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Uk Gdp: Inventories Fall At Record Pace

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http://www.telegraph.co.uk/finance/economi...ecord-pace.html

British companies ran down stocks at a record pace in the first quarter as the deepening recession led to a slump in investment and household spending.

Inventories over the first three months of the year dropped by a record £6bn - the biggest quarterly fall since records began in 1948, the Office for National Statistics said on Friday in a second estimate of gross domestic product.

Brian Hilliard of Societe Generale called the fall in inventories "staggering" and "savage". Destocking by companies cut 0.6 percentage points off first quarter GDP, which dropped an unrevised 1.9pc in the period. In the fourth quarter on 2008 inventories fell by 4.1bn, down from a rise of £1bn in the third quater.

The fall in GDP, while the biggest quarterly decline since 1979, was in line with analysts' forecasts and underlined the broad weakness of the economy at the start of this year.

Spending by households fell by 1.2pc, the biggest drop since 1980. the only sector of the economy making a positive contribution to growth was government spending.

Other key points were:

* Manufacturing - biggest quarterly fall in output since records began in 1955

* Production - biggest quarterly fall in output since Q1 1974

* Compensation for employees - biggest quarterly fall since records began in 1955

"The breakdown of Q1 GDP gives a pretty grim picture of weakness right across the economy in the early months of this year," said Jonathan Loynes of Capital Economics. "We remain unconvinced that recent 'green shoots' will translate into a return to decent growth next year."

He expected household spending and investment to fall "considerably further" due to weak housing and labour markets and the reluctance of banks to lend.

Ross Walker of Royal Bank of Scotland said: "They are awful numbers, but there is not a lot of news here and I guess they are pretty neutral for markets ... I think we are on course for what on any yardstick would be substantial fall - a drop of 0.7pc quarter on quarter. So it is stil going to be a painful contraction."

Economist expect the fall in inventories to slow over the coming months.

gdp-revised_1408338g.jpg

The running down of inventories may slow but at what levels will people restock?

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The running down of inventories may slow but at what levels will people restock?

I urgently need to replenish the bean stash if that's what you mean? :unsure:

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we need more inventors.....come on messrs Sinclair and Dysons

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