The numbers show a massive drop in construction, which fell by 5.2%. This step change comes on the back of a 4.9% drop in the previous quarter. The Queen’s Diamond Jubilee may have played a role, though the ONS reckon it is too early to work out its impact. The ONS statisticians (based in sunny South Wales) area also blaming bad weather for the anaemic numbers.
Optimists will point to better outcomes in British labour markets: unemployment fell in the quarter to May. This will leave many hoping for a revision of today’s preliminary numbers, which may change when the ONS releases information on GDP expenditure. (Today's numbers provide a volume measure of GDP based on aggregate production, and do use some modelled numbers rather than hard data to fill gaps in firms’ responses to the ONS’s surveys.)
But pessimists will say the numbers look right, because it is more than extra bank holidays and excess rainfall that is holding the economy back. Things are looking bleak for Britain because so many categories of GDP expenditure have their own bad news story. Consumption is being stunted back by low real-wage growth as firms can provide workers only measly nominal rises, and inflation erodes the rest. Government expenditure is not going to provide a boost, reflecting the coalition’s commitment to austerity. Exports—close to half of which go to the euro zone—are going to be dragged down by the crisis on the continent. Analysts are hoping for a boost from the Olympics, but predicting a hangover afterwards. Britain's economy looks set to remain in its stop-go pattern, with the emphasis on stop.
