Growth estimate: Slowly does it
Once again, many in the City will be scratching their heads at the first estimate of growth in the first three months of this year from the Office for National Statistics (ONS). Most City economists thought it would be a bit larger.
However, the gap between the City and the ONS is not as large as it has been in recent quarters - on the order of two tenths of a percent. And this time there are at least good reasons why the recovery might have lost a bit of momentum at the start of the year.
We already knew that the bad weather in January had hit some parts of the economy quite hard, especially services. On the coldest days, there were millions of people who couldn't get to work, and even the restaurants and shops that stayed open were usually empty.
This is borne out by today's early numbers, which show the distribution, hotels and restaurants sector shrank by 0.7% in the first quarter, after an impressive 1.9% rise in the previous three months.
That's the worst performance for that part of the economy since the start of 2009, in the depths of the recession - and rather worse than the leading business surveys had indicated.
But the bad weather makes it hard to judge which is right - and there is that other "special" factor to consider, the increase in VAT back up to 17.5%. We knew that might pull down the figures in the consumer side of the economy in these months as well.
What many will find most cheering in these numbers is the impressive 0.7% estimate for growth in the production sector, up from 0.4% in the last quarter of 2009.
That's the strongest quarterly performance for that part of the economy in 4 years. It owes a lot to a sharp jump in output in the utility sector, which will probably be a one-off. There is also another sharp decline in construction output buried in that headline figure.
But manufacturing also did well, continuing almost the same pace of growth as in the fourth quarter of last year. Hopes of an export-led recovery are not dashed yet.
Many will expect some upward revision in this number - if not in the next couple of months then in a year or two's time, when the ONS has 100% of the relevant data to go on - not just 40%. Remember that controversial 0.1% estimate for the final quarter of 2009 has now gone up to 0.4%.
Though disappointing, the 0.2% figure is not dramatically out of line with the popular experience of this recovery so far. We know this is a modest upturn, and the economy has yet to truly find its feet. What we don't know is what this mediocre number will mean for the campaign.
Update, 14:52: A couple of points to add about the GDP figures. It's worth noting that yesterday's retail sales figures gave a hint of the difference the bad weather made to some sectors.
In the first quarter of 2010, petrol sales fell by an astonishing 14.9% on the previous three months. (Thanks to Simon Hayes, of Barclays Capital, for pointing this out.)
If you can't drive anywhere, you don't need petrol. "Core" retail sales - excluding food and petrol - rose by 0.1% in the first three months of 2010.
Also - on the prospects for an export-led recovery, there were some positive signs from the eurozone today. Mervyn King and other have previously worried about a weak eurozone recovery putting the brakes on ours, because the rest of Europe buys more than half of our exports (see my post Weighing the risks).
The European recovery seemed to stumble at the end of 2009, but all the signs are now that growth is picking up.
Eurostat announced today that industrial new orders rose by 1.5% in the euro area in February, after falling by 1.6% the previous month. Excluding volatile sectors like ships and aerospace, the rise was 2.5%.
In Germany, the leading indicator of business confidence, the Ifo Index, has risen by much more than expected this month, to its highest level since May 2008. On current form, the economy could be looking at growth in the first quarter of more than 1.5%.
So countries like Germany are growing again. That is the good news. The bad news is that a good part of that new momentum is likely to have come from in the export sectors, thanks to the fall in the euro.
That's been a welcome side-effect, for German exporters, of the unfolding tragedy of Greece (see today's other post). I note that the Ifo Index for just the retail trade actually fell in April - albeit by much less than previous months.
Like Greece and other countries on the eurozone's hard-pressed periphery, Britain needs a big rise in domestic demand in Germany and other major European economies over the next year or two. It's not obvious that we will get it.