Home > Statistics > Quarterly national accounts > 2007 > 3rd quarter > Growth of GDP slowed down slightly in the third quarter

Growth of GDP slowed down slightly in the third quarter

The seasonally adjusted volume of gross domestic product increased in the third quarter by 0.7 per cent from the previous quarter. Compared to the third quarter of 2006, GDP was up by 3.8 per cent. Calculated at current prices, GDP grew by 6.7 per cent year-on-year.

Revisions put the year-on-year growth in the volume of GDP at 5.4 per cent for the first quarter and at 4.8 per cent for the second quarter of 2007. In 2006, GDP grew by 5.0 per cent. Economic growth appears to have slowed down slightly, but the rate of growth for the third quarter is still clearly above the long-term average of 2.7 per cent. Revised calculations put the seasonally adjusted rate of growth from the previous quarter at 1.0 per cent in the second quarter, as against the 0.9 per cent indicated by data calculated in September.

The third quarter of 2007 had the same number of working days as twelve months before.

According to the Flash estimate of GDP compiled by Eurostat, the Statistical Office of the European Communities, in the third quarter of 2007 GDP grew in the EU area by 0.8 per cent from the previous quarter, and was 2.9 per cent up on the corresponding time period of the year before.

Output

In primary production, the volume of value added was 5.8 per cent greater in the third quarter than one year earlier. Thanks to the second best grain crop ever, value added in agriculture went up by nearly 14 per cent. In forestry, value added increased by as much as 19 per cent, reflecting the strong growth in the volume of market fellings that has continued throughout the current year.

In secondary production, the volume of value added grew by 5.3 per cent in the third quarter. Value added in manufacturing was 4.6 per cent up on the third quarter of 2006. In the wood and paper industry value added contracted by one per cent. Value added in the metal industry (incl. electronics industry) grew by just short of nine per cent from twelve months back. In other manufacturing, value added went up by over four per cent.

In the July to September period, the volume of value added generated in construction increased by seven per cent from the year before.

In service industries, the volume of value added was 3.9 per cent greater than in the third quarter of 2006. The volume of value added generated in trade was 4.3 higher than twelve months earlier. Three per cent growth was recorded in transport, storage and communications. Real estate and business activities grew by just short of six per cent year-on-year. The volume of total value added generated by all industries was 4.4 % higher than twelve months earlier.

Imports, exports, consumption and investments

Total demand was increased in the third quarter of the year by all demand components: exports, consumption and investments. In the July to September period, the volume of exports increased by 7.5 per cent from twelve months back. Imports only grew by 0.7 per cent and preliminary data indicate a decline in the imports of services. Data on the imports and exports of services may become substantially revised. The data on the growth of imports (goods and services together) became revised to 3.3 per cent from the 1.6 per cent indicated by the data calculated in September. The growth in the volume of exports became revised to 6.6 per cent from the 6 per cent calculated in September.

The volume of private consumption went up by 4.3 per cent in the third quarter. The growth was strongest in the consumption on durables, which shows the peak in the sales of digital set-top boxes and flat screen televisions caused by the discontinuation of analog television broadcasting. The volume of government consumption expenditure increased by 2.1 per cent.

The volume of investments grew by 3.0 per cent year-on-year, whereas in the second quarter of the year they increased by 8.2 per cent. Investments in construction increased by eight per cent, with strongest growth recorded in other building construction. The volume of investments in machinery, equipment and transport equipment contracted by 11 per cent. In the third quarter, private investments increased by 3.1 per cent and public investments by 2.5 per cent year-on-year.

Employment, wages and salaries and national income

Employment improved in the third quarter of 2007. The number of employed persons went up by 2.2 per cent from the corresponding quarter of 2006. By contrast, the number of hours worked in the national economy remained on level with twelve months back. The quarter contained the same number of working days as the corresponding quarter of the year before. According to Statistics Finland's Labour Force Survey, the rate of unemployment for the July to September period was 6.1 per cent. In last year's corresponding quarter it stood at 6.8 per cent.

In the third quarter of 2007, the nominal wages and salaries bill (excluding incentive stock options) of the national economy grew by 5.0 per cent. The operating surplus (net), which in business bookkeeping corresponds roughly with business profit, increased by 15.8 per cent calculated at current prices. National income (net) calculated at current prices was 7.5 per cent greater than in the corresponding quarter of the previous year.

The available data

These preliminary data on the third quarter of 2007 are based on the information on economic development that was available by 29 November 2007. The quality description is available on Statistics Finland's Internet pages at http://www.tilastokeskus.fi/til/ntp/laa.html. (In Finnish only.)

Data at the annual level correspond with the National Accounts data released on 12 July 2007.

Data concerning the last quarter of 2007 will be released on 29 February 2008, when the data for previous quarters will also be revised. Quarterly data continue to be revised until final annual accounts data are published at the lag of around two years.

Revised method of calculating quarterly accounts, the new time series start from the year 1990

The revision of the method for calculating volume series and value added in quarterly national accounts that was started in 2006 has now been finalised. All volume figures are published as series expressed at reference year 2000 prices, chained from quarterly volume figures calculated at the average prices of the previous year with the so-called annual overlap method. At the same time, the fixed base year was replaced by a moving base year, which is always the previous year.

Value added by industry is now calculated by deducting intermediate consumption from output. In volume calculations, output and intermediate consumption are deflated at the average prices of the previous year and value added at the average prices of the previous year is derived as the difference between these figures (so-called double deflation method). The calculation method makes figures on value added for individual industries volatile. The quarterly data on value added by individual industry should be approached with caution. Thus, they should be regarded as an interim stage in the calculation, in which the eventual aim is to produce as reliable as possible summed up value added for all industries in the whole economy.

Data on turnover have been exploited in calculations of value added series at current prices since 1995N1. The series on the volumes of value added have been calculated with the double deflation method since 2001N1. For the value added series for the years between 1990 and 2000, the volumes at the mean prices of the previous year have been calculated by deflating increases in the value added at current prices with changes in the producer price index or a corresponding price index.

The quarterly growth percentages of the 2006 value added and GDP have changed especially much from the data published in September. The reason for this is technical: by June 2007 the production system of quarterly accounts was producing double deflated volume figures for value added at the average prices of the previous year. Before that the volume figures for value added had been converted into the average prices of the previous year with a formula which did not give exactly the same results as direct deflation with price indices. In order to obtain as accurate figures as possible on the volume changes in the first and second quarter of 2007, which were published in June and September, the quarterly volumes for 2006 had to be calculated with the same method. Therefore, in connection with the June publication, the 2006 volumes of value added were recalculated into average prices of the previous year by using genuine price indices. Thus the quarterly volumes of value added for the years 2006 and 2007 published in June and September were comparable with each other but not with the year 2005 or any year before that. In the series published on 5 December, the volume changes of GDP and value added in 2007 are relatively close to the growth percentages published in September, which was indeed our objective.

Besides the series on value added, other volume series have also been recalculated with the annual overlap method starting from 1990N1. All series have been benchmarked to annual national accounts. The old quarterly time series 1975Q1-2007Q2 are still available from Statistics Finland's ASTIKA service or upon request. The old time series are not comparable with the time series published now, and should not be combined with them.

The data for the years 2005 and 2006 are preliminary and will become revised in the next publication of annual accounts on 31 January 2008. A detailed report on the methodological revision of National Accounts can be found on Statistics Finland's website at: http://stat.fi/til/vtp/vtp_2006-03-31_men_007_en.html

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Last updated 5.12.2007