UK And USA Post Q1 Growth

Data is beginning to emerge on how major economies have fared in the first three months of 2013. The United Kingdom economy managed to post growth of 0.3% according to the Office for National Statistics (ONS). The reading is preliminary and therefore subject to subsequent revisions; roughly 44% of the data pertaining to Q1 was available to ONS when this estimate was prepared. ONS has described the UK economy as being “broadly flat for 18 months”. It also noted that the nations GDP had suffered a 6.3% drop from peak to trough of the global financial crisis (2008 and 2009 respectively).

The unusually harsh winter weather produced a decline in retail sales activity in January and February, but this was offset by higher expenditure on electricity and gas. UK production increased slightly and the picture was enhanced by restored productivity from North Sea oil and gas fields which had partially been down for maintenance. However, construction within the UK has declined which subdued growth.

The USA posted growth figures of 2.5% for Q1, but the effects of the “Sequester” only came into play at the end of the quarter. Government spending (notably on defence) was down by 4.1%. The Sequester is designed to chop $85 billion of expenditure out of the economy and came into play because a bipartisan solution to budget and tax issues could not be found. The growth was spurred by greater consumer spending which rose by 3.2% on an annualised basis to its strongest level for 2 years. Domestic demand accounts for nearly 70% of US output.

The US economy has now posted 15 consecutive quarters of growth since emerging from recession at the height of the global financial crisis, but growth has been unusually anaemic for this phase of the economic cycle.