The monthly GDP estimates from the National Institute of Economic and Social Research
(NIESR) are highly respected measures of the key broad-based indicator of economic activity.
They provide a means of consolidating disparate data into GDP, a single and easily
understood measure.
Writing in the February 2005 issue of the Economic Journal, NIESR Director Martin Weale
and his colleagues explain how the monthly indicator is produced. The estimates rely on
movements in the monthly series of data for industrial production, manufacturing output and
retail sales. Once two months’ data for any calendar quarter are available, it is possible to use
standard statistical techniques to forecast the data for the third month.
Using such forecasts, the National Institute produces an estimate for the growth in GDP in
calendar quarters. The estimates are intended to track the first estimate of GDP growth
published by the Office for National Statistics (ONS) and anticipate it by about three weeks.
The National Institute has published the indicator since 1998. There have been only three
occasions since then when the error has been as big as 0.3% of GDP in absolute size. Two of
these have been associated with unusual events, the first with the fuel protests in September
2000 and the second with the Golden Jubilee in June 2002. The data were also badly
disrupted during pre-release testing by the Princess of Wales’ funeral in September 1997.
Two of these three large errors arose because the data in the third month of the quarter were
disrupted and the standard forecasting method performed badly. Of the other twenty-five
quarters for which NIESR has published early estimates of GDP growth, nine have been exact,
eleven have had errors of 0.1 percentage points and four have had errors of 0.2 percentage
points.
Taking all the estimates since the start of 1998, the standard error has been 0.14% and the
correlation between NIESR’s estimate and the first official estimate is 0.9.
The NIESR data (http://www.niesr.ac.uk/niesr/gdp.htm) are made available by press release at
1pm on the same day in each month as the ONS releases its estimates of industrial
production. Their production is funded by subscribers who receive the estimates one and a half
hours before the press release.
ENDS
Notes for editors: ‘An Indicator of Monthly GDP and an Early Estimate of Quarterly GDP’ by
James Mitchell, Richard Smith, Martin Weale, Stephen Wright and Eduardo Salazar is
published in the February 2005 issue of the Economic Journal.
For further information: contact Martin Weale on 020-7654-1945 (email:
M.Weale@niesr.ac.uk); or RES Media Consultant Romesh Vaitilingam on 0117-983-9770 or
07768-661095 (email: romesh@compuserve.com).