A pleasant surprise on growth
Of course, today's first estimate for UK growth in the second quarter of 2010 is a pleasant surprise. After several quarters where the City has been disappointed by the first official take on the pace of the recovery, a figure so far above expectations makes a welcome change. But it's always important not to read too much into one set of figures - however striking. That could be especially important today.
The figures show surprising strength in the service sector as well - up by 0.9%, three times the pace of growth at the start of the year. But the big outlier in these numbers is construction.
This one sector which accounts for a tiny share of the overall economy was responsible for more than 0.4 percentage points of the 1.1% estimate for overall growth. Construction is thought to have grown by an astonishing 6.6% in the three months after March - after two successive quarters in which it shrank by 1.6%.
This is not to suggest that the GDP figure is wrong (though it will almost certainly be revised one way or another). Output in the construction sector is notoriously volatile. What it does tell you is that, even if this first figure of 1.1% growth does turn out to be right, it doesn't necessarily suggest that the recovery across the entire economy is a lot stronger than previously thought.
Strip out construction, and the pace of growth is broadly consistent with what the surveys have been suggesting - that is to say,roughly in line with the long-term average for the economy, and broadly similar to the early stages of past recoveries.
If this were indeed a normal recovery, you would expect the economy to start to grow well above its long-term trend rate, to make use of all the ready spare capacity created by an unusually deep recession. In that kind of an environment, this 1.1% estimate would not seem so strange.
But in the past year we have seen several European countries grow rapidly at the start of their recoveries, only to slip back into flat or even negative growth.
I'm not suggesting that will happen in the UK. But recent surveys suggest that confidence in many sectors is already beginning to ebb. With so much uncertainty hanging over the UK and global economy, no-one should assume that today's figure is a sign of things to come.
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