Wednesday, April 27, 2011
Q1 GDP shows decent underlying bounce
Posted by David Smith at 10:00 AM
Category: Thoughts and responses

A 0.5% first quarter rise in gross domestic product looks disappointing but, given the record of the Office for National Statistics it could have been a lot worse (or better) and the underlying picture was rather stronger. Service sector output grew by 0.9% in the quarter and manufacturing was up by 1.1%. That suggests an underlying growth bounce of close to 1%.

So why only 0.5%? An odd-looking 4.7% drop in construction output (which looks like a carry-over from Q4 2010), a shutdown in North Sea production and a 3.5% drop in utilities' output - reflecting milder weather - dragged down the overall number.

It is wrong to say the economy didn't grow taking the fourth and first quarters together. Some of the snow losses of Q4 were never going to be made up. Even with these numbers, 1.8% growth over the past 12 months is not bad. More here.