Triple-dip jitters as business confidence hits 21-yr low
By Michael Northcott Monday, 11 February 2013
We're fast running out of reasons to be optimistic about Q1 economic data, after an accounting firm found that business confidence was at its lowest for more than two decades in January.
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So now all the analysts are concerned that we’re about to hit a triple-dip recession, thanks to a monthly index published by accounting firm BDO. Its ‘optimism index’, which is compiled by surveying business managers on their predictions for the next two quarters, fell to 88.9 in January from 90.3 in December. This is the eighth month in a row that the index has fallen short of 95.0 – anything above this threshold indicates growth.
BDO partner Peter Hemington said: ‘In spite of a strengthening labour market, business confidence continues to weaken, and improved hiring intentions are not translating into growth plans.
‘It seems the damaging effects on businesses of five years’ zigzagging economic growth has left them weary of making concrete plans for expansion and resigned to the ‘new normal’ of economic stagnation.’ That’s enough to give anyone the blues, surely.
But there were at least a couple of signs that we may not be heading for triple-dip oblivion. The survey showed that confidence over employment was improving: the index, which records the hiring intentions of firms, rose to 95.1 in January, from 93.0 in December. This is the first time the index has nudged above that 95 mark since April last year.
Overall, it is worth noting that the manufacturing sector bucked the trend: the optimism score for these firms rose to 95.2in January from 91.9 in December, and the measure of the health of their order book rose to 92.3 in January from 90.6 in December. We could have predicted this, seeing as manufacturing output in December rose by a surprise 1.6%.
Also, triple dip fears may soon be allayed when GDP data is revised by the ONS: last week it emerged that construction figures in Q4 last year were a few basis points better than we previously thought.
Depending on how things go, the 0.3% GDP contraction recorded for the period may scrape back into growth by the skin of its teeth…