When the revised estimate for Q4’s GDP growth was announced to be 0.3% (up from 0.1%), I was a bit surprised, because I didn’t think Q4 seemed to be all that wonderful.
However, Edmundo has now analysed the underlying figures and it turns out that GDP was actually revised down, not up.
His graph is not very clear, though, so here’s my attempt at explaining what happened.
The blue line shows the old estimates from January: Q3 GDP was estimated at some £313bn, and Q4 GDP at £315.845m, thus growing by 0.1%.
The red line shows the revised estimates from this month: Q3 turned out to be much worse than initially estimated, at less than £307bn, whereas the Q4 estimate was almost right, getting adjusted down to £315.712m, and the growth from Q3 to Q4 was therefore 0.3%.
In other words, GDP was slightly lower in Q4 than initially estimated, but the growth is much bigger because Q3 was much worse.
There is therefore nothing whatsoever to celebrate about the revised figures, and the ONS must have been deliberately lying to the public when they sent out a press release called “Services growth in December pushes up GDP estimate”, given that the GDP estimate was actually down.