TD Securities' James Rossiter has raised concerns regarding the accuracy of recent UK GDP data, suggesting that problematic seasonal adjustment by the Office for National Statistics (ONS) may be inflating the country's reported economic momentum. According to Rossiter, UK GDP growth outpaced the rest of the G10 in the first half of 2025 and again led in the first quarter of 2026 based on data released so far. However, he notes that speculation has increased about the ONS' seasonal factors, which may be overstating GDP growth in the first half of the year and understating it in the second half. Rossiter points out that this pattern is evident in both quarterly and monthly GDP data, with notable surges in the first half and flat performance in the second half. The ONS has responded by defending its methodologies [1].
To address these concerns, Rossiter applied a double-seasonal adjustment approach, inspired by a method previously used by the San Francisco Fed on US GDP data. This technique involves seasonally adjusting the ONS' already seasonally adjusted data to identify recurring patterns. The analysis revealed that since 2023, the ONS' seasonally-adjusted GDP series has exhibited greater volatility compared to the double-seasonally adjusted series. The results indicate a statistically significant positive bias in the reported Q1 and Q2 GDP growth figures, while Q3 and Q4 growth appears to be understated [1].
Specifically, Rossiter's findings suggest that the reported Q1 GDP growth of 0.6% quarter-on-quarter may be overstated by as much as 0.25 percentage points. Conversely, growth in the second half of the year could be understated by up to 0.2 percentage points in both Q3 and Q4 if the seasonal factors are not corrected. These insights imply that the underlying momentum in the UK economy may not be as strong as the headline figures suggest for the first half of the year, with potential for stronger growth in the latter half if adjustments are made [1].
CONCLUSION
TD Securities' analysis highlights the possibility that UK GDP growth figures for the first half of the year may be overstated due to seasonal adjustment issues, while second half growth could be understated. Market participants should interpret recent UK GDP data with caution, as underlying economic momentum may differ from headline reports.