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.