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UK Economy Grows At Slowest Pace Since 2012 Two Weeks Ahead Of National Election
With US Q1 GDP set to be a huge disappointment to initial estimates of 3% growth set at the beginning of the year, and since plunging to 1% or lower when it is reported later this week because, well, it inexplicably snowed in the winter for the second year in a row, earlier today we learned that US harsh weather cross the Atlantic and landed in the UK where ONS reported that the economy grew at a tepid pace of just 0.3% in the first quarter, well below consensus estimates of 0.5%, and at the lowest pace since Q4 2012 when GDP posted a 0.3% drop.
A key reason for the slowdown: the plunge in oil prices, which lead to a drop in North Sea production, which in turn dragged down the UK's industrial sector.
The economic slowdown comes at a sensitive time for the UK, less than two weeks ahead of the national election. The WSJ's take:
The economy is a key battleground in the U.K. general election, which takes place on May 7. Polls signal a close fight between the Conservative Party—currently in a coalition government with the Liberal Democrats—and the main opposition Labour Party.
Prime Minister David Cameron and his Treasury chief George Osborne are trying to use the economic recovery as a way to win over voters after Britain finished 2014 as the fastest-growing nation among Group of Seven industrialized countries.
The U.K. economy is about 4% above its pre-downturn peak in 2008 and has expanded 8.4% since the Conservative-led government took charge in 2010.
However, Tuesday’s data points to Britain’s recovery losing steam across all sectors. Despite signs that consumer spending remains healthy, the services sector failed to garner enough strength to offset a disappointing start to 2015 for both manufacturing and construction. According to the ONS, activity in business services and finance slackened after climbing up to a three year-high last quarter, while a dip in North Sea production dragged down the industrial sector.
The weakness was quite widespread with only services output increasing by 0.5%qoq (contributing 0.4pp to the headline figure), while the other three sectors declined on the quarter. Production came in a touch below zero (-0.1%qoq, contributing 0.0pp), although output in manufacturing edged up (+0.1%qoq). Output growth in business sectors came in weaker at +0.1%qoq, below consensus expectations of ~ 0.5%qoq, while construction output was also very weak at -1.6%qoq.
Goldman has more:
According to the ONS's preliminary estimate, UK GDP rose by +0.3%qoq (1.2%qoq annl.) in Q1, weaker than expected (GS: +0.4%qoq, Cons: +0.5%qoq). Recorded growth in the quarter was dragged down by sharp falls in construction output (-1.6%qoq) and mining, oil and gas (-2.1%qoq), and weak growth in business services (+0.1%qoq). Today's GDP estimate contrasts with the strength of UK business surveys and labour market data. Our Current Activity Indicator (CAI) was consistent with +0.7-0.8%qoq growth in the quarter and, in time, we expect the ONS’s GDP estimate to be revised higher.
The ONS’s sectoral data suggest that GDP rose by +0.3%qoq in Q1. This was slightly weaker than our Tracking Estimate of the ONS's monthly output data (+0.36%qoq) and significantly weaker than the Consensus estimate (+0.5%qoq).
In a separate release, service sector output rose by +0.3%mom in February (+0.7% on a 3m/3m basis). As part of the preliminary GDP estimate, the ONS estimates output data for March using early survey responses. The ONS estimates that industrial production for March was flat on the month, while service sector output rose by 0.3%mom, unchanged from February. It also estimates that construction output increased by 5.3%mom in March, after the -0.9%mom fall in February. This suggests a strong starting point for output growth in Q2.
The ONS’s early GDP estimates are subject to significant revision, with the biggest revisions typically taking place around 2 years after the initial release (when the various measures of GDP are reconciled with each other and with other sources of information, such as tax returns). In past research, we have found that there is a statistically-significant downward bias in the ONS’s early reporting of GDP data and that business surveys and labour market data provide a more accurate guide to ‘post-revision’ GDP data than the ONS’s own early estimates (see here). Our Current Activity Indicator – which distils the information provided by these other indicators – was consistent with GDP growth of +0.7-0.8%qoq growth in Q1, suggesting that Q1 GDP will be revised significantly higher over time (Chart 1).
