Tuesday, July 26, 2011
GDP grows 0.2% in Q2, underlying picture stronger
Posted by David Smith at 11:30 AM
Category: Thoughts and responses

Expectations management is always useful, and so it is that growth of 0.2% in the second quarter of 2011 is moderately good news. Given the range of special factors depressing GDP, a negative number was perfectly possible.

There is nothing much to write about in these figures. Growth of 0.7% over the past 12 months is feeble and would only have been a little over 1% adding back the special factors in.

Even so, the service sector seems to be growing by around 0.9% a quarter (0.5% in the second with a possible 0.4% subtracted by the extra bank holiday and other special factors), after an actual 0.9% in the first. Q2 service sector growth was without any contribution from government.

The ONS is sticking with its strange construction numbers for Q1 but the sector contributed to growth in Q2. Manufacturing was hit by Japanese disruption, but still has momentum. So underlying growth of 0.6% or 0.7% in Q2. Not spectacular but certainly not bad. More here.