5th April 2011 by Simon Ward
A weighted average of services and industrial output rose by 1.2% in January, more than offsetting December’s 0.8% weather-driven fall – see first chart. The January level of output was equal to September’s recovery high and 0.7% above the fourth-quarter average.
Overall GDP, however, was depressed by a surprise further 9% fall in construction output in January following a 16% December plunge. GDP is estimated to have increased by only 0.6% after a 1.8% fall in December to stand 0.5% below its fourth-quarter average – first chart
Fortunately, construction weakness probably reflects carry-over from December’s bad weather disruption and output should recover strongly over coming months. Consistent with this view, construction orders, which lead output and softened in the middle of 2010, rebounded to a new recovery high in the fourth quarter – second chart.
The EU Commission’s UK business surveys for March are encouraging, showing significant rises in confidence across the services, industrial and retail sectors, in the former two cases to new recovery highs. Employment expectations, in particular, strengthened impressively, confirming an improvement in labour demand signalled by rising online job vacancies – see third chart and previous post.
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