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| | Hi Friend, We
have had a few days now to digest the latest GDP Data for the U.K.
economy. It has taken a few days since, like the King of Siam …
"There are times, I almost think I am not sure, of what I know,
I often find confusion in conclusion"
Confusion
was compounded this weekend by headlines which appeared to suggest the
UK was escaping from recession, after set backs in the third and fourth
quarters of 2023.
Indeed
the ONS commentary was upbeat. Real gross domestic product (GDP) is
estimated to have grown by 0.2% in the three months to February 2024,
compared with the three months to November 2023.
It
is confusing. I have concluded there is confusion in conclusion. There
is a fashion to report growth as a month on month, or quarter on
quarter, phenomenon. Call me old fashioned but the valid conventional measure of growth is year on year and not quarter on quarter.
The
data set [ED2R GVA at basis prices] confirms year on year, growth
slowed from 0.6% in Q1 last year to 0.5% in Q2 and Q3, before slipping
to -0.2% in the final quarter.
The
data suggests growth in January 2024 was down by -0.1% and down by -0.2% in
February. The bears are watching. Barring a bounce back in March, the
first quarter of the year, will confirm the UK is in recession, with two
successive quarters of negative growth year on year.
Slipping
into recession, no turning the corner, no light at the end of the
tunnel, no dawn of recovery, no green shoots, no bouncing back, no storm
passing.
The
Prime Minister may think “Wages are up. Energy bills are falling.
Pensions are going up. Tax cuts are now already happening and benefiting
people."
The
chancellor may think we are "Breaking Through The Clouds" when he set
out his vision for long-term prosperity in the UK, optimism despite
economic headwinds.
Hunt
may believe the economy is "back on track". He has rejected the "gloom"
about the UK's economic prospects and declaring "declinism about
Britain is just wrong."
Both
Hunt and Sunak should take a hard look at just what happened in the
final quarter of last year. There was some good news. Education and
healthcare were up by almost 2%. Manufacturing output was up by over
1.2%.
But
construction output fell by -0.5%, retail and distribution was down by
almost 1%. Accommodation and food down by 1.5%. Transport and storage
down by over 3%.
Into
the first quarter of 2025 and the poor performance of the service
sector continues, falling by 0.3% year on year. The latest jobs data
suggest the unemployment rate is rising as vacancies continue to fall.
The
bright spot, the arts and entertainment sector is growing by over 6.5%
this quarter compared to almost 5% in the last quarter of the prior
year. Which just goes to show the information should all be shared with a
pinch of uncertainty.
Let’s hope we are back on track and breaking through the clouds. Technically we are in recession and the bears are watching ...
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| | That's all for now. Have a great week ahead ...
John
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| To understand the markets, you have to understand the economics ...
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| References ONS : GDP Monthly Estimate, UK February 2024
ONS : GDP Quarterly National Accounts UK October to December 2023
Note: The Quarterly Data in the chart is based on the quarterly National Accounts Data and may vary slightly from the references in text based on the latest monthly GDP monthly estimate.
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| © 2024 John Ashcroft, Economics, Strategy and Financial Markets, experience worth sharing.
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