UK GDP Preliminary Estimate Q2 2012 -0.7%

Graham_Devon

If the government really want to avoid recession, they will direct QE money at building AFFORDABLE houses for people to buy. I don't mean the "affordable" title that does the rounds, but real affordable houses. That means building quite a lot.

Construction fell over 5% in the last quarter. Some of it is made up of less public housing.

Pete111

Lots of commentators were preemptively casting doubt on the expected figures when compared against stats liek falling unemployment - given these are far worse than expected, something seems wrong here.


Analysis Ian King
Last updated at 8:03PM, July 23 2012


Britain was still in recession in the second quarter of the year — at least, that is what official statistics should confirm tomorrow. Yet there is cause to doubt this.

First, there is the survey data. Every month, the Purchasing Marketing Index (PMI) is published for the manufacturing, services and construction sectors. This a survey of companies giving a guide to what is happening in the economy, as measured by indicators like new orders, stock levels and employment.

Anything over 50 indicates growth and anything below it, contraction. During January, February and March, each survey for each sector was positive, yet the first quarter GDP data still pointed to negative growth. Plainly, both cannot be right.
The PMIs paint a mixed picture for the second quarter, with services — the biggest single part of the economy — enjoying growth in each of April, May and June, although manufacturing contracted in May and June and construction, which was positive in April and May, contracted in June.

The second reason to doubt the official figures is the content of the reports prepared by the Bank of England’s regional agents, the Bank’s eyes and ears in the “real” economy. During the first three months of the year, the reports pointed to somewhat stronger activity in the first quarter than suggested by the official data, leading some on the Bank’s rate-setting Monetary Policy Committee in May to doubt the latter.

The third and strongest reason to doubt the official figures is the startlingly robust jobs figures. During the three months to the end of May, the number of people in work rose by 181,000 to just under 30 million, the highest for nearly four years.
Admittedly, that is partly due to an “Olympics effect”, as a third of those jobs were in London. But the fact remains that, since September, nearly a net quarter of a million more people have found work despite the job losses taking place in the public sector. That is just not consistent with an economy in recession.

The danger is that, as and when the numbers are revised higher, it will not receive anything like as much attention in the media. In the meantime, the danger is that we will end up talking ourselves into another recession. A real one.

Graham_Devon

Pete111 wrote: »

Lots of commentators were preemptively casting doubt on the expected figures when compared against stats liek falling unemployment - given these are far worse than expected, something seems wrong here.

Yes, that's what was said by the optimists in Q2. The 0.2% was wrong they said. It can't be possible they said. It was then confirmed at 0.3% and then confirmed again.

0.7% is released and the same people shout "it's wrong, it can't be possible".

luvpump

it is indeed 0.7 %
http://www.bbc.co.uk/news/business-18977084

MacMickster

A graph on the BBC website puts this in perspective a bit.


Basically, the economy has been stagnant for the last few years, and at best we can probably expect more of the same.

This stagnation has occurred despite record low interest rates, QE etc.

With a rapidly increasing population, the GDP per head figures are worsening more markedly, and again will probably continue along the path for some time to come.

The solution? Well Nobel prize winning economists can't agree on a way forward to get us out of this mess, but.....

Some on this forum would have you think that increased house prices are what is needed.

Some think that everyone in the UK should be buying every bit of shiny metals that they can get their hands on (sounding more like Gollum with each new sock puppet identity).

The current government aren't interested in a solution - just blame Gordon Brown.

The banks still seem to think that the best way out of financial problems is a trip to the casino (particularly if they can cheat a bit).

Me? I'm just a numpty who thinks that balancing the books (including the balance of trade figures) and living within our collective means is a good place to start, facing the fact that we will all have to get used to a more frugal standard of living which will not be at all comfortable.

Generali

Wookster wrote: »

This is a truly shocking number and it really ought to focus efforts around growth it is clear that Europe alone cannot be blamed for this result.

We need a massive house building strategy.

It seems to be the obvious solution: allow people to make a product that people want to buy at a price they are willing and able to pay rather than the Government spending huge amounts on preventing builders from building houses!

The_White_Horse

they need massive cuts to the public sector - they need to STOP all their pensions NOW and move everyone on to a defined contribution scheme. Then they need to LOWER taxes to stimulate demand.

As someone on here said - no one is spending (except those on benefits obviously).

ILW

Bob Crowe will sort it all out.
In a year or so, tube drivers will be earning so much money that they alone will probably add 2 or 3% to the GDP figure.

StevieJ

Pete111 wrote: »

Lots of commentators were preemptively casting doubt on the expected figures when compared against stats liek falling unemployment - given these are far worse than expected, something seems wrong here.
.

Maybe public sector cuts are starting to bite i.e. they have binned their best statisticians

wotsthat

To be honest I can't 'feel' the difference between -0.1%, +0.1% or -0.7% so I'm not sure what this means to real people.

There are no real solutions either - books have to be balanced and debts repaid or refinanced. That's going to drag on GDP but it doesn't mean (I hope) that the government are doing nothing - they could argue that they are positioning the economy to be better equipped to take advantage of future opportunities. It's going to be a hard grind and at least they've seen that blaming everything on Gordon Brown was getting a bit tired so they've replaced Gordon Brown with the Eurozone.

From my own personal viewpoint I was hoping for a couple of quarters of tiny positive growth just so the more gloomy members of the forum could start getting excited about a triple dip recession.