From the TUC

There are mediocre times just around the corner

04 Apr 2012, by in Economics

Today’s results for the Purchasing Managers’ Index for Services and the over-the-top reaction makes me want to nick Father Ted’s placard: “careful now”!

First things first: the services PMI results are good, they show the strongest performance for nearly two years and they follow good results for the Indexes for manufacturing and  construction. The contrast with the generally lousy figures we’ve had for output is cheering; confidence drives the business cycle so this could mark the start of an upturn.

But, as Duncan pointed out just now, we shouldn’t confuse improvement from a very low point with economic health. It’s great when you’re wheeled out of intensive care, but that doesn’t mean you’re going to run a marathon any time soon. To underline the point, look at the charts Markit have published for the three Indexes:

What they have in common is that they’re all positive but we’re still some way from the strength we had pre-recession.Of course, if we’re at the start of an up-turn we shouldn’t expect brilliant results yet and I’m perfectly happy say the PMIs are encouraging.

But it is far too soon to talk about fears of a double-dip recession being ‘unfounded.’