This is easily the best commentary on yesterday's growth data that I have seen and comes from Geoff Tily at the TUC (whose blog is worth following):
At 0.5%, today's preliminary estimate of GDP quarterly growth in 2015 Q3 was a little weaker than expected (0.6%), down from 0.7% in Q2, and continued the run of below-par growth throughout 2015. Comparing with the same quarter of last year, growth was 2.3%.
Looking at the measure of GDP excluding oil and gas (‘GVAX'), which tends to be used by the OBR and others for forecasting purposes, growth was unchanged at 0.5%. Over 2014 as a whole GVAX averaged 0.8% a quarter; in 2015 so far GVAX growth has averaged only 0.4%. (Unrounded: 0.75 v. 0.43)
Economic growth, quarter on previous quarter
While growth in the latest quarter is driven almost entirely by the service sector (and a bounce from energy extraction like last quarter — see), over the year the services are still weaker than last (0.9% v. 0.6%).
In the meantime manufacturing is still (‘officially') in recession, having fallen for three consecutive quarters, by -0.3% in Q3, -0.5% in Q2 and -0.1% in Q1. Construction has also come off headier growth rates in 2014, and was down -2.2% in the latest quarter.
To put it another way: Osborne rode a lucky wave in May and it looks as though it's already fading.
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Manufacturing industry is officially in recession. Well, yes.
In an economy dominated by rent-seeking and upward transfers of wealth, zero or near-zero growth represents a severe recession for the vast majority of citizens and businesses.
Why would and did people vote for this?
“In the meantime manufacturing is still (‘officially’) in recession, having fallen for three consecutive quarters, by -0.3% in Q3, -0.5% in Q2 and -0.1% in Q1. Construction has also come off headier growth rates in 2014, and was down -2.2% in the latest quarter.”
It is also worth remembering that hardly any of our manufacturing base is actually British owned. It is almost all exclusively foreign owned. Few, even the TUC, seem to acknowledge that.
Does it matter? Certainly it does. While we get the benefit of the tax they pay (or rather, what they deign to pay due to ruses like transfer pricing) the profit is repatriated out of this country to the countries that own the manufacturing companies.
That is also why our trade deficit is at a record high.
Your last claim is false
No it isn’t.
Umm yes it is. The trade figure which are released in the second week of every month show our gap fell from July to August. Not only that, but we are in a much, much better position than at the end of 2014. You simply have no evidence for your claim because it is false.
If I am wrong so are a great many other serious economists
Of course we could all be wrong and you are right
That’s a judgement call
But to say I am spreading a falsehood is nonsense
I wasn’t talking about you, Richard.
As regards real things, like things that are actually made, like cars, white goods, etc, we have a rather large trade deficit an have done for some time.
https://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=9&cad=rja&uact=8&ved=0CEwQFjAIahUKEwjJ_suYpurIAhWCcRQKHVgpAlk&url=http%3A%2F%2Fwww.ibtimes.co.uk%2Fuk-trade-deficit-quadruples-july-goods-exports-hit-lowest-point-since-september-2010-1519026&usg=AFQjCNHHnh-FTOaAks45rcOJ3c_Aicne1w&sig2=nbiAdQUzldwvHWV0scQfDg
If I remember correctly, you said our trade deficit is at a record high. You did not say that we have a trade deficit regarding only real stuff. Unless I’m mistaken, we are rather more successful at making services than we are real things, and that explains why your assertion that our trade deficit is at a record high is evidently false. If you’d have talked only of the manufacturing trade gap, that would be one thing, but your claim was about the trade deficit. There’s a link here to the newest figures which are released near the start of every month. http://www.tradingeconomics.com/united-kingdom/balance-of-trade
As John M points out, where does much of this money come from? How clean is this money? Anyone can make gains by laundering money, which a great deal of the money pouring into housing from abroad comes from.
Incidentally, the website you pointed to doesn’t mention any specific services.
Now you are looking into the figures themselves. You are entitled to do that, but not in a discussion started by your assertion that our trade deficit is at a record high. That is what you said, and all I have done (and sought to have done) is shown you to be factually incorrect. You may want to look at the composition of the trade deficit, or the moral difficulties arising from trading with other nations over whose ethics we have no control, but that’s not the issue you raised and I responded to.
£8.6 billion deficit….offset by a “surplus” on services (more dodgy cash flooding in from countries investing in that well-know bastion of lawfulness….banks and property) (and buying the land recently vacated by social housing to build million-pound bedsits)
Good evening Richard – didn’t know where to post this as it’s more of a personal message. I’ve just enjoyed an excellent presentation by John Christensen. I had a chat with him after and said I was a regular reader of your blog! He said to say ‘Hi from Bournemouth’ as apparently he hasn’t spoken with you for a couple of weeks. It seems we can look forward to your visit in early February, which I will certainly attend, God willing. We on the progressive side of politics owe a debt of gratitude to you both for your relentless attempts to educate the public as to what is really going on in Westminster and the City. It must be akin to climbing Everest without oxygen! Thanks and regards — John
Thanks
And it’s true – John and I are overdue to speak
http://www.constructionenquirer.com/2015/10/29/english-new-home-registrations-drop-4/
http://www.constructionenquirer.com/2015/10/27/construction-slowdown-drags-down-gdp-figures/
“Skills shortages, however, are proving to be a key issue constraining growth for the industry”
Austerity is the ideology that asserts that starving leads to weight gain. This myth invokes a ‘bogeyman of default’ and a ‘confidence fairy’.