DOUBLE, TRIPLE OR JUST THE SINGLE?
Only a few weeks ago economists were seriously talking about the real possibility of there being a triple dip recession. These fears have now been dispelled by an initial estimate in the first quarter of 2013 of growth of 0.3%.
The Office for National Statistics (ONS) have now revised the figures for the first quarter of 2012 which means that even the double-dip recession might never have actually have happened!
In the first quarter of 2012 the original calculation was that there was negative growth of 0.1%. Now the ONS believes the construction sector grew more strongly than originally thought and, as a result, the economy ‘flatlined’ (no growth/no contraction) and there was never a double-dip recession!
The ONS admits that much of the data gathered for the initial estimate of quarterly growth is a ‘best guess’. It bases its initial estimates solely on a monthly survey of around 44,000 businesses covering the production, manufacturing, services, retail and construction industries. It polls firms of all sizes, but admits that those with fewer employees are less likely to be included – meaning that small fast growing businesses would be excluded from the calculation.
By the time the preliminary estimate is released, the ONS will have around 70% to 80% of responses back from its survey covering the first two months of the quarter but for the third quarter the responses received are only around 20% to 30% and the ONS fill in the gaps based on historical data and a lot of assumptions.
Andrew Sentence (a former member of the Bank of England’s monetary policy committee) has called for the ONS to include broader data including employment information. He commented “What the ONS is not very good at is taking a common sense view of economic data. They need to be much better at cross-checking technical data to give a true picture.”
Tim Corfield comments “Given the political turmoil that these figures can produce and influence on business wouldn’t it be better to hold fire with producing figures that could indicate the wrong trends? Sending out the wrong signals could be damaging for the economy.”
Whether it’s a single, double or triple dip it can be tough running a business. If you hear of a director or proprietor who’s business has financial difficulties please ask them to call us. Our initial meeting is always free and I’m sure we can help!
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