So the GDP figures for Q2 are out. And we’re surprised. Growth of 1.1% over the quarter is significant, and well above consensus expectations of 0.6%. Admittedly these are provisional figures, and subject to change, but this looks like great news for the economy.
Except… a quick look at where growth has come from: Construction; Business Services and Finance; and government spending. With recent cuts to capital budgets including Building Schools for the Future, and the dramatic planned cuts in government spending it’s difficult to see how this growth can be sustained.
On a positive note, manufacturing is also growing, which is great news. Hopefully this growth will help cushion industry against an uncertain global recovery.