Goldman's conclusion based on the weak data from a BOE perspective is that "the implications of today’s data for monetary policy are limited, as the Bank of England also places relatively little weight on the ONS’s early output estimates. In the minutes of its March meeting, reflecting on the weakness of official output data, the MPC said that “sectoral output data were volatile and susceptible to revision ... and the output surveys had generally been more upbeat. Both the BCC and CBI surveys had suggested that growth in Q1 had remained solid and the composite Markit/CIPS output and expectations series had both risen sharply in March”.
Of course, who cares about hard data when manipulated and record stock-market biased surveys say the recovery is stronger. Well, the BOE will eventually, when it too is forced to join its peers from the ECB and BOJ (and soon PBOC and Fed) in some more coordinated global easing, because in a world in which trade and commerce has ground to a virtual halt, currency debasement is all that's left.
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The horror... the horror
OFF topic:
guys I am from B-more, the city looks like a war zone. I wish i could upload some pix
Rumors has it that today is going to get worst, rumors is that the gang are going to give the greenlight to shoot cops.
Cops? Hell, that's much too easy. They should try finding bankers for a real challenge.
Gotta start somewhere
Oh, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please, please...
Graph illistrates a now sputtering economy, small gasps of breath triggered by CB liquidity injections following a period propped up by easy money policies.
It's all Bullshit!!!
Worst UK growth since Lehman
I make a lot of comments moaning about our dear EU-Partners, the Brits, and how they moan about all things related to the EU and the EUR
but boy, I have to admit that they have one thing which should really be an example for many countries: they declare when they'll have a short electoral season before elections and they stick to it
imagine all the money that all those Super-PACs would not have to spend if the US presidential electoral seasons were just five or six weeks long, instead of beginning two damn years in advance, and going on the nerves of the whole planet (well, perhaps only on mine)
the funniest thing for me about those impending British elections is that the British electors seems to be hell-bent in voting for several parties, from conservative to social-democrat to greens to national-liberal to liberal-democrats to Scottish nationalists even though they have that ancient, ill-suited "First Past The Post" electoral system
but of course they would not dare to question the usefulness of the voting system itself. in my view, a terminal "not done here" issue bordering senility, in the civic sense. this even though the original Parliament was "two knights from each Commons"
for those American Cousins that moan about the "Red vs Blue" duopoly (while of course never questioning FPTP itself), Brits should be a "sterling" example: yes, it is possible to have a third and a fourth and even a fifth party. of course, it implies some effort, but then watch the Brits, and take note
We were offered PR-lite, in the form of second transferable vote, and each major party campaigned against it. The people are too thick to think for themselves so we got stuck with another decade of FPTP. There won't be any positive change here until the country gets a low as it did in the 70s.
well, of course the major parties would campaign against it. though the very act of offering "PR-lite" makes it difficult to pass it, then it's completely arcane for most
the easiest way to sell an electoral reform in a FPTP country would be either a system where the first two get elected in each district (it means half the number of districts) or full proportional representation, like Israelis do, whereas the whole state of Istrael is just one giant district
nevertheless, imho people aren't "too thick". just look how the major parties are squirming, and dreading the idea of over five parties getting elected in a system designed for duopoly. just look how they are begging voters not to cause the "horrific" case of a "hung parliament"
The present government is made up of a coalition - LibDems and Tories, with Labour in opposition. By the looks of it the next Parliament won't see any majority and the Tories will have first choice of teaming up with...someone. If they can't, then Labour will choose a coalition.
If that goes on for a few more Parliaments it's likely FPTP will be seen as redundant, but a process that's 300+ years old won't be given up that quickly.
Fuck the brits, i'm an Irishman.
