Business investment blues
Today’s Quarterly National Accounts confirmed that the preliminary estimate of 0.5% GDP growth in the first quarter of the year was correct. GDP is still 3.5% lower than it was at the start of the recession in the second quarter of 2008. Twelve quarters after the start of the 1980s recession, GDP was 1.0% higher; twelve quarters after the start of the 1990s recession, GDP was 1.3% higher.
Growth year-on-year is just 1.7% – this is a very feeble recovery.
Earlier today I mentioned that household incomes look weak; other items on the national menu don’t look too hot either. New figures for Business Investment showed that, in the first quarter of 2011, overall business investment fell 3.2% from the previous quarter; although up on the first quarter of 2010 it was still only at about the level of the first quarter of 2009. Overall, the figures do not yet suggest a strong recovery:
The results for private sector manufacturing investment were especially disappointing, a 4.4% fall on the previous quarter, after four successive quarters of increases. There is a considerable way to go before the strongest sector in the post-recovery economy returns to pre-recession levels of investment:
Overall, the prospects for economic health are not at their strongest.