GDP first quarterly estimate, UK: October to December 2023 - Office for National Statistics

3. Output

In Quarter 4 (Oct to Dec) 2023, output is estimated to have fallen by 0.3%, following an unrevised fall of 0.1% in Quarter 3 (July to Sept) 2023. In Quarter 4 2023 services, production, and construction contributed negatively to growth. Across Quarter 4, 12 out of 20 of the sub-sectors experienced a contraction, up from 10 sub-sectors in the previous quarter.

The services sector is estimated to have fallen by 0.2% in the fourth quarter of 2023, following a fall of 0.2% in Quarter 3 2023. The production sector is estimated to have fallen by 1.0%, following growth of 0.1% in the previous quarter. Construction output fell 1.3% in Quarter 4 2023, following growth of 0.1% in Quarter 3 2023.

Across 2023 as a whole, both services and construction grew by 0.3% and 2.0%, respectively, while there was a 0.3% fall in production output.

Services

We now estimate that services output decreased for three consecutive quarters, with a fall of 0.2% in the latest quarter. Figure 4 shows that there were falls in 8 out of 14 sub-sectors in Quarter 4 2023.

The largest contributor to the fall in total services was a 0.6% fall in the wholesale and retail trade; repair of motor vehicles and motorcycles sub-sector. This was largely because of a 1.3% fall in wholesale trade, except of motor vehicles and motorcycles and a 0.9% fall in retail trade, except of motor vehicles and motorcycles. Our recent Retail sales: December 2023 bulletin shows that December 2023 was the largest monthly decrease in retail sales since January 2021, when coronavirus (COVID-19) restrictions were in place.

Education also contributed negatively to the fall in services in Quarter 4 2023, with a decline of 0.8% partially attributed to a drop in school attendance. We also estimate that other service activities decreased by 2.4%. This is the third consecutive quarterly fall and the largest quarterly decline in this sub-sector since Quarter 1 (Jan to Mar) 2021. The fall in Quarter 4 2023 was mainly driven by a 3.4% fall in other personal services, where we have seen particular weakness in hairdressing and other beauty treatment over the Christmas period compared with usual.

The largest positive contribution to services growth was from administrative and support service activities, which increased by 0.6%, driven by growth of 6.9% in rental and leasing activities.

Figure 4: There were falls in 8 out of 14 services sub-sectors in Quarter 4 (Oct to Dec) 2023

UK, contributions to services growth, Quarter 3 (July to Sept) and Quarter 4 (Oct to Dec) 2023

Source: GDP first quarterly estimate from the Office for National Statistics

Notes:

1. Components contribution may not sum to total because of rounding.

Download this chart Figure 4: There were falls in 8 out of 14 services sub-sectors in Quarter 4 (Oct to Dec) 2023

Image .csv .xls

Overall, consumer-facing services fell by 0.7% in Quarter 4 2023 and this was largely driven by falls in food and beverage service activities and retail trade, except of motor vehicles and motorcycles. This offset an increase in accommodation services, particularly hotels, which performed strongly in Quarter 4 2023. This follows an unrevised fall of 1.0% in consumer-facing services in Quarter 3 2023, which was the largest decline in consumer-facing services since Quarter 1 (Jan to Mar) 2021.

Annual service sector growth for 2023 is estimated at 0.3% with 7 of the 14 service subsectors showing growth across the year. The largest positive contributor was administrative and support service activities, which increased by 5.8% in 2023. However, this was partially offset by a 1.8% fall in wholesale and retail trade; repair of motor vehicles and motorcycles.

Across 2023, the services sector sees revisions for the following reasons, with only Quarter 1 2023 seeing growth revised from our previous publication, including:

Production

The production sector is estimated to have decreased by 1.0% in the latest quarter after growth of 0.1% in Quarter 3 2023 (unrevised from our previous publication). This reflects a 1.4% fall in October, despite growth in November (0.5%) and December (0.6%). Further information is provided in our GDP monthly estimate bulletins.

Within production, manufacturing was the largest contributor to the 1.0% fall, with 10 out of the 13 manufacturing sub-sectors performing negatively over this period.

Manufacturing output is estimated to have fallen by 0.9% in Quarter 4 2023 after four consecutive quarters of growth. The largest negative contributors are a 7.0% decline in the manufacture of machinery and equipment n.e.c and a 4.7% fall in the manufacture of rubber and plastics products, and other non-metallic mineral products. However, there were some positive movements in manufacturing, as shown in Figure 5. In particular, the manufacture of transport equipment grew by 1.8%. Anecdotal evidence from the Society of Motor Manufacturers and Traders (SMMT) reported that car manufacturing for December 2023 was up 20.7% compared with the same month last year.

Figure 5: There were falls in 10 out of 13 manufacturing sub-sectors in Quarter 4 (Oct to Dec) 2023

UK, contributions to manufacturing growth, Quarter 3 (July to Sept) and Quarter 4 (Oct to Dec) 2023

Source: GDP first quarterly estimate from the Office for National Statistics

Notes:

1. Components contribution may not sum to total because of rounding.

Download this chart Figure 5: There were falls in 10 out of 13 manufacturing sub-sectors in Quarter 4 (Oct to Dec) 2023

Image .csv .xls

Elsewhere in the production sector, there was a 3.0% fall in mining and quarrying, which fell for the sixth consecutive quarter and a 2.6% fall in electricity, gas, steam and air conditioning supply. However, water supply; sewerage, waste management and remediation activities increased 0.5% on the quarter.

Annual production output is estimated to have fallen 0.3% in the year 2023. This was caused mostly by a 14.3% fall in mining and quarrying as well as falls in water supply; sewerage, waste management and remediation activities; and electricity, gas, steam and air conditioning supply, despite manufacturing showing 1.2% growth in 2023.

Across 2023, the production sector sees revisions to growth, mainly driven by manufacturing. Overall, the revisions to production reflect:

• late and updated monthly business survey data, particularly for the manufacturing sub-sector

• updated seasonal adjustment, accounting for a full year’s worth of data for 2023

Construction

Construction output is shown to have fallen by 1.3% in Quarter 4 2023 following growth of 0.1% (previously estimated to be 0.4%).

The fall reflects a fall in new work of 5.0%, though there was growth of 4.0% in repair and maintenance. Within new work, private housing sees its fifth consecutive quarterly decline, falling 8.0% in the latest quarter.

Revisions to construction from Quarter 1 2023 are attributed to new survey data and improvements to repair and maintenance deflators.

In the year 2023, construction is estimated to have grown 2.0%. Further detail on construction output can be found in our Construction output in Great Britain releases.

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