MSE News: UK economic growth weaker than expected

Really2

Kohoutek wrote: »

Wy do people attach so much importance to these figures? 0.2% is nearly a rounding error. The most important figure is surely the level of unemployment. When there's a large net increase in the amount of private sector jobs being created across the economy, we'll know we have a real recovery.

Because a growing economy = more employment.

It is only the prelim, but I dare say in terms of £'s 0.2% would be a lot more than a rounding error if it landed in you bank account.

Kohoutek

Really2 wrote: »

Because a growing economy = more employment.

That's not being reflected in the employment figures. Private sector employment is still falling, and the overall figures are cushioned by a rise in the number of students and higher public sector employment.

It's too early to tell whether these growth figures are sustainable, or will just fizzle out, especially when the government starts its fiscal tightening.

kennyboy66_2

Kohoutek wrote: »

That's not being reflected in the employment figures. Private sector employment is still falling, and the overall figures are cushioned by a rise in the number of students and higher public sector employment.

It's too early to tell whether these growth figures are sustainable, or will just fizzle out, especially when the government starts its fiscal tightening.

Employment is normally a "lagging" indicator.
It can take 18 months or more for unemployment to start falling after the recession ends.

Growth of this magnitude (less than 1.5%) will probably not result in unemployment falling anyway.

We probably need at least 4 quarters of >0.5% growth before we can say we are out of the woods.

Really2

Kohoutek wrote: »

That's not being reflected in the employment figures. Private sector employment is still falling, and the overall figures are cushioned by a rise in the number of students and higher public sector employment.

It does lag behind growth. You are more likely you are going to find employment in a growing economy than a shrinking one are you not?

Kohoutek

Really2 wrote: »

It does lag behind growth. You are more likely you are going to find employment in a growing economy than a shrinking one are you not?

If the economy keeps growing, fingers crossed.

Thrugelmir

Really2 wrote: »

It does lag behind growth. You are more likely you are going to find employment in a growing economy than a shrinking one are you not?

Depends on what the activity is. Electricity, gas and water doesn't require a huge increase in manpower.

Gross Domestic Product (GDP) increased 0.2 per cent in the first quarter of 2010, compared with an increase of 0.4 per cent in the previous quarter. The decrease in the growth rate was due to weaker growth in services.

Total services output rose 0.2 per cent, compared with a rise of 0.5 per cent in the previous quarter. The largest contribution to the weaker growth was from distribution, hotels and restaurants, but there was increased growth in business services and finance and government and other services. Transport, storage and communication growth was unchanged.

Distribution, hotels and restaurants fell 0.7 per cent, compared with an increase of 1.9 per cent in the previous quarter. Motor trades, wholesale and retail contributed most to the decrease.

Transport, storage and communication rose 0.6 per cent, unchanged from the fourth quarter of 2009. Transport support and post and telecommunications contributed most to the unchanged growth.

Business services and finance rose 0.6 per cent in the first quarter, compared with an increase of 0.4 per cent in the previous quarter. Banking and research and development contributed most to the increase in growth.

Government and other services showed zero growth, compared with a decline of 0.1 per cent in the previous quarter. Recreation contributed most to the increase in growth.

Total production output rose in the first quarter, increasing
0.7 per cent, compared with a rise of 0.4 per cent in the previous quarter. Electricity, gas and water supply made the largest contribution to the increase in growth where output rose 2.5
per cent, compared with a fall of 2.7 per cent in the previous quarter.

Manufacturing output increased 0.7 per cent, compared with an increase of 0.8 per cent in the previous quarter. Mining and quarrying fell 0.7 per cent, compared with an increase of 0.3 in the previous quarter.

Construction output fell 0.7 per cent in the first quarter, compared with a decrease of 0.9 per cent in the previous quarter. A significant proportion of this service industry is forecast in the preliminary estimate.

Agriculture, forestry and fishing output decreased 1.1 per cent, compared with a fall of 1.5 per cent in the previous quarter.

doire_2

Not been a great week has it? Inflation up, unemployment now at a 16 year high, borrowing now at a record during peace time, Lowest FTB in 20 years and now this "growth" of a pitiful 0.2%.

And i've just seen brown the clown on the news promising "jobs, jobs, jobs"

worldtraveller

doire wrote: »

And i've just seen brown the clown on the news promising "jobs, jobs, jobs"

Prat! :rotfl: Maybe he'll create even more public sector non-jobs in the next few weeks to improve the employment figures! :idea:

Sapphire

Why is this (the message in the original post) a surprise? The economy is being artificially propped up for now – the situation will probably get far worse. We have masses of debt. We have an economy that is basically reliant on discredited financial services 'industry', and our manufacturing base is a fraction of what it was. There are no jobs for many people because of this – a situation that can only get worse.

People have also not been educated in the right way to reconstruct a manufacturing base, with far too much emphasis on 'useless' superficial subjects and far too little focus on science and technology. It will take years for a change of emphasis in this area to take a positive effect, that's if anyone is really going to try and improve the situation.

ILW

Just a thought, but if growth is 0.4% and inflation is 3% is this not still a recession, or is the growth figure adjusted to include inflation?