Gross Domestic Product (GDP) represents the total monetary value of all finished goods and services produced within a country’s borders during a specific time frame. It serves as a comprehensive indicator of a country’s economic well-being. In the United Kingdom, the GDP measures the value of produced goods and services within the country which allows for an estimation of the country’s economic size and growth.
In this article, we will examine the United Kingdom’s GDP as of June 2023, with a specific focus on data related to industry.
Based on the ONS monthly GDP report for June 2023, the following are noteworthy:
- The real gross domestic product (GDP) is estimated to have expanded by 0.5% in that month. This growth follows a decline of 0.1% in May 2023 and a 0.2% increase in April 2023, both of which remain unchanged from the previous report.
- A variety of businesses attributed the rise in output in June 2023, as compared to May 2023, to the additional bank holiday in May.
- In a broader context, the GDP demonstrated a growth of 0.2% over the three-month period leading up to June 2023.
- The production output witnessed a growth of 1.8% in June 2023, following a 0.6% decrease in May 2023, which remains consistent with the previous publication. This sector played a pivotal role in driving the monthly GDP growth in June.
- The construction sector saw a 1.6% expansion in June 2023, rebounding from a 0.3% decline in May 2023. However, this decline was revised downward from the earlier estimate of 0.2%.
- In terms of services output, there was a 0.2% increase in June 2023, after no growth was observed in May 2023, and this aligns with the previous report. Specifically, consumer-facing services recorded a growth of 0.5% in June 2023, following an unrevised decrease of 0.2% in May 2023.
GDP By Industry
There are three key sectors that contributed to the 0.5% growth of GDP in the UK industry as of June 2023. They are Services, Production, and Construction.
Service Sector
Based on data from ONS, in June 2023, the service sector showed a 0.2% growth in output, rebounding from no growth in May. Over the three months leading up to June, the sector grew by 0.1% compared to the previous three months. Notably, the information and communication subsector led the growth with a 1.3% increase, driven by strong performance in publishing activities. Wholesale and retail trade, along with vehicle repair, contributed 0.8% growth, fueled by a significant rise in new car registrations. Accommodation and food services rebounded with a 1.5% growth, attributed to favorable weather and increased live events. However, human health and social work activities experienced a 0.8% decline, partially due to industrial action by junior doctors.
Figure 1: The service sector experienced a growth of 0.2% in June 2023 with Information and Communication as the largest contributor to the growth.
Production Sector
In June 2023, production output increased by 1.8%, bouncing back from a 0.6% decline in May. This boost contributed to GDP growth, the strongest since August 2020. Manufacturing drove this growth with a 2.4% increase, the largest since November 2020. Over the three months leading to June, production grew by 0.7%, mainly due to a 1.6% increase in manufacturing. Notably, 11 out of 13 manufacturing subsectors grew, including pharmaceuticals (7.9%) and transport equipment (4.8%). Motor vehicle production surged by 8.5% in June compared to the prior year. However, coke and petroleum products declined by 4.3%. Mining output dropped by 2.1%, attributed to petroleum and gas extraction. Electricity and gas supply saw no growth, while water supply and sewerage grew by 2.0%.
Figure 2: Production Sector grew by 1.8% in June, becoming the largest contributor to UK GDP growth in June 2023
Construction Sector
In June 2023, the construction sector experienced a 1.6% increase in monthly output, with both new work (2.0% growth) and repair and maintenance (1.1% growth) contributing to this uptick. Out of nine sectors, six observed growth, with infrastructure new work and non-housing repair and maintenance driving the increase at 4.7% and 3.4%, respectively.
This growth comes after three consecutive months of negative construction output. Additionally, over the three months leading to June 2023, construction output rose by 0.3%, primarily driven by June’s performance. Among the nine sectors, five saw growth, mainly from infrastructure new work (6.1% increase) and non-housing repair and maintenance (2.7% increase).
Figure 3: The Construction Sector experienced an increase of 1.6% in June 2023
Conclusively, taking a clue from the above report, the monthly real gross domestic product (GDP) is estimated to have increased by 0.5%, as at June 2023, rebounding from a 0.1% decline in May. This puts the monthly GDP at a level 0.8% higher than its pre-COVID-19 state (February 2020). The additional bank holiday in May is attributed to the improved output in June.
On a wider scale, the GDP displayed growth of 0.2% during the three months leading up to June 2023, compared to the period from January to March 2023. This trend aligns with the findings of the ONS’ GDP first quarterly estimate bulletin. Within this context, the services sector experienced a 0.1% growth in the three months to June, while the production and construction sectors saw growth rates of 0.7% and 0.3% respectively.
Breaking down sector-wise output growth in June 2023, the services sector witnessed a 0.2% expansion, while production and construction outputs saw substantial growth rates of 1.8% and 1.6% respectively. Notably, this marks the first month since October 2022 when all three sectors contributed positively to the month’s GDP.
Figure 4: UK GDP experienced 0.5% growth in June 2023 and 0.2% growth in the three months to June 2023
