Monthly Archives: April 2012

When the Office for National Statistics’ chief economist announced the first official estimate of economic output on Wednesday morning, he faced as many questions about the accuracy of the data as he did about the data themselves.

“We have no reason to believe these figures are any less reliable than would usually be the case,” Joe Grice of the ONS said several times in a press conference about the 0.2 per cent drop in output in the first quarter.

But not everyone was reassured. Kevin Daly, the UK economist at Goldman Sachs, called the ONS estimate “unbelievable”. Peter Dixon, the UK economist at Commerzbank, said: “Frankly, I don’t believe it.”

They were sceptical because unofficial indicators over the past three months had suggested the economy was growing again. The popular Markit purchasing managers’ index surveys of the construction, manufacturing and services sectors, for example, were consistent with output growth of about 0.5 per cent in the first quarter.

On Wednesday, the CBI employers’ group released a survey of the manufacturing sector that appeared to show improving orders and output volumes in the three months to April and the first improvement in sentiment in a year.

Disagreements over the reliability of official data are not uncommon, but they are important this time because the Bank of England’s Monetary Policy Committee appears to have sided with the sceptics, making it less likely the MPC will approve more quantitative easing next month.

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Valentina Romei

With the focus on today’s UK GDP numbers showing the UK is technically back in recession after the economy shrunk 0.2 percent in the first quarter, it is worth remembering another important aspect of GDP – levels.

The most recent IMF World Economic Outlook shows clearly that three of the G7 economies Japan, the UK and – more drastically – Italy have never managed to go back to pre-crisis levels of GDP.

GDP growth rebased

GDP growth (rebased) Source: IMF

Why does this matter? Well it isn’t until pre-crisis levels of GDP are reached it can be meaningfully said economies have returned to some sort of normality (my colleague Keith Fray has written more about thisRead more

Emily Cadman

Today’s EU foreign ministers meeting to discuss the possible relaxing of sanctions against Myanmar is the latest sign of diplomatic relations easing between the desperately poor south east Asian state and the west.

As relations improve, and investors and businesses eye up opportunities, its worth remembering just how poor Myanmar is compared to its neighbours. Read more

Chris Cook

UPDATE: 2 October 2012, to incorporate the latest ratings.

It’s official. Well, sort of. I’ve collected up the credit ratings that exist for the higher education sector, and all of those British universities (or university colleges) which have been rated are either prime or high-grade. (Italy, meanwhile, is not an Ivy League debt repayer.)

Institution Rating Outlook Rating issuer
University of Cambridge Aaa Stable Moody’s
 St Peter’s College, Oxford AAA Negative Fitch
 Lincoln College, Oxford AAA Negative Fitch
 Somerville College, Oxford AAA Negative Fitch
Keele Aa1 Negative Moody’s
Brunel Aa1 Negative Moody’s
De Montfort University Aa1 Negative Moody’s
Kings College, London AA Stable S&P
Lancaster University A+ Positive S&P
Nottingham, University of AA- Stable S&P
Sheffield, University of AA- Stable S&P

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The global economic recovery “remains on life support”, according to Tracking Indices for the Global Economic Recovery, the Brookings Institution-Financial Times index of the world economy.

The Tiger index, which is designed to track the global recovery on a set of macroeconomic, financial and confidence variables, shows a weakening of growth momentum in the emerging markets as well as an anaemic recovery in advanced economies. Read more

Chris Cook

The merits and limitations of contextual data are much more fruitful things to discuss and consider than a soggy drip. Read more

Chris Cook

How would the Daily Mail react if a minister was asked to allow an able poor child extra tuition and deny help to a rich, less able child?  Read more

Valentina Romei

Markets promptly react to flash releases of economic indicators and large sums of money are lost or made based on zero-point-something percentage points of GDP growth. But, in the excitement of new economic data, it is worth remembering how data is subject to frequent and quite substantial revisions.

Notoriously, in 2010 Japan’s most watched economic indicator was drastically revised downwards, slicing off a full 3.5 percentage points from the annualised growth rate first reported for the third quarter of 2009, prompting soul searching about the quality of Japanese economic data. But revisions occur across many countries and not only after the flash releases.

An OECD database of the various edition of the monthly publication of the Main Economic Indicators (MEI) shows how widespread the issue is. Read more