Economic data revision - why it's done

By THIS IS MONEY
Updated:

 

The Daily Mail City team explains why economic data published by the statistics authorities, such as gross domestic product figures, can be revised.

Bank of England

Exams looming?

No, this is nothing to do with economics students swatting for their finals. These are revisions to economic data published by the statistics authorities.

Are they frequent?

Yes, all too frequent according to some commentators.

Yesterday the Office for National Statistics revised its first estimate of third-quarter gross domestic product figures, reporting a 0.3% fall in output, compared with a previously reported 0.4% decline.

Doesn't sound much

It is in the context of a £1.3trillion economy. Many economists think there are further revisions to come. Some believe GDP didn't decline in the third quarter, and the final data will reveal a modest increase.

That could make the Bank of England's decision to continue expanding Quantitative Easing look dubious because that might suggest economic output was more punchy than previously thought.

What's the defence?

The ONS put out an article yesterday saying it produces the 'most timely estimate' of GDP of any developed economy, so there are bound to be changes to its first stab at the numbers.

Its first estimate is based on 'partial information' and the ONS also claims that its data revisions have become smaller since the mid-1990s.

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