The slightest hint of optimism from an official-sounding body and we all think the good times are on their way back, right? This time it’s the British Chambers of Commerce, which say that a strong performance from the service industries in the first three months of 2013 will help keep us out of the dreaded triple-dip recession. It also says that the weakness of the pound against the dollar and the euro has given exports a boost, too.
The difficulty is that the ONS data says completely the opposite: according the official figures UK exports are down. But this is the point the BCC is making, that the official figures are too pessimistic, and that the trade body’s members are relaying a different story about trading conditions. It even reckons that total export balances for the services industries were at their highest since the record high of 1994.
But dig a little deeper, and the data are still shaky. In its survey of around 7,000 UK companies, the BCC said that there was significant improvement in manufacturing order books and output for example, but that the number of jobs in the sector has fallen. And even with manufacturing, the CIPS Markit figures show that manufacturing PMIs edged a little higher to 48.3, but anything below 50 indicates contraction, so it’s not that good.
And given that the ONS revised down its forecast for GDP growth in 2013 from 1.2% to 0.6% just a couple of weeks ago, it’s hardly time to crack open the Bolly.
The BCC, despite its optimism, said that it does not feel chancellor George Osborne’s policies for growth are ‘good enough’. John Longworth, BCC director general, said: ‘Despite confidence rising, the prospect we face is still for a period of slow growth. We need to be more ambitious and that needs big bold action, and soon.’
But this is in the vein of practically every other I’ve-got-no-alternative-ideas commentator. Calls for ‘bold action’, ‘strong leadership’, and ‘new direction’ are all well and good, but they don’t tell us specifically what the BCC wants to see.
Still, keeping optimistic, the body’s chief economist David Kern claimed that recent GDP figures ‘exaggerated the weakness of the UK economy’. He said that if there is contraction in Q1 this year and people instantly call it a ‘triple dip’, this would cause unnecessary damage to confidence.
It really depends on what measure you use (some say two consecutive quarters of contraction are a recession, others say three), but it is all a bit a desperate. The point is that we’re clutching at straws, and the growth/shrinkage is so small each time the figures come out that it is probably within the margin of error in the ONS calculations.
In reality, the UK economy will most likely spend a while yet bumbling around the 0% growth mark, give or take a few basis points. In the meatime, there will continue to be lots of conflicting data to chew over, until that elusive definite upward trend emerges...