Tuesday, Jun 30, 2009
Green shoots
Telegraph: UK economy shrank at fastest rate in 50 years
The British recession was much more severe than first thought in the first three months of the year, with the economy suffering its sharpest quarterly contraction in more than 50 years, official figures show.
The Office for National Statistics (ONS) said the economy actually shrank by 2.4% in the first quarter compared last year, much more sharply than its original estimate of 1.9%. Economists had predicted a downward revision but not on that scale - the consensus estimate was a 2.1%.
The Ernst & Young ITEM Club described the data as "a real shock which highlights the extreme weakness of the economy in the early months of this year."
Posted by little professor @ 01:12 PM (1123 views) Add Comment
13 Comments
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1. little professor said...
That's a 2.4% decline quarter-on quarter - -almost a 10% contraction annualized. Can't see that providing much of a support for house prices
2. japanese uncle said...
Viva Green shooters in the sky! hahaha
3. fubar said...
The BBC can't ehlp themselves though. Story of contraction ended with "but Economists agree that the situation is stabilising..." Oh Yeah? As in the condition of Air France flight 447 from Rio has now stabilised.
4. george monsoon said...
Honestly.. the beeb...!!
They should be renamed "misitry of truth"
All we get from the beeb is mulch to pacify the great unwashed.
5. fubar said...
From Aunty's report
"Getting better?
Despite the economy's big downward revision for the first quarter of 2009, the expectation is that the official figures for April to June will be nowhere near as bad when the first estimates are published at the end of July.
Earlier this month, the ONS said industrial production rose in April, its first month-on-month climb since February of last year.
A growing number of reports from business organisations such as the CBI have also predicted that the worst of the recession is over.
The CBI said earlier this month that the economy was now stabilising, and would begin a "slow and gradual" recovery from early next year.
Separately, a key service sector survey reported a growth in business in May for the first time since April 2008.
The PMI service index from the Chartered Institute of Purchasing and Supply rose to 51.7 in May, up from 48.7 in April, with a measure above 50 indicating growth. "
The thing that bothers me is that I'm not by any means an economist, just an interested bystander, so can't really put this in any kind of proper context. Does anyone with any knowledge of these things agree with the above claims? Are the CBI a reliable source or a VI?
6. japanese uncle said...
The shameless fictitious rigging of house market as we see now just reflects the sheer fear of those concerned. Further 40% HPC (which again is an extremely conservative prediction) will send a dozen more financial institutions into serious trouble, a few of them facing the wall. The real horror of this phase (post-bubble era) of an economy is, things will get worse and worse in spiral, beyond anyone's control, as if to ridicule the empty effort of those greenshooters. Now (useless) company management is asking employees to work for nothing for a month, but sooner they will ask you to work for nothing for two months, etc. In a few years time, people would certanly look back this period (circa 2009), as the last year in which people could still afford some element of optimism.
There is a calm before the strom.
7. bluebeach said...
My work is the design of diggers... the summer pick just up ain't coming through as thought. What is reported in the press and in the headline news is just not happening in the real world at the moment
8. sovietuk said...
A quarterley 2.4% contraction is truly horrific. Statistics aside personally I am seeing things becoming increasingly gruesome for friends/people I know as lay offs increase and work hours are cut. This ordeal has a long way to go yet.
9. gone-to-colombia said...
Just not good enough, once again we are presented with statistics, real evidence of what is happening out there. What proof is this!
No, give me some green shoot survey of a sensible group of VI's, or a survey of the amount of for sale boards in stock at estate agents.
Far more likely to point the way house prices will go. I'm so angry about this I'm going red!
10. gone-to-colombia said...
And in any case the chancellor hs predited growth! He must have had a reason for that! He knew all about those shoots, he knows where they are gowing, see!
11. 51ck-6-51x said...
Hmm, alternatively, maybe Q1 was not as bad as they say...
e.g.:
If Q1 was actually -1.9 and they decide to report it as -2.4 and Q2 is also -1.9
then they can report Q2 as -1.4%
[ since ( 1 - 0.024 ) * ( 1 - 0.014 ) == ( 1 - 0.019 ) ^ 2 ]
and it looks like we're getting better (which tends to self-fulfil)
- of course they run the risk of having the opposite effect now ( if we not at or past the bottom )
Just a thought, but I would not put it past 'em!
12. Ob2002 said...
What will be its impact on housing market? The recent rises of house prices have taken us all by surprise. Clearly the QE and low interest rate is inflating the housing market.
13. Sell-your-soul said...
I think the key point to take from this data is that it now confirms that IR will be maintained at historically low levels for longer. Consensus is pricing rate rises to 4%, which assumes sustainable growth of a similar figure...impossible! Whatever your macro view is, the market is pricing in rate rises far above a level which can be accomodated. My best guess would be the first rise in the later end of 2010, capped to 2%. Raising rates any higher without demonstrable growth, in the face of extreme fiscal difficulties, forced lower government spending, develerage from a banking system which is shot through and will not return, and consumers facing high debt levels, higher taxation and falling house prices, would be economic suicide to raise rates any higher.