Compliance review of Treatment of Seasonality in Quarterly GDP statistics

Overview

At the time of this report, the Office for National Statistics (ONS)’s quarterly GDP statistics are published as accredited official statistics.

Quarterly GDP statistics are closely watched as a key indicator of macro-economic performance and inform crucial macroeconomic policy decisions by key stakeholders including the Bank of England. Quarterly (and monthly) GDP statistics are published on a seasonally adjusted basis.

Why we did this review

Users, and media reports, suggested that there may be residual seasonality in recent quarterly GDP statistics. This review investigated this specific issue; it is not a full assessment of the compliance of quarterly GDP statistics with the Code of Practice for Statistics.

Findings

In recent years, quarterly (and monthly) GDP statistics published by ONS have shown stronger growth in the first half of the year than in the second half. Since 2022, based on first-release data, growth in the first and second quarters has averaged 0.6% and 0.3% respectively, while the third-quarter average has been nearly flat, with an average contraction of 0.1% in the fourth quarter.

ONS follows international best practice in the methodology it uses to seasonally adjust GDP data. This combines a standardised software-based approach with expert review and judgement. ONS has told us about ongoing improvements to further support its approach.

During 2025, ONS increased transparency about its approach to seasonal adjustment by publishing details of its assessment of seasonality in quarterly GDP. This assessment found that there is no statistically significant residual seasonality in quarterly (and monthly) GDP statistics, including recently. Like other organisations, such as the Bank of England and the Office for Budgetary Responsibility, the ONS has noted that over recent years, stronger growth in the first part of the year reflects, at least in part, a series of one-off events (for example the bringing forward of economic activity in advance of the expected imposition of tariffs and upcoming changes in stamp duty).

Analysis of external Purchasing Managers’ Index (PMI) data from S&P Global, and other contextual information, provides corroborative evidence of stronger economic growth in the first half of the year, particularly in the first quarter, over the period since 2022. While differences in methodology and coverage mean that PMIs would not be expected to align closely with official GDP estimates, the broadly similar seasonal pattern not suggest that there is something unusual going on with the ONS’s approach to seasonal adjustment. However, it reinforces the case for continued monitoring and further investigation of the drivers of recent patterns in GDP growth.

Detecting emerging problems with residual seasonality in real time is challenging – statistical methods need at least three years, and usually five, to detect effects. There is therefore an important role for judgement in setting parameters and updating processes to reflect more recent economic developments. ONS adjusts parameters and processes dynamically based on expert judgment, but the challenge faced in doing this has increased in recent years due to the series of one-off events impacting in the first part of the year.

While ONS reviews key series and routinely tests for residual seasonality in headline GDP, capacity constraints have limited the consistent and timely application of expert review and judgement to component series. ONS has been addressing this by rebuilding the central seasonal adjustment team and putting in place more robust arrangements for regular review.

Our judgement

This review finds that ONS has followed internationally recognised best practice in its approach to seasonal adjustment, and current statistical tests show no evidence of significant residual seasonality in quarterly or monthly GDP. However, because emerging seasonal patterns can take several years to detect using standard methods, there remains a risk that early signs of change may not yet be visible in statistical tests.

It is therefore important for producers, users and commentators to keep an open mind about the possibility of newly evolving trends. To strengthen confidence and manage this risk, ONS should continue increasing transparency around its methods and uncertainties, rebuild and stabilise the specialist team responsible for seasonal adjustment, and seek external assurance, particularly on the detection of emerging seasonal signals. Doing so will ensure that its approach remains robust, timely and benefits from challenge.

As a result of the findings of this review, we are making three recommendations for ONS. In summary:

Recommendation 1: ONS should commission external expertise to review its approach to the seasonal adjustment of GDP, with a particular focus on the detection of, and adjustment for, emerging seasonality. The outcomes of the review should be made publicly available increase confidence amongst users. In finalising this review, ONS have told us they have already commissioned this work.

Recommendation 2: ONS should further increase transparency in its approach to seasonal adjustment and the associated uncertainties and limitations. We make specific suggestions for how ONS could accomplish this and note that while this report was being finalised ONS committed to publishing non-seasonally adjusted measures of GDP.

Recommendation 3: We recommend that ONS should continue with its plans to improve the resourcing, planning, and implementation of its approach to seasonal adjustment.

Next steps

We expect ONS to respond to this report and provide updates on its progress against our recommendations as part of its quarterly reporting on progress with its plans for economic statistics.