Below are the ten key economic indicators for the United Kingdom, the world’s sixth-largest economy. Most of these indicators are published by the Office for National Statistics (ONS). The ONS is an independent producer of official statistics and is regarded as the national statistical institute.
1. GDP Growth
Every quarter, the ONS issues three releases—a preliminary first estimate, a revised second estimate, and a third and final number—of the quarterly change in the gross domestic product (GDP). The reports show GDP change, which is the main indicator of economic growth, as well as the contribution to the growth of the main sectors of the economy: agriculture, construction, production, manufacturing, and services.
2. Labor Market Statistics
Key data on the employment market in the U.K., such as a net change in employment, the unemployment rate, economic inactivity, claimant count, average weekly earnings, labor productivity, and vacancies, are contained in the Labor Market Overview report released monthly by the ONS. These estimates are derived from the Labor Force Survey (LFS), which is representative of the U.K. population over a three-month period rather than a single month.
The LFS is also used to generate single-month indicators for the labor market, but these are considered to be supplementary data, whose use is restricted to an improved understanding of the movements in the headline three-month average rates.
3. CPI Inflation Indicator
The ONS releases monthly reports on the Consumer Price Inflation Index (CPI) and Price Index (PPI), which measure inflation at the consumer and producer levels, respectively. The CPI is constructed by comparing the changes over time in the cost of a fixed basket of goods and services purchased by consumers.
The monthly report shows the change in CPI monthly and over the past 12 months. The CPI is the inflation measure used in the British government's target for inflation and is also used for indexing pensions as well as wages and benefits.
4. Balance of Payments
This quarterly report from the Office for National Statistics summarizes the status of trade between the U.K. and the rest of the world. The report includes detailed information on U.K. trade in goods and services, as well as income, current and capital transfers, and transactions in U.K. external assets and liabilities.
Additional information, such as the current account as a percentage of GDP and the current account with European Union and non-Union countries, is also shown. Balance of payments data has a significant bearing on the value of the national currency. The U.K. has run a combined current and capital account deficit every year since 1983, meaning that it is a net borrower from the rest of the world.
5. Household Expenditure
Household spending is shown in ONS's quarterly Consumer Trends report, in both current prices and volume terms, on an inflation-adjusted basis. Household expenditure measures the contribution of households to economic growth. That accounts for some 60% of the expenditure measure of the U.K.'s GDP.
6. Retail Sales
The ONS releases a monthly report on retail sales activity across the U.K., showing changes in a given month compared to the previous month and to a year ago. The figures contained in the report are based on a monthly survey of 5,000 retailers, including all large retailers employing at least 100 people.
The monthly report also shows the four retail sectors’ contribution to sales growth, as well as their share of each pound spent in the retail industry. The four retail sectors are predominantly food stores (supermarkets, specialist food stores, sales of alcoholic drinks, and tobacco), primarily non-food stores (department stores, textiles, clothing and footwear, household goods), non-store retailing (mail order, catalogs), and stores selling automotive fuel (petrol stations).
7. Index of Production
The ONS provides monthly estimates of the Index of Production for the U.K.'s production industries, which account for over 15% of GDP. The Index of Production is one of the earliest indicators of growth, measuring output in manufacturing, mining and quarrying, energy supply, water supply, and waste management industries.
Index values are referenced to 2015, which means that an index value of 115 would indicate the output is 15% higher than the average for 2015. Index estimates are based on a monthly business survey of about 6,000 businesses across the U.K.
8. The GfK Consumer Confidence
Consumer confidence in the U.K. is obtained from the findings of the GfK Consumer Climate Europe survey. The survey is completed by research firm GfK (Growth from Knowledge).
In addition to an overall Consumer Confidence Index, the survey findings are used to calculate four key indicators: economic expectations, income expectations, propensity to buy, and consumer climate.
If an indicator has a reading above zero, it indicates a positive view. A negative value conveys a pessimistic view. The survey is conducted for all members of the European Union as well as the U.K.
For example, consumer confidence overall was seen as improving, although still negative, in March 2021, as the U.K. continued its rollout of COVID-19 vaccinations and the economy appeared poised to begin recovering.
9. Halifax House Price Index
This is the U.K.'s longest-running monthly house price series, with data for the entire country from January 1983 to present. The index is named after a subsidiary of the U.K.'s largest mortgage lender, Lloyds Banking Group plc. These data are used to calculate a standardized house price, with the annualized change computed as an average for the latest three months (to smooth out short-term fluctuations) compared with the year-earlier period. Changes in house prices are provided on a national basis.
10. Public Sector Expenditure and Debt
Data on public sector expenditure, receipts, investments, borrowing, and debt are reported in the monthly Public Sector Finances statistical bulletin from the ONS. These figures enable the evaluation of the U.K. government's fiscal position.
The Bottom Line
The 10 economic indicators described above collectively provide a comprehensive picture of the state of the U.K. economy.