Thursday, May 24, 2012
A 'deeper' recession
Posted by David Smith at 10:00 PM
Category: Thoughts and responses

The first quarter growth figures were revised lower, gross domestic product dropping by 0.3% rather than 0.2%, as the Office for National Statistics had suggested when publishing revised construction figures on May 11. What do we know? A year ago the ONS was similarly gloomy about construction, only to revise it up later. It is impossible to say whether the latest construction numbers will undergo the same fate.

What else do we know? Something odd happened in February. That month manufacturing output fell by 1% while the service sector contracted by 0.6%, in both cases bouncing back the following month. February was an unusually difficult month for the economy, for no obvious reason. This was a leap year, which the ONS adjusts for. I'm sure the February weakness, without which GDP would not have fallen, had anything to do with that adjustment.

The figures also tell us that there was a significant build-up of inventories in the first quarter, which normally tells us that the ONS cannot make the numbers add up. But anyway, the ONS has generated another set of headlines. This time Britain is apparently "deeper" in recession. The figures are here.