More signs that the UK economy contracted in the last quarter of 2012
Disappointing figures on industrial production and construction in November have added to fears that the UK economy contracted in the last quarter of 2012. The index of production grew 0.3% in November, compared with October, but had been expected to grow more as some North Sea oil and gas production resumed following maintenance.
Construction sector output contracted 3.4% in the month. Both figures are components of the GDP. Preliminary GDP figures for the final three months of 2012 are due to be released on Friday 25 January.
The production report from the UK Office for National Statistics (ONS) showed that industrial production was down 2.4% in November compared with the same month a year earlier.
Manufacturing, which is one of the components of the index of production along with mining and quarrying, gas and electricity, and water and sewerage, fell 0.3% compared with the previous month.
The ONS report on output in the construction industry showed a 9.8% drop compared with November 2011. But the really important figure on construction will be the one for December, according to Alan Clarke at Scotiabank.
December is a big month for construction because we've had really bad snow for the last two Decembers, so that may yet save us from a fractionally negative GDP reading, he said.
But he added that, this probably pushes us over the threshold into a negative reading for GDP in the fourth quarter.
Both the Bank of England and the Office for Budget Responsibility, which prepares economic forecasts for the government, have warned that GDP may have contracted in the fourth quarter of 2012.
The absence of the one-off factors that boosted growth in the third quarter such as the Olympics make it more difficult for the economy to register growth in the fourth.
The big picture is that the UK has stalled, it's bouncing along the bottom, it's stable, not growing very much, not falling very much, said Rob Wood, economist at Berenberg Bank. ”That's going to be the theme for the next six months or so - it's one of stagnation”.