Happy Christmas - GDP revised up to 0.6%

Be of good cheer, all ye citizens - the ONS has revised Q3 GDP up to 0.6% just in time for the yuletide holiday.

by Andrew Saunders
Last Updated: 06 Nov 2012
The surprise upgrade may be pretty modest - it’s only 0.1% more than the expected figure - but let’s be honest we need all the economic good news we can get at the moment.
So no surprises that many commentators have seized upon the story and are spreading the glad tidings far and wide. Trouble is, the good news isn’t really all that good, as a closer perusal of the ONS numbers reveals.
The three monthly GDP figures are quarter on quarter, not year on year, and if Q3’s numbers are up it’s mainly because Q2’s numbers have also been revised down, from 0.1% to nil. Hmm. So the main reason Q3 looks good is that Q2 was even worse than we thought. Oh well, the warm feeling was nice while it lasted.
The overall growth for the first nine months of the year remains unchanged at 0.5%, although there are signs that the squeeze on household incomes relaxed a little in Q3, with real disposable incomes up 0.3%. Manufacturing grew strongly with output up 6% for the quarter, and construction grew slightly.
But the overall picture is hardly one of rude health - the UK’s Q3 current account deficit stands at a record high of £15.2bn, double that of the previous quarter, and consumer spending remains flat. These figures certainly won’t be enough to divert the Bank of England from its widely anticipated move to undertake further rounds of quantitative easing next year - £50bn in February followed by another £50bn in the Spring seems most likely.
The markets reacted positively all the same (not-as-bad-as-we-thought is the new good, after all) with the FTSE up slightly this morning on the news. And that’s despite the fact that the ONS also revealed that the price of such vital Christmas dinner trimmings as back bacon (to keep the turkey moist of course) and sausages are rising at a brisk pace.
It’s also worth remembering that these numbers are for Q3, with Q4 yet to come. And given that most of the people MT has spoken too in recent weeks are saying that the back end of the year has turned into something of a car crash, the chances of much in the way of growth for the three months from October look pretty slim.
But as regular readers will know, we do try to maintain a glass-half-full approach to life here, so we’ll leave the final word on the prospects for 2012 to a group who perhaps don’t get as much airtime on MT as they should - Druids. Apparently the auspices from the dawn ceremony to mark the Winter Solstice at Stonehenge this morning were uncommonly good, with the sun shining strongly on the A303’s most famous landmark.
And who’s to say they don’t have at least as much chance of being right as anyone else? The track record of even the most illustrious economic prognosticators has hardly been faultless recently, after all…

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