As the Office for National Statistics has announced this morning:
- Monthly real gross domestic product (GDP) is estimated to have grown by 0.2% in August 2023, following a fall of 0.6% in July 2023, revised down from a 0.5% fall in our previous publication.
- Looking at the broader picture, GDP increased by 0.3% in the three months to August 2023, with growth in all sectors.
- Services output rose by 0.4% in August 2023 and was the main contributor to the growth in GDP.
- Output in consumer-facing services fell by 0.6% in August 2023 after a fall of 0.2% in July 2023, revised down from no growth in our previous publication.
- Production output fell by 0.7% in August 2023 after falling by 1.1% in July 2023, revised down from a 0.7% fall in our previous publication.
- The construction sector fell by 0.5% in August 2023 after a fall of 0.4% in July 2023, revised up from a 0.5% fall in our previous publication.
Overall, in July and August, the UK economy declined, just as the Bank of England would wish that it did.
There is little sign that this pattern will change in the rest of this year: there is nothing within the economy that suggests that growth is going to suddenly start happening, whatever the Labour Party might like to think.
As a result, it is reasonable to expect a decline in GDP over the rest of the year, which would deliver a technical recession.
In reality, many households are, of course, already facing this situation. Aggregates do not reveal that across the spectrum of the UK economy, where some (mainly the wealthy, whose investment income is rising rapidly, and those without mortgages and who do not pay rent, who are mainly more elderly homeowners) are doing very well whilst others (younger renters and those forced to remortgage) are doing very badly indeed.
I report none of this with pleasure, not least because none of this is necessary. The interest rate rises that are the primary cause of this situation were unnecessary and are doing nothing to beat inflation. However, Labour is saying nothing about bringing them down. In that case, where it thinks growth is going to come from is hard to work out: unless the drain that interest is now imposing on the UK economy is removed the prospects of any significant growth for some time to come is something that only those who also believe in fairies might anticipate.
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I do not think that my already sceptical view of ONS statistics has ever recovered from your revelation that 10% of UK GDP is an entirely notional figure regarding rents included to try and make UK GDP measurement comparable to the measurement of German GDP.
Given that what is and what is not counted as inflation is highly contentious in the first place, differentiating between what is genuine growth and what is actually inflation must be regarded as a political decision.
It certainly makes the idea that you can calculate GDP accurately to one thousandth part of the whole each month look like a very shaky claim.
Agreed
As a retired statistician, it astonishes me that they claim to be able to identify trends in such muddy waters.
It’s no good claiming that “AI” can do it, either. Machine learning is only good at looking in the rear-view mirror. When you’re looking at situations where things might change drastically without warning, that’s worse than useless.
Agreed
I want to see error bars. This is all based on sampling, and who knows what other errors they may be. The ONS does not quantify their uncertainty but we know the numbers are frequently revised up or down by 0.1 or 0.2 percentage points. Any difference less than that, either way is meaningless.
Economists pretend they are scientists but they don’t operate to the same standards of statistical certainty. Simon Kuznets who essentially formulated the measurement of GDP warned about the misleading precision and simplicity of a single number.
Agreed
A couple of cheers for Andrew and Jacky Smith. Economists and statistics do not mix well (read Zilliak and McCloskey, ‘The Cult of Statistical Significance’), Economics has form on bad statistics.
When the ONS corrected its forecasts, the Conservative Government sent out the dogs of spin to celebrate a triumph. Nobody asked what confidence we should place in ONS forecasting. So, what confidence should we place in ONS forecasting? Allow me to be helpful to them;
1) Where, on a scale of 1-10, would the ONS place their own forecasting?
2) More germane, if they required to but their own forecasts – how much would they pay?
2) is how every economic forecaster should be judged. Call it market economics, coming home to roost.
“BUY their own forecasting” …… been here before …… naughty step.
Well, something is definitely happening in development.
Private developers we deal with on s.106 agreements have stopped whinging about 52% OMV and seem desperate to sell anything (housing associations aren’t buying anything at the moment due to higher interest rates).
I’m deluged by private building firms wanting to get on our procurement frameworks too. Local authority affordable housing development might be the only game in town until the bonfire of the planning regulations by Stymied & Co.
So something is up – or should I say ‘down’ that supports the post.
Interesting
And thanks
I suspecyt they know there is an absolute shortage of private sectoir buyers, including first time ones who are hoklding out for prices to tumble.