More evidence that the British economy started to grow again around June from the latest industrial production figures.

On the basis that manufacturing output, the most volatile sector of the economy, grew in the three months to July compared with the previous three months, the National Institute of Economic and Social Research now reckon that UK economic activity rose in their latest quarterly growth estimate. They were comparing June to August against March to May. If this estimate is right, and NIESR have a good track record, the horrible official Q2 contraction of 0.7 per cent in the UK economy appears to be old news.

There has been lots of concern in Britain that the UK is doing much worse than France, Germany or Japan, which started growing again in the second quarter official figures. This data shows the British resumption of growth appears to be about two months delayed, not a big deal.

Whether the recovery will endure remains in the balance, But few would have been disappointed in March had they known the economy would return to growth by June. NIESR now think the recession is on track to be less severe than the 1930s in Britain (see chart). But Martin Weale, its director, is clear that output might well rise in some months and fall in others for a period to come. “The end of the recession should not be confused with a return to normal economic conditions,” he says wisely.

The other thing of note is that if the economy begins broadly to recover from here, the recession of 2008-09 will be extremely sharp and severe, but also very short. The worry must therefore be that it is not yet over, even if we are now past the worst.

Tags: production, recession, UK

September 8, 2009 3:36pm in Europe, energy, utilities and mining | Comment