Q Why is there doubt at all?
A The relatively sharp quarterly tumble in GDP, of 0.7 per cent, seems incongruous with the reassuring jobs figures for the three months to May, when employment grew 181,000, and unemployment dropped 65,000. If employment has grown rapidly but output has fallen, then productivity must have seen a significant drop – one that many analysts find implausible.
Q What explanation does the ONS give?
A The Office for National Statistics (ONS), which prepared both sets of statistics, says we must wait for its productivity report, but that won’t be released until September. A spokesperson said unemployment tends to lag output, but that wouldn’t explain how an increase in hours worked could go hand in hand with reduced value added.
Q How reliable are these early GDP statistics?
A The figures released yesterday are “preliminary”, and only use about 40 per cent of the eventual total submissions for the survey. An ONS spokesperson said that the long-term average revision was about 0.2 per cent, but it could go either way.
Q Do the figures show we are back in a deep recession?
A The ONS says that the impact of the Golden Jubilee holiday skewed the figures, but didn’t speculate on the underlying strength of the economy. But analysts saw this as a reason to take the GDP figures with a pinch of salt, and downplayed the depth of the recession.
Q Are there other reasons to doubt the figures?
A The index of services showed expansion in May, with output 1.3 per cent higher than a year earlier – jarring with yesterday’s data, which alleged a 2.2 per cent services dip in June. And separate CBI data, also out yesterday, was fairly positive.