Published by , February 26th 2010 at 1:18 pm
UK economy grew 0.3% in last quarter, with Index of Production up 0.5%
Revised figures show that the UK economy grew by 0.3% in the final quarter of 2009, not 0.1% as previously reported. The revision was due to faster than expected growth in both services and manufacturing in December.
The Index of Services for December rose by 0.6%, while the Index of Production (which measures the output of manufacturing and utilities) increased by 0.5%. These figures were not available when the preliminary estimate of overall growth was reported.
However, the decline in gross domestic product during the recession has been revised up to 6.2%, from 6%.
Meanwhile, the composition of growth in the final quarter of 2009 will have been disappointing to those hoping for a shift in the balance of the economy. Consumer spending increased by 0.4%, while business investment contracted by 3.1%. And, although exports increased by 3.7%, imports grew by 4.1% and so net exports subtracted 0.2pp from growth.
Although other economic data also show the economy was improving in the final quarter of 2009, in particular unemployment stopping falling, it is too soon to be sure that the economy is safely out of recession.
Growth in the first quarter of 2010 could be very weak as a result of the bad weather, which will have affected construction activity for example, and if the increase in the main rate of VAT from 15 to 17.5% in January caused some people to bring spending forward into the final months of 2009.
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RT @leftfootfwd: UK economy grew 0.3% in last quarter, with Index of Production up 0.5% http://cli.gs/b1g3S
RT @leftfootfwd: UK economy grew 0.3% in last quarter, with Index of Production up 0.5% http://cli.gs/b1g3S
This is why the stimulous is working and we still need it.
UK economy grew 0.3% in last quarter, with Index of Production up …: Revised figures show the UK economy grew by… http://bit.ly/97oNeB
UK economy grew 0.3% in last quarter, with Index of Production up …: Revised figures show the UK economy grew by… http://bit.ly/97oNeB
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One of the features os the data that went unremarked is that the 0.3% rebound was as large because prior quarters wre actually revised down. So in the 3 estimates of Q4 GDP to date, the total lost output has gone from £81bn (1st estimate), £78bn (2nd) and back to £80bn (latest).
There are no forecasts for a sharp rebound to recover that loss, £46bn of which is a slump in investment. The decline in investment, and how to correct it, has been exercising influential mainstream economics commentators such as Martn Wolf in the FT. His voice calling for increased investment is a welcome one, even if his reliance on private sector investment, which is still falling, seems misplaced.
http://socialisteconomicbulletin.blogspot.com/2010/02/financial-times-chief-economics.html