Wednesday, December 22, 2010
Those GDP revisions
Posted by David Smith at 04:00 PM
Category: Thoughts and responses

The latest Office for National Statistics' take on gross domestic product saw a downward revision of growth in the second quarter, from 1.2% to 1.1%, as expected (in fact slightly less had been expected), but also the latest quarter from 0.8% to 0.7%, and the first quarter of the year from 0.4% to 0.3%.

There are swings and roundabouts, as always, with two quarters of 2009, the first and the fourth, being revised higher by 0.1 percentage points. But growth over the latest 12 months has been revised down from 2.8% to a still-respectable 2.7%. Growth for calendar 2010 as a whole looks like being between 1.6% and 1.7%.

Revisions were expected on the back of the new construction data but these were a wide-ranging set of revisions. Net trade no longer contributed to growth in the third quarter but business investment did. More here.

The current account deficit widened to 9.6 billion in the third quarter from a downward-revised 5.2 billion in the second suggesting an overall 2010 deficit of about 32 billion. Details here.

Finally, the Bank of England's monetary policy committee voted 7-1-1 in favour of holding Bank rate at 0.5% and kept the amount of quantitative easing at 200 billion. Adam Posen wanted more QE, while Andrew Sentance wanted a rate hike. The majority, however, appears to be getting slightly more concerned about inflation, saying the medium-term risk had moved upwards. The minutes are here.