Business Confidence 'Improving'

Rinoa

http://www.bbc.co.uk/news/business-22423167

Confidence among UK businesses is continuing to improve, a survey suggests, despite slow growth in the economy.
The quarterly Business Confidence Monitor, released by a trade body for accountants, suggest confidence is at its highest level since 2010.
It also forecasts stronger economic growth in the second quarter.
Official estimates suggest the economy grew by 0.3% in the first three months of the year.
The accountants' trade body, ICAEW, and business advisory firm Grant Thornton said improved business confidence would boost the economy further, and they forecast growth of 0.6% in the second quarter.
"There is a gradual improvement in the economy and the recovery is starting to stand on more solid ground," said Michael Izza, chief executive of ICAEW.
"We should not be complacent though. There is still a degree of fragility and the economy is susceptible to knock-backs from events outside the UK."
Business confidence stood at its highest level since the third quarter of 2010.
Confidence was up across all sectors, and in all parts of the country, the survey indicated.

Hmmm. Grant Thornton forecasting 0.6% growth in Q2. Will George Osborne's policies turn out to be vindicated after all?

Generali

Rinoa wrote: »

http://www.bbc.co.uk/news/business-22423167

Hmmm. Grant Thornton forecasting 0.6% growth in Q2. Will George Osborne's policies turn out to be vindicated after all?

Services PMI is 52.9 (link), manufacturing PMI is 52.6 (link) and construction PMI is 49.4 (link).

Anything over 50 means more respondents feel their company is growing, under 50 means they think things are getting tougher. The graph below shows how GDP compares with PMI:



It looks like there's some pretty solid good news in the air for the British people which is....good news.

MacMickster

Whilst the graph demonstrates a correlation between PMI and GDP, it also appears to show that the all sector PMI for 2012 was around 55 (but I'm not sure that this is correct as it would be at odds with the "highest level since 2010" claim in the article) whilst it now stands at a little over 52. This seems to suggest that confidence is, in fact, weakening.

antrobus

MacMickster wrote: »

Whilst the graph demonstrates a correlation between PMI and GDP,...

The graph compares GDP with the results of PMI surveys, the BBC report deals with the Business Confidence Monitor. They aren't the same thing.

MacMickster wrote: »

....This seems to suggest that confidence is, in fact, weakening.

A PMI doesn't measure 'confidence'. It's based on (supposedly) actual data on orders, stock levels etc. (And besides that little line appears to pointing up.)

HAMISH_MCTAVISH

Rinoa wrote: »

Will George Osborne's policies turn out to be vindicated after all?

Nope.

Look at the mess we've been in for the last couple of years, since the muppets decided to try and cut their way out of a recession, and left us in a long lasting depression instead.

We should already have exceeded the previous GDP high by some margin, as the US has done, after spending their way out of recession.

Rinoa

HAMISH_MCTAVISH wrote: »

We should already have exceeded the previous GDP high by some margin, as the US has done, after spending their way out of recession.

Yes, but the US hadn't endured Labour policies for 13 years.

antrobus

Rinoa wrote: »

Yes, but the US hadn't endured Labour policies for 13 years.

Ouch!

(S10CL)

Thrugelmir

Rinoa wrote: »

Hmmm. Grant Thornton forecasting 0.6% growth in Q2. Will George Osborne's policies turn out to be vindicated after all?

Budget deficit is far from sorted. Cuts will be harder and more painful at each stage. Growth isn't going to cure the problem.

HAMISH_MCTAVISH

Rinoa wrote: »

Yes, but the US hadn't endured Labour policies for 13 years.

The US endured record state expansion and 2 of the costliest wars in history under Bush, which was worse in terms of fiscal impact than anything Blair or Brown did.

The US entered the recession with a higher debt to GDP ratio than the UK, and remains so to this day.

And the Tories pledged in opposition to match or exceed Labour's spending plans.

So your point, although doubtless good for scoring cheap internet points, is not really of much relevance to the debate.

Of all the things to dislike about Labour, and there are plenty of them, going into this recession with one of the lowest debt to GDP ratio's in the G20 and a debt to GDP ratio lower than at all times but a few decades out of the last 400 years wouldn't be high on the list of most rational people.

Generali

HAMISH_MCTAVISH wrote: »

The US endured record state expansion and 2 of the costliest wars in history under Bush, which was worse in terms of fiscal impact than anything Blair or Brown did.

The US entered the recession with a higher debt to GDP ratio than the UK, and remains so to this day.

And the Tories pledged in opposition to match or exceed Labour's spending plans.

So your point, although doubtless good for scoring cheap internet points, is not really of much relevance to the debate.

Of all the things to dislike about Labour, and there are plenty of them, going into this recession with one of the lowest debt to GDP ratio's in the G20 and a debt to GDP ratio lower than at all times but a few decades out of the last 400 years wouldn't be high on the list of most rational people.

The other difference is that the UK Government was spending well in excess of 50% of GDP (if you include tax credits as spending, about 48% if not) whereas the US Government spends rather less:



In the UK, increases in the size of Central Government are in the process of overwhelming the entire economy. It was necessary and urgent for the incoming Government to reverse that trend.

HAMISH_MCTAVISH

Generali wrote: »

In the UK, increases in the size of Central Government are in the process of overwhelming the entire economy. It was necessary and urgent for the incoming Government to reverse that trend.

I'll be the first person to cheer a smaller state and lower taxes.

But trying to engineer a contraction of the state at the same time that you have a global recession pummelling the private sector, causing rising unemployment, and with the credit crunch forcing households to deleverage, is economically illiterate.

You can't cut your way out of a recession. It simply doesn't work.