The first estimate of GDP growth in 2014q1 showed another solid quarter of expansion for the UK. As usual we get a bit more detail in the second cut of numbers released this morning, and there were some encouraging trends - particularly on business investment. But first, the key points:
- Growth unrevised - GDP up 0.8%, manufacturing up 1.4% in the first quarter.
- Business investment grows for 5th consecutive quarter - up 2.7%.
- Exports down - no contribution from net trade at the start of 2014.
- Households were the main contributor to growth, with spending up 0.8%.
Economists have been talking about rebalancing for long time now, but with news that business investment recorded another quarter of growth in the first three months of the year, we may now be seeing clearer signs that the recovery is beginning to broaden out.
Indeed, in contrast to the trend of continuous downgrades to investment forecasts, growth in the first quarter came in a bit stronger than we'd expected.
As after a long wait for a recovery in business investment we've got five consecutive quarters of growth - last seen in 1998; and the highest level of business investment since 2008q3. Still, we are only edging towards pre-recession levels (still around 17% below) which arguably weren't that great a starting point.
Investment growth, £bn
There's always a but .... exports
The other component for better balanced growth is positive contributions from net trade. Today's data don't shine much new light on this - we know from earlier trade statistics that the year didn't get off to a great start with exports declining by 1%. Imports also fell leaving the net contribution from trade at 0. Over the past four quarters trade has only boost growth in one.
That could change. Business surveys have been more upbeat about new order intake from overseas customers and expanding activity, as signalled by today's flash PMIs, in Europe, should bode somewhat better for the exports in the official data in the coming quarters.