contributed 0.2 points and 0.1 point to the fall in GDP quarterly growth.

Both transport storage and communication (+0.7% q/q, after +0.2% q/q in Q3 2012) and business services and finance sectors underpinned activity (+0.4% q/q). The first benefited from the consumption of films or DVDs after the Games and the second from employment agencies activity. Construction output slightly increased (+0.3% q/q, after -2.5% q/q) despite bad weather conditions at the end of 2012.

The eurozone crisis and the global economic conditions still weigh on the economy. Moreover pressure on household disposable income probably weighed on consumption. The weakness of external and domestic demand should probably have still a negative on economy at the beginning of the year, which may be in triple-dip recession.

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