Tuesday, June 12, 2012
Still a flat economy
Posted by David Smith at 03:00 PM
Category: Thoughts and responses

On the face of it, the National Institute of Economic and Social Research's estimate of 0.1% UK economic growth in the three months to May is mildly encouraging after two successive quarters of falling GDP. 0.1% is, however, neither here nor there.

There are also a couple of caveats. in January NIESR predicted a 0.1% rise in GDP for the fourth quarter, while the Office for National Statistics gave us a 0.3% fall. There was a similar picture in April, and NIESR's estimate of 0.1% growth - and avoidance of technical recession - for the first quarter. Again the ONS's number is now minus 0.3%.

This is not to criticise NIESR. I think its estimates will eventually turn out to be more right than those of the ONS. But it suggests we may have to aim off when it comes to initial official GDP estimates. The other point, of course, is that the three months to May do not include the effects of the Jubilee bank holiday.

The latest estimates were on the back of industrial production figures which were flat in April, though only after a big cold weather boost in utilities (gas and electricity) output. Industrial production still fell 1% year on-yera.

Manufacturing disappointed, falling by 0.7% on the month, and 0.3% on a year earlier. The high watermark for manufacturing was May last year, at which point it had recorded a 7.5% rise from its mid-2009 lows. More here.