Wednesday, November 24, 2010
Better balanced GDP growth
Posted by David Smith at 11:00 AM
Category: Thoughts and responses

Gross domestic product rose by an unrevised 0.8% in the third quarter, for a rise of 2.8% on a year earlier. The second quarter GDP rise of 1.2% is vulnerable to a downward revision, though that was not a task for the Office for National Statistics on this occasion.

The best news in this release was that it showed growth is becoming better balanced. So the 0.8% rise in GDP in the third quarter came in spite of just a 0.3% increase in household spending and a 0.4% rise in government expenditure. Exports rose by 2.2%, imports by only 0.7%, so net trade was an important contributor to growth. More here.

Also published, the latest index of services, which showed a rise of 0.6% between August and September. The importance of that is that this very important sector of the economy had decent momentum going into the fourth quarter. Even if service sector output were to remain at September levels, it would show a 0.6% rise between the third and fourth quarters. The release is here.