Mick wanker :)
The brits are going to be fucked one way or the other, their Queen always dies, this is not acceptable and they don't care why, just staying high, huh lord?
Sounds all good - on paper. You can have up to 9 parties in parliament, yet nothing ever changes. In today's Germany there are 5 parties present. Yet, since I can remember there seems to be only one agenda. It never mattered in the big picture: the SPD and the greens bombed the shit out of Serbia, and those where the anti-war parties!
Maybe more parties would help?
How about this Chamber (of criminals): http://en.wikipedia.org/wiki/People%27s_Chamber
9 Parties, 1 agenda.
Keep looking.
Correct. Party-based democracy entails somewhat different tools of mass manipulation but the result is the same. If neither of the big parties does get the majority of the votes to form a government they simply form a coalition. The sheeple won't complain of having been had through the illusion of choice.
Moreover, party-based democracy means the nation's leadership will necessarily _always_ consist of party apparatschiks such as the assholes around (and including) Merkel.
Time to issue more paper financal contracts backed by the price of brent. Nothing like overcoming physical supply/demand with derivatives that do not settle with an exchange of the underlying product.
Its not just oil thats dragged down growth, construction is technically in recession, retail sales plummeted last month, and it has virtually no manufacturing sector.
Which they are all pinning on oil prices and weather. Effect, meet Cause.
Not enough hookers and blow?
"Inconceivable!"
Slowest since Leman
Snowing in winter twice in a row is the clearest scientific evidence of global warming there can be. The science is settled. We need more govt and less liberty to save us from snow in winter.
Britain's political puppets and defense contractors are hard at work trying to get deals going so give them time to work the schemes
UK Govt Allows Arms Sales Through Open Licenses to Russia and Others – CAEC Report
UK Defense Sect. Michael Fallon Pushes Defense Spending On Fake Russian Aggression
Britain Sells £86m Of Arms To Russia
Which ultimately means they need a war to spend, spend & spend. This also explains why they have been pushing WW2 stuff all over the local rag and T.V., remembrance etc. Program the other day talking about how nobel it was to fight for your country - the same place that keeps you in a deadend job with no pay rises and takes what little you have through NIRP
Plus they are hard liners in deep denial over at the house of lords.
A Labour government would probalyt be the best for the UK.
Western economies going down, it's just a matter of time and who falls first or last.
Labour wankers will take the economy down even quicker than the Tories. If you're going to hit rock bottom you want to go there as fast as possible so the re-building can start.
Almost spat my tea all over the screen reading an opening sentence like that on ZH. Then I read the rest. By the end, I was in full agreement. Good work. I might vote Labour, if I was the sort of short sighted, selfish, irresponsible, cerebrally hindered, willing accomplice to state initiated murder theft and violence, conscience free cunt that votes and feels smug about it.
...or you can vote for one of the other corporate run parties.
Either way you're voting for more corporate power.
"that votes and feels smug about it"
That was a catch all - we're pissing in the same latrine my friend ;)
The UK needs to ramp up their scone production.
I prefer a bit of crumpet.
Either way it will be bullish for the tea market and bode well for a large increase in the UK GDP.
The country would benefit from even more tits and ass in our tabloid newspapers. Fact.
LOL
WTF? Just what is notable about that?
Besides; who believes anything governments report about economies? I mean; give me/us a break.
Economic bedtime stories are just lame, no?
Want to know how much Tea the British drink, check out the top right of this site -
As of writing, and only half the day has gone, we've had 86 million cuppas. Population of the UK is about 65million.
http://www.tea.co.uk/
UKIP will give Blue and red team a bleading nose beyond May.
Exiting euro land will fix
housing shortage
Stagnant wages
Unemloyment
and give .GOV what it needs to reduce our debt to GDP ratio and start a reduction in the deficit..............wage inflation.
Just imagine not having to pay Euro all those Billions...........for them to pass laws that go against our values.