Another Pleasant Surprise from the Official Statistics
Byline: Bill Gleeson
YESTERDAY'S provisional figure for GDP growth was a pleasant surprise, especially after all of last week's anguish over government spending cuts. At a rate of 0.8% for the third quarter, UK economic growth is powering ahead faster than many anticipated.
Many forecasters had pencilled in half that growth rate. Combined with the 1.2% enjoyed in the second quarter, the data suggests that annual growth will exceed official forecasts by a significant margin. All of the growth is coming from the private sector, leading to the very real prospect that private sector job creation will be strong enough to offset the job losses expected in the public sector following the Comprehensive Spending Review.
Manufacturing, construction and business services have led the way by bouncing back from the last recession with some vigour, according to the detailed analysis provided by the Office for National Statistics.
Distribution, hotels and restaurants rose 0.6%.
Taken together, the second and third quarter GDP growth figures raise the question: Should we be so surprised? After all, prior to the recession, the UK economy was consistently very resilient, comfortably surviving many of the bumps along the way that caused serious problems in the US and western Europe. Our economists have yet to put their finger on the factors that move our economy.
But it's worth being a little cautious. There are still some ambiguous signals.
Consumer spending, house prices and business hiring intentions remain low. These figures, though, surely put to rest any lingering fears that the UK could slip back into a double-dip recession. The Office for National Statistics said that, taking into account the poor weather that hit the UK at the start of the year - which deferred some activity into the second quarter and artificially boosted growth in that period - growth in the second and the third quarters was broadly similar. …