GDP growth signals end of recession
THE UK economy has emerged from the longest double dip recession since the end of the Second World War.
GDP figures released this morning show the economy grew by 1% in the three months to September, the strongest quarterly growth in five years.
The figures show production industries grew by 1.1% and the service sector grew by 1.3%.
However, construction is still in the doldrums with output shrinking by 2.5%. That follows a contraction of 3% in the previous quarter.
A return to growth after three consecutive quarters of contraction was expected by analysts. Two consecutive quarters of shrinking GDP constitutes an official recession.
The economy first went into recession in the second quarter of 2008 and did not emerge until the third quarter of 2009. Growth continued, barring a blip at the end of 2010, until the fourth quarter of 2011 when the economy shrank again and continued to do so through the first half of 2012.
David Ost, North West region director at manufacturers’ organisation EEF, said: “Output across manufacturing and the wider economy has mounted a strong rebound confirming that activity wasn’t lost, just displaced from the previous quarter. This has to be regarded as a positive development, given the disappointing data in the year so far.
“However, a true account of the UK’s economic performance has been skewed recently due to a series of one-off events, and this quarter is no different. The question is whether this first estimate is enough to signal an improvement in the underlying growth picture. With survey data, particularly in our major markets, pointing to difficult trading conditions in recent months, it’s unlikely this pace of expansion will be maintained into the new year.”
Dr Brian Sloan, chief economist at Greater Manchester Chamber of Commerce, said: “Today’s figures are good news and slightly higher than many expected, however we must be mindful of the details behind these numbers and the challenges that remain ahead. The figures include a 0.2% impact due to Olympic ticket sales prior to Q3, that for accounting purposes were included this quarter to coincide with the event itself.
“The contraction of the economy in Q2 was due to the extra Bank Holiday and so the improvement in Q3 is flattered by this and the underlying picture for the last 12 months remains flat. This is not the growth that the Government expected or desires and at the regional level our own Quarterly Economic Survey suggests our region suffered a setback in Q3, which reflects the ongoing low growth environment that will be experienced in different sectors and regions differently from time to time.”
There is a consensus that what growth there is in the economy remains fragile with an ongoing threat posed by conditions in the eurozone.
The latest eurozone purchasing managers index, published yesterday, fell to 45.8, a 40-month low.
The figures mean that eurozone output has fallen every month since October last year with the exception of a marginal increase in January.
