Still, this isn’t nearly as bad as the economic doom-mongers were expecting. Considering that the ONS makes no seasonal adjustments for bank holidays and such, a 2.5% drop overall is pretty good going. Industrial production is now estimated to have fallen 0.9% in the second quarter rather than the 1.3% previously estimated. Manufacturing has shown a similar decline – also bearable - but mining and quarrying has fared substantially worse, falling by 4.4%. On the flipside, the energy sector actually rose last month, up 5.6%, as people whacked on radiators to dispel the unseasonal chill.
Crunching the production data, it looks like GDP figures will be revised up from -0.7% to -0.6%, but that still means that the UK is in the clutches of the downturn. However, stripping out the Jubilee effect, which flattened GDP by as much as 0.5%, you are left with an economy that is simple stagnant, rather than actively shrinking. Today’s figures from the British Retail Consortium (BRC) back up this theory. It says that sales rose 0.1% in July compared with a year earlier on a like-for-like basis – that’s pretty close to a flat line.
But while Q2 looks sunnier – in economic terms – than expected, the prospects remain pretty bleak for the upcoming quarter. Purchasing managers reported the steepest drop in production since March 2009 at the start of the third quarter. And export orders are at their lowest levels since February 2009, which means that the July fall-off in production was more than a hangover effect from lost domestic orders across the bank holidays.
If you’re an online retailer, however, ignore all this grim news. Your sector is booming. The BRC reckons online retail sales rose 15.6% in July compared with the same time last year. Etailers have actually profited from the wet weather, as consumer opted to browse stores online rather than brave the howling gale outside.
And despite all the bellyaching about the Olympics denting retail, London 2012 may yet prove a boost to the economy. While customer footfall levels were 11.7% down on Saturday, the first day of the Olympics competition, people have been gradually returning to the high street. Experian data shows that between Wednesday 1 and Saturday 4 August, shopper numbers in central London were down a by between 2.1% and 4.5% compared with the same day a year earlier. And on Sunday, footfall was actually up 4.5%.
‘Clear messages that the city is dealing effectively with the Olympic crowds and relaxed Sunday trading laws have together made an impact and certain retailers and particular sites witnessed significant increase in shopper numbers,’ reckons Experian.
Let’s just hope the London 2012 feel-good factor is reflected in next month’s GDP figures too.