UK GDP growth revised higher: the ONS rewrites history
In this perspective Ruth Lea, economic adviser to the Arbuthnot Banking Group, includes discussion of the ONS’s latest GDP data.
The main points to note are:
– The ONS has made significant upwards revisions to the GDP data. It now means that annual growth for the years 2010-2014 averaged nearly 2%, which is quite respectable under the circumstances.
– GDP in 2015Q2 is now estimated to be 5.9% higher than the pre-recession peak (2008Q1), whilst GDP per capita is 0.6% higher.
– Labour productivity (output per hour) jumped by 0.9% in 2015Q2, much as expected.
– The latest Markit/CIPS data suggested some slowdown in activity in 2015Q3.
– The IMF’s October update modestly downgraded their world output growth forecasts, but not catastrophically.
– The world economy may be going through a quasi-structural change. After a period of fast world growth driven by very fast growing emerging markets (EM’s), it now seems likely there will be a period of more moderate world growth with the EM’s growing less quickly, though still faster than advanced economies.
– The September US employment report was very disappointing. It cast doubt on a Fed interest rate rise in 2015.
Ruth said: “The degree of the ONS’s latest GDP revisions should warn against over-reliance on early estimates. More specifically, the revisions suggest that, when the chancellor was heavily criticised for persisting with “austerity” because the economy appeared to be “struggling” in 2012 and early 2013, the economy was not struggling so badly after all.”
For the full article visit http://www.arbuthnotgroup.com/economic_perspectives_group.html
