Manufacturing is GDP star performer
- 29 April 2014
- From the section Business
GDP figures are like "Match of the Day" - recorded highlights of what's already happened.
In fact, it's worse than that: the publication of figures for national output every three months is like watching recorded highlights on a faulty television, that shows only three-quarters of the action and sometimes misses what's really been going on.
That said, they are certainly a very worthwhile measure of economic progress, even if these days, there is a growing consensus that they are not the be-all and end-all.
And the big simple story of the latest figures is not contentious: the economic recovery is picking up a bit of momentum.
So in the three months to the end of March, GDP increased by 0.8%, compared with 0.7% in the final quarter of last year.
This is a bit slower than the 0.9% the City expected and the 1% the Bank of England was predicting at the time of the last meeting of its Monetary Policy Committee.
But the shortfall against expectations is less significant than the direction of travel, which remains positive.
On an annualised basis, the economy is growing at a rate of 3.1% - which is back to the kind of growth rates the UK enjoyed before it all went splat in 2008.
As for contributors to the continued recovery, it is inevitable that services - representing three-quarters of the economy - are the driver.
The output of the service industries rose 0.9%, which in turn contributed 0.7 percentage points of the 0.8% increase (or most of it).
But the current star of the UK's economic performance is the small manufacturing sector (roughly a tenth of the economy) - whose output jumped 1.3% and is growing at an annual rate of 3.4%.
The government's longed-for and fabled rebalancing of the economy - towards making things - may at last be happening.
All that said, the economy is still 0.6% smaller than it was at its peak size, before the crash, in the first quarter of 2008 (which of course implies that, barring a calamity, I will be telling you in three months that the UK has at last regenerated all the income wiped out by the Great Recession).
And only the service sector is actually bigger than it was six years ago (2% bigger in fact).
Also, as recent research by the Office for National Statistics shows, if GDP is divided by our population, we are still quite a lot poorer - because lacklustre growth has been accompanied by a rising population.
At the end of last year, GDP per head was still more than 6% below where it was in 2007 - and GDP per capita will still be more than 5% smaller than before the deluge, even after these latest positive figures.
This is what you might call the UKIP paradox.
On the one hand, our rising population is one reason why our economic performance in gross terms is better than some other developed economies: immigrants coming here, working cheaply, and buying stuff stimulates output.
But economic growth that leaves indigenous citizens typically only a bit better off isn't the most popular form of growth.
As for our national obsession, possibly more pervasive than handwringing about the plight of association football - to wit, when will interest rates go up - the latest GDP figures perhaps indicate, as I mentioned recently, that the timing of the first tiny rise may be deferred a bit.
How so? Well, it is because the good or bad news - depending on whether you are borrower or saver - is that the economy is growing a touch slower than the Bank of England had been expecting.
But these are fine judgements. And more relevant than the fuzzy pictures shown in the GDP announcement will be the finer detail available in coming weeks of whether the labour market shows signs of tightening in a way that could stoke inflation.
I should have mentioned that consumption and shopping appears to have spurred service-sector performance - with the output of distribution, hotels and restaurants (or shopping and leisure) 1.5% higher in the quarter, and a remarkable 4.9% higher year-on-year.
So the cherished rebalancing of the economy has some way to go (ahem).
We are still more a nation of shoppers than makers, and we may be losing the savings habit we acquired after the Crash.
We are not turning German.