RIP for double dip?

  • 10 May 2013
  • From the section Business
  • comments
Builders working on a new house

There has been encouraging news on the state of the UK recovery in the past few days, suggesting the economy may have gained some momentum in the last couple of months.

You might also be interested to know that the Office for National Statistics (ONS) has moved a step closer to revising away last year's double dip recession.

Today's trade figures for March show UK exports rising, and the gap between our exports and our imports narrowed somewhat, though we should remember it is still massive by historical standards.

Exports to non-European markets grew 10% on the previous month, with exports to the US up by more than 20%, though exports to EU countries were broadly flat.

On the basis of these figures, some in the city think our net trade with the rest of the world may turn out to have made a positive contribution to Britain's growth in the first three months of the year.

Others are more cautious. But if it didn't actively detract from growth in the first quarter, that itself would be a big improvement on 2012.

We have also had the latest unofficial (but reputable) estimate of monthly growth from the National Institute for Economic Social Research (NIESR).

It reckons that national output grew by 0.8% in the three months to the end of April, up from growth of 0.3% in the three months to the end of March.

As NIESR economists are quick to point out, that 0.8% figure is being pushed up by the fact that January was so weak.

They don't think the underlying growth rate is anything like that fast, which is why they are yet to revise up their forecast of 0.9% growth for 2013 overall.

Still, it looks like we won't be talking about the possibility of a "triple dip" recession for a while - and not just because it now looks even more likely that the second of those dips is going to be revised away.

I flagged this up a while ago.

You'll remember that the second dip formally started with a fall in GDP in the last three months 2011 which has been gradually been revised into a decline of just 0.1%. The fall in output in the first three months of 2012 is also now 0.1%, and that in itself is a rounding up of the underlying number.

As I said in that earlier blog, the ONS only needed to revise that figure for the first quarter of 2012 by a few hundredths of a percentage point for the double dip recession to disappear.

With today's revised construction output data, the statisticians seem now to have reason to do just that.

The release shows construction output in the first quarter of 2012 has been revised up by 0.4%.

Even though construction accounts for less than 7% of national output, that change would be enough to turn minus 0.1% into 0.0% in the GDP figures for the first quarter of 2012.

The ONS says it is also planning to make further small adjustments to the data - to adjust for what they have decided is extra "seasonality" in the construction numbers.

That could actually make the GDP figure for the start of 2012 very slightly positive.

Or that's the theory - though, of course, there might be other changes to the data in the next month or so, which change the picture again.

We won't know for sure until the "Blue Book" national accounts figures come out on June 27th. But right now it looks as though the UK has not formally been in recession since the summer of 2009.