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UK economy grew 0.5% in quarter four, NIESR says

Date: Friday 13 Jan 2012

UK economy grew 0.5% in quarter four, NIESR says

The United Kingdom’s gross domestic product (GDP) grew by 0.1% in the three months ending in December, in terms of quarterly rates of change, according to the latest data out this morning from the National Institute of Economic and Social Research (NIESR).

That follows on a quarterly rate of expansion of 0.3% in the three months ending in November, which in turn implies that economic activity rose by 1% in 2011, half of what was achieved in 2010 (2.1%).

In quarterly and annualized terms the economy is estimated to have expanded by 0.5% in quarter four of 2011.

Of interest is how the NIESR distinguishes between a ‘recession’, which it describes as “a period when output is falling or receding”, and a ‘depression’, which it defines as, “a period when output is depressed below its previous peak.”

Thus, the NIESR explains, unless output turns down again, the recession is over, while the period of depression is likely to continue for some time.

Also in terms of quarterly annualized rates of growth, output in industry contracted at a 5.0% rate in the final three months of 2011, as did that from construction (-0.4%), while that in agriculture rose by 1.2% and by another 2.5% in the case of private services (2.5%). Output from public services increased 0.1%.

The NIESR does however warn that its track record in producing early estimates of GDP suggest that for the most recent three-month period has a standard error of 0.1-0.2% points (for the quarterly rates of growth) when compared to the first estimate produced by the Office for National Statistics. In other words, a small contraction cannot be completely ruled out.

AB

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