MSE News: Economic growth slows to 0.2%

Former_MSE_Helen

This is the discussion thread for the following MSE News Story:

"Britain's economy slowed between April and June, though experts say the figures aren't as bad as feared ..."

Read the full story:
Economic growth slows to 0.2%

peakoil_2

OMG! A representaive from MSE has ventured into the house price ghetto! AKA the forum that moderation forgot! I wonder if MSE Helen had to be escorted by ex-SAS body guards when she came in here. no wonder she ran straight out.

HAMISH_MCTAVISH

Not something I can get particularly worked up about one way or another.

There are just 8 quarterly GDP reports to go until we're effectively back into the election run-up, by which time Georgie boy needs to have the economy firing on all cylinders and some tasty tax relief lined up for the voters, and he know's it.

Until then he can continue to squeeze the economy and consumer, and he know's that too.

So I'd expect more of the same for the next couple of years, followed by the great election give-away.

We should all be used to this cycle by now.....

HAMISH_MCTAVISH

peakoil wrote: »

OMG! A representaive from MSE has ventured into the house price ghetto!

And responses like that are probably why they don't venture over here more often.....:D

Nothing like rolling out the welcome mat in true debate board style, is there?:rotfl:

abaxas

Anyone know the noise of these figures? As in are the 0.2 (-+1%) etc?

Generali

abaxas wrote: »

Anyone know the noise of these figures? As in are the 0.2 (-+1%) etc?

Normally you'd expect to see a maximum revision of about 0.2-0.3%.

This is a first estimate based on a pretty limited data set (about 40% of the total data normally). The first estimate I believe tends to be heavy on consumer data and light on industrial data. It is plausible that an extra bank holiday would knock a few tenths of a percentage point off growth. It is equally plausible that it wouldn't. The extra holiday for the Queen Mum's 100th Birthday (death? can't remember which) reduced output by perhaps 0.4-0.5%.

This is the press release from the ONS:

Gross Domestic Product (GDP) increased by 0.2 per cent in the second quarter of 2011, following an increase of 0.5 per cent in the first quarter of 2011.

There were a number of special events associated with 2011 Q2 including; the additional April bank holiday; the royal wedding and the after effects of the Japanese tsunami.

It is not possible to state precisely what the net overall impact of these special effects might have been. Analysis that we have carried out indicates that Q2’s special events may have had a net downward impact on Q2 2011 GDP of 0.4 in the services sector and 0.1 in the production sector. These estimates are broad brush and illustrative. There can be no certainty as to the impact of the special events and there may be other factors at play.

More detail on the impact of these special events can be found in the Gross Domestic Product preliminary estimate statistical bulletin published on 26 July 2011.

Total services output increased by 0.5 per cent in the second quarter compared with an increase of 0.9 per cent in the previous quarter. The largest contribution to the growth in this quarter was from business services and finance.

Business services and finance increased by 0.7 per cent, compared with an increase of 0.4 per cent in the previous quarter. Other business services contributed most to the growth in this quarter.

Transport, storage and communication increased by 1.1 per cent, compared with an increase of 2.5 per cent in the previous quarter. Land transport contributed most to the growth in this quarter.

Government and other services showed zero growth, compared with a 1.1 per cent increase in the previous quarter. Health made the largest positive contribution to the quarter, partially offset by a negative contribution from recreation.

Distribution, hotels and restaurants increased by 0.3 per cent, compared with an increase of 0.9 per cent in the previous quarter. Hotels and restaurants contributed most to the growth in this quarter.

Construction output increased by 0.5 per cent in the second quarter, compared with a decrease of 3.4 per cent in the previous quarter.

Total production output decreased 1.4 per cent in the second quarter of 2011, compared with a decrease of 0.1 per cent in the previous quarter. The largest contribution to the decline in this quarter was from mining and quarrying.

Manufacturing decreased by 0.3 per cent compared with an increase of 0.7 per cent in the previous quarter.

Mining and quarrying decreased by 6.6 per cent, compared with a decrease of 1.8 per cent in the previous quarter.

Electricity, gas and water supply decreased by 3.2 per cent, compared with a decrease of 3.5 per cent in the previous quarter.

Agriculture, forestry and fishingoutput decreased 1.3 per cent, compared with an increase of 0.1 per cent in the previous quarter.

The accompanying graph is looking ominous:

abaxas

^ good post.

michaels

Had it been 0.6/0.7 (ie no extra bank holiday) would we all be so worried?

For me of more concern is that the 'deleveraging' means that even with 'spare capacity' in the economy the trend growth rate for the next 5 years may be about 1.5% rather than the 2.5-3% that one would hope for following a recession...

Generali

michaels wrote: »

For me of more concern is that the 'deleveraging' means that even with 'spare capacity' in the economy teh trend growth rate for the next 5 years may be about 1.5% rather than the 2.5-3% that one would hope for following a recession...

That is my expectation.

Borrowing to consume (eg buying plasma TVs and paying public employees wages) just brings consumption forward from tomorrow to today.

We've had the extra consumption and now we have the reduced consumption across Europe and the US.

Australia has lucked out as while she has had profligate consumers, the Government has been relatively restrained.

Generali

teddyco wrote: »

A cut in the VAT is something George Osborne needs to consider for the next budget.

Why do you think that teddyco?

michaels

It does worry me that Balls is suggesting we are copying Greece's mistake of 'cutting to quickly'. You have to hope that this is just politics and he does not really think Greece should be trying to spend more....