UK GDP - Q4 2023 Preliminary Estimate

GDP

Quarterly GDP is estimated to have fallen by 0.3% in Q4 2023 (October to December), following an unrevised fall of 0.1% in the previous quarter.
Although the economy has contracted for two consecutive quarters, GDP is estimated to have increased by 0.1% across 2023 compared with 2022.
In Q4 2023 there were falls in all main sectors, with declines of 0.2% in services, 1.0% in production and 1.3% in construction output.

UK GDP declined by 0.3% in Q4 2023

By Sector:

Services:

Services output decreased by 0.2% in Q4 2023, declining for the third consecutive quarter. There were falls in 8 of the 14 sub-sectors.
The main driver of the decline in Q4 was a 0.6% fall in the wholesale and retail trade; repair of motor vehicles and motorcycles sub-sector. Indeed, December 2023 saw the largest monthly decrease in retail sales since January 2021, according to the ONS.
Education also contributed to the decline in the sector, recording a fall of 0.8% due to a decrease in school attendance. Other personal services fell 3.4% in the period, driven by lower than usual consumption of hairdressing services and other beauty treatments in the Christmas period.
The largest positive contributor was administrative and support service activities, which grew by 0.6% in the period, driven by an increase in rental and leasing activities.
Overall, consumer-facing services fell by 0.7% in Q4 2023, primarily driven by falls in good and beverage service activities, and retail trade, except of motor vehicles and motorcycles.

Production

Production output decreased 1.0% in Q4 2023, following 0.1% growth in the previous quarter. On a monthly basis, October saw a 1.4% fall while November (0.5%) and December (0.6%) both saw weak increases.
The fall in production output in the latest quarter was mainly driven by a decrease of 0.9% in manufacturing, which saw falls in 10 out of the 13 sub-sectors in the period. The largest negative contributions were from the manufacture of machinery and equipment n.e.c (-7.0%) and the manufacture of rubber and plastic products, and other non-metallic mineral products (-4.7%).
On the other hand, the manufacture of transport equipment grew by 1.8% in the period, while anecdotal evidence from the Society of Motor Manufacturers and Traders (SMMT) suggests car manufacturing increased 20.7% YoY in December 2023.

Construction

Construction output fell by 1.3% in Q4 2023, following growth of revised growth 0.1%.
This was driven by a fall in new work of 0.5%, although growth of 4.0% in repair and maintenance was recorded.
Construction is estimated to have grown 2.0% in 2023.

UK GDP declined across all main sectors

Source: ONS

Household consumption

Real household expenditure fell by 0.1% in Q4 2023, following a downwardly revised fall of 0.9% in Q3.
Household consumption is estimated to have increased by 0.3% in 2023, following a 4.8% increase in 2022.