GDP increased 0.8% in the third quarter of 2010, compared with an increase of 1.2% in the previous quarter – but was still much better than had been anticipated.
Business leaders welcomed the announcement but said the West Midlands could not become complacent.
Allowing for the recovery in Q2 following the bad weather at the start of the year, the underlying growth in Q3 is broadly similar to that in Q2. The growth in the third quarter is due to growth in each of the component aggregate series, namely services, construction and production.
Total services output rose 0.6% in the third quarter, compared with a rise of 0.6% in the previous quarter. The largest contribution to the growth in this quarter was from business services and finance and government and other services:-
Distribution, hotels and restaurants rose 0.6%, compared with an increase of 0.5% in the previous quarter. Retail contributed most to growth in this quarter.
Transport, storage and communication increased by 0.7%, compared with a decrease of 1.5% in the previous quarter. Post and telecommunications and land transport contributed most to the growth in this quarter.
Business services and finance rose 0.5%, compared with an increase of 1%in the previous quarter. Computer services contributed most to the growth in this quarter.
Government and other services rose 0.6%, compared with 0.7% growth in the previous quarter. Recreation and health contributed most to the growth this quarter.
Total production output rose 0.6% in the third quarter of 2010, compared with an increase of 1% in the second quarter. Manufacturing made the largest contribution to the growth, where output rose 1% compared with an increase of 1.6% in the previous quarter.
Electricity, gas and water supply output decreased by 0.2%, compared with a decrease of 1.3% in the previous quarter. Mining and quarrying fell 0.7%, compared with zero growth in the previous quarter.
Construction output rose 4% in the third quarter of 2010, compared with an increase of 9.5% in the previous quarter.
Agriculture, forestry and fishing output decreased 0.3%, compared with an increase of 2.7% in the previous quarter.
Birmingham and Solihull business leaders said the revised improvement should not divert attention from the real challenges facing UK plc.
Will Rogers, policy adviser at Birmingham Chamber Group said: “We are not out of the woods yet and there is still the threat of a double dip recession.
“The Office for Budget Responsibility has estimated that the public sector spending cuts will result in the loss of 490,000 public sector jobs by 2014/2015. In Birmingham the total employment reduction, direct and indirect, is predicted to be 19,880, equivalent to 4.1% of total employment. It is unreasonable for government to expect the private sector to take up this slack unless conditions are created which will encourage businesses to create jobs and wealth.
“The Government must play its part by supporting capital investment. If access to finance continues to hinder the business community, the Government will come under pressure to implement further measures, such as fresh stimulus through quantitative easing that will help grow the economy further.”
Graham Aylott, policy officer at the Coventry and Warwickshire Chamber of Commerce, said the figures could not be used as a barometer for short term growth.
He said: “These figures are better than expected and build on the second quarter growth of 1.2%.
“But, that said, we cannot read too much into them. The fact that we have had three quarters of growth is undoubtedly positive but we cannot become complacent.
“So what we must see and hear from the Government is a commitment to rebalancing the economy being driven through in order to help create the jobs and economic prosperity of the future.”
He said he would be surprised if the move heralded any change of policy on interest rates by the Bank of England.
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