Friday, July 08, 2011
Second quarter GDP - another drama?
Posted by David Smith at 01:30 PM
Category: Thoughts and responses

The royal wedding was a splendid occasion but it risks setting the cat among the pigeons in terms of the gross domestic product numbers. The extra bank holiday in April coincided with a softening of economic activity and the result is that Q2 GDP could be very weak indeed, even negative.

The industrial production index averaged 89.8 in the first quarter. To even match that in the second quarter then, in the absence of revisions, industrial production would need to jump by 4% between May and June. Construction output is doing a little better. New figures show that output in the March-May period was 13.8% up on the previous three months. The figures, however, are unadjusted.

As for the service sector, all we know so far is that output fell by 1.2% between March and April. Its recovery in May and June is crucial to a positive Q2 number.