Figures released last Wednesday showed a 0.5% increase in GDP in the first quarter of 2011. This balanced out the drop of 0.5% in the final quarter of last year, which was blamed on the abnormal weather we saw in December.
However, as labour leader Ed Miliband was quick to point out in the House of Commons, this means that GDP is now at the level it was in the quarter 3 last year.
Some sectors fared a lot better than others in Q1. Manufacturing output contributed the most to growth with an increase of 1.1%, whilst construction output dropped by 4.7%, mainly due to the large drop in public sector projects such as schools and hospitals. Total services output increased in the quarter, as did distribution, hotels and restaurants and transport, storage and communication.
Contractors may be concerned to hear the views of Michael Baxter, the editor of InvestmentandBusinessNews.co.uk, who believes that the UK’s economic recovery has reached a temporary peak.
He said Q1’s rise cancelled out the deficit from the previous quarter to put us back where we started from. He had been expecting a slightly better set of figures for the first quarter of this year because the Purchasing Managers Index looked more promising.
He went on to say that this was as good as it’s going to get for a while, but on the bright side, we are extremely unlikely to see another contraction, or a recession, later this year or at the start of 2012.
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Image: Recycled Cars by JD Hancock
