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Nowcasting Monthly UK GDP: Evidence from Bottom-Up Sectoral Modeling with Big Data Methods and Forecast Combination Algorithms

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  • Paula Bejarano Carbo
  • Rory MacQueen
  • Efthymios Xylangouras

Abstract

Our predecessors at NIESR helped pioneer the estimation of monthly Gross Domestic Product (GDP) in the United Kingdom (Mitchell et al., 2005). This approach, which led to the publication of monthly GDP by the Office for National Statistics (ONS) from 2018, aggregates sectoral indices (e.g. agriculture, construction) to produce an overall estimate of monthly economic growth. Since 2018, NIESR has produced its monthly GDP 'tracker' on the ONS estimate release date, commenting on the latest data point and producing a 'bottom-up' forecast (i.e. constructed by aggregating sectoral forecasts) of economic performance up to the end of the next quarter (Kara et al., 2018). The NIESR GDP tracker forecast of 10 sub-sectors and aggregate GDP combines a 'fixed parameter' approach and forecaster judgement to produce, we find, accurate estimates one month in advance of the official first estimate.

Suggested Citation

  • Paula Bejarano Carbo & Rory MacQueen & Efthymios Xylangouras, 2025. "Nowcasting Monthly UK GDP: Evidence from Bottom-Up Sectoral Modeling with Big Data Methods and Forecast Combination Algorithms," National Institute of Economic and Social Research (NIESR) Policy Papers 46, National Institute of Economic and Social Research.
    • Handle: RePEc:nsr:niesrp:46
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    File URL: https://niesr.ac.uk/publications/nowcasting-uk-gdp?type=policy-papers
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