{"id":3139,"date":"2011-02-25T14:44:59","date_gmt":"2011-02-25T14:44:59","guid":{"rendered":"https:\/\/mmm.9dotdigital.ca\/?p=3139"},"modified":"2025-03-27T15:49:10","modified_gmt":"2025-03-27T15:49:10","slug":"uk-q4-gdp-revised-down-but-big-q1-bounce-likely","status":"publish","type":"post","link":"https:\/\/mmm.9dotdigital.ca\/?p=3139","title":{"rendered":"UK Q4 GDP revised down but big Q1 bounce likely"},"content":{"rendered":"<p>Today&#8217;s fourth-quarter GDP revision contains little news but may incline MPC waverers towards waiting for more data on the performance on the economy in early 2011 before voting for a rise in Bank rate.<\/p>\n<p>Last quarter&#8217;s GDP fall was revised down from 0.5% to 0.6%, mainly reflecting a larger decline in services output, concentrated in business services and finance. The change in gross value added excluding oil and gas extraction, however, remained at -0.5%.<\/p>\n<p>The Office for National Statistics continues to claim that December&#8217;s bad weather depressed GDP by 0.5% over the quarter, implying that the economy would have contracted by 0.1% in its absence &ndash; slightly more pessimistic than its previous interpretation that underlying economic performance was &#8220;flattish&#8221;.<\/p>\n<p>The view here remains that the ONS view is too bearish and that GDP was on course to rise by about 0.25% last quarter before the weather hit:<\/p>\n<ul>\n<li>\n<p>A GDP estimate based on monthly output data for industry, services and construction (comprising 99% of GDP) rose by 0.4% in the three months to November from the previous three months &ndash; see chart.<\/p>\n<\/li>\n<li>\n<p>The average level of the monthly estimate in October and November was 0.1% higher than in the third quarter while November business surveys were signalling expansion in December.<\/p>\n<\/li>\n<li>\n<p>The expenditure measure of GDP, before incorporating ONS consistency adjustments, fell by -0.4% last quarter. The &#8220;official&#8221; GDP number is based mainly on output-side information at this stage of the estimation process but the expenditure figure may, on this occasion, be more reliable, suggesting underlying GDP growth of 0.1% &ndash; higher if the ONS estimate of a 0.5% negative impact from the weather is too low.<\/p>\n<\/li>\n<\/ul>\n<p>Despite the December weather hit, nominal domestic spending grew by 6.2% in the year to the fourth quarter &ndash; faster than in the five years before the recession (i.e. during the credit bubble) and above a level consistent with achievement of the 2% inflation target over the medium term.<\/p>\n<p>A reasonable scenario remains that monthly GDP changes over January-March 2011 will mirror those in the three months following the weather-related slump in January 2010. This would imply a 1.1% GDP rise in the first quarter, assuming no further revision to the fourth-quarter estimate.\ufeff<\/p>\n<p><span class=\"full-image-block ssNonEditable\"><span><img decoding=\"async\" style=\"width: 680px;\" src=\"\/storage\/chart1_25-02-2011.gif?__SQUARESPACE_CACHEVERSION=1298632612834\" alt=\"\" \/><\/span><\/span><\/p>\n<p>&#8212;&#8211;<br \/>\nCOMMENT:<br \/>\nAUTHOR: Jeremy Dufton<br \/>\nEMAIL: jeremydufton@ukpml.co.uk<br \/>\nIP: 85.158.138.19<br \/>\nURL:<br \/>\nDATE: 02\/25\/2011 01:19:06 PM<\/p>\n<p>Imapct on the MPC-ometer, Simon?<\/p>\n<p>&#8212;&#8211;<br \/>\nCOMMENT:<br \/>\nAUTHOR: Jeremy<br \/>\nEMAIL:<br \/>\nIP: 81.187.127.137<br \/>\nURL:<br \/>\nDATE: 02\/25\/2011 02:44:59 PM<\/p>\n<p>Any comment on M4ex contraction in Q4?<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Today&#8217;s fourth-quarter GDP revision contains little news but may incline MPC waverers towards waiting for more data on the performance on the economy in early 2011 before voting for a rise in Bank rate. Last quarter&#8217;s GDP fall was revised down from 0.5% to 0.6%, mainly reflecting a larger decline in services output, concentrated in [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-3139","post","type-post","status-publish","format-standard","hentry","category-money-moves-markets"],"_links":{"self":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/3139","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3139"}],"version-history":[{"count":1,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/3139\/revisions"}],"predecessor-version":[{"id":5448,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/3139\/revisions\/5448"}],"wp:attachment":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3139"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3139"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3139"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}